benefits accrue to the Landholder
Henry George called attention to the solution to a mystery, but
as a society, we've managed to forget what most well-read people in George's
primary reason we have such a concentration of wealth and a concentration
of income relates
to an unacknowledged distortion: as society grows, most of the
economic benefits go to those who own the best land. The best land is
not the land
on which most of us make our homes; it is generally the urban land
(particularly the central business district) and occasionally the coastal
land (that house
on the Outer Banks or in the Hamptons
or rents for an amazing sum would earn a lot less were it located
in a less choice location).
John Stuart Mill: Principles
of Political Economy with some of their Applications to Social Philosophy
The ordinary progress of a society which increases in wealth, is at all
times tending to augment the incomes of landlords; to give them both a greater
amount and a greater proportion of the wealth of the community, independently
of any trouble or outlay incurred by themselves. They grow richer, as it
were in their sleep, without working, risking, or economizing. What claim
have they, on the general principle of social justice, to this accession
of riches? In what would they have been wronged if society had, from the
beginning, reserved the right of taxing the spontaneous increase of rent,
to the highest amount required by financial exigencies?
Henry George: The Common Sense of Taxation (1881
Or, take the case of the railroads. That railroads are a public benefit
no one will dispute. We want more railroads, and want them to reduce their
fares and freight. Why then should we tax them? for taxes upon railroads
deter from railroad building, and compel higher charges. Instead of taxing
the railroads, is it not clear that we should rather tax the increased value
which they give to land? To tax railroads is to check railroad building,
to reduce profits, and compel higher rates; to tax the value they give to
land is to increase railroad business and permit lower rates. The
elevated railroads, for instance, have opened to the overcrowded population
York the wide, vacant spaces of the upper part of the island. But this great
public benefit is neutralized by the rise in land values. Because these vacant
lots can be reached more cheaply and quickly, their owners demand more for
them, and so the public gain in one way is offset in another, while the roads
lose the business they would get were not building checked by the high prices
demanded for lots. The increase of land values, which the elevated roads
have caused, is not merely no advantage to them — it is an injury;
and it is clearly a public injury. The elevated railroads ought not to be
taxed. The more profit they make, with the better conscience can they be
asked to still further reduce fares. It is the increased land values which
they have created that ought to be taxed, for taxing them will give the public
the full benefit of cheap fares.
So with railroads everywhere. And so not alone with railroads, but with
all industrial enterprises. So long as we consider that community most prosperous
which increases most rapidly in wealth, so long is it the height of absurdity
for us to tax wealth in any of its beneficial forms. We should tax what we
want to repress, not what we want to encourage. We should tax that which
results from the general prosperity, not that which conduces to it. It
is the increase of population, the extension of cultivation, the manufacture
of goods, the building of houses and ships and railroads, the accumulation
of capital, and the growth of commerce that add to the value of land — not
the increase in the value of land that induces the increase of population
and increase of wealth. It is not that the land of Manhattan Island is now
worth hundreds of millions where, in the time of the early Dutch settlers,
it was only worth dollars, that there are on it now so many more people,
and so much more wealth. It is because of the increase of population and
the increase of wealth that the value of the land has so much increased.
Increase of land values tends of itself to repel population and prevent improvement.
And thus the taxation of land values, unlike taxation of other property,
does not tend to prevent the increase of wealth, but rather to stimulate
it. It is the taking of the golden egg, not the choking of the goose that
Every consideration of policy and ethics squares with this conclusion.
The tax upon land values is the most economically perfect of all taxes. It
does not raise prices; it maybe collected at least cost, and with the utmost
ease and certainty; it leaves in full strength all the springs of production;
and, above all, it consorts with the truest equality and the highest justice.
For, to take for the common purposes of the community that value which results
from the growth of the community, and to free industry and enterprise and
thrift from burden and restraint, is to leave to each that which he fairly
earns, and to assert the first and most comprehensive of equal rights — the
equal right of all to the land on which, and from which, all must live.
Thus it is that the scheme of taxation which conduces to the greatest production
is also that which conduces to the fairest distribution, and that in the
proper adjustment of taxation lies not merely the possibility of enormously
increasing the general wealth, but the solution of these pressing social
and political problems which spring from unnatural inequality in the distribution
"There is," says M. de Laveleye, in concluding that work in which
he shows that the first perceptions of mankind have everywhere recognized
a most vital distinction between property in land and property which results
from labor, — "there is in human affairs one system which is the
best; it is not that system which always exists, otherwise why should we
desire to change it; but it is that system which should exist for the greatest
good of humanity. God knows it, and wills it; man's duty it is to discover
and establish it." ... read the whole article
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty, Chapter 5: The
Basic Cause of Poverty (in the unabridged: Book
V: The Problem Solved)
The truth is self-evident. Put to any one capable of consecutive thought this
"Suppose there should arise from the English Channel or the German
Ocean a no man's land on which common labor to an unlimited amount should
to make thirty shillings a day and which should remain unappropriated and
of free access, like the commons which once comprised so large a part of
soil. What would be the effect upon wages in England?"
He would at once tell you that common wages throughout England must soon increase
to thirty shillings a day.
And in response to another question, "What would be the effect on rents?" he
would at a moment's reflection say that rents must necessarily fall; and
if he thought out the next step he would tell you that all this would happen
any very large part of English labor being diverted to the new natural
opportunities, or the forms and direction of industry being much changed;
only that kind of
production being abandoned which now yields to labor and to landlord together
less than labor could secure on the new opportunities. The great rise in
wages would be at the expense of rent.
Take now the same man or another — some hardheaded business man, who
has no theories, but knows how to make money. Say to him: "Here is a little
village; in ten years it will be a great city — in ten years the
railroad will have taken the place of the stage coach, the electric light
of the candle;
it will abound with all the machinery and improvements that so enormously
multiply the effective power of labor. Will, in ten years, interest be
He will tell you, "No!"
"Will the wages of common labor be any higher; will it be easier for
a man who has nothing but his labor to make an independent living?"
He will tell you, "No; the wages of common labor will not be any higher;
on the contrary, all the chances are that they will be lower; it will not
be easier for the mere laborer to make an independent living; the chances
that it will be harder."
"What, then, will be higher?"
"Rent; the value of land. Go, get yourself a piece of ground, and hold
And if, under such circumstances, you take his advice, you need do nothing
more. You may sit down and smoke your pipe; you may lie around like the lazzaroni
of Naples or the leperos of Mexico; you may go up in a balloon, or down a hole
in the ground; and without doing one stroke of work, without adding one iota
to the wealth of the community, in ten years you will be rich! In the new city
you may have a luxurious mansion; but among its public buildings will be an
In all our long investigation we have been advancing to this simple truth:
That as land is necessary to the exertion of labor in the production of wealth,
to command the land which is necessary to labor, is to command all the fruits
of labor save enough to enable labor to exist. ...
... For land is the habitation of man, the storehouse upon which he must
draw for all his needs, the material to which his labor must be applied for
supply of all his desires; for even the products of the sea cannot be taken,
the light of the sun enjoyed, or any of the forces of nature utilized,
without the use of land or its products. On the land we are born, from it
to it we return again — children of the soil as truly as is the blade
of grass or the flower of the field. Take away from man all that belongs
to land, and he is but a disembodied spirit. Material progress cannot rid
our dependence upon land; it can but add to the power of producing wealth
from land; and hence, when land is monopolized, it might go on to infinity
increasing wages or improving the condition of those who have but their
labor. It can but add to the value of land and the power which its possession
Everywhere, in all times, among all peoples, the possession of land is
the base of aristocracy, the foundation of great fortunes, the source of
... read the whole chapter
H.G. Brown: Significant
Paragraphs from Henry George's Progress & Poverty:
10. Effect of Remedy Upon Wealth Production (in the unabridged P&P: Part
IX — Effects of the Remedy: Chapter 1 — Of the effect upon the
production of wealth)
The elder Mirabeau, we are told, ranked the proposition of Quesnay, to substitute
one single tax on rent (the impôt unique) for all other taxes,
as a discovery equal in utility to the invention of writing or the substitution
of the use of money for barter.
To whosoever will think over the matter, this saying will appear an evidence
of penetration rather than of extravagance. The advantages which would be gained
by substituting for the numerous taxes by which the public revenues are now
raised, a single tax levied upon the value of land, will appear more and more
important the more they are considered. ...
And to shift the burden of taxation from production and exchange to the value
or rent of land would not merely be to give new stimulus to the production
of wealth; it would be to open new opportunities. For under this system no
one would care to hold land unless to use it, and land now withheld from use
would everywhere be thrown open to improvement.
The selling price of land would fall; land speculation would receive its death
blow; land monopolization would no longer pay.* Millions and millions of acres
from which settlers are now shut out by high prices would be abandoned by their
present owners or sold to settlers upon nominal terms. And this not merely
on the frontiers, but within what are now considered well settled districts.
* The fact that a tax on the rental value of land cannot
be shifted by landowners to tenants, though recognized by all competent
economists, is sometimes a stumbling block to persons untrained in economics.
The reason such a tax cannot be shifted is that it cannot limit the supply
of land. Landowners are presumably, before the tax is laid, charging all
the rent they can get. There is nothing in a tax on the rental value of
land to make tenants willing to pay more or to make land more difficult
to hire. On the contrary, more land will be on the market, because of such
a tax, rather than less, since the tax puts a heavy penalty on holding
land out of use and unimproved for mere speculation. The competition of
former vacant land speculators to get their land used will make land cheaper
to rent rather than more expensive. And since only the net rent remaining
after the tax is subtracted is capitalized into salable value, land will
be very much cheaper to buy. H.G.B.
And it must be remembered that this would apply, not merely to agricultural
land, but to all land. Mineral land would be thrown open to use, just as agricultural
land; and in the heart of a city no one could afford to keep land from its
most profitable use, or on the outskirts to demand more for it than the use
to which it could at the time be put would warrant. Everywhere that land had
attained a value, taxation, instead of operating, as now, as a fine upon improvement,
would operate to force improvement. Whoever planted an orchard, or sowed a
field, or built a house, or erected a manufactory, no matter how costly, would
have no more to pay in taxes than if he kept so much land idle.
