Who owns America's natural resources? Our instant answer to that question isn't quite as fast as the answer to the question "who own's America's airwaves?" (to which the immediate answer tends to be "the American people," though in fact we don't currently claim that ownership, instead allowing corporations to claim it as if they created it). While corporations which extract resources do pay some royalties to the commons, a lot of that value is being privatized.

The next question, of course, is "who owns the natural resources in oil-rich areas?" Is it the people of the country under whose sand those resources reside? Is it some of those people? Is it the shareholders of American corporations? Important questions to ponder.

"Land" includes not only the acres under our feet, but the entire natural creation -- all those things which are not manmade and of which humans cannot create an additional supply. Improved technology may allow us to extract it more efficiently, or use it more efficiently, but when we use up all of a non-renewable resource, or pollute the air or water, we are robbing our children and future generations of their birthright.

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty, Chapter 4: Land Speculation Causes Reduced Wages

That mineral land, when reduced to private ownership, is frequently withheld from use while poorer deposits are worked, is well known, and in new states it is common to find individuals who are called "land poor" -- that is, who remain poor, sometimes almost to deprivation, because they insist on holding land, which they themselves cannot use, at prices at which no one else can profitably use it. ... read the whole chapter

Henry George: Thy Kingdom Come (1889 speech)

You laugh, and it is ridiculous. But there is a moral in it that is worth serious thought. Is it not ridiculous to imagine the application to God’s heaven of the same rules of division that we apply to God’s earth, even while we pray that His will may be done on earth as it is done in Heaven?

Really, if we could imagine it, it is impossible to think of heaven treated as we treat this earth, without seeing that, no matter how salubrious were its air, no matter how bright the light that filled it, no matter how magnificent its vegetable growth, there would be poverty, and suffering, and a division of classes in heaven itself, if heaven were parcelled out as we have parceled out the earth. And, conversely, if people were to act towards each other as we must suppose the inhabitants of heaven to do, would not this earth be a very heaven?

“Thy kingdom come.” No one can think of the kingdom for which the prayer asks without feeling that it must be a kingdom of justice and equality — not necessarily of equality in condition, but of equality in opportunity. And no one can think of it without seeing that a very kingdom of God might be brought on this earth if people would but seek to do justice — if people would but acknowledge the essential principle of Christianity, that of doing to others as we would have others do to us, and of recognising that we are all here equally the children of the one Father, equally entitled to share His bounty, equally entitled to live our lives and develop our faculties, and to apply our labour to the raw material that He has provided.... Read the whole speech

Henry George: In Liverpool: The Financial Reform Meeting at the Liverpool Rotunda (1889)

We have come . . . to the same point by converging lines. Why is freedom of trade good? Simply that trade — exchange — is but a mode of production. Therefore, to secure full free trade we must also secure freedom to the natural opportunities of production. (Hear, hear) Our production—what is it? We produce from what? From land. All human production consists but in working up the raw materials that we find in nature — consists simply in changing in place, or in form, that matter which we call land. To free production there must be no monopoly of the natural element. Even in our methods we agree primarily on this essential point — that everyone ought to be free to exert his labor, to retain or to exchange its fruits, unhampered by restrictions, unvexed by the tax gatherer. (Hear, hear) . . . ... read the whole speech

Henry George: Thou Shalt Not Steal  (1887 speech)

• "Are your lands all in use?
• Are your mines all worked out?
• Are there no natural opportunities for the employment of labor?"

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894) — Appendix: FAQ

Q11. How can mines be taxed without increasing the price of the out-put?
A. By taxing the royalty, or, what is essentially the same, by taxing their capitalized value as mining opportunities. This would tend to lower rather than increase the price of the product. Read note 11.

Note 11: This is usually a stumbling block to those who, without much experience in economic thought, consider the single tax for the first time. As soon as they grasp the idea that taxes upon commodities shift to consumers they jump to the conclusion that similarly taxes upon land values would shift to the users. But this is a mistake, and the explanation is simple. Taxes upon what men produce make production more difficult and so tend toward scarcity in the supply, which stimulates prices; but taxes upon land, provided the taxes be levied in proportion to value, tend toward plenty in supply (meaning market supply of course), because they make it more difficult to hold valuable land idle, and so depress prices.

"A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else. . . A tax on rent, therefore, has no effect other than its obvious one. It merely takes so much from the landlord and transfers it to the state." — John Stuart Mill's Prin. of Pol. Ec., book v, ch. iii, sec. 1.

"A tax laid upon rent is borne solely by the owner of land." — Bascom's Tr., p.159.

"Taxes which are levied on land . . . really fall on the owner of the land." — Mrs. Fawcett's Pol. Ec. for Beginners, pp.209, 210.

"A land tax levied in proportion to the rent of land, and varying with every variation of rents, . . . will fall wholly on the landlords." — Walker's Pol. Ec., ed. of 1887, p. 413, quoting Ricardo.

"The power of transferring a tax from the person who actually pays it to some other person varies with the object taxed. A tax on rents cannot be transferred. A tax on commodities is always transferred to the consumer." — Thorold Rogers's Pol. Ec., ch. xxi, 2d ed., p. 285.

"Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenant, to whom the landlord is obliged to allow it in payment of the rent." — Adam Smith's Wealth of Nations, book v, ch. ii, part ii, art. i.

"The way taxes raise prices is by increasing the cost of production and checking supply. But land is not a thing of human production, and taxes upon rent cannot check supply. Therefore, though a tax upon rent compels land-owners to pay more, it gives them no power to obtain more for the use of their land, as it in no way tends to reduce the supply of land. On the contrary, by compelling those who hold land on speculation to sell or let for what they can get, a tax on land values tends to increase the competition between owners, and thus to reduce the price of land." — Progress and Poverty, book viii, ch. iii, subd. i.

