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Natural Resources

"The meek shall inherit the earth - but not the mineral rights." - Jean Paul Getty (1892-1976), billionaire oil tycoon

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)

... The story goes on to describe how the roads of heaven, the streets of the New Jerusalem, were filled with disconsolate tramp angels, who had pawned their wings, and were outcasts in Heaven itself.

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)

Not work enough! Why, what is work? Productive work is simply the application of human labor to land, it is simply the transforming, into shapes adapted to gratify human desires, of the raw material that the Creator has placed here. Is there not opportunity enough for work in this country? Supposing that, when thousands of men are unemployed and there are hard times everywhere, we could send a committee up to the high court of heaven to represent the misery and the poverty of the people here, consequent on their not being able to find employment.

What answer would we get?
  • "Are your lands all in use?
  • Are your mines all worked out?
  • Are there no natural opportunities for the employment of labor?"
What could we ask the Creator to furnish us with that is not already here in abundance? He has given us the globe amply stocked with raw materials for our needs. He has given us the power of working up this raw material.

If there seems scarcity, if there is want, if there are people starving in the midst of plenty, is it not simply because what the Creator intended for all has been made the property of the few? And in moving against this giant wrong, which denies to labor access to the natural opportunities for the employment of labor, we move against the cause of poverty. ...

Go into Pennsylvania, and there you will see great stretches of land, containing enormous deposits of the finest coal, held by corporations and individuals who are working but little part of it. On these great estates the common American citizens who mine the coal are not allowed even to rent a piece of land, let alone buy it. They can only live in company houses; and they are permitted to stay in them only on condition (and they have to sign a paper to that effect) that they can be evicted at any time on five days’ notice. The companies combine and make coal artificially dear here, and make employment artificially scarce in Pennsylvania.

Now, why should not those miners, who work on it half the time, why shouldn’t they dig down in the earth and get up coal for themselves? Who made that coal? There is only one answer — God made that coal. Whom did He make it for? Surely you would say that God made it for the people that would be one day called into being on this earth. But the laws of Pennsylvania, like the laws of New York, say God made it for this corporation and that individual; and thus a few people are permitted to deprive miners of work and make coal artificially dear.

A few weeks ago when I was traveling in Illinois a young fellow got into the car at one of the mining towns. Entering into conversation with him, he said he was going to another place to try to get work. He told me of the condition of the miners, that they could scarcely make a living, getting very small wages, and only working about half the time. I said to him: "There is plenty of coal in the ground; why don’t you employ yourselves in digging coal?" He replied: "We did get up a co-operative company, and we went to see the owner of the land to ask what he would take to let us sink a shaft and get out some coal. He wanted $7,500 a year. We could not raise that much." Tax land up to its full value, and how long can such dogs-in-the-manger afford to hold that coal land away from these men? And when people who want work can go and employ themselves, then there will be no million or no thousand unemployed people in all the United States.

The relation of employer and employed is a relation of convenience. It is not one imposed by the natural order. People are brought into the world with the power to employ themselves, and they can employ themselves wherever the natural opportunities for employment are not shut up from them.

People do not have a natural right to demand employment of another, but they have a natural right, an inalienable right, a right given by their Creator, to demand opportunity to employ themselves. And whenever that right is acknowledged, whenever the people who want to go to work can find natural opportunities to work upon, then there will be as much competition among employers who are anxious to get people to work for them, as there will be among people who are anxious to get work. ...  read the whole article

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)

The monopoly of rude materials, indispensably requisite for carrying on any branch of industry, is far more pernicious than the monopoly of manufactured commodities ready for consumption. The monopoly possessed by landholders is of the first sort, and affects the prime material of the most essential industry.

The monopoly possessed by land-holders enables them to deprive the peasants not only of the due reward of industry exercised on the soil, but also of that which they may have opportunity of exercising in any other way, and on any other subject; and hence arises the most obvious interest of the landholder, in promoting manufactures.... Read the entire essay

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

The economic policy of liberty has four rules:
  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

Michael Hudson: The Lies of the Land: How and why land gets undervalued
Turning land-value gains into capital gains
Hiding the free lunch
Two appraisal methods
How land gets a negative value!
Where did all the land value go?
A curious asymmetry
Site values as the economy's "credit sink"
Immortally aging buildings
Real estate industry's priorities
THE FREE LUNCH     Its cost to citizens     Its cost to the economy

Turning land-value gains into capital gains
YOU MAY THINK the largest category of assets in this countrly is industrial plant and machinery. In fact the US Federal Reserve Board's annual balance sheet shows real estate to be the economy's largest asset, two-thirds of America's wealth and more than 60 percent of that in land, depending on the assessment method.
Most capital gains are land-value gains. The big players do not want their profits in rent, which is taxed as ordinary income, but in capital gains, taxed at a lower rate. To benefit as much as possible from today's real estate bubble of fast rising land values they pledge a property's rent income to pay interest on the debt for as much property as they can buy with as little of their own money as possible. After paying off the mortgage lender they sell the property and get to keep the "capital gain".

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

The Social Justice of Site Value Rating
The Efficiency of Site Value Rating
How Valuations would be Made

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. ...

The extraction of minerals requires special treatment under site value rating, because this activity reduces the value of the heritage of future generations. For mineral deposits that can be expected to be fully depleted within a few years, the sensible thing to do is to auction the right to deplete the resource fully, subject to rules about restoration of the site when extraction is complete. Future generations should be compensated by investing the proceeds in such a way that all generations share equally in the value of the extracted resource.

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

Nic Tideman:  Global Economic Justice, followed by Creating Global Economic Justice

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.

Another troublesome issue with respect to natural opportunities is that people have different ideas about which creatures are properly treated simply as resources and which deserve a higher level of respect. When creatures are non-migratory, the right to control them can simply go with the land they occupy, and bids for the land will reflect values with respect to the creatures that occupy the land. However, with migratory creatures such as whales and songbirds, a different mechanism must be created to deal with desires to protect. If nations representing 80% of the world's population want to protect whales, then they should be able to protect 80% of whales. How such a rule would be implemented in practice is a problem that I leave for others to wrestle with.  ...

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

Nic Tideman: The Shape of a World Inspired by Henry George
How would the world look if its political institutions were shaped by the conception of social justice advanced by Henry George?

Nic Tideman:  Applications of Land Value Taxation to Problems of Environmental Protection, Congestion, Efficient Resource Use, Population, and Economic Growth
Applications to Resource Use
It is only a small step from charging people for street use and parks to charging them for renewable and exhaustible resources. If people who could fish as much as they wanted would deplete fish stocks excessively, then some form of control over fishing is beneficial. It is possible in theory to have efficient control through quotas, though it is difficult to set the quotas properly, and highly contentious to change them when conditions require a change. The recognition that the fish are everyone's common heritage would require that, if there are to be quotas, the quotas be auctioned, and that if not, then everyone who fishes be required to pay for fishing according to the loss in the value of fish stocks that results from fishing. If a fishing resource lies entirely within a single nation (as in a lake or river), then the recipient of the fees for fishing should be the polity that includes the resources (Though the value of the fishing resource would be included in the calculation of whether the nation was using more than its share of global natural opportunities.) When the fishing resource is in international waters, the fees should be shared equally among all nations in proportion to their populations. ...