- The monopolist of agricultural land would be taxed as much as though
his land were covered with houses and barns, with crops and with stock.
- The owner of a vacant city lot would have to pay as much for the privilege
of keeping other people off of it until he wanted to use it, as his
neighbor who has a fine house upon his lot.
- It would cost as much to keep a row of tumble-down shanties upon valuable
land as though it were covered with a grand hotel or a pile of great
warehouses filled with costly goods.
Thus, the bonus that wherever labor is most productive must now be paid before
labor can be exerted would disappear.
- The farmer would not have to pay out half his means, or mortgage his
labor for years, in order to obtain land to cultivate;
- the builder of a city homestead would not have to lay out as much for
a small lot as for the house he puts upon it*;
- the company that proposed to erect a manufactory would not have to expend
a great part of its capital for a site.
- And what would be paid from year to year to the state would be in lieu
of all the taxes now levied upon improvements, machinery, and stock.
*Many persons, and among them some professional economists,
have never succeeded in getting a thorough comprehension of this point.
Thus, the editor has heard the objection advanced that the greater
cheapness of land is no advantage to the poor man who is trying to
save enough from his earnings to buy a piece of land; for, it is said,
the higher taxes on the land after it is acquired, offset the lower
purchase price. What such objectors do not see is that even if the
lower price of land does no more than balance the higher tax on it,
(and this overlooks, for one thing, the discouragement to speculation
in land), the reduction or removal of other taxes is all clear gain.
It is easier to save in proportion as earnings and commodities are
relieved of taxation. It is easier to buy land, because its selling
price is lower, if the land is taxed. And although the land, after
its purchase, continues to be taxed, not only can this tax be fully
paid out of the annual interest on the saving in the purchase price,
but also there is to be reckoned the saving in taxes on buildings and
other improvements and in whatever other taxes are thus rendered unnecessary.
Consider the effect of such a change upon the labor market. Competition
would no longer be one-sided, as now. Instead of laborers competing with
for employment, and in their competition cutting down wages to the point
of bare subsistence, employers would everywhere be competing for laborers,
wages would rise to the fair earnings of labor. For into the labor market
would have entered the greatest of all competitors for the employment of
competitor whose demand cannot be satisfied until want is satisfied — the
demand of labor itself. The employers of labor would not have merely to
bid against other employers, all feeling the stimulus of greater trade
profits, but against the ability of laborers to become their own employers
upon the natural opportunities freely opened to them by the tax which prevented
With natural opportunities thus free to labor;
- with capital and improvements exempt from tax, and exchange released
from restrictions, the spectacle of willing men unable to turn their labor
the things they are suffering for would become impossible;
- the recurring paroxysms which paralyze industry would cease;
- every wheel of production would be set in motion;
- demand would keep pace with supply, and supply with demand;
- trade would increase in every direction, and wealth augment on every
hand. ... read the whole chapter
Henry George: Ode to
Liberty (1877 speech)
In the very centers of our
civilization today are want and
suffering enough to make sick at heart whoever does not close his
eyes and steel his nerves. Dare we turn to the Creator and ask Him to
relieve it? Supposing the prayer were heard, and at the behest with
which the universe sprang into being there should glow in the sun a
greater power; new virtue fill the air; fresh vigor the soil; that
for every blade of grass that now grows two should spring up, and the
seed that now increases fifty-fold should increase a hundredfold!
Would poverty be abated or want relieved? Manifestly no! Whatever
benefit would accrue would be but temporary. The new powers streaming
through the material universe could be utilized only through land.
And land, being private property, the classes that now monopolize the
bounty of the Creator would monopolize all the new bounty. Land
owners would alone be benefited. Rents would increase, but wages
would still tend to the starvation point!
This is not merely a deduction of political economy; it is a
fact of experience. We know it because we have seen it. Within our
own times, under our very eyes, that Power which is above all, and in
all, and through all; that Power of which the whole universe is but
the manifestation; that Power which maketh all things, and without
which is not anything made that is made, has increased the bounty
which men may enjoy, as truly as though the fertility of nature had
- Into the mind of one came the thought that harnessed
steam for the service of mankind.
- To the inner ear of another was
whispered the secret that compels the lightning to bear a message
around the globe.
- In every direction have the laws of matter been
revealed; in every department of industry have arisen arms of iron
and fingers of steel, whose effect upon the production of wealth has
been precisely the same as an increase in the fertility of nature.
has been the result? Simply that land owners get all the gain.
The wonderful discoveries and inventions of our century have neither
increased wages nor lightened toil. The effect has simply been to
make the few richer; the many more helpless! Can it be that the
gifts of the Creator may be thus misappropriated with impunity? Is it
a light thing that labor should be robbed of its earnings while greed
rolls in wealth — that the many should want while the few are
surfeited? Turn to history, and on every page may be read the lesson
that such wrong never goes unpunished; that the Nemesis that follows
injustice never falters nor sleeps! Look around today. Can this
state of things continue? May we even say, “After us the
deluge!” Nay; the pillars of the state are trembling even now,
and the very foundations of society begin to quiver with pent-up
forces that glow underneath. The struggle that must either revivify,
or convulse in ruin, is near at hand, if it be not already begun. The
fiat has gone forth! With steam and electricity, and the new powers
born of progress, forces have entered the world that will either
compel us to a higher plane or overwhelm us, as nation after nation,
as civilization after civilization, have been overwhelmed before. It
is the delusion which precedes destruction that sees in the popular
unrest with which the civilized world is feverishly pulsing only the
passing effect of ephemeral causes. Between democratic ideas and the
aristocratic adjustments of society there is an irreconcilable
conflict. Here in the United States, as there in Europe, it may be
seen arising. We cannot go on permitting men to vote and forcing them
to tramp. We cannot go on educating boys and girls in our public
schools and then refusing them the right to earn an honest living. We
cannot go on prating of the inalienable rights of man and then
denying the inalienable right to the bounty of the Creator. Even now,
in old bottles the new wine begins to ferment, and elemental forces
gather for the strife! ... read
the whole speech
and also Significant
Paragraphs from Henry George's Progress & Poverty:
14 Liberty, and Equality of Opportunity
(in the unabridged P&P
X: The Law of Human Progress — Chapter 5: The Central Truth
Henry George: The Crime
of Poverty (1885 speech)
... Men are compelled to compete
with each other for the wages of an employer, because they have been
robbed of the natural opportunities of employing themselves; because
they cannot find a piece of God's world on which to work without
paying some other human creature for the privilege.
I do not mean to say that even
after you had set right this
fundamental injustice, there would not be many things to do; but this
I do mean to say, that our treatment of land lies at the bottom of
all social questions. This I do mean to say, that, do what you
please, reform as you may, you never can get rid of wide-spread
poverty so long as the element on which and from which all men must
live is made the private property of some men. It is utterly
impossible. Reform government — get taxes down to the
minimum — build railroads; institute co-operative stores; divide
profits, if you choose, between employers and employed -- and what will
be the result? The result will be that the land will increase in
value — that will be the result — that and nothing else.
Experience shows this. Do not all improvements simply increase the
value of land — the price that some must pay others for the
privilege of living?
Consider the matter, I say it
with all reverence, and I merely
say it because I wish to impress a truth upon your minds — it is
utterly impossible, so long as His laws are what they are, that God
himself could relieve poverty — utterly impossible. Think of it
and you will see. Men pray to the Almighty to relieve poverty. But
poverty comes not from God's laws — it is blasphemy of the worst
kind to say that; it comes from man's injustice to his fellows.
Supposing the Almighty were to hear the prayer, how could He carry
out the request so long as His laws are what they are?
Consider -- the Almighty gives us
nothing of the things that
constitute wealth; He merely gives us the raw material, which must be
utilised by man to produce wealth. Does He not give us enough of that
now? How could He relieve poverty even if He were to give us more?
Supposing in answer to these prayers He were to increase the power of
the sun; or the virtue of the soil? Supposing He were to make plants
more prolific, or animals to produce after their kind more
abundantly? Who would get the benefit of it? Take a country where
land is completely monopolised, as it is in most of the civilised
countries — who would get the benefit of it? Simply the
landowners. And even if God in answer to prayer were to send down out
of the heavens those things that men require, who would get the
In the Old Testament we are
told that when
the Israelites journeyed through the desert, they were hungered, and
that God sent manna down out of the heavens. There was enough for all
of them, and they all took it and were relieved. But supposing that
desert had been held as private property, as the soil of Great
Britain is held, as the soil even of our new States is being held;
suppose that one of the Israelites had a square mile, and another one
had twenty square miles, and another one had a hundred square miles,
and the great majority of the Israelites did not have enough to set
the soles of their feet upon, which they could call their
own — what would become of the manna? What good would it have done
to the majority? Not a whit. Though God had sent down manna enough
for all, that manna would have been the property of the landholders;
they would have employed some of the others perhaps, to gather it up
into heaps for them, and would have sold it to their hungry brethren.
Consider it; this purchase and sale of manna might have gone on until
the majority of Israelites had given all they had, even to the
clothes off their backs. What then? Then they would not have had
anything left to buy manna with, and the consequences would have been
that while they went hungry the manna would have lain in great heaps,
and the landowners would have been complaining of the over-production
of manna. There would have been a great harvest of manna and hungry
people, just precisely the phenomenon that we see today. ...
... Yet that is not any more
absurd than our land titles. From whom
do they come? Dead man after dead man. Suppose you get on the
cars here going to Council Bluffs or Chicago. You find a passenger
with his baggage strewn over the seats. You say: "Will you give
me a seat, if you please, sir?" He replies: "No; I bought
this seat." "Bought this seat? From whom did you buy
it?" I bought it from the man who got out at the last
station," That is the way we manage this earth of ours. ... read the whole speech
Henry George: The Wages
Land being necessary to life and
labor, where private
property in land has divided society into a landowning class and a
landless class, there is no possible invention or improvement, whether
it be industrial, social, or moral, which, so long as it does not
affect the ownership of land can prevent poverty or relieve the general
conditions of mere laborers.
For, whether the effect of any
invention or improvement be
to increase what labor can produce or to decrease what is required to
support the laborer, it can, so soon as it becomes general, result
only in increasing the income of the owners of land, without benefiting
the mere laborers.