Sometimes this point is raised as a question of shifting the tax in higher rent to the tenant, and at others as a question of shifting it to the consumers of goods in higher prices. The principle is the same. Merchants cannot charge higher prices for goods than their competitors do, merely because they pay higher ground rents. A country storekeeper whose business lot is worth but few dollars charges as much for sugar, probably more, than a city grocer whose lot is worth thousands. Quality for quality and quantity for quantity, goods sell for about the same price everywhere. Differences in price are altogether in favor of places where land has a high value. This is due to the fact that the cost of getting goods to places of low land value, distant villages for example, is greater than to centers, which are places of high land value. Sometimes it is true that prices for some things are higher where land values are high. Tiffany's goods, for instance, may be more expensive than goods of the same quality at a store on a less expensive site. But that is not due to the higher land value; it is because the dealer has a reputation for technical knowledge and honesty (or has become a fad among rich people), for which his customers are willing to pay whether his store is on a high priced-lot or a low-priced one.

Though land value has no effect upon the price of good, it is easier to sell goods in some locations than in others. Therefore, though the price and the profit of each sale be the same, or even less, in good locations than in poorer ones, aggregate receipts and aggregate profits are much greater at the good location. And it is out of his aggregate, and not out of each profit, that rent is paid, For example: A cigar store on a thoroughfare supplies a certain quality of cigar for fifteen cents. On a side street the same quality of cigar can be bought no cheaper. Indeed, the cigars there are likely to be poorer, and therefore really dearer. Yet ground rent on the thoroughfare is very high compared with ground rent on the sidestreet. How, then, can the first dealer, he who pays the high ground rent, afford to sell as good or better cigars for fifteen cents than his competitor of the low priced location? Simply because he is able to make so many more sales with a given outlay of labor and capital in a given time that his aggregate profit is greater. This is due to the advantage of his location, and for that advantage he pays a premium in higher ground rent. But that premium is not charged to smokers; the competing dealer of the side street protects them. It represents the greater ease, the lower cost, of doing a given volume of business upon the site for which it is paid; add if the state should take any of it, even the whole of it, in taxation, the loss would be finally borne by the owner of the advantage which attaches to that site — by the landlord. Any attempt to shift it to tenant or buyer would be promptly checked by the competition of neighboring but cheaper land.

"A land-tax, levied in proportion to the rent of land, and varying with every variation of rent, is in effect a tax on rent; and as such a tax will not apply to that land which yields no rent, nor to the produce of that capital which is employed on the land with a view to profit merely, and which never pays rent; it will not in any way affect the price of raw produce, but will fall wholly on the landlords." — McCulloch's Ricardo (3d ed.), p. 207 ... read the book

Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)

Q8. How about fertility value?
A. On the surface of the globe are countless varieties of exhaustible fertility, i.e. chemical constituency, differing in kind and degree, from the nitrogen, hydrogen, oxygen, and carbon of the soil to the carbon of the coal, the gold, and the diamond. Fertility as an attribute need not be predicated of agricultural land alone. Economic fertility belongs equally to any other land which yields to labor its product whether in food, mineral, or metal. Land may be fertile in wheat, corn, and potatoes. It may be fertile in cotton, in tobacco, or in rice. It may be fertile in diamonds, in gold, silver, copper, lead, or iron. It may be fertile in oil, coal, or natural gas, in a water power or water front. The value of artificial fertility is an improvement value. The value of natural fertility of any kind is a site value.

... read the whole article

“Free to Choose: A Conversation with Milton Friedman” — July 2006: http://www.hillsdale.edu/imprimis/ The following is an edited transcript of a conversation between Hillsdale College President Larry Arnn and Milton Friedman, which took place on May 22, 2006, at the Ritz-Carlton Hotel in San Francisco, California, during a two-day Hillsdale College National Leadership Seminar celebrating the 25th anniversary of Milton and Rose Friedman's book, Free to Choose: A Personal Statement. excerpt:

LA: Let me ask you about demographic trends. Columnist Mark Steyn writes that in ten years, 40 percent of young men in the world are going to be living in oppressed Muslim countries. What do you think the effect of that is going to be?

MF: What happens will depend on whether we succeed in bringing some element of greater economic freedom to those Muslim countries. Just as India in 1955 had great but unrealized potential, I think the Middle East is in a similar situation today. In part this is because of the curse of oil. Oil has been a blessing from one point of view, but a curse from another. Almost every country in the Middle East that is rich in oil is a despotism.

LA: Why do you think that is so?

MF: One reason, and one reason only — the oil is owned by the governments in question. If that oil were privately owned and thus someone's private property, the political outcome would be freedom rather than tyranny. This is why I believe the first step following the 2003 invasion of Iraq should have been the privatization of the oil fields. If the government had given every individual over 21 years of age equal shares in a corporation that had the right and responsibility to make appropriate arrangements with foreign oil companies for the purpose of discovering and developing Iraq's oil reserves, the oil income would have flowed in the form of dividends to the people — the shareholders — rather than into government coffers. This would have provided an income to the whole people of Iraq and thereby prevented the current disputes over oil between the Sunnis, Shiites and Kurds, because oil income would have been distributed on an individual rather than a group basis.

LA: Many Middle Eastern societies have a kind of tribal or theocratic basis and long-held habits of despotic rule that make it difficult to establish a system of contract between strangers. Is it your view that the introduction of free markets in such places could overcome those obstacles?

MF: Eventually, yes. I think that nothing is so important for freedom as recognizing in the law each individual's natural right to property, and giving individuals a sense that they own something that they're responsible for, that they have control over, and that they can dispose of.

Reprinted by permission from IMPRIMIS, the national speech digest of Hillsdale College, www.hillsdale.edu.

Q Is there no tax you like?

A Yes, there are taxes I like. For example, the gasoline tax, which pays for highways. You have a user tax. The property tax is one of the least bad taxes, because it's levied on something that cannot be produced — that part that is levied on the land. So some taxes are worse than others, but all taxes are bad.

— Milton Friedman, interview with Scott Duke Harris,
San Jose Mercury News, Sunday November 5, 2006

William Ogilvie: An Essay on the Right of Property in Land (Scotland, 1782)

John Dewey: Steps to Economic Recovery

Go to the work of Henry George himself and learn how many of the troubles from which society still suffers, and suffers increasingly, are due to the fact that a few have monopolized the land, and that in consequence they have the power to dictate to others access to the land and to its products -- which include waterpower, electricity, coal, iron and all minerals, as well as the foods that sustain life -- and that they have the power to appropriate to their private use the values that the industry, the civilized order, the very benefactions, of others produce. This wrong is at the very basis of our present social and economic chaos, and until it is righted, all steps toward economic recovery may be temporarily helpful while in the long run useless. ...