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

Nic Tideman: The Constitutional Conflict Between Protecting Expectations and Moral Evolution
The Complementary Right of Equal Access to Natural Opportunities
One of the factors that makes the case for secession difficult is the problem of regional inequality in natural resources. When the people who called themselves Biafrans sought to secede from Nigeria in the 1960s, the morality of their claim was undermined by the fact that, if they had succeeded, they would have taken disproportionate oil resources from the rest of Nigerians. The limited support for the efforts of the Chechins to separate from Russia is explained in part by the understanding that, even though the Chechins have been abused by Russians for centuries and have never fully acceded to their incorporation into Russia, if Chechniya were allowed to separate from Russia, that would create a precedent that would make it difficult to oppose an effort by the people of the sparsely populated Yakutsia region of Eastern Siberia, rich in oil and diamonds, to insist that they too have a right to be a separate nation.

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

Karl Williams:  Social Justice In Australia: INTRODUCTORY KIT
We all need to be responsible (and financially accountable) for the consequences of our purchasing decisions. If the goods and services we buy have been produced by drawing on more of the Global Commons than others, then we'll be paying more eco-taxes. Some obvious examples of the activities whose costs we, the consumers, would have to bear are:
  • 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

Karl Williams:  Land Value Taxation: The Overlooked But Vital Eco-Tax
I. Historical overview
II. The problem of sprawl
III. Affordable and efficient public transport
IV. Agricultural benefits
V. Financial concerns
VI. Conclusion: A greater perspective
Appendix: "Natural Capitalism" -- A Case Study in Blindness to Land Value Taxation
Land value taxation (LVT) has often been omitted from the lists of natural resources for which eco-taxes are being advocated. LVT provides strong financial encouragement for land to be put to its optimal use and will eliminate speculation on land, as occupants must pay the full LVT whether the land is being fully utilised or not. This leads to better land management, a reduction in urban sprawl, less urban smothering of agricultural land, and less farmland being pushed into hinterland.

LVT makes the investment in resource-efficient infrastructure affordable because the resulting enhanced land values are "recycled" back into public coffers. One particular application of LVT to agricultural land provides much-needed financial incentives for organic farming. Unlike other ecotaxes which "sow the seeds of their own revenue demise," LVT actuallyincreases over time as our environment is enhanced and is thus a stable revenue base.

This paper argues that the LVT assessment process shifts and refines our focus from monitoring human activity onto our use and abuse of natural resources, as any responsible form of stewardship should. It suggests that only if land users are prepared to pay the full cost of utilising resources should private resource holding be permitted.
"The depletion of natural resources and the despoliation of nature is due to a single reason: the failure properly to measure the rental value of all of nature's resources, and to make the users pay the community for the benefits they receive." F. Harrison, "The Corruption of Economics" ...
Why has land value taxation (LVT) frequently been omitted from lists of significant eco-taxes yet, as this paper will argue, LVT can be enormously influential in its effect on economic and environmental practices?

One reason lies in the confusion arising from how the very word "land" is used imprecisely or in different circumstances such as
  • 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.
Even within the discipline of macroeconomics, there have been three major shifts in the way land has been regarded, almost in the manner of a magician's sleight of hand.  Scene 1 has the magician display a rabbit in a cage. Scene 2 has the rabbit disappear. Scene 3 has the magician pull the "same" rabbit out of a hat.
  • 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!" ...
The process of monitoring and assessing LVT itself leads to a more subtle, more environmentally-appreciative understanding of how best to prioritise conflicting demands on land. Should a tract of land best be used for green space for local residents, a light rail corridor or employment providing development? LVT assessment inherently weighs the pros and cons of a whole range of intangible costs and benefits for the wider community now and into the future, and eliminates corrupting "NIMBY" motives and rent-seeking behaviour that influence existing planning and development decisions. In response to the accusation that LVT assessment is little more than a best guess at quantifying values that are inherently unquantifiable, LVT advocates respond "Guilty as charged!" However, they then add, "Our good guesses are based on solid, objective methodology and are better than wild guesses, and even most wild guesses are better than the decisions made today." Currently, many natural resources are almost assigned a worthless value because, not entering the mainstream marketplace, they usually have no $ tags hanging off them - hence the existence of externalities whereby the environment is plundered as near worthless. So even wild guesses at the value of land and other natural resources are better than the present situation, in which the "no guess" decision effectively assigns natural and community resources a zero value.

One way or another, it is necessary to quantify and prioritise the real value (in a broad sense) of natural resources to better account for economic externalities. In the end, only if a prospective resource user is prepared to pay the full cost of utilising land and other natural resources will resource extraction or development go ahead. The intrinsic nature of the LVT assessment process considerably assists in such cost estimation.

LVT's foundation of detailed land use assessments will also help expose the true costs of subsidies for natural resources, which effectively amount to negative eco-taxes. Subsidies come in all shapes and sizes, often barely visible, and urgently need to be exposed and evaluated. Even some harmful subsidies which are labeled land taxes have nothing to do with genuine LVT. Banks gives the example of a Brazilian tax which was levied on unimproved land but was reduced by up to 90% on land used for crops or pasture. Forests were classified as unimproved land and were therefore taxed at the full rate, which induced settlers to chop down the trees to reduce their tax liability."  ...

The whole field of eco-taxes cannot be viewed in isolation of the fiscal imperatives to raise sufficient public finance, and here we see another of the virtues of LVT. If people were required to pay the rental value of most natural resources they used (as many, in fact, already do - to private owners) an adjustment in patterns of consumption would follow. The environmental goals would be achieved - at the cost of fiscal goals....  read the entire article

Mason Gaffney: Nonpoint Pollution: Tractable Solutions to Intractable Problems
The Special Challenge to Economic Thinking
The Search for Surrogates
Sources of Nonpoint Pollution
What Problems are Created?
What Problems are Unsolved by Excise Taxes on Surrogates?
The Case of Forestry
The Case of Urban Settlement
The Case of Agriculture
The Common Theme from Forest, City and Farm

Mason Gaffney: Property Tax: Biases and Reforms
Priority #1. Safeguarding the property tax
Priority #2: Enforce Good Laws
  • Reassess Land Frequently
  • Use the Building-Residual Method of Allocating Value
  • Federal Income Taxes
Priority #3. De-Balkanize Tax Enclaves
  • 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
Priority #4. What Tax to Fight First?
Priority #5: Make Landowners Pay Their Taxes

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.
Most of our domestic oil and gas is now produced from the seabed under this water wilderness. The property is public domain under federal BLM administration, but firms bid for leaseholds there under a system that the majors seem to manipulate to their advantage. Even so, there are some Federal revenues from both lease payments and corporate taxes. State and local revenues, however; are nil.

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

I. The issue
II. Sources of rent
III. Dissipation of rent before the fisc takes it: what and how?
A. Dissipation means waste and destruction or suppression.
B. How rent is dissipated.
C. Open access followed by tenure: rent-seeking institutions.
IV. Dissipating rent via public spending
A. Taxes and lease provisions need not twist incentives.
B. Public spending of tax proceeds may dissipate rent.
C. History of recognition of this spending effect
D. Successful compromises with the principle.
1. Barriers to immigration or sharing.
2. Selling voters on the benefits of immigration
E. Less successful compromises with the principle
1. Public works.
2. Subsidized public works in tandem with exclusionary zoning
3. Hocking the revenues
V. Solutions
A. Socialize rent at the national level.
B. Limit benefits to citizens per se (not to landowners per se).
C. A social dividend to citizens is the obvious route.
D. Return rents to local school districts in inverse proportion to local tax base per capita (the Colin Clark principle).
E. Promote James Madison and Neville Chamberlain to elder statesmen emeritus. Read the whole article

Mason Gaffney:  Sounding the Revenue Potential of Land: Fifteen Lost Elements
Variant kinds of natural resources, hitherto neglected or not classed with land, show great revenue potential.