How true this is we may see in the
facts of today. In our own
time invention and discovery have enormously increased the productive
power of labor, and at the same time greatly reduced the cost of many
things necessary to the support of the laborer.
Have not the benefits of these
improvements mainly gone to the
owners of land – enormously increased land values?
I say mainly, for some part of the
benefit has gone to the
cost of monstrous standing armies and warlike preparations; to the
payment of interest on great public debts; and, largely disguised as
interest on fictitious capital, to the owners of monopolies other than
that of land. ...
If labor-saving inventions and
improvements could be carried,
to the very abolition of the necessity for labor, what would be the
result? Would it not be that landowners could then get all the wealth
that the land was capable of producing, and would have no need at all
for laborers, who must then either starve or live as pensioners on the
bounty of the landowners? ...
So long as private property in
land continues – so long as
some men are treated as owners of the earth, and other men live on it
only by their sufferance – human wisdom can devise no means by which
the evils of our present condition may be avoided.
Could even the wisdom of God do
so? How could He? Should He
infuse new vigour into the sunlight, new virtue into the air; new
fertility into the soil, would
not all this new bounty go to the owners
of the land?
Should He open the minds of men to
the possibilities of new
substances, new adjustments, new powers, would this do any more to
relieve poverty than steam, electricity and all the numberless
discoveries and inventions of our time have done?
Or, if He were to send down from
the heavens above or cause to
gush up from the subterranean depths, food, clothing – all the things
that satisfy man’s material desires to whom under our laws would all
these belong? Would not this
increase and extension of His bounty
merely enable the privileged class more riotously to roll in wealth,
and bring the disinherited class to more widespread pauperism?
Though the rich were to “bestow
all their goods to feed the
poor and give their bodies to be burned,” poverty would continue while
property in land continued.
Take the case of the rich man today
who is honestly desirous of devoting his wealth to the improvement of
the condition of labor. What can he do?
- Bestow his wealth on
those who need it?
He may help some who deserve it, but he will not improve general
conditions. And against the good he may do will be the danger of doing
- Build churches?
Under the shadow of churches poverty festers and the vice that is born
of it breeds!
- Build schools and
Save as it may lead men to see the iniquity of private property in
land, increased education can effect nothing for mere laborers, for as
education is diffused the wages of education sink!
- Establish hospitals?
Why, already it seems to laborers that there are too many seeking work,
and to save and prolong life is to add to the pressure!
- Build model tenements?
Unless he cheapens house accommodation he but drives further the class
he would benefit, and as he cheapens house accommodation he brings more
to seek employment, and cheapens wages!
- Institute laboratories,
scientific schools, workshops far physical experiments?
He but stimulates invention and discovery, the very forces that, acting
on a society based on private property in land, are crushing labor as
between the upper and the nether millstone!
- Promote emigration from
places where wages are low to places where they are somewhat higher?
If he does, even those whom he at first helps to emigrate will soon
turn on him and demand that such emigration shall be stopped as
reducing their wages!
- Give away what land he
may have, or refuse to take rent for it, or let it at lower rents than
the market price?
He will simply make new landowners or partial landowners; he may make
some individuals the richer, but he will do nothing to improve the
general condition of labor.
- Or, bethinking himself of
public-spirited citizens of classic times who spent great sums in
improving their native cities, shall he try to beautify the city of his
birth or adoption? Let him widen and straighten narrow and
crooked streets, let him build parks and erect fountains, let him open
tramways and bring in railways, or in any way make beautiful and
attractive his chosen city, and what will be the result? Must it not be
that those who appropriate God’s bounty will take his also? Will it not
be that the value of land will go up, and that the net result of his
benefactions will be an increase of rents and a bounty to
landowners? Why, even the
mere announcement that he is going to do such things will start
speculation and send up the value of land by leaps and bounds.
What, then, can the rich man do
to improve the condition of labor?
He can do nothing at
except to use his strength for the abolition of the great primary wrong
that robs men of their birthright.
The justice of God laughs at the attempts of men to substitute
anything else for it! ... read the whole article
Henry George: The Condition of
Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)
But worse perhaps than all else is the way in which this substituting of
vague injunctions to charity for the clear-cut demands of justice opens an
easy means for the professed teachers of the Christian religion of all branches
and communions to placate Mammon while persuading themselves that they are
serving God. Had the English clergy not subordinated the teaching of justice
to the teaching of charity — to go no further in illustrating a principle
of which the whole history of Christendom from Constantine’s time to
our own is witness — the Tudor tyranny would never have arisen, and
the separation of the church been averted; had the clergy of France never
substituted charity for justice, the monstrous iniquities of the ancient
régime would never have brought the horrors of the Great Revolution;
and in my own country had those who should have preached justice not satisfied
themselves with preaching kindness, chattel slavery could never have demanded
the holocaust of our civil war.
No, your Holiness; as faith without works is dead, as men cannot give to
God his due while denying to their fellows the rights be gave them, so charity
unsupported by justice can do nothing to solve the problem of the existing
condition of labor. Though the rich were to “bestow all their goods
to feed the poor and give their bodies to be burned,” poverty would
continue while property in land continues.
Take the case of the rich man today who is honestly desirous of devoting
his wealth to the improvement of the condition of labor. What can he do?
- Bestow his wealth on those who need it? He may help some who deserve
it, but will not improve general conditions. And against the good he may
do will be the danger of doing harm.
- Build churches? Under the shadow of churches poverty festers and the
vice that is born of it breeds.
- Build schools and colleges? Save as it may lead men to see the iniquity
of private property in land, increased education can effect nothing for
mere laborers, for as education is diffused the wages of education sink.
- Establish hospitals? Why, already it seems to laborers that there are
too many seeking work, and to save and prolong life is to add to the pressure.
- Build model tenements? Unless he cheapens house accommodations he but
drives further the class he would benefit, and as he cheapens house accommodations
he brings more to seek employment and cheapens wages.
- Institute laboratories, scientific schools, workshops for physical experiments?
He but stimulates invention and discovery, the very forces that, acting
on a society based on private property in land, are crushing labor as between
the upper and the nether millstone.
- Promote emigration from places where wages are low to places where they
are somewhat higher? If he does, even those whom he at first helps to emigrate
will soon turn on him to demand that such emigration shall be stopped as
reducing their wages.
- Give away what land he may have, or refuse to take rent for it, or let
it at lower rents than the market price? He will simply make new landowners
or partial landowners; he may make some individuals the richer, but he
will do nothing to improve the general condition of labor.
- Or, bethinking himself of those public-spirited citizens of classic
times who spent great sums in improving their native cities, shall he try
to beautify the city of his birth or adoption? Let him widen and straighten
narrow and crooked streets, let him build parks and erect fountains, let
him open tramways and bring in railroads, or in any way make beautiful
and attractive his chosen city, and what will be the result? Must it not
be that those who appropriate God’s bounty will take his also? Will
it not be that the value of land will go up, and that the net result of
his benefactions will be an increase of rents and a bounty to landowners?
Why, even the mere announcement that he is going to do such things will
start speculation and send up the value of land by leaps and bounds.
What, then, can the rich man do to improve the condition of labor?
He can do nothing at all except to use his strength for the abolition of
the great primary wrong that robs men of their birthright. The justice of
God laughs at the attempts of men to substitute anything else for it. ... read the whole letter
Henry George: The Crime of Poverty (1885 speech)
... Nature gives to labour, and to
labour alone; there must be human work before any article of wealth can
be produced; and in the natural state of things the man who toiled honestly
and well would be the rich man, and he who did not work would be poor.
We have so reversed the order of nature that we are accustomed to think
of the workingman as a poor man.
And if you trace it out I believe you will
see that the primary cause of this is that we compel those who work to pay
others for permission to do so. You may buy a coat, a horse, a house; there
you are paying the seller for labour exerted, for something that he has produced,
or that he has got from the man who did produce it; but when you pay a man
for land, what are you paying him for? You are paying for something that
no man has produced; you pay him for something that was here before man was,
or for a value that was created, not by him individually, but by the community
of which you are a part. What is the reason
that the land here, where we stand tonight, is worth more than it was twenty-five
years ago? What is the reason that land in the centre of New York, that once
could be bought by the mile for a jug of whiskey, is now worth so much that,
though you were to cover it with gold, you would not have its value? Is it
not because of the increase of population? Take away that population,
and where would the value of the land be? Look at it in any way you please. ...
Now, supposing we should abolish all other
taxes direct and indirect, substituting for them a tax upon land values,
what would be the effect?
- In the first place it would be to kill speculative values. It would
be to remove from the newer parts of the country the bulk of the taxation
and put it on the richer parts. It would be to exempt the pioneer from
taxation and make the larger cities pay more of it. It would be to relieve
energy and enterprise, capital and labour, from all those burdens that
now bear upon them. What a start that would give to production!
- In the second place we could, from the value of the land, not merely
pay all the present expenses of the government, but we could do infinitely
more. In the city of San Francisco James Lick left a few
blocks of ground to be used for public purposes there, and
the rent amounts to so much, that out of it will be built the largest telescope
in the world, large public baths and other public buildings, and various
costly works. If, instead of these few blocks, the whole value of
the land upon which the city is built had accrued to San Francisco what
could she not do? ... read the whole speech
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894)
d. Dependence of Labor upon Land
We have now seen that division of labor and trade, the distinguishing characteristics
of civilization, not only increase labor power, but grow out of a law of
human nature which tends, by maintaining a perpetual revolution of the circle
of trade, to cause opportunities for mutual employment to correspond to desire
for wealth. Surely there could be no lack of employment if the circle flowed
freely in accordance with the principle here illustrated; work would abound
until want was satisfied. There must therefore be some obstruction. That
indirect taxes hamper trade, we have already seen;78 but there is a more
fundamental obstruction. As we learned at the outset, all the material wants
of men are satisfied by Labor from Land. Even personal services cannot be
rendered without the use of appropriate land.79 Let us then introduce into
the preceding chart, in addition to the different classes of Labor, the corresponding
classes of Land-owning interests, indicating them by black balls:
78. See ante, pp. 9, 6 and 16.
79. Demand for food is not only demand for all kinds and
grades of Food-makers, but also for as many different kinds of land as
there are different kinds of labor set at work. So a demand for clothing
is not only a demand for Clothing-makers, a demand for shelter is not
only one for Shelter-makers, a demand for luxuries is not only one for
Luxury-makers, a demand for services is not only one for Personal Servants,
but those demands are also demands for appropriate land — pasture
land for wool, cotton land for cotton, factory land, water fronts and
rights of way, store sites, residence sites, office sites, theater sites,
and so on to the end of an almost endless catalogue.