I do not claim that George's remedy is a panacea that will cure by itself all our ailments. But I do claim that we cannot get rid of our basic troubles without it. I would make exactly the same concession and same claim that Henry George himself made:

"I do not say that in the recognition of the equal and unalienable right of each human being to the natural elements from which life must be supported and wants satisfied, lies the solution of all social problems. I fully recognize that even after we do this, much will remain to do. We might recognize the equal right to land, and yet tyranny and spoilation be continued. But whatever else we do, as along as we fail to recognize the equal right to the elements of nature, nothing will avail to remedy that unnatural inequality in the distribution of wealth which is fraught with so much evil and danger. Reform as we may, until we make this fundamental reform, our material progress can but tend to differentiate our people into the monstrously rich and frightfully poor. Whatever be the increase of wealth, the masses will still be ground toward the point of bare subsistence -- we must still have our great criminal classes, our paupers and our tramps, men and women driven to degradation and desperation from inability to make an honest living." ... read the whole speech

Lindy Davies: Land and Justice

We tend to have a very romantic conception of land, in this day and age. I'm not sure why, but I suspect it has to do with how seldom modern people actually come into contact with the stuff of the earth itself. We deal with burgers... papers... toilets... Without thinking about the many layers of processing between hayfield and burger, between tree and paper, between flush and water table.

We think of dropping out of the modern plastic world to go "back to the land." "The land" is where we go on camping trips.

This romantic conception of land can lead to some dangerously fuzzy thinking. It leads us to think, for example, that perhaps land used to be absolutely vital to human life, back in some halcyon, underpopulated past — but modern technology has long since taken care of that.

Or has it?

Let's think about this question: what is our most valuable natural resource? Is it
— gold, diamonds, precious or strategic minerals? Nope, not even close.
— Oil? Well, it's highly important to industrial civilization, of course, a matter of great political import — but by no means the most valuable.
— Water? Now we're getting closer: necessary for life, to be sure, and thus a potential object of wars — but in terms of cost per cubic foot, not so terribly high, yet.

What is it? Our most valuable natural resource — by leaps and bounds, more valuable than all the others combined — is urban land. Our most valuable natural resource is land whose natural fertility is utterly depleted, it will yield no gems or minerals; its soil is full of toxins. There's nothing worthwhile about it, except for one vital attribute: where it is. ... read the whole speech

Joseph Stiglitz: October, 2002, interview

Q: I want to follow-up on what you had said some months ago about land reform:

JES: "The main, underlying idea of Henry George is the taxation of land and other natural resources. At the time, people thought, "not really that too," but what was underlying his ideas is rent associated with things that are inelastically supplied, which are land and natural resources. And using natural resource extraction and using land rents as the basis of taxation is an argument that I think makes an awful lot of sense because it is a non-distortionary source of income and wealth.

Q: In Globalization and its Discontents, you write (p. 81): "But land reform represents a fundamental change in the structure of society, one that those in the elite that populates the finance ministries, those with whom the international financial institutions interact, do not necessarily like."

JES: Yes. Let me try to approach the question a little more systematically. Once you take the perspective I just gave, that means the management should be done in such a way that it maximizes the amount of money available to the US government from natural resources because they are within its domain and control. So, looking at the United States, one of the implications of this is that a foundation such as yours [the Robert Schalkenbach Foundation, created to promote the ideas of Henry George, as expressed in Progress & Poverty] ought to be very much against the policies of the US government of giving away our natural resources. Here is a case where we not only are not taxing it much, we're actually giving it away.

Q: I assume you're speaking in particular of oil and mineral rights, but would not Broadband Spectrum rights also be included in that category?

JES: Yes, Broadband Spectrum rights as well. Now, giving away rights such as those would be anathema to the spirit of Henry George. And the second part is that when you sell them, you want to do so in such a way as to maximize the revenues. And whether you decide to sell it or whether you decide to rent it, would be the question of what is the way that maximizes the extraction of public revenues.

Q: And those revenues go to the people. Not to private concerns.

JES: Exactly. So you're trying to say, from the perspective of public management, how can we take this inelastic supply of public resources and maximize the rents that we can extract from it, consistent with other public objectives? That is a very deep philosophical approach, and requires a re-thinking of how we manage all aspects of those public resources. However, much of what we do is inconsistent with that. Now, the issue of land reform is a little bit different. There, it's a two-step analysis. My concern that I expressed about land is that in many developing countries, you have most land owned by a few rich people, and the land is relatively little taxed. But the land is worked in a system of sharecropping in which workers have to pay the landlord 50% of their output. In a way, you can look at that 50% as a tax. The sharecroppers are paying a 50% tax to the landlord. But it's worse than a tax. Because it's not a land tax, it's a tax on their labor. And it's a tax that goes to the landlord rather than to society. So the notion is that land reform could take a variety of different forms. For instance, the government could take over the land and rent it to the people. Or give it to the people and have a land tax that would not have the distortionary effect of land reform. So, in a way, these systems of share-cropping are worse even than anything that Henry George was worried about in terms of misuse of land. ...

Q: What are the greatest political obstacles confronting developing countries to the extraction of economic "rent" for public purposes? Is it simply a matter of "vested interests?"

JES: Yes, it's not very complicated. You know, in the Clinton Administration, we tried to reform the disposition of natural resources — mineral rights — by saying the US Government should not be giving this away to a few wealthy people. But the mining interests were adamant in opposing this reform. ...

Q: In your opinion, would it be more effective to attempt to achieve support from economists about the need for such reform, or to bypass them in seeking to build popular support independently from them, in that the views of mainstream economists on the topic of land reform might fairly be characterized as an "intransigent"?

JES: There are some economists who are interested in this. I think most economists would like the idea, and would support it. But, economists spend their time on things that they think have marketability. So it isn't that they don't think it's a good idea; they don't think there's any resonance in it. President Bush is still talking about the inheritance tax, and income tax, and they want to get involved in what other people are talking about. It's a social phenomenon, I think. So, if you get a lot of other people talking about it, then they'll join the fray.