      Some examples are
  • the radio spectrum;
  • telecom relay sites;
  • slots in the geosynchronous orbit;
  • fishing quotas;
  • quotas of all sorts on production and marketing;
  • pollution permits;
  • power drops;
  • street parking spaces;
  • driving on congested roads and through bottlenecks;
  • mooring boats; etc. ...
Prices of land and resources have risen sharply in recent years, but assessments always lag. For example, forty years ago Alfred Kahn and Paul Davidson found that most oil profits were rents. Since then prices have risen from under $10/bbl to about $45. Natural gas prices have doubled in the last 6 years. Read the whole article

Mason Gaffney: The Taxable Surplus of Land: Measuring, Guarding and Gathering It
1. Common Property in Land is Compatible with the Market Economy.
2. The Net Product of Land is the Taxable Surplus
A. To socialize the taxable surplus, land rent, effectively, you must define and identify it carefully, and structure your taxes to home in on it.
B. Taxable surplus is also what you can tax without driving land into the wrong use.
C. To tax rent we must be sure there is rent to tax, and we must adopt public policies to husband and maximize it, and avoid policies that lower and dissipate it.
i. Avoid "perverse subsidies."
ii. Avoid letting lessees of public land conceal their revenues.
iii. Avoid letting lessees or taxpayers pad their costs to understate their net revenues.
iv. Avoid dissipating rent by allowing open access to resources like fisheries,
v. Avoid trying to distribute rents to consumers by capping prices below the market.
D. Raising output by removing tax bias
E. Maximizing public revenue.
F. Sustaining the tax base
3. Taxing the Net Product of Land Permits Untaxing Labor
4. Taxing the Net Product of Land Permits Untaxing Capital
5. Taxing the Net Product of Land Provides Ample Public Revenues: a Master Solution to Many Problems
A. Public revenues will support the ruble.
B. Your public credit will, of course, recover to AAA rating when lenders see that there is a strong flow of revenue to pay public debts.
C. Never again need you bend to any "advice" or commands from alien lenders, nor endure patronizing, humiliating homilies from alien bankers, nor beg any foreign power for aid.
D. If you again feel the need (as I hope you will not) to rebuild your military, you will of course require strong revenues.
E. Strong national revenues are required to unite Russia, and keep it one nation.

1. Common Property in Land is Compatible with the Market Economy.
You can enjoy the benefits of a market economy without sacrificing your common rights to the land of Russia. There is no need to make a hard choice between the two. One of the great fallacies that western economists and bankers are foisting on you is that you have to give up one to enjoy the other. These counselors work through lending and granting agencies that seduce you with loans and grants to learn and accept their ideology, which they variously call Neo-Classical Economics, or "monetarism," or "liberalization." It is glitter to distract you and pave the way for aliens to acquire and control your resources. 

To keep land common while shifting to a market economy, you simply use the tax system. Taxation is the form that common property takes in a monetary, market-oriented economy. To tax is to socialize. It's then just a simple question of what you will socialize through taxation, and how; but in the answers lie success or failure.

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.

The very people who gave us the term laissez-faire -- the slogan at the core of a free market economy -- made communizing land rents a central part of their program. These were the French economistes of the 18th Century, sometimes called "Physiocrats," who were the tutors of Adam Smith, and who inspired land reforms throughout Europe. The best-known of them were François Quesnay and A.R. Jacques Turgot, who championed land taxation. They accurately called it the "co-proprietorship of land by the state."
Since their time we have learned to measure land values, and we have broadened the meaning of "land" to comprise all natural resources. Agrarians will be relieved, and may be surprised, that farmland ranks well down the list in terms of total market value. Thus, a land tax is not primarily a tax on farms; only the very best soils in the best locations yield much taxable surplus.  ...  

Another natural resource (hence part of "land"), whose nature and value the mass of people are only slowly realizing, is the radio spectrum. In this age of communication its value is vaulting skywards even faster than the rockets launching the satellites that direct and relay signals through the spectrum. Each satellite requires a spectrum assignment, or it is nothing but space junk. One minor American entrepreneur, Craig McCaw, collected a bundle of spectrum rights for cell phones, and a few years ago sold them to AT&T for $12 billions. Then Mr. McCaw went partners with Bill Gates, perhaps the richest American, in a firm called Teledesic, to launch hundreds of satellites and amass radio spectrum rights around the entire world, including your part of the world, in the hope of dominating worldwide communications. Radio spectrum is a natural resource, and it belongs to the government, even in the capitalistic U.S.A. When Teledesic comes calling, under the auspices of our Vice President Al Gore, don't sell anything cheap! In fact, don't sell anything at all, but lease it for a limited time, so you may gain from future rises in value. And don't stint on the professional help you should hire to protect your interests: these lease contracts are complex, and are worth Billions if you play your cards right.
Hydrocarbons are a third set of valuable resources. The values involved are gigantic. The recent merger of the Exxon and Mobil oil firms was valued at $260 billions, several times greater than the Russian annual budget. Why should private parties make off with all this natural value? Several nations, including some of your neighbors, support themselves entirely from these revenues. Norway pays for a lush welfare state from its oil revenues. Its reserves are so valuable that the mere change in their appraised value in several recent years has exceeded the entire GDP of Norway. And your oil reserves? If they match your production, they may be the largest in the world.
World oil prices are down this year, as you know, but there is another side to this. The devaluation of the ruble has raised the value of your oil in Russian terms, because the oil earns "hard" currency abroad. Your government has recognized this by imposing a special tax on the resulting "windfall," but we will see below (Sections 2,C and 2,D) that there is a much more effective way to tax resource rents.
The American state of Alaska holds down its other taxes by socializing part of its oil revenues, which otherwise would inure to a handful of the major stockholders of two corporations (ARCO and BP). Alaska not only holds down other taxes, it pays each resident - man, woman, and child - a social dividend of over $1,000 per year. Go thou and do likewise. Your expert, Dmitri Lvov from the Russian Academy of Sciences, a speaker at this meeting, has written that you could cover most of your national budget from your enormous production of oil and gas.  
Many third-world nations like Venezuela or Nigeria have fabulous mineral oil that they fail to exploit for their own people, letting sophisticated or ruthless foreign corporations, in tandem with weak or corrupt insiders, reap the gains. The question for Russia is whether to follow their bad example and become a poor resource-colony of the west, or whether to assert your own sovereignty over your own resources for the benefit of your own people. You need look no further than Norway for a model.
Other subsoil resources have great value, too. Many nations, even backward ones, gain large parts of their national revenue from "hardrock" minerals. Bolivia, Gabon, Jamaica, Liberia, New Caledonia, Papua-New Guinea, Zaire, and Zambia have raised over 25% of their budgets this way in recent years; Chile, Thailand and Malaysia have taken lesser, but substantial amounts. Saskatchewan, a Canadian Province, raises large revenues from potash and uranium; Minnesota, an American state, from iron ore; and so on. Some other nations fail to raise much revenue from fabulous minerals from which others profit, like S. Africa with its gold and diamonds, West Virginia with its coal, or Missouri with its lead mines and reserves. Russia is a treasure-house of untapped mineral wealth that you can and should tax to alleviate the condition of the Russian people.
In arid lands, water is life, and the most valuable natural resource is water. For example, in southern California we need water so much we import it from the Feather River 600 miles north of us, pump it uphill through the long San Joaquin Valley, then over the high Tehachapi Mountain range, and tunnel it through the San Bernardino Mountain Range, all at great cost. When it gets here, it supplements and competes with local water that nature provides freely in the Santa Ana, San Jacinto, and other rivers. That local water then has a value equal to the high cost of importing the remote northern water. That value in the local waters is a taxable surplus. However, we have not learned to take that surplus value into the local treasuries; we give the water away, and worse, we actually subsidize people to withdraw water by helping them pay for dams, canals, and pipelines so they can waste water without paying for it. Thus we turn a public asset into a public liability - an extreme form of folly that is called "dissipating rent." In this age of growing water scarcities it is past time we learned to husband and nurture rent, in order to socialize it by taxing the surplus. So should you, in comparable circumstances.  
Another value from water is to generate power. Again, California witlessly fails to socialize this value, but Canada, our northern neighbor, has shown the way. British Columbia, Newfoundland (the Labrador part), Quebec, and other provinces raise large revenues from charges on the use of falling water. Russia, with some of the world's largest hydro-electric projects, can do the same, or better.