Every class of Labor has now its own parasite.
The arrows which run from one kind of Labor to another, indicating an out-flow
of service, are respectively offset by arrows that indicate a corresponding
in-flow of service; but the arrows that flow from the various classes
of Labor to the various Land-owning interests are offset by nothing to indicate
a corresponding return. What possible return could those interests make?
- They do not produce the land which they charge laborers for using; nature
- They do not give value to it; Labor as a whole does that.
- They do not protect the community through the police, the courts,
or the army, nor assist it through schools and post offices; organized
that to the extent to which it is done, and the Land-owning interests
contribute nothing toward it other than a part of what they exact from
Labor interests and Land-owning interests the arrows can be
made to run only in the one direction.
80 See ante, pp. 12, 13, and 14.
Now, suppose that as productive methods improve, the exactions
of the Land-owning interests so expand — so enlarge the drain from Labor — as to
make it increasingly difficult for any of the workers to obtain the Land
they need in order to satisfy the demands made upon them for the kind of
Wealth they produce. Would it then be much of a problem to determine the
cause of poverty or to explain hard times? Assuredly not. It would be plain
that poverty and hard times are due to obstacles placed by Land-owning interests
in the way of Labor's access to Land.
We thus see that in the civilized state as well as in the primitive, the
fundamental cause of poverty is the divorce of Labor from Land. 81 But the
manner in which that divorce is accomplished in the civilized state remains
to be explained.
81. People with socialistic tendencies argue that while
it is true that Labor and Land are the only things necessary in primitive
conditions, Capital also is necessary in civilized conditions. (See ante,
notes 49 and 58.) And they want to know, with something like a sneer,
what clerks and mechanics and bookkeepers and other specialists in our
highly organized industry would do with land even if it were freely open
to them. "They don't know how to make food, and they can't eat sand!" I
once heard a socialist exclaim. The same notion is widespread among that
large class of single tax opponents in church and college, whom the late
Wm. T. Croasdale described as "people who believe in socialism,
but don't believe in putting it into practice."
The idea is best expressed perhaps by a writer of the
most brilliant socialistic verses, Charlotte Perkins Stetson, in the
"Free land is not enough. In earliest days
When man, the baby, from the earth's bare breast
Drew for himself his simple sustenance,
Then freedom and his effort were enough.
The world to which a man is born to-day
Is a constructed, human, man-built world.
As the first savage needed the free wood,
We need the road, the ship, the bridge, the house,
The government, society, and church, —
These are the basis of our life to-day
As much necessities to modern man
As was the forest to his ancestor.
To say to the newborn, 'Take here your land;
In primal freedom settle where you will,
And work your own salvation in the world
Is but to put the last-come upon earth
Back with the dim fore-runners of his race,
To climb the race's stairway in one life
Allied society owes to the young—
The new men come to carry on the world—
Account for all the past, the deeds, the keys,
Full access to the riches of the earth.
Why? That these new ones may not be compelled
Each for himself to do our work again ;
But reach their manhood even with to-day,
And gain to-morrow sooner.
To go on,—
To start from where we are and go ahead
That is true progress, true humanity."—In This Our World.
If one man were turned loose alone upon the earth, or
shut off from trading with his fellows, it might in great degree be true,
as Mrs. Stetson says, that he would be put "back with the dim forerunners
of his race, to climb the race's stairway in one life"; but her
criticism does not apply to millions of free men who freely trade. To
them the land would be enough. Even though they were denied existing
roads and ships and bridges and houses, they would soon make new ones,
and starting "from where we are," would "go ahead." For
free land means access to all natural materials and forces, and free
trade means unobstructed industrial intercourse between laborer and laborer.
These are the essential conditions, the only conditions, of all production — even
of the most civilized.
The root of the socialistic idea is the thought that we
are dependent for social life upon accumulated capital. This is a mistake.
Social life depends, not upon accumulated capital, but upon accumulated
knowledge made effective by interchange of labor. A laborer who operates
some great machine seems to be dependent upon the owner of his machine
for opportunity to work; but the only people upon whom he really depends
are laborers who are competent co-operatively to make such machines,
and who have access to both the land from which the materials must be
drawn and that upon which they must group themselves while doing the
work. When socialists lay stress upon the importance of accumulated capital
they are attributing to accumulated capital the power that resides in
land and trade; for to control these is to command the benefits of accumulated
Since the production of a machine precedes its use, the
inference is almost irresistible, upon a superficial consideration, that
opportunities to labor and compensation for labor are governed by the
existing supplies of machinery to which labor is allowed access. But
this is of a piece with the old notion of classical political economy
that opportunities to labor are dependent upon the existing supplies
of subsistence that are devoted to the maintenance of laborers. The inference
is wrong in either form. When we once grasp the essential truth of the
law illustrated in the text, that the production of subsistence, or machinery,
or any other unfinished object, that is to say, of Capital, is but a
form of general wealth production, and that all forms of wealth production
are in obedience to demand, we clearly see that labor is in no respect
dependent upon capital either for employment or compensation. In the
social as in the solitary state, Labor and Land are the only factors
of wealth production. It is not Capital but Land that supplies materials
to Labor for its subsistence and its machinery. Instead of capitalists
supplying laborers with subsistence and machinery, laborers themselves
continuously produce subsistence and machinery from the materials that
land supplies. Capitalists neither employ nor pay laborers; laborers
employ and pay one another.
Read "Progress and Poverty," book i, chs. iii,
iv, and v. Also read "The Story of My Dictatorship" (No. 4,
Sterling Library), chs. v, vi, vii, and viii.
b. Normal Effect of Social Progress upon Wages and Rent
In the foregoing charts the effect of social growth is ignored, it being
assumed that the given expenditure of labor force does not become more
productive.93 Let us now try to illustrate that effect, upon the supposition
that social growth increases the productive power of the given expenditure
of labor force as applied to the first closed space, to 100; as applied
to the second, to 50; as applied to the third, to 10; as applied to the
fourth, to 3, and as applied to the open space, to 1. 94 If there were
no increased demand for land the chart would then be like this: [chart]
93. "The effect of increasing population upon the
distribution of wealth is to increase rent .. . in two ways: First,
By lowering the margin of cultivation. Second, By bringing out in land
special capabilities otherwise latent, and by attaching special capabilities
to particular lands.
"I am disposed to think that the latter mode, to
which little attention has been given by political economists, is really
the more important." — Progress and Poverty, book iv, ch.
"When we have inquired what it is that marks off
land from those material things which we regard as products of the
land, we shall find that the fundamental attribute of land is its extension.
The right to use a piece of land gives command over a certain space — a
certain part of the earth's surface. The area of the earth is fixed;
the geometric relations in which any particular part of it stands to
other parts are fixed. Man has no control over them; they are wholly
unaffected by demand; they have no cost of production; there is no
supply price at which they can be produced.
"The use of a certain area of the earth's surface
is a primary condition of anything that man can do; it gives him room
for his own actions, with the enjoyment of the heat and the light,
the air and the rain which nature assigns to that area; and it determines
his distance from, and in great measure his relations to, other things
and other persons. We shall find that it is this property of land,
which, though as yet insufficient prominence has been given to it,
is the ultimate cause of the distinction which all writers are compelled
to make between land and other things." — Marshall's Prin.,
book iv, ch. ii, sec. i.
94. Of course social growth does not go on in this regular
way; the charts are merely illustrative. They are intended to illustrate
the universal fact that as any land becomes a center of trade or other
social relationship its value rises.
Though Rent is now increased, so are Wages. Both benefit by social growth.
But if we consider the fact that increase in the productive power of labor
increases demand for land we shall see that the tendency of Wages (as a
proportion of product if not as an absolute quantity) is downward, while
that of Rent is upward. 95 And this conclusion is confirmed by observation.
95. "Perhaps it may be well to remind the reader,
before closing this chapter, of what has been before stated — that
I am using the word wages not in the sense of a quantity, but in the
sense of a proportion. When I say that wages fall as rent rises, I
do not mean that the quantity of wealth obtained by laborers as wages
is necessarily less, but that the proportion which it bears to the
whole produce is necessarily less. The proportion may diminish while
the quantity remains the same or increases." — Progress
and Poverty, book iii, ch. vi.
96. The condition illustrated in the last chart would
be the result of social growth if all land but that which was in full
use were common land. The discovery of mines, the development of cities
and towns, and the construction of railroads, the irrigation of and
places, improvements in government, all the infinite conveniences and
laborsaving devices that civilization generates, would tend to abolish
poverty by increasing the compensation of labor, and making it impossible
for any man to be in involuntary idleness, or underpaid, so long as
mankind was in want. If demand for land increased, Wages would tend
to fall as the demand brought lower grades of land into use; but they
would at the same time tend to rise as social growth added new capabilities
to the lower grades. And it is altogether probable that, while progress
would lower Wages as a proportion of total product, it would increase
them as an absolute quantity.
c. Significance of the Upward Tendency of Rent
Now, what is the meaning of this tendency of Rent to rise with social
progress, while Wages tend to fall? Is it not a plain promise that if Rent
be treated as common property, advances in productive power shall be steps
in the direction of realizing through orderly and natural growth those
grand conceptions of both the socialist and the individualist, which in
the present condition of society are justly ranked as Utopian? Is it not
likewise a plain warning that if Rent be treated as private property, advances
in productive power will be steps in the direction of making slaves of
the many laborers, and masters of a few land-owners? Does it not mean that
common ownership of Rent is in harmony with natural law, and that its private
appropriation is disorderly and degrading? When the cause of Rent and the
tendency illustrated in the preceding chart are considered in connection
with the self-evident truth that God made the earth for common use and
not for private monopoly, how can a contrary inference hold? Caused and
increased by social growth, 97 the benefits of which should be common,
and attaching to land, the just right to which is equal, Rent must be the
natural fund for public expenses. 98
97. Here, far away from civilization, is a solitary
settler. Getting no benefits from government, he needs no public revenues,
and none of the land about him has any value. Another settler comes,
and another, until a village appears. Some public revenue is then required.