Q: You are aware that Henry George was a critic of the moral foundations of our economic institutions. What do you think of reform efforts toward land value taxation based on an appeal to morality?

JES: What it fits into is that there is a wide view today that we should tax environmental "bads" such as pollution and the like. And switch from taxing good things like labor. So, in a way, that's where it comes in: let's stop taxing good things like labor, and tax things that are resources. So the argument is, "why tax things that are contributing to society?" ...

Q: I wanted to ask your view on the adequacy of land as a tax base. At one time, as you know, there was a "Single Tax" movement, for the purpose of deriving revenues sufficient to run the government solely from land value taxation. In your view, how feasible is that today?

JES: Most economists would say that you cannot run the US economy on the "Single Tax." In my mind, the "Single Tax" is the wrong way to think about it. The question is: "Would it be better if we had more taxation of land and natural resource, and more revenue from natural resource management, and I would include atmosphere and spectrum." And less tax on income and savings. And I would say, "Yeah." And I think many economists would agree with that. So, if you want to sell it as a "Single Tax," then, no, you won't get anyone to agree that there's enough revenue there. If you look at is a more "central" tax, then, yes, you will get most economists to agree with you. ...

Q: A former Director of Robert Schalkenbach Foundation was given a grant recently to research the adequacy of land as a tax base. He's a professor at the University of California, Riverside, named Mason Gaffney, and he wrote a book titled, "The Corruption of Economics." Are you familiar with his work?

JES: No.

Q: I'll send you a copy of the book. Basically, he argues that the founders of neo-classical economics, which, as you know, is the paradigm taught in schools such as the University of Chicago, distorted the science of economics to protect vested interests. For example, Rockefeller money was spent to hire professors of economics with a view to their discrediting the ideas of Henry George. Did that happen?

JES: My general impression is that most donors that give money to universities don't take a very strong view of [who should be on] the faculty. Sometimes it ends up on one side, sometimes on the other. It would have been unusual [at Chicago], but it could have happened there. What is striking about Chicago as a school of economic theory is that it's very conservative. One would have thought that Henry George was someone who would have been liked by "Conservatives."

Q: In that George wanted to reduce tax on the fruits of one's own labor?

JES: Exactly. And you want non-distortionary taxes, so I would have thought that every "Conservative" would be in Henry George's camp. Now, as far as I know, I'm one of the few people who keeps emphasizing that you ought to view Henry George in a broader way, to include natural resources. I didn't think that people thought about that a hundred years ago. But if they had, and maybe Rockefeller was smart — he realized that he obviously didn't want a tax on natural resources.

Q: He wouldn't have wanted rents flowing from natural resources to go to the people rather than to him.

JES: Yes, he obviously wouldn't like that perspective. But I don't know if that view was at that time recognized, and I just don't know whether he actively intervened at Chicago. read the entire interview

Clarence Darrow: How to Abolish Unfair Taxation (1913)

Everybody nowadays is anxious to help do something for the poor, especially they who are on the backs of the poor; they will do anything that is not fundamental. Nobody ever dreams of giving the poor a chance to help themselves. The reformers in this state have passed a law prohibiting women from working more than eight hours in one day in certain industries — so much do women love to work that they must be stopped by law. If any benevolent heathen see fit to come here and do work, we send them to gaol or send them back where they came from.

All these prohibitory laws are froth. You can only cure effects by curing the cause. Every sin and every wrong that exists in the world is the product of law, and you cannot cure it without curing the cause. Lawyers, as a class, are very stupid. What would you think of a doctor, who, finding a case of malaria, instead of draining the swamp, would send the patient to gaol, and leave the swamp where it is? We are seeking to improve conditions of life by improving symptoms.

Land Basic

No man created the earth, but to a large extent all take from the earth a portion of it and mould it into useful things for the use of man. Without land man cannot live; without access to it man cannot labor. First of all, he must have the earth, and this he cannot have access to until the single tax is applied. It has been proven by the history of the human race that the single tax does work, and that it will work as its advocates claim. For instance, man turned from Europe, filled with a population of the poor, and discovered the great continent of America. Here, when he could not get profitable employment, he went on the free land and worked for himself, and in those early days there were no problems of poverty, no wonderfully rich and no extremely poor — because there was cheap land. Men could go to work for themselves, and thus take the surplus off the labor market. There were no beggars in the early days. It was only when the landlord got in his work — when the earth monopoly was complete — that the great mass of men had to look to a boss for a job.

All the remedial laws on earth can scarcely help the poor when the earth is monopolized. Men must live from the earth, they must till the soil, dig the coal and iron and cut down the forest. Wise men know it, and cunning men know it, and so a few have reached out their hands and grasped the earth; and they say, "These mines of coal and iron, which it took nature ages and ages to store, belong to me; and no man can touch them until he sees fit to pay the tribute I demand".

Pirates Demand Tribute

Nature prepared the earth for ages to make a mine of iron ore, which is so useful in civilized life. It was here before man came, and will be here after he is gone, and yet a plundering, soulless, conscienceless band of pirates, called the steel trust, have taken possession of all the iron in America, and they say to every man who will use it: "You must pay us tribute." And every time two dollars is paid for their product one dollar goes to labor, and one dollar is taken as plunder pure and simple, because of the foolish laws of man. They can take from the farmer and laborer all that they earn except enough to keep them alive still to toil for the monopolist.

You may make eight-hour laws, you may make laws regulating sweat shops and factories, but so long as a few rich men own the earth, there will be a few rich and many millions of helpless poor. As population becomes more dense, the proportion of poor will increase.

... Most of our laws were made by the dead, and the dead have no right to legislate for the living. The present generation has no right to bind its legislation upon the generation still unborn. When one generation is dead, it ought to stay dead and not reach out its dead hand to bind the living. We have no right to fix terms and conditions for those yet unborn; it is for each generation to fix the rules and regulations for itself. The earth should be owned by all men, the coal mines should belong to the people who live here, so they can take what they want while they live, as when they are dead they won't need coal — they will be warm enough without it — and they should not have the power to say who shall have it when they are gone. Carnegie and Morgan cannot use or withhold it much longer, as they will soon be gone — that is one consolation. ... read the whole speech

Fred E. Foldvary — The Ultimate Tax Reform: Public Revenue from Land Rent

The rental value of oil, minerals, and water is more complex. Government often subsidizes water, especially to agriculture, selling below cost, whereas efficient provision would base the price on the market price, often above cost, the extra amount being rent. Offshore oil leases are commonly bid on by companies, and the bids are basically the rent they pay for the leases. There can also be extraction fees that take the rent as the raw material is taken out. Such fees can be paid for taking natural resources such as timber and wildlife.