Fisheries are another source of value. In the past most nations have let this rent be "dissipated" by overfishing. In recent years the U.S. and Canada have in effect "privatized" fishing in their offshore waters by limiting the number of licenses and boats. This limitation was needed and desirable, overall. It created large rents, where previously there were little or none, by preventing overfishing and the great waste of duplicate, triplicate, and even quintuplicate fishing effort. That is a good example of husbanding and guarding rent, which is necessary before you can collect it. It was not necessary or desirable, however, to give away this net benefit to private parties.
The government did not sell these licenses, but simply gave them away to owners of existing boats, and others with political influence. Each license now sells for something like a million dollars, creating a new class of instant millionaires and "parlor fishermen." This giveaway to the few, and takeaway from the many, created an instant class society where before there were equal access and equal opportunities.
These privileges are worth so much that there are now documented cases off Alaska where the parlor fisherman takes 70% of the total catch. The captain, the crew, and the owner of the boat, who do the work and bear the dangers and discomforts and financial risks of fishing, must get by with the other 30%. Parlor fishermen are simply leeches; these rents should be socialized, relieving the workers from taxes.

Avoid "perverse subsidies."
These are subsidies that encourage harmful things like
  • polluting air and water,
  • wasting water,
  • cutting timber whose value is less than the cost of logging, or
  • populating remote regions whose costs exceed the benefits derived.
Cape Breton Island, the northern tip of Nova Scotia, contains the most polluted area in Canada thanks to years of subsidies to sustain its uneconomic, obsolescent coal and steel industries that employ just a few people by fouling one of the most scenic jewels in North America.
We have mentioned how we actually subsidize people to withdraw scarce water from our overdrawn rivers in the arid U.S.A. The so-called water "shortage" in the lower Colorado River is entirely an artifact of such misguided policies: every major agency drawing on the Colorado is actually subsidized to do so, when they should be paying for the privilege. If they paid, they would stop wasting water, and would enrich the Treasury, which could then abate taxes on work, trade, and saving.
The U.S. Forest Service has turned a great national asset, our national forestlands, into a drain on the Treasury by subsidizing forest roads in subeconomic areas. It makes money selling good timber in good areas, but then spends $10 on roads into subeconomic areas to get $1 in revenues from sale of timber to private parties, destroying scenic values and watershed protection.
Perverse subsidies like those are unspeakably foolish and wasteful. They "dissipate rent" so there is none left to tax.

Avoid letting lessees of public land conceal their revenues
. Many minerals and hydrocarbons on public lands are leased by private firms, subject either to "royalties" or "severance taxes" based on the value of output. Many of these private firms are "vertically integrated," meaning they own the downstream firms, often in other countries, to which they sell. They grow skilled at shifting profits away from where taxes are higher to where they are lower, by rigging the internal transfer prices. That is, they sell to themselves at artificially low prices, so your share of their revenues disappears. What they call "world market" prices are really their own internal prices, adjusted to help them steal from you. You must guard against that.

Avoid trying to distribute rents to consumers by capping prices below the market. This, of course, is the history of energy prices in Russia; it has also been used, in milder forms, in Canada and the U.S. What is wrong with it? In a word, it fosters wasteful use, and aborts a lot of economical production. In addition, it leaves a lot of rent in private hands, untaxed.
It is easy to understand the dire need for guaranteed fuel in a northern continental winter climate. You mustn't let people freeze, and they will bless and support you for keeping them warm. As society gets better organized, though, you can gain by guaranteeing the poor a minimum cash income with which to buy fuel and other needs at market prices, rather than lavishing them with free fuel that you might be exporting to meet other urgent needs. You can provide the cash income from the rents created when fuel prices rise, and have a lot more to spare from the resulting net gains, which I next explain. ...

Note, finally, that a cap on the price of G [gross revenues], such as discussed above, has the same effects as a tax based on G.  
Read the entire article

Nic Tideman:  The Ethics of Coercion in Public Finance

Jeff Smith: How Sharing Earth Brought Peace
Since forever, humans have claimed and counter-claimed every square inch of this planet. Occasionally, these disputes have ended peacefully. What has worked in other times and places might work again in the Mideast. Delivering a double dividend, what settled land disputes also developed moribund economies and revived developed ones. Among others, New York, now aiming to rebuild, has used this policy before. Because it's growing popular among environmentalists, greens could lead the US to geonomics.

...  These cases involved different classes, not different cultures. Yet with a new twist the rent rebate that worked within society may work between societies. The Koran urges landlords to not gouge tenants but to consider land a trust. In Israel, admonished to not own land forever, since the land is Mine (Leviticus), the National Trust leases all the land to the occupants. These strictures could lead to geonomics.

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.

While sharing rent may soothe hurt feelings, collecting it stimulates development.  ...

Using geonomics, people have turned some of the poorest lands into the richest economies. Hong Kong is a barren rock owned by the public. The city collects enough site-rent to keep taxes on effort way down.  ...

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.

Early last century, Gifford Pinchot, first head of the US Forest Service, said: "The earth belongs of right to all its people and not to a minority, insignificant in numbers but tremendous in wealth and power. The people shall get their fair share of the benefit which comes from the development of the country which belongs to us all with equal opportunity for all and special privileges for none." A man in a Republican administration could say that then. We need to hear it again now.    Read the whole article

Jeff Smith: Subsidies at Their Worst: Privileges
Money is the mother's milk of politics. Yet the milk invested by lobbyists and those they represent is a drop in the bucket compared to the flow they get back from the public tit, thanks to the milkmaid state. Politicians grant well-connected big businesses:
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

Abstract: Citizens of Alaska have been receiving individual dividend checks from an oil rent trust fund since 1982. Norway¹s citizens receive substantial social services and invest oil rents in a permanent fund for the future. Nigeria has yet to establish a similar fund for its oil revenue stream. This paper explores the oil rent institutions of Alaska, Norway and Nigeria with a focus on these questions:
  • Are citizen dividends from oil rent funds currently or potentially a source of substantial basic income?
  • Are oil rent funds the best source for citizen dividends or should CDs be based on other types of resource rents?
The paper recommends full use of information and communication technologies for transparency in extractive resource industries, that resource rent from non-renewable resources should be invested in socially and environmentally responsible ways and primarily in the needed transition to renewable energy based economies, and that oil and other non-renewable resource rent funds should transition towards capturing substantial resource rents from surface land site values (ground rent) and other permanent and sustainable sources of rent for possible distribution of citizen dividends.