Not much, but some. And the land has a little value, only a little;
perhaps just enough to equal the need for public revenue. The village
becomes a town. More revenues are needed, and land values are higher.
It becomes a city. The public revenues required are enormous, and so
are the land values.
98. Society, and society alone, causes Rent. Rising
with the rise, advancing with the growth, and receding with the decline
of society, it measures the earning power of society as a whole as
distinguished from that of the individuals. Wages, on the other hand,
measure the earning power of the individuals as distinguished from
that of society as a whole. We have distinguished the parts into which
Wealth is distributed as Wages and Rent; but it would be correct, indeed
it is the same thing, to regard all wealth as earnings, and to distinguish
the two kinds as Communal Earnings and Individual Earnings. How, then,
can there be any question as to the fund from which society should
be supported? How can it be justly supported in any other way than
out of its own earnings?
If there be at all such a thing as design in the universe — and
who can doubt it? — then has it been designed that Rent, the earnings
of the community, shall be retained for the support of the community, and
that Wages, the earnings of the individual, shall be left to the individual
in proportion to the value of his service. This is the divine law, whether
we trace it through complex moral and economic relations, or find it in
the eighth commandment. ...
d. Effect of Confiscating Rent to Private Use.
By giving Rent to individuals society ignores this most just law, 99 thereby
creating social disorder and inviting social disease. Upon society alone,
therefore, and not upon divine Providence which has provided bountifully,
nor upon the disinherited poor, rests the responsibility for poverty and
fear of poverty.
99. "Whatever dispute arouses the passions of men,
the conflict is sure to rage, not so much as to the question 'Is it
wise?' as to the question 'Is it right?'
"This tendency of popular discussions to take an
ethical form has a cause. It springs from a law of the human mind;
it rests upon a vague and instinctive recognition of what is probably
the deepest truth we can grasp. That alone is wise which is just; that
alone is enduring which is right. In the narrow scale of individual
actions and individual life this truth may be often obscured, but in
the wider field of national life it everywhere stands out.
"I bow to this arbitrament, and accept this test." — Progress
and Poverty, book vii, ch. i.
The reader who has been deceived into believing that
Mr. George's proposition is in any respect unjust, will find profit
in a perusal of the entire chapter from which the foregoing extract
Let us try to trace the connection by means of a chart, beginning with
the white spaces on page 68. As before, the first-comers take possession
of the best land. But instead of leaving for others what they do not themselves
need for use, as in the previous illustrations, they appropriate the whole
space, using only part, but claiming ownership of the rest. We may distinguish
the used part with red color, and that which is appropriated without use
with blue. Thus: [chart]
But what motive is there for appropriating more of the space than is used?
Simply that the appropriators may secure the pecuniary benefit of future
social growth. What will enable them to secure that? Our system of confiscating
Rent from the community that earns it, and giving it to land-owners who,
as such, earn nothing.100
100. It is reported from Iowa that a few years ago a
workman in that State saw a meteorite fall, and. securing possession
of it after much digging, he was offered $105 by a college for his "find." But
the owner of the land on which the meteorite fell claimed the money,
and the two went to law about it. After an appeal to the highest court
of the State, it was finally decided that neither by right of discovery,
nor by right of labor, could the workman have the money, because the
title to the meteorite was in the man who owned the land upon which
Observe the effect now upon Rent and Wages. When other men come, instead
of finding half of the best land still common and free, as in the corresponding
chart on page 68, they find all of it owned, and are obliged either to
go upon poorer land or to buy or rent from owners of the best. How much
will they pay for the best? Not more than 1, if they want it for use and
not to hold for a higher price in the future, for that represents the full
difference between its productiveness and the productiveness of the next
best. But if the first-comers, reasoning that the next best land will soon
be scarce and theirs will then rise in value, refuse to sell or to rent
at that valuation, the newcomers must resort to land of the second grade,
though the best be as yet only partly used. Consequently land of the first
grade commands Rent before it otherwise would.
As the sellers' price, under these circumstances, is arbitrary it cannot
be stated in the chart; but the buyers' price is limited by the superiority
of the best land over that which can be had for nothing, and the chart
may be made to show it: [chart]
And now, owing to the success of the appropriators of the best land in
securing more than their fellows for the same expenditure of labor force,
a rush is made for unappropriated land. It is not to use it that it is
wanted, but to enable its appropriators to put Rent into their own pockets
as soon as growing demand for land makes it valuable.101 We may, for illustration,
suppose that all the remainder of the second space and the whole of the
third are thus appropriated, and note the effect: [chart]
At this point Rent does not increase nor Wages fall, because there is
no increased demand for land for use. The holding of inferior land for
higher prices, when demand for use is at a standstill, is like owning lots
in the moon — entertaining, perhaps, but not profitable. But let
more land be needed for use, and matters promptly assume a different appearance.
The new labor must either go to the space that yields but 1, or buy or
rent from owners of better grades, or hire out. The effect would be the
same in any case. Nobody for the given expenditure of labor force would
get more than 1; the surplus of products would go to landowners as Rent,
either directly in rent payments, or indirectly through lower Wages. Thus:
101. The text speaks of Rent only as a periodical or
continuous payment — what would be called "ground rent." But
actual or potential Rent may always be, and frequently is, capitalized
for the purpose of selling the right to enjoy it, and it is to selling
value that we usually refer when dealing in land.
Land which has the power of yielding Rent to its owner
will have a selling value, whether it be used or not, and whether Rent
is actually derived from it or not. This selling value will be the
capitalization of its present or prospective power of producing Rent.
In fact, much the larger proportion of laud that has a selling value
is wholly or partly unused, producing no Rent at all, or less than
it would if fully used. This condition is expressed in the chart by
the blue color.
"The capitalized value of land is the actuarial
'discounted' value of all the net incomes which it is likely to afford,
allowance being made on the one hand for all incidental expenses, including
those of collecting the rents, and on the other for its mineral wealth,
its capabilities of development for any kind of business, and its advantages,
material, social, and aesthetic, for the purposes of residence." — Marshall's
Prin., book vi, ch. ix, sec. 9.
"The value of land is commonly expressed as a certain
number of times the current money rental, or in other words, a certain
'number of years' purchase' of that rental; and other things being
equal, it will be the higher the more important these direct gratifications
are, as well as the greater the chance that they and the money income
afforded by the land will rise." — Id., note.
"Value . . . means not utility, not any quality
inhering in the thing itself, but a quality which gives to the possession
of a thing the power of obtaining other things, in return for it or
for its use. . . Value in this sense — the usual sense — is
purely relative. It exists from and is measured by the power of obtaining
things for things by exchanging them. . . Utility is necessary to value,
for nothing can be valuable unless it has the quality of gratifying
some physical or mental desire of man, though it be but a fancy or
whim. But utility of itself does not give value. . . If we ask ourselves
the reason of . . . variations in . . . value . . . we see that things
having some form of utility or desirability, are valuable or not valuable,
as they are hard or easy to get. And if we ask further, we may see
that with most of the things that have value this difficulty or ease
of getting them, which determines value, depends on the amount of labor
which must be expended in producing them ; i.e., bringing them into
the place, form and condition in which they are desired. . . Value
is simply an expression of the labor required for the production of
such a thing. But there are some things as to which this is not so
clear. Land is not produced by labor, yet land, irrespective of any
improvements that labor has made on it, often has value. . . Yet a
little examination will show that such facts are but exemplifications
of the general principle, just as the rise of a balloon and the fall
of a stone both exemplify the universal law of gravitation. . . The
value of everything produced by labor, from a pound of chalk or a paper
of pins to the elaborate structure and appurtenances of a first-class
ocean steamer, is resolvable on analysis into an equivalent of the
labor required to produce such a thing in form and place; while the
value of things not produced by labor, but nevertheless susceptible
of ownership, is in the same way resolvable into an equivalent of the
labor which the ownership of such a thing enables the owner to obtain
or save." — Perplexed Philosopher, ch. v.
The figure 1 in parenthesis, as an item of Rent, indicates potential Rent.
Labor would give that much for the privilege of using the space, but the
owners hold out for better terms; therefore neither Rent nor Wages is actually
produced, though but for this both might be.
In this chart, notwithstanding that but little space is used, indicated
with red, Wages are reduced to the same low point by the mere appropriation
of space, indicated with blue, that they would reach if all the space above
the poorest were fully used. It thereby appears that under a system which
confiscates Rent to private uses, the demand for land for speculative purposes
becomes so great that Wages fall to a minimum long before they would if
land were appropriated only for use.
In illustrating the effect of confiscating Rent to private use we have
as yet ignored the element of social growth. Let us now assume as before
(page 73), that social growth increases the productive power of the given
expenditure of labor force to 100 when applied to the best land, 50 when
applied to the next best, 10 to the next, 3 to the next, and 1 to the poorest.
Labor would not be benefited now, as it appeared to be when on page 73
we illustrated the appropriation of land for use only, although much less
land is actually used. The prizes which expectation of future social growth
dangles before men as the rewards of owning land, would raise demand so
as to make it more than ever difficult to get land. All of the fourth grade
would be taken up in expectation of future demand; and "surplus labor" would
be crowded out to the open space that originally yielded nothing, but which
in consequence of increased labor power now yields as much as the poorest
closed space originally yielded, namely, 1 to the given expenditure of
labor force.102 Wages would then be reduced to the present productiveness
of the open space. Thus: [chart]
102. The paradise to which the youth of our country
have so long been directed in the advice, "Go West, young man,
go West," is truthfully described in "Progress and Poverty," book
iv, ch. iv, as follows :
"The man who sets out from the eastern seaboard
in search of the margin of cultivation, where he may obtain land
without paying rent, must, like the man who swam the river to get
a drink, pass for long distances through half-titled farms, and traverse
vast areas of virgin soil, before he reaches the point where land
can be had free of rent — i.e., by homestead entry or preemption."