The frequencies of the electromagnetic spectrum also can be taxed as a type of natural resource. The market for the frequencies will set the rent. If an active market does not exist, then the current users can self-assess, subject to having to sell if another user wishes to buy it at that assessment plus some set premium. ... read the whole document

Fred Foldvary:  Well being and being well off

1. To the creator belongs the creation.
2. The profit of nature's creation belongs equally to all.
3. The benefit of what is created by government belongs to all the people in its jurisdiction.
4. When the initial distribution is just, the outcomes of free exchange are just and should not be hampered.   ... Read the whole article
   

This price appreciation is actually a "land gain", that is, it's not from providing start-up capital for new enterprises, but from sitting on a rising asset already in place, the land. Its value rises because neighbourhoods are upgraded, mortgage money is ample, and rezoning is favorable from farmland on the outskirts of cities to gentrification of the core to create high-income residential developments. The potential capital gain can be huge. That's why developers are willing to pay their mortgage lenders so much of their rent income, often all of it.

Of course, investing most surplus income and wealth in land has been going on ever since antiquity, and also pledging one's land for debt ("mortgaging the homestead") that often led to its forfeiture to creditors or to forced sale under distress conditions. Today borrowing against land is a path to getting rich -- before the land bubble bursts. As economies have grown richer, most of their surplus is still being spent acquiring real property, both for prestige and because its flow of rental income grows as society's prosperity grows. That's why lenders find real estate to be the collateral of choice.

Most new entries into the Forbes or Fortune lists of the richest men consist of real estate billionaires, or individuals coming from the fuels and minerals industries or natural monopolies. Those who have not inherited family fortunes have gained their wealth by borrowing money to buy assets that have soared in value. Land may not be a factor of production, but it enables its owners to assert claims of ownership and obligation, i.e., rentier income in the forms of rent and interest. ...     Read the whole article


Nic Tideman: The Case for Site Value Rating

Both for reasons of social justice and for reasons of economic efficiency, site value rating deserves a continued place in the programme of the Liberal Party.

The case for site value rating in terms of social justice is founded on two understandings: first, that the value of land in the absence of economic development is the common heritage of humanity, and second, that increases in the rental value of land arising from economic development and government expenditures should be collected by governments to finance those activities. What is meant by "land" is the unimproved value of sites and the value of extractable natural resources such as North Sea oil.

While there may someday be institutions capable of implementing a recognition of land as the heritage of all humanity on a worldwide basis, in the absence of such institutions each nation should implement a recognition that land within its boundaries is the common heritage of its citizens. This is accomplished not by making the nation a gigantic Common or by instituting government management of all land, but rather by requiring all persons and corporations that are granted the use of land to pay a fee or tax equal to what the rental value of the land they control would be if it were in an unimproved condition.

The case for site value rating in terms of economic efficiency is founded on the fact that a tax on resources that are not produced by human effort is one of the few sources of government revenue that does not reduce incentives for people to be productive. Two other revenue sources that have this virtue are taxes on other government-granted privileges such as exclusive use of radio frequencies and taxes on activities with harmful consequences, such as polluting the air. An economy will be more efficient if revenue sources that do not diminish productivity are employed to the greatest possible extent before any use is made of taxes that impede productivity.

What makes a tax efficient is that the amount of tax that is due cannot be reduced by reducing productive activities. When incomes are taxed, people can reduce the amount of taxes owed by working less. They do so, and the productivity of the economy falls. When houses are taxed, people can reduce the amount of taxes owed by building fewer house and smaller houses. They do so, and the housing shortage worsens. But when the unimproved value of land is taxed, there is no resulting diminution in the quantity of land. Thus taxes can be levied on land without diminishing the productivity of an economy. And shifting taxes from other, destructive bases to land will improve the productivity of an economy.

Subsequent sections explain in more detail these social justice and efficiency arguments for site value rating, describe procedures for implementing such a tax system, and explain why a variety of potential objections are without merit. ...

For deposits that can be expected to last a generation or more, one must be concerned about whether future generations will be content with the financial arrangements that are made. For these cases, it is best to have deposits developed by joint public-private enterprises, where costs are shared in the same proportions as benefits, so that future generations cannot complain about their heritage having been sold for a song.

In the same way that mineral extractions reduce the value of land for future generations, so can the subdivision of land into small parcels. Once land has been subdivided, it is extremely expensive, if it is possible at all, to reassemble it for projects that require large sites. Reassembly, and the economic growth that it permits, can be facilitated by a "self-assessed property tax." Under such a tax, each owner of property is required to specify a price at which he or she would be willing to sell the property, and anyone who wishes can buy the property at that price. A person who was required to sell would be permitted to remove anything he or she wished, so that compulsory sales would be initiated only by persons or public bodies that wished to redevelop land. The appropriate tax rate would be a fraction of a per cent per year, so that people would find it financially feasible to assess their land a prices that would fully compensate them for being required to relinquish it. ... Read the whole article

Humanity is emerging from eons of development during which survival has been promoted both by the ability to grab resources from others and by the ability of groups to cooperate and share natural resources within communities that occupied territorial homelands. In recent centuries we have been developing a consensus that taking from the weak is wrong, and that we ought to have a social order that prevents all such behavior. But we have not yet worked out how to do it.

Some people think of preventing grabbing in terms of preserving the status quo. There are two difficulties with this.

• First, the status quo incorporates extensive holdings that were acquired by indefensible means. A decision to preserve the status quo commits us to defending the indefensible.
• Second, there is no magic to any particular date, before which unjust appropriations are incorporated into the status quo and after which they are reversed.