Nic Tideman: Revenue Sharing under Land Value Taxation
The proposition that the rental value of land should be collected by governments and used for public purposes has a powerful moral rationale: Since no one made the land, no one can properly claim to own it. There is a simple efficiency rationale as well: Social collection of the rental value of land does not interfere with incentives to be productive. If governments do not collect the rental value of land, then they will levy taxes that discourage productive activity.

When "government" is not a monolith but a collection of entities with responsibilities in different geographic and functional areas, these rationales for land value taxation leave unanswered the question of how the rental value of land should be allocated among governments. That question is addressed in this paper.

Nic Tideman: The Structure of an Inquiry into the Attractiveness of A Social Order Inspired by the Ideas of Henry George
 I. Ethical Principles
A. People own themselves and therefore own what they produce.
B. People have obligations to share equally the opportunities that are provided by nature.
C. People are free to interact with other competent adults on whatever terms are mutually agreed.
D. People have obligations to pay the costs that their intrusive behaviors impose on others.
II. Ethical Questions
A. What is the relationship between justice (as embodied in the ethical principles) and community (or peace or harmony)?
B. How are the weak to be provided for?
C. How should natural opportunities be shared?
D. Who should be included in the group among whom rent should be shared equally?
E. Is there an obligation to compensate those whose presently recognized titles to land and other exclusive natural opportunities will lose value when rent is shared equally?
F. Can a person who is occupying a per capita share of land reasonably ask to be left undisturbed indefinitely on that land?
G. What is the moral status of "intellectual property?"
H. What standards of environmental respect can people reasonably require of others?
I. What forms of land use control are consistent with the philosophy of Henry George?
III. Efficiency Questions
A. Would public collection of the rent of land provide enough revenue for an appropriate public sector?
B. How much revenue could public collection of rent raise?
C. Is it possible to assess land with sufficient accuracy?
D. How much growth can a community expect if it shifts taxes from improvements to land?
E. To what extent does the benefit that one community receives from shifting taxes from buildings to land come at the expense of other communities?
F. What is the impact of land taxes on land speculation?
G. How, if at all, does the impact of shifting the source of public revenue to land change if it is a whole nation rather than just a community that makes the shift?
H. Is there a danger that the application of Henry George's ideas would lead to a world of over-development?
I. How would natural resources be managed appropriately if they were regarded as the common heritage of humanity?    Read the whole article

Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
John Muir is right. "Tug on any one thing and find it connected to everything else in the universe." Tug on the property tax and find it connected to urban slums, farmland loss, political favoritism, and unearned equity with disrupted neighborhood tenure. Echoing Thoreau, the more familiar reforms have failed to address this many-headed hydra at its root. To think that the root could be chopped by a mere shift in the property tax base -- from buildings to land -- must seem like the epitome of unfounded faith. Yet the evidence shows that state and local tax activists do have a powerful, if subtle, tool at their disposal. The "stick" spurring efficient use of land is a higher tax rate upon land, up to even the site's full annual value. The "carrot" rewarding efficient use of land is a lower or zero tax rate upon improvements. ...

An obvious loser is a resource extractor such as an Oregon timber harvester (Weyerhauser is the biggest landowner in the state). All the rent that society now allows them to retain, they'd lose. Perhaps there is a silver lining to corporate mergers and diversification and interlocking stock holding; the huge corporations holding resources would have other profitable lines to turn to.

An obvious winner, balancing the losses of the extractor, are the service-providing companies located off the beaten path, like a neighborhood cafe. After centuries of just getting by, smaller enterprises would gain by competing on a level playing field. What they'd gain (that is, retain) is the fruit of their labor. Conversely, what big business would lose is the commonwealth generated by all.

A big problem needs a big solution which in turn needs a matching shift of our prevailing paradigm. Geonomics -- advocating that we share the social value of sites and natural resources and untax earnings -- does just that. Read the whole article

Jeff Smith: Sharing Natural Rents to Sustain Human Society
To get rich, or more likely to stay rich, some of us can develop land, especially sprawling shopping centers, and extract resources, especially oil. While sprawl and oil depletion are not necessary, they are more profitable than a car-free functionally integrated city. Under the current rules of doing business, waste returns more than efficiency. We let a few privatize rent -- ground rent and resource rent -- although rent is a social surplus. As if rent were not profit enough, winners of rent have also won further state favors -- tax breaks, liability limits, subsidies, and a host of others designed to impel growth (20 major ones follow herein).

If we are to sustain our selves, our civilization, and our eco-system, we must make some hard choices about property. What we decide to do with rent, whether we let it reward our exploiting or our attaining eco-librium, matters. Imagine society waking up to the public nature of rent. Then it would collect and share its surplus that manifests as the market value of sites, resources, the spectrum, and government-granted privileges. Then we could forego taxing labor and capital. On such a level playing field, this freed market would favor efficiency -- the compact city -- not waste -- the mall and automobile. ...

Drawing their cue from the public, governments tolerate "rentention", the private retention of publicly-generated land values. Lacking this Rent, states turn to taxes. But to grow the economy, all governments -- left, right, or undecided -- hustle to stimulate development; they cut taxes and slop subsidies. Going beyond the call of duty, the state excuses producers' their routine pollution and limit liability, thereby cutting the cost of insurance. Companies that don't impose on nature, worker, or customer are not benefited at all but lose a competitive advantage. On this tilted playing field, one with the lumps of subsidies and the tilts of taxes, technologies lean and clean have a hard time competing as suppliers of materials, homes, food, rides, and energy....

1. Materials - Extraction vs. Recycling

  • Rent: The light levy on the value of resources in the raw, government vitiates that with depletion allowances. Plus, government accepts under-market bids for leases of publicly owned pastures and deposits. Getting to keep Rent makes extracting virgin materials extra remunerative; recycling used materials, wherein Rent does not even exist, has no such gratis profit.
  • Taxes: The tax on sales complicates business. One must do extra bookkeeping or hire an accountant; an easier burden upon entrenched firms than upon startups, such as a store to sell ap-tech (the products that consume fewer resources) so every home can be an eco-home. Being sneakily regressive, the tax nibbles away at would-be customers' discretionary income.
  • License: The price of raw materials does not include all the costs from the loss of habitat, other species, sources of new medicines, the downwind and downstream costs from tailings, etc, disadvantaging recyclers.
  • Subsidy: Government logging roads and way under-market leases favor loggers and miners, not selective harvesters and recyclers.
Energy - Fossil Fuels vs. Renewables
  • Rent. By taxing, rather than living off Rent, governments can afford to lose land to a dam or its value to a nuclear power plant. Clean energy, on the other hand, would tred lightly on land values, the proper source of public funds.
  • Taxes. The tax on property makes improvements to buildings more expensive year after year. Some states do exempt certain ap-tech improvements, which amounts to a few dollars, but they also grant tax-free bonds to utilities, which adds up to millions of dollars. States make up its exemptions by raising tax rates. An ecologizer may pay no greater property tax for solar panels, but like everyone else will pay more to higher taxes on sales and income.
  • License. The price of AC electricity does not include all the costs from inundated valleys, nuclear radiation, acid rain, etc., disadvantaging safe power producers.
  • Subsidy. The federal government pays a billion dollars a year to oil companies to pump oil back into the ground as a "strategic reserve" rather than just leave it under Louisiana and Texas. Cost-plus contracts benefit power utilities, not independent solar converters. Rents, tax breaks, license, and subsidies total trillions each year in the US. Destructive subsidies total $1.5 trillion each year worldwide (The Natural Wealth of Nations: Harnessing the Market for the Environment, 1998, by David Roodman in The Worldwatch Environmental Alert Series; he also suggests capturing the windfall rent-jumps in settled areas.) Thus virgin extraction, sprawl, mechani-chemical agri-business, gasoline car manufacture, and fossil fuels look like bargains, making recycling, eco-homes, organic gardening, mass transit, and solar power look expensive. Low prices win over customers who string along investors. As long as the economy is rigged against the eco-system, guess which one is going to continue to go downhill?...  Read the whole article

Dave Wetzel: Justice or Injustice: The Locational Benefit Levy
We all have our own personal interpretation of how “justice” can be achieved.