If we assume that 1 for the given expenditure of labor force is the least
that labor can take while exerting the same force, the downward movement
of Wages will be here held in equilibrium. They cannot fall below 1; but
neither can they rise above it, no matter how much productive power may
increase, so long as it pays to hold land for higher values. Some laborers
would continually be pushed back to land which increased productive power
would have brought up in productiveness from 0 to 1, and by perpetual competition
for work would so regulate the labor market that the given expenditure
of labor force, however much it produced, could nowhere secure more than
1 in Wages.103 And this tendency would persist until some labor was forced
upon land which, despite increase in productive power, would not yield
the accustomed living without increase of labor force. Competition for
work would then compel all laborers to increase their expenditure of labor
force, and to do it over and over again as progress went on and lower and
lower grades of land were monopolized, until human endurance could go no
further.104 Either that, or they would be obliged to adapt themselves to
a lower scale of living.105
103. Henry Fawcett, in his work on "Political Economy," book
ii, ch. iii, observes with reference to improvements in agricultural
implements which diminish the expense of cultivation, that they do
not increase the profits of the farmer or the wages of his laborers,
but that "the landlord will receive in addition to the rent already
paid to him, all that is saved in the expense of cultivation." This
is true not alone of improvements in agriculture, but also of improvements
in all other branches of industry.
104. "The cause which limits speculation in commodities,
the tendency of increasing price to draw forth additional supplies,
cannot limit the speculative advance in land values, as land is a fixed
quantity, which human agency can neither increase nor diminish; but
there is nevertheless a limit to the price of land, in the minimum
required by labor and capital as the condition of engaging in production.
If it were possible to continuously reduce wages until zero were reached,
it would be possible to continuously increase rent until it swallowed
up the whole produce. But as wages cannot be permanently reduced below
the point at which laborers will consent to work and reproduce, nor
interest below the point at which capital will be devoted to production,
there is a limit which restrains the speculative advance of rent. Hence,
speculation cannot have the same scope to advance rent in countries
where wages and interest are already near the minimum, as in countries
where they are considerably above it. Yet that there is in all progressive
countries a constant tendency in the speculative advance of rent to
overpass the limit where production would cease, is, I think, shown
by recurring seasons of industrial paralysis." — Progress
and Poverty, book iv, ch. iv.
105. As Puck once put it, "the man who makes two
blades of grass to grow where but one grew before, must not be surprised
when ordered to 'keep off the grass.' "
They in fact do both, and the incidental disturbances of general readjustment
are what we call "hard times." 106 These culminate in forcing
unused land into the market, thereby reducing Rent and reviving industry.
Thus increase of labor force, a lowering of the scale of living, and depression
of Rent, co-operate to bring on what we call "good times." But
no sooner do "good times" return than renewed demands for land
set in, Rent rises again, Wages fall again, and "hard times" duly
reappear. The end of every period of "hard times" finds Rent
higher and Wages lower than at the end of the previous period.107
106. "That a speculative advance in rent or land
values invariably precedes each of these seasons of industrial depression
is everywhere clear. That they bear to each other the relation of cause
and effect, is obvious to whoever considers the necessary relation
between land and labor." — Progress and Poverty, book v,
107. What are called "good times" reach a
point at which an upward land market sets in. From that point there
is a downward tendency of wages (or a rise in the cost of living, which
is the same thing) in all departments of labor and with all grades
of laborers. This tendency continues until the fictitious values of
land give way. So long as the tendency is felt only by that class which
is hired for wages, it is poverty merely; when the same tendency is
felt by the class of labor that is distinguished as "the business
interests of the country," it is "hard times." And "hard
times" are periodical because land values, by falling, allow "good
times " to set it, and by rising with "good times" bring "hard
times" on again. The effect of "hard times" may be overcome,
without much, if any, fall in land values, by sufficient increase in
productive power to overtake the fictitious value of land.
The dishonest and disorderly system under which society confiscates Rent
from common to individual uses, produces this result. That maladjustment
is the fundamental cause of poverty. And progress, so long as the maladjustment
continues, instead of tending to remove poverty as naturally it should,
actually generates and intensifies it. Poverty persists with increase of
productive power because land values, when Rent is privately appropriated,
tend to even greater increase. There can be but one outcome if this continues:
for individuals suffering and degradation, and for society destruction. ...
Q32. Is not ownership of land necessary to induce its improvement?
Does not history show that private ownership is a step in advance of
A. No. Private use was doubtless a step in advance of common use. And because
private use seems to us to have been brought about under the institution of private
ownership, private ownership appears to the superficial to have been the real
advance. But a little observation and reflection will remove that impression.
Private ownership of land is not necessary to its private use. And so far from
inducing improvement, private ownership retards it. When a man owns land he may
accumulate wealth by doing nothing with the land, simply allowing the community
to increase its value while he pays a merely nominal tax, upon the plea that
he gets no income from the property. But when the possessor has to pay the value
of his land every year, as he would have to under the single tax, and as ground
renters do now, he must improve his holding in order to profit by it. Private
possession of land, without profit except from use, promotes improvement; private
ownership, with profit regardless of use, retards improvement. Every city in
the world, in its vacant lots, offers proof of the statement. It is the lots
that are owned, and not those that are held upon ground-lease, that remain vacant.
Q39. Why does not labor-saving machinery benefit laborers?
A. Suppose labor-saving machinery to be ideally perfect — so perfect that
no more labor is needed. Could that benefit laborers, so long as land was owned?
Would it not rather make landowners completely independent of laborers? Of course
it would. Well, the labor-saving machinery that falls short of being ideally
perfect has the same tendency. The reason that it does not benefit laborers is
because by enhancing the value of land it restricts opportunities for employment.
Q42. Does not the growth of a community increase the value of other
things as well as of land? For example, does it not add to the value
of the services of professional men, or of any other business that is
dependent upon the presence and growth of the community, as truly as
it does to the value of land?
A. Granted that the growth of a community primarily tends to increase profits,
the increased profits tend in turn to attract men there to share them. This intensifies
competition and tends to lower profits. At the same time it increases demand
for land and tends to enhance the value of that. It therefore cannot be said
that the growth of a community finally increases the value of other things as
well as of land. In fact it does not. Appropriate houses in cities are no dearer
than appropriate houses in the country, differences in cost of production being
allowed for. And although some professional men get very high wages in thickly
populated cities, the average comfort of professional men in cities is no higher
than in the country, if as high. Moreover, even if labor values as well as land
values were increased by communal growth, it must never be forgotten that labor
values must always be worked for by the individual, whereas land values are never
worked for by the individual. A lawyer may command enormous fees, but he gets
no fee at all unless he works for it; but when land commands enormous rent the
owner gets it without doing the slightest work.... read the book
Dan Sullivan: Are you a Real
Libertarian, or a ROYAL Libertarian?
Even welfare increases do not
stay in the hands of welfare
recipients, but are quickly greeted by higher rent demands from
ghetto landlords. (The War on Poverty did little to end poverty, but
it did a lot to enrich absentee owners of poor communities.) ... Read
the whole piece
Winston Churchill: The
enterprise only undertaken after the land monopolist has skimmed the
cream off for himself It does not matter where you
look or what examples you select, you will
see that every form of enterprise, every step in material progress, is
only undertaken after the land monopolist has skimmed the cream off for
himself, and everywhere today the man or the public body who wishes to
put land to its highest use is forced to pay a preliminary fine in land
values to the man who is putting it to an inferior use, and in some
cases to no use at all. All comes back to the land value, and its owner
for the time being is able to levy his toll upon all other forms of
wealth and upon every form of industry. A portion, in some cases the whole, of
every benefit which is laboriously acquired by the community is
represented in the land value, and finds its way automatically into the
landlord's pocket. If there is a rise in wages, rents are able
to move forward, because the workers can afford to pay a little more.
If the opening of a new railway or a new tramway or the institution of
an improved service of workmen's trains or a lowering of fares or a new
invention or any other public convenience affords a benefit to the
workers in any particular district, it becomes easier for them to live,
and therefore the landlord and the ground landlord, one on top of the
other, are able to charge them more for the privilege of living there.
Now let the Manchester Ship Canal tell its tale about the land.
a story to tell which is just as simple and just as pregnant as its
story about Free Trade. When it was resolved to build the Canal, the
first thing that had to be done was to buy the land. Before the
resolution to build the Canal was taken, the land on which the Canal
flows -- or perhaps I should say 'stands' -- was, in the main,
agricultural land, paying rates on an assessment from 30s. to L2 an
acre. I am told that 4,495 acres of land purchased fell within that
description out of something under 5,000 purchased altogether.
Immediately after the decision, the 4,495 acres were sold for L777,000
sterling -- or an average of L172 an acre -- that is to say, five or
six times the agricultural value of the land and the value on which it
had been rated for public purposes.
Now what had the landowner done
the community; what enterprise had he shown; what service had he
rendered; what capital had he risked in order that he should gain this
enormous multiplication of the value of his property! I will tell you
in one word what he had done. Can you guess it! Nothing.
But it was not only the owners of the land that was needed for
the Canal, who were automatically enriched. All the surrounding land
either having a frontage on the Canal or access to it rose and rose
rapidly, and splendidly, in value. By
the stroke of a fairy wand,
without toil, without risk, without even a half-hour's thought many
landowners in Salford, Eccles, Stretford, Irlam, Warrington Runcorn,
etc., found themselves in possession of property which had trebled,
quadrupled, quintupled in value.
Apart from the high prices which were paid, there was a heavy
compensation, severance, disturbance, and injurious affection where no
land was taken -- injurious affection, namely, raising the land not
taken many times in value -- all this was added to the dead-weight cost
of construction. All this was a burden on those whose labour skill, and
capital created this great public work. Much of this land today is
still rated at ordinary agricultural value, and in order to make sure
that no injustice is done, in order to make quite certain that these
landowners are not injured by our system of government, half their
rates are, under the Agricultural Rates Act, paid back to them. The
balance is made up by you. The land
is still rising in value, and with
every day's work that every man in this neighbourhood does and with
every addition to the prosperity of Manchester and improvement of this
great city, the land is further enhanced in value. ... Read the whole piece
Weld Carter: A Clarion Call to Sanity, to Honesty, to
Back in the early days of this
century, Winston Churchill saw and
recorded an example of this. There had been a ferry fare over the
river Thames for the common laborers who lived on the wrong side of
the river to pay in order to get to work. A spirit of nobility
prompted the absorption of this fare by the City, and almost
immediately rents in the working class area were increased by the
same amount as the fare had been. When this thing was done, the guys
who got the benefit were not the poor working class people, but the
owners of the homes in which they lived, or, more accurately and more
critically, the owners of the land on which those homes stood. The
laborers were thus charged a higher rent, and that rent diverted the
benefit from the seemingly intended beneficiary (i.e., the public) to
landowners in the affected area.