A practice of allowing an appropriation to be treated as just if it has survived long enough gives aggressors an incentive to see if they can grab and hold on long enough. The result is actions like Indonesia's seizure of East Timor and Iraq's invasion of Kuwait. Only if we have a standard of justice that is independent of history can we expect to end such actions.

Henry George's theory of economic justice--that every person has a right to his or her productive powers, and that all persons have equal rights to all natural opportunities--provides a simple formula around which opinion about the shape of a peaceful world can coalesce.

This may seem hopelessly optimistic. But no other theory that I have seen has anything like the clarity, coherence and power of this theory. ...

Resources that Fluctuate over Time

The natural opportunities that have been considered to this point are ones that, to a first approximation, yield constant returns over time. A new set of issues arises when this theory of social justice is applied to resources that yield returns that necessarily vary over time. Now the issue of intergenerational justice arises along with that of international justice.

Consider first the issue of intergenerational justice without the complication of international concerns. The efficient use of depletable natural opportunities requires that they be allocated over time in such a way as to maximize the present value of net revenue from sales. As economists have long known, this requires that prices charged for resources that are being depleted rise at the rate of interest. But this is just efficiency. It says nothing about who should get the money.

The axiom that all persons have equal rights to natural opportunities suggests that when we deplete a resource such as oil, there are two steps that must be taken to achieve intergenerational equity. In the first step, when oil is sold we must share the proceeds over generations in such a way that every person in every generation can receive a payment of the same real value every year. To satisfy this obligation when the number of people alive in different years is not proportional to the amount of oil used in those years, we need to invest the proceeds of oil sales in a fund that would make annual payments to all persons of a size that could be maintained for all generations.

This first step provides intergenerational equity with respect to oil revenue, but it does nothing about the fact that, if oil is allocated efficiently over time, later generations will face a higher price of oil than early generations. To provide equity with respect to the changing price of access to natural opportunities, there must be a second step that redistributes money among generations to offset the changing price.

This second step implicitly assumes a world with no change in technology. If an early generation provides later generations with improved technology, then the later generations are treated justly if the combination of prices of commodities, technology and money received from the earlier generation permits them to attain the same overall level of satisfaction as the earlier generation. This specification of justice presumes that everyone has the same tastes. When tastes differ, an improvement in technology that more than compensates some persons for a greater scarcity of some natural resources will provide inadequate compensation for others. Such inequality cannot be avoided. All that can be expected is that those who use exhaustible resources will, by limiting their use and providing endowments for future generations, make it possible for the typical member of every future generation to attain the same level of well-being as the typical members of the earlier generations of resource users. Success in such an effort cannot be guaranteed. We don't know the tastes of future generations. We don't know the rate at which technology will advance. We don't know the rate at which new resources will be discovered. Estimates of all these things must be made to determine the proper rate of resource use and the proper endowments of future generations. The most that can be asked for is a good-faith effort to achieve the standard required by justice.

Now consider the international dimension of intergenerational equity. What one nation owes to others with respect to intergenerational equity is compensation for making it more difficult for the other nations to provide adequately for their future generations. If all nations are using the same amount of oil per capita, then no nation can complain about what the others are doing. But if one nation is using more oil per capita than the others, then it owes compensation to the others for making it harder for the others to provide all of their future generations with equal rights to natural opportunities. If oil is being allocated efficiently and equitably among generations, the amount of compensation that an excessively consuming nation owes will be the market value of its excess oil consumption, valued in terms of the price of oil in the ground. The same result is obtained if all nations include the resource value of all oil that they consume, and all other depletable resources, in the calculation of what they appropriate for themselves from everyone's common heritage.

One of the ways that a nation can compensate other nations for disproportionate use of natural opportunities is by creating technology that other nations can use to compensate their future generations for scarcer natural resources. If gasoline costs twice as much but cars are twice as efficient, people are not, on net, disadvantaged by the higher price of gasoline. This line of reasoning requires contestable judgements about the value of new technology and how long it would have taken before someone else would have made the same discovery. Nevertheless, technological improvements are a valid form of compensation for resource scarcity.

One issue that arises when technological improvements are used as compensation is that not all nations place the same value on technology. If some island nation wishes to maintain a way of life that does not involve cars, then that nation is not compensated for an increased scarcity of fish by increased efficiency of car engines. What compensates a particular nation must reflect the typical preferences of that nation.

What to Do When Some Nations Fail to Fulfill Their Obligations

THE THEORY that has been developed incorporates all of the ways that nations impinge upon one another by their appropriations of natural opportunities-through their claims to land, natural resources, the frequency spectrum, and geosynchronous orbits, through their appropriations of fish in the ocean, through their use of natural resources that are embedded in goods, through their emissions of pollutants that cross international borders, including the ones that produce global warming and ozone depletion, through their decisions to have population growth rates that differ from the world average, and in any other way that nations appropriate scarce natural opportunities. The theory describes what nations must do to fulfill their obligations to other nations. But how will unwilling nations be compelled to fulfill their obligations if they do not wish to do so?

The theory is not designed to coerce recalcitrant nations. The theory is designed to describe what must be done by those who wish to fulfill their obligations. But universal acceptance is not needed for the theory to work. In the first place, under the theory that has been presented only some nations have obligations. The others have claims. Until a careful analysis is done, it is not possible to specify which nations have the obligations and which have the claims. But only the nations with obligations need to be persuaded to fulfill their obligations under the theory, and these are likely to be predominantly rich nations. Because the magnitudes of transfers to recipient nations depend on what those nations do, they receive incentives to economize on their appropriations of natural opportunities, even if they do not agree with the theory.

But suppose that only some of the nations with net obligations are willing to honor those obligations. How should these nations respond to the lack of cooperation by others?

• First, they should compute their obligations as if the resources and populations of the non-cooperating nations did not exist. All persons have equal rights to all natural opportunities. If some natural opportunities have been improperly grabbed by people who refuse to acknowledge their obligation to share, then those who do recognize their obligation should understand that they must all claim less.
• Second, the cooperating nations should do what can reasonably be done to deny acceptability of excessive claims to natural opportunities. If some nation appropriates the oil, diamonds or other resources under the ground that it occupies without regard to the rights of people in other nations, then the people in the other nations should decline to purchase those resources, or products made with them. To do so would be to purchase stolen property. If they have a dire need for the resources, they should recognize the claims of all persons to the resources by including the value of the resources in their own calculations of what they appropriate from everyone's common heritage. In this way, economic pressure would be put on all resource users to acknowledge the equal rights of all persons to natural opportunities.