Often “justice” is interpreted in a very narrow legal sense and only in reference to the judicial system, which has been designed to protect the status quo. ...

Of course, all citizens (and subjects in the UK) -- need to know exactly what are the legal boundaries within which society operates.

But, supposing those original rules are unfair and unjust. Then the legal framework, being used to perpetuate an injustice -- does not make that injustice moral and proper even if within the rules of jurisprudence it is “legal.”

Obvious examples of this dislocation between immoral laws and natural justice is
  • South Africa's former policy of apartheid;
  • the USA's former segregated schools and buses;
  • discrimination based on race, religion, disability or sex;
  • slavery;
  • the oppression of women;
  • Victorian Britain's use of child labour and colonialism.
All these policies were “lawful” according to the legal framework of their day but that veneer of legality did not make these policies righteous and just.

Any society built on a basis of injustice will be burdened down with its own predisposition towards self-destruction. Even the most suppressed people will one-day, demand justice, rise up and overthrow their oppressors.

Human survival demands justice. Wherever slavery or dictatorship has been installed -- eventually, justice has triumphed and a more democratic and fairer system has replaced it. It is safe to predict that wherever slavery or dictatorship exists today -- it will be superseded by a fairer and more just system.

Similarly, let's consider our distribution of natural resources.

By definition, natural resources are not made by human effort. Our planet offers every inhabitant a bounty -- an amazing treasure chest of wealth that can supply our needs for food, shelter and every aspect for our survival.

Surely, “justice” demands that this natural wealth should be equally available to all and that nobody should starve, be homeless or suffer poverty simply because they are excluded from tapping in to this enormous wealth that nature has provided. ...

If our whole economy, with the private possession of land and other natural resources, is built upon an injustice -- then can any of us really be surprised that we continue to live on a planet where wars predominate, intolerance is common, crime is rife and where poverty and starvation is the norm for a huge percentage of earth's population.

Is this inherited system really the best we can do?

There must be a method for fairly utilising the earth's natural resources.

Referring to the rebuilding of Iraq in his recent speech to the American Congress, Tony Blair stated “We promised Iraq democratic Government. We will deliver it. We promised them the chance to use their oil wealth to build prosperity for all their citizens, not a corrupt elite. We will do so”.

Thus, Tony Blair recognises the difference between political justice in the form of a democratic Government and economic justice in the form of sharing natural resources.

We have not heard any dissenting voice from this promise to share Iraq's natural oil wealth for all the people of Iraq to enjoy the benefits. But if it is so obviously right and proper for the Iraqi people to share their natural wealth – why is it not the practice to do the same in all nations?

No landowner can create land values. If this were the case, then an entrepreurial landowner in the Scottish Highlands would be able to create more value than an indolent landowner in the City of London.

No, land values arise because of natural advantages (eg fertility for agricultural land or approximity to ports or harbours for commercial sites) or because of the efforts of the whole community -- past and present investment by both the public and private sectors, and the activities of individuals all give rise to land values. Why do we not advocate the sharing of these land values, which are as much a gift of nature and probably in most western economies are worth much more than Iraqi oil?

One solution would be to introduce a Location Benefit Levy, where each site is valued, based on its optimum permitted use and a levy is applied – a similar method to Britain's commercial rates on buildings but based soley on the land value and ignoring the condition of the building.

The outcome of this policy would be to give all citizens a share in the natural wealth of the nation. ...

It is an injustice that landowners can speculate on empty sites, denying their use for jobs or homes.

It is an injustice that a factory owner can sack all their workers, smash the roof of their building to let in the rain and be rewarded with elimination of their rates bill.

It is an injustice that the poorest residents pay the highest share of their incomes in Council Tax.

It is an injustice that people are denied their share of the earth's resources.

The Location Benefit Levy is a simple way to start addressing the world's last great injustice.   Read the whole article

Bill Batt: Water and Privatization
... But only recently, with the advent of data availability and increased computer power, is it possible to demonstrate that Henry George was right: i.e. that taxing what he called "land" - really meaning all natural capital and resources rather than labor or human capital - constitutes the best possible tax design we could have.

If these natural resources are a "commons" worthy of being preserved as the birthright of all humanity, their use can be rented at rates sufficient to cover the costs of not only the provision of those services but for all public needs. All taxes are ultimately shifted through the economy to rest on what classical economists call land rent in any case, and levying the taxes directly on rent improves efficiency by eliminating "deadweight loss." Moreover, taxing or collecting what classical economists call economic rent bears all the hallmarks of a perfect tax -- fairness, simplicity, stability, administrability, neutrality, and efficiency.  ... read the whole article

Bill Batt: The Compatibility of Georgist Economics and Ecological Economics
A Georgist agenda also calls for the regular auctioning of mineral extraction rights, fishing rights, and other access to natural resources in a way that their rent is returned fully and fairly to the public weal. Competitively assessed royalties especially on the extraction of mineral capital could yield billions of dollars. Alanna Hartzok has offered compelling arguments why rent from locational sites should be reserved to finance the services of local governments, rent from natural resources identifiable within a nation’s boundaries should be captured to finance national governments, and rents of those resources beyond national borders should be used to finance world governments. ...

A central premise of ecological economics is a recognition that market prices do not reflect the value of commodities, particularly the resources and services of nature. Oscar Wilde first noted that a cynic was “a man who knows the price of everything and the value of nothing.” 83 But it is clearly not only cynics who hold such ideas today. The growing “commodification” of all things — the consequence of a gradual and inexorable privatization of the whole world and the ever expanding attempts to include everything which humans touch in a market economy, where objects and services which lack a market price are thus treated as free goods — means either that ultimately everything must be priced or else that other means must be found by which to identify value. The subfield of environmental economics is based on just this view — that everything must be priced. To be sure, we cannot live without the natural environment, yet treatment of natural goods and services as free under the neoclassical economics framework leads inevitably to their total consumption and destruction.84 The looming exhaustion of natural resources compels us to recognize that market prices have limited worth in signaling true value, whether those resources be the biota of the world upon which human beings also depend for their existence or mineral wealth in the form of fossil fuel energy which drives modern economies. If we do try in any way to price the goods and services provided by the environment, they are so far beyond counting that it becomes self-evident that our economic approach must change.85 ...