This occurs every day in this
country. A new road is built, or a
superhighway is constructed, which makes access to a particular site
much easier. We telll outselves that we justify this as an
expenditure of public funds by the benefits that accrue to the
traveling public; but the benefits go, in the form of higher land
prices and rents, to the owners of the sites that are served by this
new road. If you doubt this, consider the jockeying for the insider
information or for influence over the selection.
Robert Caro, in his biography of
Robert Moses, recalls the time in
the early 1920s that Moses suggested to the authorities the building
of a causeway from the Long Island mainland over to Jones Island.
This proposal was rejected outright by the Long Island Park
Commission. Some months later, Moses presented them with a drawing
showing precisely where this causeway would run, and, after a
suitable period of during which these public employees could buy up
the land along the proposed highway, he resubmitted his proposal.
This time, they officially approved the suggested construction.
In the town of Antioch, Illinois,
there were two developments
underway almost simultaneously. In the one, roads were provided,
together with water and sewer lines, but no sidewalks; in the other,
just across a main road from the first, the mayor of the city had
storm sewers, curbs and sidewalks installed at public expense, for
which of course, any prospective buyer or tenant would gladly pay for
use of that land the higher price these added benefits provided. Any
reader will recognize this chain of events and set of economic
relationships as being the course of everyday life and business at
the local, state and national level. The cynic would say that a
primary motivation for entering local or even national politics would
be the opportunity for personal gain offered daily by publicly
Another example relates to a piece
of farmland in central
Pennsylvania. In the early 1940's, an 18-acre farm complete with a
two-story house with five bedrooms, a large barn that would among
other things hang 3 ½ acres of tobacco and store hay, straw and
corn on the upper level, with stalls for 6 milking cows and a half
dozen steers, housing for 100 laying hens and for fattening a few
hogs plus a shed for equipment – all in all, not a large farm by
local standards at the time – sold for $7,500. Twenty years
later, with about $12,000 in residential improvements, that land and
its buildings were sold for approximately $20,000. In those twenty
years, the neighborhood and the general economy in the county had not
changed a great deal. Within the next year, a decision was pending on
the exact location and routing of a new superhighway. The decision,
which was announced some time later, carried the route of the highway
via a bridge across the local road on which that farm was situated
and a cloverleaf access was built nearby. Soon, the value of that
piece of land jumped to $10,000 per acre, which, ignoring the value
of any improvements to the original piece of land, was an increase of
800%. That increase, from $20,000 to $180,000, benefitted the most
recent purchaser of the land. However, the increase resulted from the
effects of public (i.e., taxpayers') spending, and, in a more just
society, would have been returned to the taxpayers, rather than
accruing to the private benefit of an individual who either made a
good guess, had some private information, or even perhaps lobbied for
that particular routing of that publicly financed highway.
Thus, the benefits of a
tax-supported public work accrued once
more not to the benefit of the public at large, but to that of a very
limited and narrowly defined class, those who were rich enough to own
land in that location.
There are undoubtedly many other
problems to be resolved before
the ills of our society are cured; but what many do not recognize and
understand is the primacy of the adoption of land value taxation over
all these other corrections. The reason for that can be very simply
stated: If any of these other measures already adopted have no
merit and have only added to the burden of our problems, then they
are disqualified at the outset. On the other hand, if they are of
themselves beneficial, any benefit from them will be immediately
capitalized into land values and will therefore exacerbate the very
problems which otherwise might be helped toward a cure. Thus it
is that our first step toward any possible remedy for the awesome
plight into which we have been led increasingly over the recent years
must be the adoption of land value taxation. ... read
the whole essay
Charles T. Root — Not a Single Tax! (1925)
Every community, whatever its political name and extent — village, city,
state or province or nation — has its own normal, unfailing income,
growing with the growth of the community and always adequate to meet necessary
To explain: Every community has an indefeasible original right to the land
on which it exists, and to all the natural, unmodified properties and advantages
of that particular area of the earth's surface. To this land in its natural
state, undrained, unfenced, unfertilized, unplanted and unoccupied, including
its waters, its contents and its location, every individual in the community
(which may consist of any political unit selected) has an equal right, while
all the individuals together have a joint right to the value for use which
society has conferred upon these natural advantages.
This value for use is known as "Land Value," or by the not particularly
descriptive but generally adopted name of "Economic Rent."
Briefly defined the land value or economic rent of any piece of ground
is the largest annual amount voluntarily offered for the exclusive use of
ground, or of an equivalent parcel, independent of improvements thereon. Every
holder or user of land pays economic rent, but he now pays most of it to the
wrong party. The aggregate economic rent of the territory occupied by any political
unit is, as has been stated above, always sufficient, usually more than sufficient,
for the legitimate expenses of the government of that unit. As also stated
above, the economic rent belongs to the community, and not to individual landowners.
On the other hand, the result of every utilization or enhancement of the natural
advantages of land (such as farm profits, the rent and selling value of buildings
and other improvements), when accomplished by an individual, belongs wholly
to that individual, and should never, and need never, be taken from him by
This principle of economic rent applies to all the users of land, including
mining, use of waterpower, and rights of way over or under its surface. Had
this principle always been recognized, and the economic rent always been retained
by the community, taxation would never have been heard of. When the economic
rent is reclaimed by the community, the need of taxation will disappear.
Let us roughly restate the proposition: All members of the community having
a joint right to the income which the social advantages of the land will command,
they are all partners in this income.
Therefore, when one of their number wishes to take for his private use a parcel
of this land, he should buy out his partners, i.e., the rest of the community,
by paying regularly into the common treasury the economic rent of that parcel,
instead of paying, as at present, the purchase price, i.e., the right to collect
the economic rent, in a lump, to some other individual who has no more original
right to it than himself.
But before this time the reader, unless he has given previous attention
to the subject, is full of objections to the above doctrine: "How about the
law?" he is asking. "Hasn't a man the right to buy a piece of land
as cheaply as he can, to do what he pleases with it, and hold on to it till
he gets ready to sell?" The answer is that at present he certainly
has this statutory right, which has been so long and so universally recognized
that most people suppose it to be not only a legal, but a real or equitable
right. A shrewd man, foreseeing the direction of growth of population in
city, for example, can buy a well-located block at a moderate figure from
some less far-seeing owner, can let it grow up to weeds, fence it off against
comers and give it no further attention except to pay the very small tax
usually imposed upon vacant land.
Meantime the increasing community builds up all around it with homes, banks,
stores, churches, schools, paving and lighting the streets, giving police and
fire protection, etc., and at last comes to need this block so urgently that
the owner is fairly begged to sell it, at three or ten or fifty times what
it cost him. Quite often the purchaser at this enormous advance is the very
community which has through its presence and the expenditure of its taxes created
practically the whole value of the land in question!
It was said above that an individual has a statutory right to pursue this
very common course. That was an error. The statement should have been that
he has a statutory wrong; for no disinterested person can follow the course
of land speculation as almost universally practiced, without feeling its rank
Being the high financiers of their days and generations, they managed to
contrive taxes which could be plausibly and gradually imposed upon the landless,
within a few generations they had succeeded in shifting most of the cost
of government on to the plebeians without giving up a foot of land or any
part of the income therefrom. The "common people" were deftly
loaded with the heavy end of the beam, which they have been carrying ever
the arbitrarily created landlords and their successors, down to the present
day, have kept their tight hold on the community's natural income.
The landlords, being also the lawmakers, have seen to it that their tenure
of this easy money should not be disturbed, but on the contrary have so buttressed
it with centuries of legislation, precedents, and judicial decisions, that
any proposition to hark back to the terms of the original bargain, whereby
the owners of the land agreed to pay the expenses of the government, is now
denounced as anarchy and sacrilege.
Lapse of time, however, never can transform wrong into right, nor can a buyer
acquire any better title than the seller possessed. The economic rent belongs
to the community, which can and will begin to reclaim it as soon as the
voters thoroughly awake to the facts and the right and wrong of the matter,
are not hard to grasp when the subject is presented in its simplest form.
An illustration has already been given of the case of a piece of farm land.
Let us take an example in a large city. Let us take a corner lot centrally
located in New York City, the title to which lot is held by, say, Mr. John
William Rhinelastor. This lot was a part of an old Dutch farm, and is an heirloom.
It did not cost the present owner anything, nor his father nor his grandfather.
There is a little old building on it, which has always been rented at a figure
ten times as large as the taxes imposed, so that the owner has been handsomely
subsidized each year for storing his title-deeds during a period of the city's
growth in which the increase in population and the expenditure of public money
in that neighborhood have raised the value of this corner location to, say,
two hundred times its early value.
About now, Mr. Rhinelastor decides that he will go abroad to live, and can't
be bothered with this piece of property. But knowing that the pressure of population
is sure to increase and that the expenditure of public money to the benefit
of this land must continue, he will not sell it. So he gives a twenty-one year
lease to the corner for, say, $20,000 a year net, with a privilege to the lessee
of renewals at advancing figures. The lessee agrees to pay all taxes.
Now what is this net $20,000 a year, which will be regularly remitted to
Mr. Rhinelastor, in Europe or wherever he may be, given in payment for? Not
the old building — the first thing the lessee does is to pull it down.
Not for the land itself — it is all rock, which has got to be blasted
out as part of its improvement.
Clearly it is paid for a location or site value, which the community, and
the community only, has built up and paid for. In other words, the present
$20,000 rental, and the larger one which that location will command in later
years, is strictly a community product, and as such belongs to the community
and not to Mr. Rhinelastor.