What if a nation refuses to share the value of natural opportunities among its citizens? A reasonable test of whether a nation can properly be treated as the agent of its citizens and the appropriate recipient of its citizens' shares of the value of natural opportunities is whether the nation allows its citizens to leave. If a nation does not allow its citizens to leave, then it is not proper to treat the nation as the agent of its citizens. The citizens are effectively imprisoned. We have no way of honoring our obligations to them. We might put their shares in trust, but if they are not allowed to leave, then we should not trust their government to use their shares of the value of natural opportunities as they would wish. On the other hand, if the citizens could leave and decline to do so, and if there are some other nations that would accept them, then we are justified in regarding their continued citizenship as evidence of their implied consent to the decisions of their government about how their shares of natural opportunities will be used. This rule may induce governments that would otherwise keep their citizens captive within their borders to instead allow them liberty.

Thus the proper application of a principle of equal rights of all persons to natural opportunities will generate incentives for increased compliance and increased liberty for all. It is not necessary to have a world government that has the power to coerce all nations to abide by a single authority's determination of what they owe. Every nation can make its own determination of what, if anything, they owe to others. Within broad limits people can accept differing interpretations of obligations. If some nation exceeds the limits of tolerance, other nations can reasonably respond by declining to regard that nation or its citizens as the true owners of the things they seek to trade. What is created is a diverse, tolerant, and responsible international community.

It is not necessary to achieve universal acceptance of this theory for it to be effective. What is necessary is acceptance by the major economic powers, plus a willingness to condition economic relations on an assurance that traded goods are not unjustly appropriated from nature, and are not made with the labor of persons who are deprived of their liberty to migrate if they choose....  Read the whole article

With resources such as oil, which are depleted over time, new issues of efficiency and justice arise. Depletable resources ought to be regarded as part of the heritage to which everyone has equal rights, though some provision must then be made to provide incentives for discovery. Equal rights are expressed by requiring everyone who uses a depletable resource to pay for the resulting depletion. Efficiency requires that a resource that is to be depleted over time be sold in such a pattern over time as will maximize the present value of receipts. This generally means using a lot in early years, then less and less as time goes by, with the price of resources in the ground rising at the interest rate. If the receipts were spent as they were received, more would go to early generations than to later generations. A principle of equal rights to natural opportunities means that the receipts should be put into a fund, from which equal payments are made to all persons in all years. Furthermore, later generations are disadvantaged by the higher price of oil that they face. A principle of equal rights for all persons would allocate additional payments to later generations to compensate them for the higher price of oil they faced, though this could be offset by later generations having access to technology that earlier generations did not have. Thus a nation that provides the rest of the world with technology that eases the task of providing for future generations should receive a credit for this, although there will be difficulty in estimating the contribution of any innovation. (If one person had not discovered something, the chances are that eventually some else would have.) ... Read the entire article

Perhaps, a general recognition of a right of secession will need to wait for another component of moral evolution: a recognition that all persons have equal claims on the value of natural opportunities. If this were recognized, then any nation or region with disproportionately great natural resources would be seen to have an obligation to share the value from using those resources with those parts of the world that have less than average resources per capita. This would eliminate the desire to appropriate natural resources as a reason for secession and as a reason for opposing secession. Signs of a recognition of the equal claims of all persons on the use of natural opportunities are slim. One can point to John Locke:

Whether we consider natural Reason, which tells us, the Men, being once born, have a right to their Preservation, and consequently to Meat and Drink, and such other things, as Nature affords for their Subsistence: Or Revelation, which gives us an account of those Grants God made of the World to Adam, and to Noah, and his Sons, 'tis very clear, that God, as King David says, Psal. CXV. xvi. has given the Earth to the Children of Men, given it to Mankind in common.2

Locke goes on to say that every person has a right to himself, and therefore to the things of value that are created by combining his efforts with natural opportunities, "at least where there is as much and as good left in common for others." He then argues that with so much unclaimed land in America, no one can justly complain if all of Europe is privately appropriated. Locke does not address the question of how rights to land should be handled if there is no unclaimed land.

Thomas Jefferson, writing on the subject of patents, said, But while it is a moot question whether the origin of any kind of property is derived from nature at all, it would be singular to admit a natural and even an hereditary right to inventors. It is agreed by those who have seriously considered the subject, that no individual has, of natural right, a separate property in an acre of land, for instance.3

Henry George said,

The equal right of all men to the use of land is as clear as their equal right to breathe the air--it is a right proclaimed by the fact of their existence. For we cannot suppose that some men have the right to be in this world and others no right.

If we are all here by the equal permission of the creator, we are all here with an equal title to the enjoyment of his bounty--with an equal right to the use of all that nature so impartially offers. This is a right which is natural and inalienable; it is a right which vests in every human being as he enters the world, and which during his continuance in the world can be limited only by the equal rights of others.4

General recognition of the equal rights of all to the use of land and other natural opportunities is hard to find. When the powerful nations of the world got together to eject Iraq from Kuwait, very little was heard of the bizarreness of supposing that Emir of Kuwait and his relatives had a right to all the oil that lay under Kuwait. Some recognition of equal rights to the use of natural opportunities can be found in the proposed Law of the Sea Treaty, which would have had all nations benefiting from the granting of franchises to extract minerals from the sea. From an economic perspective, the treaty was flawed by the fact that it would have created an artificial scarcity of seabed mining activities in order to raise revenue, and it was opposed by the U.S. and not implemented. But it did suggest general recognition of global equal rights to at least those natural opportunities that no one has yet begun to use.