The heart of ecological economics is ecological carrying capacity and the premise of economic sustainability. Although this term has to some extent become a mantra and widely abused, its most popular definition remains that first enunciated by the 1987 Brundtland Commission Report: "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."92 Principle 3 of the 1992 UNCED Rio Declaration: "The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations."93 At various times scholars have sought to improve upon this definition; one offered by adherents of the ecological economics school reads as follows:
1. For renewable resources (fish, trees, etc.), the rate of harvest should not exceed the rate of regeneration.
2. The rate at which we allow economic activity to generate wastes that must be passed into the environment should not be allowed to exceed the environment’s ability to absorb them.
3. The depletion of nonrenewable resources (oil, coal, etc.) should not be offset by investment in and development of renewable substitutes for them.94

Implicit in all this is the argument that manufactured capital (i.e., that created by human beings), and natural capital (those resources provided by nature) are not substitutable, as well as the belief that current practices portend irreversible consequences for the earth’s environmental stability. Nor can the various components of natural capital alone be regarded as interchangeable goods. Natural gas might in some instances be a substitute energy source for coal, and chicken an alternative protein source to beef. But fundamentally each element is to a significant extent unique in nature — fulfilling its own special niche in what ecologists call lexicographic uniqueness.

Conventional thinkers argue that these two classes of natural and man-made capital are mostly substitutable, in what ecological economists have called “weak sustainability.” But the contrary, “strong sustainability,” is at the heart of ecological economics, going even further than many authors of the Brundtland Commission Report would have accepted by recognizing the lexicographic character and place of each and every element of the biota.95 There is no definitional consensus, however. The Clinton-Gore administration, for example, established a President’s Council on Sustainable Development on June 15, 1993, and adopted the Brundtland Commission’s language. But it carefully avoided any detailed definition of what was meant by sustainability.96 Subsequent executive orders and press releases have been equally vague as to what definition of sustainability is being used,97 and to this day the matter remains unsettled. ... read the whole article

Mason Gaffney: Red-Light Taxes and Green-Light Taxes
What is waste?

The question has been faced before. Gifford Pinchot was a leader with a magic name in the U.S.A. during the early conservation era. He answered well for his times and, I submit, for ours too.

"... natural resources must be developed and preserved for the benefit of the many and not merely for the profit of a few. ... the people shall get their fair share of the benefit which comes from the development of the country which belongs to us all."

He did not say just "preserved;" he said "developed and preserved." Today I suspect he would say "REdevelop," to get away from the negative baggage carried by "develop;" I certainly will.

Pinchot went on:

"The first principle of conservation is development, the use of the natural resources now existing ... for the benefit of the people who live here now. There may be just as much waste in neglecting the development and use of certain natural resources as there is in their destruction by waste. ... Conservation, then, stands emphatically for the use of substitutes (he mentions water for power and transportation) for all the exhaustible natural resources, ... The development of our natural resources and the fullest use of them for the present generation is the first duty of this generation. ...

In the second place conservation stands for the prevention of waste. ... "

So Pinchot was against waste, like everyone, but he gives it a new turn (or, rather, an old turn that many have forgotten). To him, WASTE MEANS FAILING TO USE RENEWABLE RESOURCES. Urban land makes a good example. Urban land, economically speaking, is a lot like falling water, strange as it seems. Economists (who are not all bad) classify urban land as a "flow resource." They liken it to flowing water because its services perish with time, whether used or not - and we are trapped in the one-way flow of time. It is an even better example of a "flow resource" than water itself, because unused water may have other uses downstream. Even in wasting out through California's Golden Gate, fresh water repels salinity. The unreaped harvests of idle land, however, flow down the river and out the Golden Gate of time like lost loves, and magic moments that passed us by. The waste of NOT using flow resources is just as real as the waste of misusing exhaustible resources. Indeed, when we tote up the transportation costs of disintegrated urban settlement patterns, it is clear that failure to use good urban land is a major cause of wasting energy. ... read the whole article

Mason Gaffney: Full Employment, Growth And Progress On A Small Planet: Relieving Poverty While Healing The Earth
6. Energy-wasting biases. Identifying and eliminating tax biases to both extracting and consuming energy, and other primary products. Whether on balance these biases raise or lower prices to consumers is not known, but neither is it relevant here: the point is that the combination raises the total volume of extracting the primary products, and of course of consequent combustion and pollution.

The writer has identified many of these biases elsewhere (Gaffney, 1978). Suffice it here to observe the following. It is not just that a commodity like gasoline is subsidized; it is worse than that. Within the stream of production, subsidies go to those activities involved in extraction, while taxes fall on activities downstream that conserve and economize on the primary product (Gaffney, 1982).... read the whole article

Mason Gaffney: Oil and Gas Leasing: a Study in Pseudo-Socialism
I pose three questions.
I) What is Socialism?
II) What is pseudo-Socialism?
III) How should we administer public lands bearing oil and gas?... Read the whole article


Maurie Fabrikant: An Open Letter to Wayne Swan
The "Great Australian Dream" now - as in preceding years - has been to own your own home. From their earliest years of adulthood, most citizens have attempted to purchase "a roof over their head." It used to be - no more than two human generations ago - "a three-bedroom weatherboard - or brick veneer, if you could afford it! - on a quarter-acre block in the suburbs." Most citizens - then - succeeded in realising that dream; at least they started repaying a loan that was large compared with their earnings. Nowadays, it's quite impossible for most. Why? Simply because land-price has escalated out of the reach of most. Allow me to give you a specific instance:- ...

As you can very clearly see, it now costs couples - or singles - a great deal more to own a residence. Naturally, if they don't own their own residence, they must
  • pay rent to somebody else ... or
  • live in a caravan park or
  • share a home with relatives or friends or
  • have no place to call "home". 
None of these alternatives lead to a high quality lifestyle and undoubtedly are potent factors in separation and divorce and reliance on drug abuse which, itself, leads to anti-social - even criminal - behaviour. We also know to our great regret that these aberrations are becoming increasingly prevalent. So is there a solution? And if so, what is it?

In my opinion, there certainly is a solution ... but, seemingly, very few want to know it. Judging by your article, I think you do. Here it is: ...
Modern conventional wisdom is that increasing land price signifies a healthy economy. Exactly the reverse is true! Increasing land price demonstrates that much money is being invested in real estate and that necessarily means that less money is being invested in productive ventures. Increasing land price causes increasing rents ... because the land owner must derive sufficient income to pay the interest charged on the loan needed to buy the land and its improvements. This makes it increasingly difficult for businesses to trade profitably ... especially when there is a plethora of complicated taxes that cause extremely high compliance costs. It's no wonder that more and more goods are now imported as local manufacturers choose to close their operations. In many places in Australia, land lies relatively idle. For example, in Melbourne's CBD, several large blocks have been idle for years and in the suburbs, shops remain empty for months, even years. Yet government-released figures on unemployment - the reality may well be much worse! - admit that unemployment exceeds 6%. The old adage, "Idle lands cause idle hands" is clearly demonstrated in Australia ... and elsewhere.
The only possible "winners" in this "game" are those who presently own land; the more they own, the more they have the potential to "win". Land owners enjoy enormous increase in the price of land they own simply because they were able to purchase it when its price was comparatively low. They do not - in their role as owners - contribute in any way to the prosperity of the nation. Indeed, because they grow wealthier without producing, they are, in fact, parasites! That sounds incredible but it is true nonetheless. How so? Simply because those owners receive part of the wealth earned by all citizens; at least some of that wealth is used to push up land prices but only owners enjoy those increased prices. Tenants certainly do not! All who labour - and this includes land owners who perform labour! - are thereby effectively robbed of some of their earnings. (Please note that I do not blame landowners personally; most would - I'm certain - be horrified to think that they are parasites. The fault lies in the parliamentary enactments that permit such a situation to prevail.)