That the latter has no good right to it is at once evident when we
remember that "When one man gets something for nothing somebody else
has got to give something for nothing." Here are $20,000 that
some men and women have got to work to earn every year to hand over to a
man who does not render,
and does not feel any obligation to render, one dollar's worth of public or
private service in return. Such is the wild travesty of justice which we call
law. It is not comical only because it is frankly tragic in its social results.
... read the whole article
Mason Gaffney: The Taxable Surplus
of Land: Measuring, Guarding and Gathering It
Taxable surplus is also what you
can tax without
driving land into the
wrong use. It is not enough that the land supply is fixed: a tax must
underuse or other misuse of the fixed supply.
A great advantage of taxing rent is
that it does not
change the ranking of land
uses in the eyes of the landowner. Let me explain.
In a free market, the function of rent is to sort and arrange land uses: landowners
allocate land to those uses yielding the most net product, or rent. Economists
have shown (and you can easily see) that this is socially advantageous: the net
product is the excess of revenue over all costs, so land yielding the highest
is adding its utmost to the
When you base your tax on the net product (or rent), the ranking of rival land
remains the same after-tax as it was before-tax. That is,
if use "A" yields 20%
more rent than use "B", and a tax takes 50% of the rent, then use A still yields
the owner 20% more after-tax than use B, and the owner still prefers use A. We
will see below, (Section
D), that when you tax something other than rent (say the Gross Revenue, G),
you will drive the land into less
intensive uses, or out of use
A related advantage of taxing rent
is that you can often
levy the tax on the land's potential to
regardless of what use the owner
actually chooses. This is, indeed, a standard way of taxing rent in most
capitalist nations. It is possible because buyers and sellers trade land based
on their careful estimates of its maximum rent-yielding capability. The tax valuer
observes and records these value data, and uses them to place a value on all
comparable lands. Many books and manuals and professional journals have been
published on the techniques used: it is a well established art, with its own
associations, of which our
speaker Mr. Gwartney is a leading member.
Such a tax is limited to the maximum possible
rent, and so will not exceed a landowner's ability to pay - provided he uses
the land in the most economical manner (which is not always the most intensive
manner). It will surely not interfere with his using the land in the best way,
discourage using it any other way. ... read the whole article
Everett Gross: Explaining Rent
Sometimes it's difficult for people to understand the meaning of "rent" as
an economic concept. One way I have of explaining it doesn't use the
word rent. I just use a little analogy.
I'm from Crete, Nebraska. It's a small town of 5,000 people.
Suppose a man comes to Crete, and he wants to start a business. He needs
a building, but first he needs a piece of ground to build this new building
on. So he looks up a real estate agent, describes what he wants, and the
real estate agent shows him a parcel that's just right for his needs. The
man asks the agent, "All right, now how much money do you want for this
land?" The agent says, "It's worth $50,000." The man says, "Why is it worth
$50,000?" And the real estate agent points out that "The school is good,
the roads are good, the police department is good, the rescue crew is good
and very fast, and business is good here."
So the man says "Yeah, I believe that $50,0000 is a fair price. I'll
take it. How do I pay the $50,000 to the school people, and the road people,
and the police department? To whom do I pay the $50,000?" And the real
estate agent says, "Oh no. You don't pay it to them. You pay it to the
person who owned the land before."
The man says, "But who supports the schools, and the roads, and the police,
and the other good things?" And the real estate agent says, "If you
build, then you'll pay for them again."
The buyer then asks, "And what will the previous owner do for me
for my $50,000?" The real estate man answers, "Nothing! Nothing
Now I don't need to use the word "rent" in that explanation.
Jeff Smith: Share Rent, Transform Society
If society decided to share among its members all the annual value of society's
sites and resources and air space, what
If someone buys a ticket to Super Bowl and decides not to go and sells it for
more than its face value, he could face the wrath of the law. If he bought a
super location and sold it for more than he paid for it, he could become a pillar
of society. Temporary ownership for profiteering is illegal; but if permanent
ownership, it is legal. If only we had a single standard, I think society would
change for better. It doesn't matter who owns
matters is who gets the rent. We have millions of acres of forest
we Americans own together, and we are losing rent on it.
The word property cannot convey the distinction
rent and land. Ralph Borsodi came up with an alternative, a trust that
would claim publicly and occupy privately and use sparingly and compensate neighborly.
Share the rent with
neighbors. A word for that is geonomics, earth-focused
economics. It hones in on all this flow of rent that is so overlooked.
Shift the focus to sharing; then owning of land loses importance and belonging
to earth regains its importance. It is a different identity for human beings
as parts of the economic
system. ... read the whole article
Karl Williams: Two
NEOCLASSICAL LAND-MONOPOLY CAPITALIST
You have two cows and several hectares of land.
Your neighbour is a single mother, has no cows, no land and works a part-time
You tell her that if she works longer and harder she could buy one of your
cows and become an enterprising capitalist. So she takes on full-time work
so that, after 3 months, she has saved enough money to buy one of your cows.
But what use is a cow (or anything, for that matter) without a plot of your
land, which is now worth $20,000?
So your neighbour takes on a night shift in addition to her day job, leaving
for work after the kids are in bed and arriving home just in time to get
them dressed for school.
After a year she has saved enough money to buy that land.
Expressing great regret you explain that, in the meantime, the taxes on
her income have paid for the infrastructure that have boosted the value of
your land, so that the current market price for that plot is now worth $30,000.
Back to the grindstone, baby!
Another year of sweat and toil follows, after which she returns with the
money. But, with hand on heart, you break the news that economic circumstances
have recently driven most single and married mothers to bring in an extra
income in order to save for the ever-escalating price of land. As no-one’s
making any more land, the greater number of bidders has pushed up the price
of the fixed amount of land (this is called a “healthy, buoyant property
market”). It’s now worth $40,000 but it would be a lot easier
if she just got a bank loan, you tell her. However, all those eager bidders
for land have also bid up the rate of interest they’re prepared to
suffer, so that interest rates are now prohibitive. Your neighbour collapses
in tears at your feet, but what can you do? – you didn’t invent
the system! Just as our poor mum relents and considers taking out a mortgage,
she finally gets some good news – in a surprise move, the Reserve Bank
has decided to make it easier on prospective home-owners by reducing interest
rates. However, this has had the effect of making the owning of property
more attractive, so – immediately the interest rate decision is announced – landowners
raise the selling price of land. The “fair market price” of that
plot is now $50,000.
However, under political pressure because of the unaffordability of property,
the federal government announce that it will institute a First Home Owners’ grant
of $7,000. Suddenly that plot is selling for $57,000.
You have two cows and several acres of land.
Your neighbour is a single mother, has no cows, no land and works a minimum
You’ve had an amazing vision wherein you see the geoist paradigm
in all its glory and realise that all other reforms are just band-aids, so
you become an activist with ProsperAustralia. You share your insight with
your neighbour and so everyone pulls together to successfully reform our
insane tax laws and system of land tenure. As a result:
(1) your neighbour can keep all of her hard-earned income, and
(2) those who have enclosed substantial amounts of the Common Wealth for
their own private domain now pay fair land value taxation (LVT) to society.
Your LVT bill arrives and you realise you have been holding more land than
you really need, so auction off the title to your land and the improvements
on it. Because of genuine tax relief, your neighbour can now afford to buy
And so - with LVT and trust and angel dust - they all live happily ever after. ... read
the whole article
Peter Barnes: Capitalism
3.0 — Chapter 5: Reinventing the Commons (pages 65-78)
Thus far I’ve argued that Capitalism 2.0 — or surplus capitalism — has
three tragic flaws: it devours nature, widens inequality, and fails to make
us happier in the end. It behaves this way because it’s programmed
to do so. It must make thneeds, reward property owners disproportionately,
and distract us from truer paths to happiness because its algorithms direct
it to do so. Neither enlightened managers nor the occasional zealous regulator
can make it behave much differently. ...
Property rights are useful human inventions. They’re legally enforceable
agreements through which society grants specific privileges to owners. Among
these are rights to use, exclude, sell, rent, lend, trade, or bequeath a
particular asset. These assorted privileges can be bundled or unbundled almost
any which way.
It’s largely through property rights that economies are shaped. Feudal
economies were based on estates passed from lords to their eldest sons, alongside
commons that sustained the commoners. Commoners were required, in one way
or another, to labor for the lords, while the lords lived off that labor
and the bounty of the land. The whole edifice was anchored by the so-called
divine right of kings.
Similarly, capitalism is shaped by the property rights we create and honor
today. Its greatest invention has been the web of property rights we call
the joint stock corporation. This fictitious entity enjoys perpetual life,
limited liability, and — like the feudal estate of yesteryear — almost
total sovereignty. Its beneficial ownership has been fractionalized into
tradeable shares, which themselves are a species of property. ... read
the whole chapter
Bill Batt: Comment on Parts of
the NYS Legislative Tax Study Commission's 1985
study “Who Pays New York Taxes?”
As for their treatment of the New York Local Property Tax, the authors first
identified seven separate categories of real property: owner-occupied,
rental, commercial, industrial, public utilities, farmland, and unimproved.
This is a somewhat unusual classification, different even than those universally
used in New York State.7 One can see immediately that there will necessarily
be some overlap – “unimproved” parcels can sometimes
be assigned in other categories according to their zoning. And rental property
is commercial, whomever the tenants may be, whether households or businesses.
To their credit, however, the authors devoted considerable attention to
the issue of tax shifting, which is never an easy subject, including a discussion
of taxes on real property. They recognized that no shifting occurs for vacant
parcels and titleholders therefore bear the full burden. So also for homeowners.
For rental properties they assigned 50% of the burden to tenants, 25% to
corporate stockowners, and 25% to real estate owners. For commercial, industrial,
farmers, and public utility parcels, the shifting was put at 67%. In every
instance where shifting is recognized, the part never shifted, of course,
is the land component, and this is implicit in their assumption. These were
referred to as “consensus incidence assumptions regarding the property
A third consideration they recognized is the potential for tax exporting
to other states, more often important for classes other than residential
property but still significant. It occurs both on account of titleholders
being out-of-state and also because of what is known as the “federal
offset,” i.e., the deductibility of state and local taxes for federal
tax itemizing. For all New York State and local taxes taken together, they
estimated that roughly 10% percent of total revenue is exported, but for
real property taxes, the total exported is only about half that. ... read the whole commentary