One impediment to the recognition of equal rights to the use of natural opportunities is that some system of assessment would be needed to identify the transfers that would compensate for unequal access to natural opportunities. Another impediment is that a system of rewards for those who discover new opportunities would be needed. But if there were a will to address them, these technical difficulties could be solved adequately, as they are in jurisdictions such as Alberta, Canada, that claim all mineral rights for the government....  Read the whole article

• polluting industries (which draw on clean air and water) · the extraction of minerals (using up finite resources)
• the cutting of non-plantation timber (effecting our biodiversity and weather)
• fishing (drawing on our oceans' resources).
• The amount of eco-taxes that will be paid by us is difficult to estimate because our consumption patterns will necessarily greatly change - and so they should! ...   Read the entire article
  

• land with agricultural value,
• (urban) land with largely locational value,
• land as the very soil itself, or
• even land in the broad and inclusive sense of meaning natural resources in general.

• Scene 1 was the era of classical economics, when the 3 factors of production were labour, capital and land - and here the rabbit represents land principally in the sense of urban land with locational value, while other natural resources were accorded little or no value as they were considered to be drawn from an almost infinite storehouse.
  
• Scene 2 was the era of neoclassical economics, whose textbooks invariably started with a recognition that there were three factors of production but from then on treated land as simply a type of capital. Land was simply conflated with capital and the rabbit had disappeared!
  
• Scene 3 is the era of the environmental reform of economics, when the rabbit suddenly reappears in the form of natural resources which effectively exclude land. "Hang on!" squeals a freckle-faced boy in the front row, "that's a different rabbit!" ...

• Reassess Land Frequently
• Use the Building-Residual Method of Allocating Value
• Federal Income Taxes

• A. Rich and Poor
• B. Timber and Timberland
• The Role of Timber and Timberland
• Two More Areas Deserving Attention
• Offshore Oil
• Tax All Natural Resources Uniformly and Comprehensively

In 1946 President Harry S. Truman, with the stroke of a pen, added 50 percent to the area of the U.S. when he unilaterally extended our traditional three-mile limit out to 200 miles.

• The first three miles were soon given to the coastal states; California and Alaska both raise large lease and tax revenues from their lands under these coastal waters.
• The next 197 miles, however, is unorganized territory, outside the sovereignty and tax reach of any state, or subdivision thereof.

Counties may, and often do assess and tax "possessory interests" in leaseholds on federal uplands that lie within state boundaries. They are helpless, however, to tax such property held offshore. The property values are huge, and so are the firms that own the leaseholds. Many firms own tens of millions of acres apiece, areas larger than whole states. Offshore oil is our largest enclave protecting rent-bearing lands from property taxation, and any other form of state or local taxation.

Some form of national property tax is called for; or higher lease payments in lieu of taxes. Perhaps some income tax surcharge is the best way, or special federal tax on net proceeds. This paper cannot enter the thicket of what jurisdiction should have sovereignty to tax offshore leaseholds, nor how best to levy the tax. The point here is that no system of resource-based taxation is complete, philosophically or practically, that leaves this enclave untouched. Read the whole article

Mason Gaffney:  Rent, Taxation, Dissipation and Federalism

Not only can you have both common land and free markets, you can't have one without the other. They go together, like love and marriage. You need market prices to help identify land's taxable surplus, which is the net product of land after deducting the human costs of using it. At the same time, you must support government from land revenues to have a truly free market, because otherwise you will raise taxes from production, trade, and capital formation, interfering with free markets. If you learn this second point, and act on it, you will have a much freer market than any of the OECD nations that now presume to instruct you, and that are campaigning vigorously to make all nations in the world "harmonize" their taxes to conform with their own abysmal systems.

Israel and Palestine would establish a steward to collect land dues and disburse rent dividends a la Alaska's oil dividend. Since land is more valuable in Israel than in Palestine, Jews would pay in more than Arabs, yet everyone would get back the same. And since Israelis prosper, they drive up land values; having Jews as co-owners developing land, raising its value, fattening everyone's Citizens Dividend Arabs might accept that. Profit does make for strange bedfellows. Two archrivals, China and Taiwan, recently agreed to explore for oil together.

Where to draw a line in the sand becomes a lot less contentious when land and oil are no longer spoils of war and when neighbors do not endure drastically different standards of living. Growing up, we learn to not fight over toys but to take turns. Societies need to learn this, too.

a. direct cash outlays, such as cash to corporations for advertising overseas,

b. lucrative contracts, such as with weaponeers et al campaign contributors, and

c. tax breaks that burden would-be competitors, such as tariffs that protect GM and Ford but not autoworkers. Even if we were to abolish subsidies (a) and taxes, eliminating the advantage of tax breaks (c), and negotiate responsible contracts (b), that'd still leave in place

d. seven subtle privileges, mere pieces of paper that government grants its customers at nowhere near market value, positioning the privileged to claim all the surplus value of society.

1. The corporate charter's salient feature is to limit the liability of those choosing to profit by putting others at risk. ...

2. Pollution permits, performance waivers, land use exemptions -- whether granted by bureaucracies, legislatures, or courts - are worth much more than however much government charges and business pays. ...

3. Patents protect the basement inventor, right? Wrong....

4. Utility franchises create monopolies in exchange for some public service, such as providing electricity, phone communication, etc. ...

5. Communication licenses for TV, radio, cell phones, and the like are given away for free or for far less than market value, turning recipients into "instant billionaires" (the business press gleefully notes). ...

6. Resource leases for public oil, minerals, forests, and grazing land, are often let at "fire-sale" prices. ...

7. Land titles do protect the average homeowners but because they cost virtually nothing (a paltry filing fee often about $2.00), they also protect enormously wealthy absentee landlords. ... 

Land titles are the granddaddy of all privileges. Historically, titles preceded all others and created a class of elite owners with the power to win the six other indirect subsidies, along with the more direct ones – grants, contracts, and tax favors. To undo and reverse this history, it's necessary to collect and share the natural rents from all seven inconspicuous privileges.

For these pieces of paper, government should charge full market value. ... 

Getting a Citizens Dividend would not only eliminate poverty, it'd also erase any rationale for subsidies - direct or indirect - to the poor or to the privileged. Repealing the free ride of privileges would be like repealing capitalism. Without those subtle detours imposed upon public revenue, owners would have to work to amass a fortune, and work is one of the worst ways known to strike it rich.

What you can do: Dry up the milkmaid state. Dispense with the notion that the state must meddle in enterprise. Dispense the notion from others, too. Focus government on its lone raison d'etre - defend rights. Demand your right to a fair share of natural revenue. ...  Read the whole article