Difficult as the situation is now, it will be worse still in another two human generations' time. How so? Because the same forces that have been exerted in the past continue unabated. In fact, these forces appear to be intensifying! Taxation is continuing to escalate as pressure groups clamour ever louder for financial assistance. The average rate at which personal income tax is levied is increasing - even though the maximum rate levied is falling - and sales taxes and the like are being applied to a widening range of goods and services. The wealthy continue to derive benefit from the tax-minimisation experts they employ - because they save more tax than they pay to those experts - leaving the relatively poorly-paid employees to carry most of the burden. Unless, of course, steps are taken to change these tendencies, Australia will become an increasingly unpleasant country in which to live. That's definitely not the future I want for my 3 children and 7 grandchildren. And I'm sure you don't, either!

The solution to this conundrum is, perhaps amazingly, incredibly simple; namely, require all owners of land - in fact, all natural resources, including intangibles such as broadcast bands, to pay to all Australians, via the government, an annual rental in exchange for exclusive ownership rights to those natural resources. What could be fairer? If a citizen has exclusive ownership rights to a natural resource, that obviously means that all others have no rights to it whatsoever. Therefore, that citizen must pay compensation - in the form of a periodic rent - to all others. Now that's a perfect manifestation of "user pays". How big is this periodic rent? That's simply answered, too. It's what the citizens, generally, think that natural resource is worth! And that's easily - and accurately - determined by valuers, individuals who have great experience because they simply note the prices at which similar natural resources in the vicinity - both in space and in time - are sold then use those prices to predict that of a similar resource.

This would constitute real tax reform and - when implemented - would obviate the need for income taxes and sales taxes. How is this? When a continuing rent is charged for ownership rights to a natural resource, that natural resource will have little or no purchase price. Setting up a business or residence will be much cheaper first up as only the improvements must be paid for initially. Money that presently must be borrowed to pay for access to natural resources will become available for productive purposes. Because rents will be payable on all natural resources that are privately owned - whether or not they are in use - those natural resources will become used or will return to the nation as public land. Speculation in natural resources will be immediately terminated thus eliminating a major factor in escalating price. The converse of the old adage quoted earlier is apposite:- Far less idle land will translate into far fewer idle hands! That will translate into a reduced need for social security expenditure. Additionally, lower levels of unemployment will cause reduced anti-social and criminal activity with consequent savings in law enforcement, punishment and rehabilitation. And elimination of most of our taxation regulations will cause compliance costs to all but disappear. The brakes that presently retard Australia's productivity will not merely be released; they will be discarded! ... read the entire article

Nic Tideman: Market-Based Systems for Assigning Rental Value to Land

The general characteristics of the domains to which these bidding systems can usefully be a
pplied are the following:
1. The domain contains many similar bundles of rights.
2. A bundle of rights in the domain must be held for a considerable span of time to be used efficiently.
3. The future value of the rights is more uncertain than the current value of the rights.
4. In the cycle of use of the rights in conjunction with other inputs, there are times when use can be terminated efficiently (as when land is cleared for rebuilding).
While land and the frequency spectrum have these characteristics, the first characteristic is generally present neither for mineral deposits nor for enterprises. Thus other systems are be needed for the privatization of these domains.

WE are met to celebrate the 100th anniversary of the birth of Henry George. We meet, therefore, in a spirit of joy and thanksgiving for the great life which he devoted to the service of humanity. To very few of the children of men is it given to act the part of a great teacher who makes an outstanding contribution toward revealing the basic principles to which human society must adhere if it is to walk in the way which leads to freedom. This Henry George did, and in so doing he expressed himself with a clarity of thought and diction which has rarely been surpassed.

... Indeed, if we try to envision, in view of our present location this afternoon, "The World of Tomorrow," I have no hesitation in saying that if the world of tomorrow is to be a civilized world, and not a world which has relapsed into barbarism, it can be so only by applying the principles of freedom which Henry George taught. The principles to which I refer are:

First, that men have equal rights in natural resources, and that these rights may find recognition in a system which gives effect to the distinction between what is justly private property because it has relation to individual initiative and is the creation of labor and capital, and what is public property because it is either a part of the natural resources of the country, whose value is created by the presence of the community, or is founded upon some governmental privilege or franchise.

Henry George believed in an order of society in which monopoly should be abolished as a means of private profit. The substitution of state monopoly for private monopoly will not better the situation. It ignores the fact that even where a utility is a natural monopoly which must be operated in the public interests, it should be operated as a result of cooperation between the representatives of labor, capital. and consumers, and not by the politicians who control the political state.

We should never lose sight of the fact that all monopolies are created and perpetuated by state laws. If the states wish seriously to abolish monopoly, they can do so by withdrawing their privileges; but they cannot grant the privileges which make monopoly inevitable and avoid the consequences by invoking anti-trust laws against them.

It is strange that the state, which has assumed all sorts of functions which it cannot with advantage perform, still persists in neglecting a vital function which it should and can perform — the function of collecting public revenues, as far as possible, from those who reap the benefits of natural resources. In view of public and social needs, it is remarkable that no effort has been made by governments to reduce the tax burdens on labor and capital, which are engaged in increasing production, by transferring them to those who restrict production by making monopoly privileges special to themselves.

These monopolistic privileges are of course disguised under many different forms, but the task of ascertaining what they are, and their true value, is a task within the competency of government if it really desires to accomplish it. ... read the whole speech

Frank Stilwell and Kirrily Jordan: The Political Economy of Land: Putting Henry George in His Place

Environmental Concerns

What about the relevance of Georgist ideas to current concerns with environmental quality and ecological sustainability? Here too there is a strong claim to consider. Interest in Georgism has been reinvigorated in recent years by the need to develop public policies that reflect the nature of land as a finite natural resource. From a ‘green’ perspective, land tax is a useful tool in discouraging the excessive and wasteful use of land. That is, the prospect of paying a high rate of land tax can be expected to discourage people from purchasing more land than they need directly for their own purposes. It accords with the principle that people should be taxed according to their use of scarce environmental assets.

This ‘ecological take’ on Georgism is particularly powerful at a time of intensifying global environmental problems and recognition of the need for remedial policy responses. It requires creative extension of Georgist principles because the limitation of George’s own analysis in this context is its primary focus on land. A range of other natural resources needs to be considered, linking up with the broader concerns of modern environmentalists such as Herman Daly (see, for example, Daly and Cobb, 1990). Hence, land tax should be seen as an adjunct to taxes on the use of other scarce environmental assets, including mineral, forestry and fishing stocks, and also bandwidth for radio and telecommunications, for example (Stilwell, 2002: 316-317). It should also be seen as a corollary to other taxes that discourage environmental damage, including resource rental taxes, carbon taxes and fuel excises.

The case for these environmental taxes need not necessarily rest on Georgist principles, of course, but Georgism can claim to provide a unifying analytical framework. A common feature of ‘environmental taxes’ is that they are all targeted, like land tax, at reducing the scope for profiting from the private appropriation of natural resources, and thereby restricting the profligate use of those resources.

A tension remains, reflecting the Georgist orientation towards taxes rather than more directly regulatory interventions. Whether the use of the price mechanism in this ‘environmental fine tuning’ is sufficient for dealing with pervasive environment threats is a moot point. The nature and severity of environmental stresses is such that more directly proscriptive environmental policies are commonly needed to protect natural resources. The creation and maintenance of national parks, for example, constitutes a necessary direct regulation of land-use: the market, even when modified by taxes, cannot absolutely guarantee the conservation of such crucial assets. In other words, protection of ‘natural capital’ may commonly require regulation as well as taxation. ... read the whole article




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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper