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From its Latin origin, a privilege is a "private law," a law with someone's name on it, a law that permits someone to do what others may not do. We should agree to eschew privilege.
Nic Tideman: A Bill of Economic Rights and Obligations
Judge Maguire: Seeing the Cat
I was one day walking along Kearney Street in San Francisco when I noticed a crowd in front of the show window of a store. They were looking at something inside. I took a glance myself, but saw only a poor picture of an uninteresting landscape. As I was turning away my eye caught these words underneath the picture: "Do you see the cat?" I looked again and more closely, but I saw no cat. Then I spoke to the crowd. "Gentlemen," I said, "I do not see a cat in that picture; is there a cat there?" Some one in the crowd replied: "Naw, there ain't no cat there. Here's a crank who says he sees a cat in it, but none of the rest of us can." Then the crank spoke up. "I tell you," he said, "there is a cat there. The picture is all cat. What you fellows take for a landscape is nothing more than a cat's outlines. And you needn't call a man a crank either because he can see more with his eyes than you can with yours." ...
There it was, sure enough, just as the crank had said; and the only reason the rest of us couldn't see it was that we hadn't got the right angle of view. but now that I saw the cat, I could see nothing else in the picture. The poor landscape had disappeared and a fine looking cat had taken its place. And do you know, I was never afterwards able, upon looking at that picture, to see anything in it *but* the cat.
Nic Tideman's addendum: In my view, "the cat" is the possibility of a world without privilege.... Read the whole pieceHenry George: The Land Question (1881)
Here is a system which robs the producers of wealth as remorselessly and far more regularly and systematically than the pirate robs the merchantman. Here is a system that steadily condemns thousands to far more lingering and horrible deaths than that of walking the plank–to death of the mind and death of the soul, as well as death of the body. These things are undisputed. No one denies that Irish pauperism and famine are the direct results of this land system, and no one who will examine the subject will deny that the chronic pauperism and chronic famine which everywhere mark our civilization are the results of this system. Yet we are told – nay, it seems to be taken for granted – that this system cannot be abolished without buying off those who profit by it. Was there ever more degrading abasement of the human mind before a fetish? Can we wonder, as we see it, at any perversion of ideas?
Consider: is not the parallel I have drawn a true one? Is it not just as much a perversion of ideas to apply the doctrine of vested rights to property in land, when these are its admitted fruits, as it was to apply it to property in human flesh and blood; as it would be to apply it to the business of piracy? In what does the claim of the Irish landholders differ from that of the hereditary pirate or the man who has bought out a piratical business? "Because I have inherited or purchased the business of robbing merchantmen," says the pirate, "therefore respect for the rights of property must compel you to let me go on robbing ships and making sailors walk the plank until you buy me out." "Because we have inherited or purchased the privilege of appropriating to ourselves the lion's share of the produce of labor," says the landlord, "therefore you must continue to let us do it, even though poor wretches shiver with cold and faint with hunger, even though, in their poverty and misery, they are reduced to wallow with the pigs." What is the difference? ... read the whole article
Henry George: The Wages of
That the value attaching to land with social growth is intended for social needs is shown by the final proof. For refusal to take for public purposes the increasing values that attach to land with social growth is to necessitate the getting of public revenues by taxes that lessen production, distort distribution, and corrupt society.
It is to have some to take what justly belongs to all; it is to forego the only means by which it is possible in an advanced civilisation to combine the security of possession that is necessary to improvement with equality of natural opportunity – the most important of all natural rights.
It is thus at the basis of all social life to set up an unjust inequality between man and man, compelling some to pay others for the privilege of living, for the chance of working, for the advantages of civilisation, for the gifts of God. ...
So long as private property in land continues – so long as some men are treated as owners of the earth, and other men live on it only by their sufferance – human wisdom can devise no means by which the evils of our present condition may be avoided.
Could even the wisdom of God do so? How could He? Should He infuse new vigour into the sunlight, new virtue into the air; new fertility into the soil, would not all this new bounty go to the owners of the land?
Should He open the minds of men to the possibilities of new substances, new adjustments, new powers, would this do any more to relieve poverty than steam, electricity and all the numberless discoveries and inventions of our time have done?
Or, if He were to send down from the heavens above or cause to gush up from the subterranean depths, food, clothing – all the things that satisfy man’s material desires to whom under our laws would all these belong? Would not this increase and extension of His bounty merely enable the privileged class more riotously to roll in wealth, and bring the disinherited class to more widespread pauperism?...
It is assumed that there are in the natural order two classes, the rich and the poor, and that laborers naturally belong to the poor. It is true that there are differences in capacity, in diligence, in health and in strength, that may produce differences in fortune. These, however, are not the differences that divide men into rich and poor. The natural differences in powers and aptitudes are certainly not greater than are natural differences in stature. But while it is only by selecting giants and dwarfs that we can find men twice as tall as others, yet in the difference between rich and poor that exists today we find some men richer than others by the thousand-fold and the million-fold!
Nowhere do these differences between wealth and poverty coincide with differences in individual powers and aptitudes. The real difference between rich and poor is the difference between those who hold the toll gates and those who pay toll; between tribute receivers and tribute yielders.
To assume that laborers, even ordinary manual laborers, are naturally poor is to ignore the fact that labor is the producer of wealth, and to attribute to the Natural Law of the Creator an injustice that comes from man’s impious violation of His benevolent intention. ... read the whole article
William Ogilvie: An Essay on the Right of Property in Land (Scotland, 1782)
It were unjust to censure the proprietors of land, however, for retaining and exercising, as they do, a right whose foundations have not been inquired into, and whose extent no one has ever yet controverted. It is the situation in which they find themselves placed that prompts their conduct; nor can they readily conceive either the injustice or the detriment which the public suffers, by permitting such rights to be exercised. On the other hand, the farmers and cultivators have no clear perception of the injustice and oppression which they suffer. They feel indeed, and they complain, but do not understand, or dare not consider steadily, from what cause their grievances take their rise. The oppressive rights of the one order, and the patient submission of the other, have grown up together insensibly from remote ages, in which the present state of human affairs could not have been foreseen. ... Read the entire essayHenry George: The Great Debate: Single Tax vs Social Democracy (1889)
We would abolish all taxes, and begin with the most important of all monopolies, the fruitful parent of lesser monopolies, that monopoly which disinherits men of their birthright; that monopoly which puts in the hands of some that, element absolutely indispensable to the use of all ... Read the entire articleHenry George: Concentrations of Wealth Harm America (excerpt from Social Problems) (1883)
That he who produces should have, that he who saves should enjoy, is consistent with human reason and with the natural order. But existing inequalities of wealth cannot be justified on this ground. As a matter of fact, how many great fortunes can be truthfully said to have been fairly earned? How many of them represent wealth produced by their possessors or those from whom their present possessors derived them? Did there not go to the formation of all of them something more than superior industry and skill? Such qualities may give the first start, but when fortunes begin to roll up into millions there will always be found some element of monopoly, some appropriation of wealth produced by others. Often mere is a total absence of superior industry, skill or self-denial, and merely better luck or greater unscrupulousness. ...
An acquaintance of mine died in San Francisco recently, leaving $4,000,000, which will go to heirs to be looked up in England. I have known many men more industrious, more skilful, more temperate than he -- men who did not or who will not leave a cent. This man did not get his wealth by his industry, skill or temperance. He no more produced it than did those lucky relations in England who may now do nothing for the rest of their lives. He became rich by getting hold of a piece of land in the early days, which, as San Francisco grew, became very valuable. His wealth represented not what he had earned, but what the monopoly of this bit of the earth's surface enabled him to appropriate of the earnings of others.
A man died in Pittsburgh, the other day, leaving $3,000,000. He may or may not have been particularly industrious, skilful and economical, but it was not by virtue of these qualities that he got so rich. It was because he went to Washington and helped lobby through a bill which, by way of "protecting American workmen against the pauper labor of Europe," gave him the advantage of a sixty-per-cent, tariff. To the day of his death he was a stanch protectionist, and said free trade would ruin our "infant industries." Evidently the $3,000,000 which he was enabled to lay by from his own little cherub of an "infant industry" did not represent what he had added to production. It was the advantage given him by the tariff that enabled him to scoop it up from other people's earnings.
This element of monopoly, of appropriation and spoliation will, when we come to analyze them, be found largely to account for all great fortunes....
Take the great Vanderbilt fortune. The first Vanderbilt was a boatman who earned money by hard work and saved it. But it was not working and saving that enabled him to leave such an enormous fortune. It was spoliation and monopoly. As soon as he got money enough he used it as a club to extort from others their earnings. He ran off opposition lines and monopolized routes of steamboat travel. Then he went into railroads, pursuing the same tactics. The Vanderbilt fortune no more comes from working and saving than did the fortune that Captain Kidd buried.
Or take the great Gould fortune. Mr. Gould might have got his first little start by superior industry and superior self-denial. But it is not that which has made him the master of a hundred millions. It was by wrecking railroads, buying judges, corrupting legislatures, getting up rings and pools and combinations to raise or depress stock values and transportation rates.
So, like wise, of the great fortunes which the Pacific railroads have created. They have been made by lobbying through profligate donations of lands, bonds and subsidies, by the operations of Credit Mobilier and Contract and Finance Companies, by monopolizing and gouging. And so of fortunes made by such combinations as the Standard Oil Company, the Bessemer Steel Ring, the Whisky Tax Ring, the Lucifer Match Ring, and the various rings for the "protection of the American workman from the pauper labor of Europe."
Or take the fortunes made out of successful patents. Like that element in so many fortunes that comes from the increased value of land, these result from monopoly, pure and simple. And though I am not now discussing the expediency of patent laws, it may be observed, in passing, that in the vast majority of cases the men who make fortunes out of patents are not the men who make the inventions.
Through all great fortunes, and, in fact, through nearly all acquisitions that in these days can fairly be termed fortunes, these elements of monopoly, of spoliation, of gambling run. The head of one of the largest manufacturing firms in the United States said to me recently, "It is not on our ordinary business that we make our money; it is where we can get a monopoly." And this, I think, is generally true.
The Evils of Monopolists
Consider the important part in building up fortunes which the increase of land values has had, and is having, in the United States. This is, of course, monopoly, pure and simple. When land increases in value it does not mean that its owner has added to the general wealth. The owner may never have seen the land or done aught to improve it. He may, and often does, live in a distant city or in another country. Increase of land values simply means that the owners, by virtue of their appropriation of something that existed before man was, have the power of taking a larger share of the wealth produced by other people's labor. Consider how much the monopolies created and the advantages given to the unscrupulous by the tariff and by our system of internal taxation -- how much the railroad (a business in its nature a monopoly), telegraph, gas, water and other similar monopolies, have done to concentrate wealth; how special rates, pools, combinations, corners, stock-watering and stock-gambling, the destructive use of wealth in driving off or buying off opposition which the public must finally pay for, and many other things which these will suggest, have operated to build up large fortunes, and it will at least appear that the unequal distribution of wealth is due in great measure to sheer spoliation; that the reason why those who work hard get so little, while so many who work little get so much, is, in very large measure, that the earnings of the one class are, in one way or another, filched away from them to swell the incomes of the other.
That individuals are constantly making their way from the ranks of those who get less than their earnings to the ranks of those who get more than their earnings, no more proves this state of things right than the fact that merchant sailors were constantly becoming pirates and participating in the profits of piracy, would prove that piracy was right and that no effort should be made to suppress it.
I am not denouncing the rich, nor seeking, by speaking of these things, to excite envy and hatred; but if we would get a clear understanding of social problems, we must recognize the fact that it is due to monopolies which we permit and create, to advantages which we give one man over another, to methods of extortion sanctioned by law and by public opinion, that some men are enabled to get so enormously rich while others remain so miserably poor. If we look around us and note the elements of monopoly, extortion and spoliation which go to the building up of all, or nearly all, fortunes, we see on the one hand now disingenuous are those who preach to us that there is nothing wrong in social relations and that the inequalities in the distribution of wealth spring from the inequalities of human nature; and on the other hand, we see how wild are those who talk as though capital were a public enemy, and propose plans for arbitrarily restricting the acquisition of wealth. Capital is a good; the capitalist is a helper, if he is not also a monopolist. We can safely let any one get as rich as he can if he will not despoil others in doing so.
There are deep wrongs in the present constitution of society, but they are not wrongs inherent in the constitution of man nor in those social laws which are as truly the laws of the Creator as are the laws of the physical universe. They are wrongs resulting from bad adjustments which it is within our power to amend. The ideal social state is not that in which each gets an equal amount of wealth, but in which each gets in proportion to his contribution to the general stock. And in such a social state there would not be less incentive to exertion than now; there would be far more incentive. Men will be more industrious and more moral, better workmen and better citizens, if each takes his earnings and carries them home to his family, than where they put their earnings in a "pot" and gamble for them until some have far more than they could have earned, and others have little or nothing. ... Read the entire article
Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)
John Dewey: Steps to Economic Recovery
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
Charles T. Root — Not a Single Tax! (1925)
Ted Gwartney: Estimating Land Values
Not only is land rent a potentially important source of public revenue, the tax on land is a means of limiting excessive speculation in land prices. This would ensure that the equal opportunity to be productive would be available to all citizens. With limited money to invest, people could invest in productive equipment and wages, rather than in high land prices which produce no additional tangible wealth. ...
THE SOURCE OF PUBLIC REVENUE
What are the factors that cause land to have market value and to whom does this market revenue advantage properly belong? Land has market value for three reasons:
Land rent is the price that people and businesses are willing to pay for the exclusive right to possess and use a good land site for a period of time. For example, people prefer to use sites of good location because it gives them an advantage of spending less time in travel by being near what they choose to do and where they work. A businessman can sell more goods at a site where many people pass each day, compared to a site where only a few people would pass.
The collection of land rent should be used as revenue, by the community for supplying public needs. This returns the advantage an individual land possessor receives from the exclusive use of a land site, to the balance of the people who live within the community and have allowed the land possessor the exclusive use of the land site for the period of time.
It is the responsibility of the local communities to insure that the market rent of land is collected for public purposes. When a major part of land rent is not collected, which is the case in most of the world today, land title holders obtain rights to sell the value of the public improvements which were made by the whole community. The community added to the market value to land by making improvements which increases demand and rent for the land. The longer the possessors hold the land out of use the greater will be the bonus they obtain.
By prohibiting people from using good land, the possessors force the premature use of other less desirable land, which is more distant from the city. This raises the cost of community improvements and the rental value of the unused, but better located, land. This precipitates the degradation of the rural environment by using city land inefficiently -- and creates huge unnecessary pressures on the natural environment. ...
Any moves to enact good government principles without collecting the full market rent of the land may result in a failure. People are guided by the profit motive. When people can make a larger profit by doing nothing, but keeping the land they possess out of use for a long period of time, they will do so. When the community collects the full market rent of land, they eliminate the motive for keeping land out of efficient use, because the unearned profit has been collected as public revenue. ... Read the whole articleRobert V. Andelson Henry George and the Reconstruction of Capitalism
There are two things which a government can never do and still be just:
All wealth that is privately produced rightfully belongs to private individuals or corporations, and for the government to appropriate it is unjust. But land rent is publicly produced, and for the government to give it to private individuals or corporations is equally unjust. He who thinks himself prepared to justify in principle the private monopolization of land rent, must also be prepared to justify in principle the jobbery of the Tweed Ring and the looting of Teapot Dome -- not to mention the escapades of Michael Milken, Ivan Boesky, and Charles Keating.
In closing, I will summarize with a quotation from the late Dr. Viggo Starke, for many years a member of the Danish cabinet: "What I produce is mine. All mine! What you produce is yours. All yours! But that which none of us produced, but which we all lend value to together, belongs by right to all of us in common." This, in a nutshell, is the philosophy of Henry George. Read the whole article
Kris Feder: Progress and Poverty Today
... Unemployment and underemployment of labor mean that energy and intelligence go untapped. For those who find work, he said, high wages stimulate creativity, invention, and improvement, while low wages encourage carelessness. Inadequate education of the poor multiplies the loss. There are the damages done by poverty-related vice and crime, and the substantial costs of protecting society against them. There is the burden upon the wealthy of providing welfare support for the very poor - or risking social upheaval if they do not. Moreover, said George, social institutions by which some prosper at others' expense cause talent and resources to be diverted from productive enterprise to unproductive conflict, as individuals find that competing for political advantage can be more lucrative than competing for market success.
In short, an unjust system of privileges and entitlements tends to cause misallocation of resources, macroeconomic instability and stagnation, political corruption, and social conflict that ultimately may threaten whole civilizations.
George's central contribution was to show that the distinction between individual property and common property forms a rational basis for distinguishing the domain of public activity from that of the private. This distinction leads him to a theory of public finance that reconciles the competing insights of socialism and laissez-faire capitalism. By a simple fiscal device, the revenue arising from common property can be captured for the public treasury and applied to the common benefit, so that government may assume needed general functions without interfering with individual incentives.
This bill of economic rights and obligations is designed to end the struggle for domination through government policy, and thereby free to the people from the tyranny of governments. Instead of fighting for the chance to impose our will on one another, we would agree that all have equal rights; no one is to be in a position of privilege. From its Latin origin, a privilege is a "private law," a law with someone's name on it, a law that permits someone to do what others may not do. We should agree to eschew privilege. ...
Nic Tideman: Basic Tenets of the Incentive Taxation Philosophy
When the principle that the value of government-assigned opportunities should be received by the public treasury is violated, the result is "privilege," which from its Latin roots means "private law," that is, law that permits one person to do what others are not permitted to do. Thus what we stand for is an end to privilege.
Numerous examples of privilege are incorporated in our institutions.
This list of examples of privilege, which is by no means exhaustive, contains some privileges, such as acreage allotments and import quotas, that would be best reformed by eliminating restrictions and permitting all to do what now only some may do. For other privileges, such as broadcast licenses and land titles, great productivity results from the social understanding that a specified individual will have the use of a given resource. For these privileges, the best reform is the introduction of the requirement that any person who is assigned such an opportunity must pay to the public treasury an annual fee equal to what the opportunity would be worth to someone else. ...
The Importance of Constitutional Change
One important way of seeking to ensure that a new proposal that disappoints some persons is not selfishly motivated is to require the proposal to clear not just the hurdles for new legislation, but the higher, more elaborate hurdles for constitutional amendments. It is an unfortunate fact that legislative processes are all too often dominated by well-organized special interests.
The constitutional amendment process, on the other hand, requires such broad consensus that domination by special interests is highly unlikely.
We believe that while some steps in the direction of our ideas can be properly undertaken through legislation alone, the full implementation of our ideas should occur through a process of constitutional amendment that would signify a social consensus that privilege is intolerable.... Read the whole articleNic Tideman: The Case for Taxing Land
I. Taxing Land as Ethics and Efficiency
II. What is Land?
III. The simple efficiency argument for taxing land
IV. Taxing Land is Better Than Neutral
V. Measuring the Economic Gains from Shifting Taxes to Land
VI. The Ethical Case for Taxing Land
VII. Answer to Arguments against Taxing Land
There is a case for taxing land based on ethical principles and a case for taxing land based on efficiency principles. As a matter of logic, these two cases are separate. Ethical conclusions follow from ethical premises and efficiency conclusions from efficiency principles. However, it is natural for human minds to conflate the two cases. It is easier to believe that something is good if one knows that it is efficient, and it is easier to see that something is efficient if one believes that it is good. Therefore it is important for a discussion of land taxation to address both question of efficiency and questions of ethics.
This monograph will first address the efficiency case for taxing land, because that is the less controversial case. The efficiency case for taxing land has two main parts. ...
To estimate the magnitudes of the impacts that additional taxes on land would have on an economy, one must have a model of the economy. I report on estimates of the magnitudes of impacts on the U.S. economy of shifting taxes to land, based on a mathematical model that is outlined in the Appendix.
The ethical case for taxing land is based on two ethical premises: ...
The ethical case for taxing land ends with a discussion of the reasons why recognition of the equal rights of all to land may be essential for world peace.
After developing the efficiency argument and the ethical argument for taxing land, I consider a variety of counter-arguments that have been offered against taxing land. For a given level of other taxes, a rise in the rate at which land is taxed causes a fall in the selling price of land. It is sometimes argued that only modest taxes on land are therefore feasible, because as the rate of taxation on land increases and the selling price of land falls, market transactions become increasingly less reliable as indicators of the value of land. ...
Another basis on which it is argued that greatly increased taxes on land are infeasible is that if land values were to fall precipitously, the financial system would collapse. ...
Apart from questions of feasibility, it is sometimes argued that erosion of land values from taxing land would harm economic efficiency, because it would reduce opportunities for entrepreneurs to use land as collateral for loans to finance their ideas. ...
Another ethical argument that is made against taxing land is that the return to unusual ability is “rent” just as the return to land is rent. ...
But before developing any of these arguments, I must discuss what land is. ...
Ownership of land is thus a form of privilege. The word ‘privilege’ comes from the Latin prive + legis, meaning ‘private law’. A private law is a law that has someone’s name it, that is, a law that authorizes one person to do what others are not permitted to do. In a just world, there would be no privilege. (Thus no one is underprivileged.) In a just world, land would not be ‘owned’, but rather ‘held’ or ‘possessed’, subject to a payment that reflected the value given up by others in allowing one person to have exclusive use of a site. ... 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 justice of collecting the rent of land can be generalized to the justice of collecting a fee for any privilege that governments grant to some individuals and not others. The value of the special privilege for a few that is entailed in planning permission would be recouped automatically in collecting the rental value of land. A version of social collection of the value of privilege occurs in the present government's auctioning of ten-year broadcast licenses. For the same reason that people are justly required to pay for broadcast licenses,
The general principle involved in all of these examples is that whenever a government grants a right to some and not to others, those who are granted such rights should pay annually, to the government, the value of those rights, measured by what others who do not have them would be willing to pay to have them.
Private appropriation of rent and other privileges makes it necessary for governments to look elsewhere for revenue, with the consequence that even persons with very low incomes are required to turn over part of what little they earn to the state. In justice we ought to allow everyone, but especially those whose earnings are lowest, to allocate what they produce as they themselves choose. ...
Another objection sometimes raised against site value rating is that it would make leisure uses of land, such as golf courses, impossibly expensive. There are two parts to the answer to this objection.
Correcting for downward bias in standard data (Items 1-3)
1. Standard data sources neglect and understate real estate rents and values. These standard sources include:
a. Assessed valuations used for property taxation. ... [selected from a longer list in original]:
... Throughout history - and even today - wealth and privilege has been based upon ownership of land and monopoly. Economics, unchecked and in ignorance of the land and rent question, remains "the caveman's law, the law of the sharpest tooth, the angriest brow and the greediest maw." (so said Al Smith, Governor of New York and presidential candidate during the 1920s)
But we know there is a better way. The recognition that "territoriality" may be necessary as the law of survival for lower species is not borne out for mankind; for humanity there is a higher order. The human condition, the dignity of man and the aspiring benevolence that are made material by way of man's free association and the free exchange of labor and its handmaiden - capital.
Land rent is socially created, it is the fruit of the loins of unfettered labor and capital. Monopoly and privilege are the highwaymen who rob us of the means to end poverty, slums and depression. This is the promise of LVT. This is the big idea. The hope. Something to believe in - its time surely has come. Read the whole article
Mason Gaffney: The Taxable Surplus of Land: Measuring, Guarding and Gathering It (for the Duma Hearings in Moscow, 1999)
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. ... Read the whole article
Karl Williams: Social Justice In Australia: ADVANCED KIT - Part 2
"Modern privilege: the power of being the first to know insider information, the power of monopoly, the power to disregard foreign borders, the power to sway who gets loans, reloans and who doesn't, the power to obtain preferential bailouts and payoffs at taxpayer expense, the power to fund foreign interests for special interest gained at local taxpayers' expense, the power to fund foreign depots and tyrannical social engineering, the power to gain preferential access to foreign and domestic natural resources." - (can't remember where I got this!) ... Read the entire articleNic Tideman: Applications of Land Value Taxation to Problems of Environmental Protection, Congestion, Efficient Resource Use, Population, and Economic Growth
... The first problem of environmental protection is management of the harm that is caused to nearby areas by the discharge of pollutants into air and water. In the U.S. this problem is often managed by quantitative controls. Historic polluters are allowed to continue to pollute at reduced levels, and potential new polluters are restricted even further or prevented from polluting entirely.
A system of quantitative controls can be efficient if the overall level of control is appropriate and permission to pollute is completely transferable. But these conditions are rarely met. It is particularly difficult to know the optimal level of pollution control when the costs of pollution are continuous, upward sloping and not catastrophic. And systems of quantitative controls almost always lack fairness. They grant permanent privileges to those who have a history of having caused harm. If a system of quantitative controls provided that pollution rights would be auctioned, and all the proceeds would be collected publicly, then it would be in accord with a principle that all persons have equal rights to natural opportunities. But there would still be the difficulty of determining the right number of permits to sell. ... Read the entire articleMason Gaffney: Land as a Distinctive Factor of Production
The initial distribution of land - the origin of property in land - is military, legal, and political, not economic. The prime business of nations throughout history has been to gain and defend land. What was won by force has no higher sanction than lex fortioris, and must be kept and defended by force.
After land is appropriated by a nation the original distribution is political. The nature of societies, cultures and economies for centuries afterwards are moulded by that initial distribution, exemplified by the differences between Costa Rica (equal partition) and El Salvador with its fabled "Fourteen Families" (Las Catorce), or between Canada and Argentina.
Political redistribution also occurs within nations, as with the English enclosures and Scottish "clearances", when one part of the population in effect conquered the rest by political machinations, and took over their land, their source of livelihood. Reappropriation and new appropriation of tenures is not just an ancient or a sometime thing but an on-going process. This very day, proprietary claims to water sources, pollution rights, access to rights of way, radio spectrum, signal relay sites, landing rights, beach access, oil and gas, space on telephone and power poles(e.g. for cable TV), taxi licences, etc. are being created under our noses. In developing countries of unstable government the current strong man often grants concessions to imperialistic adventurers who can bolster his hold on power by supplying both cash up front, and help from various US and UN agencies from the IMF to the United States Marine Corps.
Ordinary economic thinking today would have it that a nation that distributes land among private parties by "selling to the highest bidder" is using an economic method of distribution. Such thinking guides World Bank and IMF economists as they advise nations emerging from communism on how to privatise land. The neutrality is specious, at best. Even selling to the highest bidder is a political decision, as 19th century American history makes clear.
The right to sell was won by force, is not universally honoured, and must be kept by continuous use of force. In practice, selling for cash up front reserves most land for a few with front-money advantage, inside information, good contacts, corrupt aids, etc. The history of disposal of US public domain leaves no doubt about this and it is still going on with air rights, water, radio, landing rights, fishing licenses, etc. Choices being made currently are just as tainted as those of 19th century history.
Selling land in large blocks under frontier conditions is to sell at a time before it begins yielding much if any rent. It is bid in by those few who have large discretionary funds of patient money. Politicians, meantime, treat the proceeds as current revenues used to hold down other taxes today, leaving the nation with inadequate revenues in the future.
The ability to bid high does not necessarily come from legitimate savings. The early wealth of Liverpool came from the slave trade. High bidders for many properties today are middle eastern potentates who neither produced nor saved the wealth they control. Other high bidders are criminals, who find the "sanctity of property" a splendid route for laundering their gains, and a permanent shelter against further prosecution. Read the whole article
Jeff Smith: What the Left Must Do: Share the Surplus
RENT – THE STUFF OF FORTUNES – ROCKS AND RULES
The value of a parcel of land is initially based on the natural endowments of the location (“location, location, location”), created not by an owner but by whatever created all of us. Next, land value rises with the presence of society, and grows with the population of society. It’s highest where society is densest, in the city centers, typically 2000 times more valuable than sites in the boondocks. Land values as economic values disappear whenever society quits respecting one’s claim, as in a war zone; there, real estate offices nimbly shut down. And while land titles may be the holy grail of wannabe homeowners, they’re also the ticket to pocket unearned rent by absentee landlords, such as Donald Trump.
Making land public does not guarantee that the public end up with the rent. The public’s steward, the state, often lets public resources at “fire-sale” prices, unduly enriching Chevron, Arco, Kerr-McGee, Weyerhauser, etc. The state gifts enormously valuable licenses for TV, radio, and cell phones to GE, Disney, Time Warner, and Clear Channel. The metaphor, “field of knowledge”, lets us see patents and copyrights as flags; by excluding innovative outsiders, they not only skew techno-progress (thus addicting civilization to oil) but also enrich those few who can afford to corral them: GM, DuPont, and Microsoft. Similarly, a utility franchise lets AT&T pay investors, and Enron insiders, handsomely. ...
Buying a land title – the granddaddy of all privileges – typically requires a mortgage, which disguises rent as “interest”. Pierre Joseph Proudhon (1809-1865), French journalist/anarchist, noted: "As long as land monopoly is maintained, the few can take possession of what Nature free of charge has granted to everyone, and usury will penetrate the whole society, and we will have banks, which instead of being servants for the exchange of goods will become powerful extorters." He called this one; today’s banks do bleed the economy.
What does the central bank, the private consortium dubbed the Federal Reserve, lend to the US? Nothing. Given the power to create money by Congress (which the Constitution had given to Congress), from no savings at all but merely from legal standing, it manufactures credit, which the US borrows, at interest. The US exempts this interest from its income tax; people who hold US bonds – mainly the wealthy – keep this income tax-free.
The much and justifiably criticized corporation is in essence its corporate charter, given value by limiting the liability of managers, directors, and investors. It’s worth at least the cost of the insurance payments not made by the corporation, which would equal the costs imposed upon worker, customer, and nature. As the “need” arises, legislatures extend limited liability even further: Congress legally lowered the greater risk of nuclear power to benefit Westinghouse, of the Valdez oil transport spill for Exxon, and the Y2K software design bug for Microsoft. Politicians define legally “safe” amounts of polluted air and water for GM and Monsanto, keeping safe the wealth of those responsible.
Not to be outdone by any legislature, the Supreme Court has ruled in favour of compensating landowners for environmental “takings”, but has remained silent about landowners compensating the public for any “givings”, as when site values skyrocket near a new light rail stop. Molly Ivins wrote,
"Henry George must be in his grave spinning' like a cyclotron. We, the people at large, make the land more desirable; and then the landowners want us to pay them because we won't allow them to poison the air or to pollute the rivers." (1995 March)
That’s how great fortunes are made: by sloughing off private costs (which become “negative externalities”) while soaking up public benefits (some “positive externalities”). Land titles, corporate charters, and other privileges – mere pieces of paper – are worth trillions each year. The corporations – from the Federal Reserve to Exxon (both founded by the “oiligarchy”) – that receive these privileges make their owners rich or richer. Their wealth is not compensation for the exertions of either labor or capital, not profit in the market from output, but rent from present lobbying of legislatures or past conquest of others’ lands. Thus laws (“privilege” means “private law”) funnel multi-trillions of dollars each year from the many to the few. Read the whole article
Jeff Smith: How Sharing Earth Brought Peace
Besides rent from land titles, resource leases, broadcast licenses, and standards waivers, revenue could be raised, too, from monopoly patents, utility franchises, and corporate charters. Charging full market value for these pieces of papers, we'd rake in trillions each year from the privileged elite. We'd still be the envy of the world but no longer the master of the world. The terrorist crisis would make America better; it'd get us to do what we should have been doing all along. ... Read the whole articleJeff 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. ...
Now wipe out the taxes, subsidies, liability limits, and rent retention. Instead, replace all that with running government like a business. Charge full-market value for state acknowledgements (the seven secret subsidies):
Collecting rent for government-granted privileges would not only raise trillions but also whittle corporations down to a competitive size, less hazardous to democracy.
Besides charging what privileges are worth, government should also replace license with responsibility ("internalize the externalities"). To temper the temptation to use lands both fragile and valuable, society could impose surcharges - an Ecology Security Deposit, Restoration Insurance, Emission Permits, and fines when users exceed standards. To minimize all these charges, producers would seek sustainable alternatives. Getting and sharing rent from land titles is the centerpiece of this geonomic revenue reform. Each phase of such a revenue shift motivates sustainable choices in its own way. ... 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,
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
Fred Foldvary: Underprivileged or Rights-Deprived?
Poor folk are often labeled "underprivileged" and richer folk are called "privileged." For example, there is a book titled "One Nation, Underprivileged: Why American Poverty Affects Us All." But "privileged" and "underprivileged" are confused and misleading expressions. If you think the poor are "underprivileged," then you don't really understand poverty.Henry George: The Land for the People (1889 speech)
What is a "privilege?" The term originally meant "private law." A privilege is a special advantage or prerogative or immunity or benefit given only to some people only because they have power or are favored by those with power. If everyone is entitled to something, like freedom of expression, or if everyone may obtain an item such as a passport with the same rules applying to all, then it is not a privilege but a right.
Whether a rich person is "privileged" depends on how he got the money. ...
So if a person is poor, it is not because he is lacking in special protections, subsidies, and other privileges. A person is usually poor because he has been deprived of the natural right to work. Governments world-wide impose barriers between labor and productive resources, keeping some workers deprived of labor and others who do work deprived of their earnings from labor.
Taxes on wages create a wedge between the cost of labor to employers and the take-home pay of the worker. More costly labor results in less employment. Taxes on the income from capital goods and on the sale of goods has the same effect. There are unemployment taxes, disability taxes, and payroll taxes that increase the tax wedge. On top of that, there are minimum-wage laws that prevent the least productive workers from getting hired. There are permits, zoning, and other rules and costs that also prevent some workers from becoming self-employed.
Deprived of the full natural right to peaceful enterprise and labor, and the natural right to fully keep one's earnings, the poor have little or no income, and depend on charity and governmental assistance. To call them "underprivileged" is a lie. The rights-deprived poor do not need privileges. They just need government to stop interfering with their right to work and save!
The biggest privilege world-wide is subsidies to landowners. ...
There has been confusion about what is a right and what is a privilege. ...
Some consider a patent a privilege, but it too is a right. ...
Some also consider a corporation to be a privilege, since the firm has a charter from a government. ...
Real privileges are favors arbitrarily given to some groups and not others. ...
The really underprivileged folks are all consumers, taxpayers and those who are restricted from peaceful and honest practices or have to pay extra to the government while others are unrestricted and non-taxed. These people lack privileges which others have. The proper remedy is not to expand privileges, but to eliminate all governmental privileges. That is why libertarians and geoists alike have the motto: "Equal rights for all; privileges for none!"Read the whole article
THE Land Question is not merely a question between farmers and the owners of agricultural land. It is a question that affects every man, every woman, and every child. The Land Question is simply another name for the great labor question, and the people who think of the Land Question as having importance simply for farmers forget what land is.
If you would realize what land is, think of what men would be without land. ...
NOW, as to the rights of ownership -- as to that principle which enables a man to say of any certain thing --"This is mine; it is my property" -- where does that come from? If you look you will see that it comes from the right of the producer to the thing which he produces. What a man makes he can justly claim to be his. Whatever any individual, by the exercise of his powers, takes from the reservoirs of nature, molds into shapes fitted to satisfy human needs, that is his; to that a just and sacred right of property attaches. That is a right based on the right of the individual to improvement, the right to the enjoyment of his own powers, to the possession of the fruits of his exertions. That is a sacred right, to violate which is to violate the sacred command, "Thou shalt not steal." There is the right of ownership. Now that right, which gives by natural and Divine laws, the thing produced to him whose exertion has produced it, which gives to the man who builds a house the right to that house, to the man who raises a crop the right to that crop, to the man who raises a domestic animal a right to that domestic animal-how can that right attach to the reservoirs of nature? How can that right attach to the earth itself?
WE start out with these two principles, which I think are clear and self-evident:
As no man made the land, so no man can claim a right of ownership in the land. ...
We say that all the social difficulties we see here, all the social difficulties that exist in England or Scotland, all the social difficulties that are growing up in the United States--
--are all due to one great primary wrong, that wrong which makes the natural element necessary to all, the natural element that was made by the Creator for the use of all, the property of some of the people, that great wrong that in every civilized country disinherited the mass of men of the bounty of their Creator. What we aim at is not the increase in the number of a privileged class, not making some thousands of earth owners into some more thousands. No, no; what we aim at is to secure the natural and God-given right to the humblest in the community--to secure to every child born in Ireland, or in any other country, his natural right to the equal use of his native land. ...
THE way to secure equality is plain. It is not by dividing the land; it is by calling upon those who are allowed possession of pieces of land giving special advantage to pay to the whole community, the rest of the people, aye, and including themselves--to the whole people, a fair rent or premium for that privilege, and using the fund so obtained for the benefit of the whole people. What we would do would be to make the whole people the general landlord, to have whatever rent is paid for the use of land to go, not into the pockets of individual landlords, but into the treasury of the general community, where it could be used for the common benefit. ...
True we are confronted with this fact all over the civilized world that a certain class have got possession of the land, and want to hold it. Now one of your distinguished leaders, Mr. Parnell in his Drogheda speech some years ago, said there were only two ways of getting the land for the people. One way was to buy it; the other was to fight for it. I do not think that is true. I think that Mr. Parnell overlooked at that time a most important third way, and that is the way we advocate.
That is what we propose by what we call the single tax. We propose to abolish all taxes for revenue. In place of all the taxes that are now levied, to impose one single tax, and that a tax upon the value of land. Mark me, upon the value of land alone -- not upon the value of improvements, not upon the value of what the exercise of labor has done to make land valuable, that belongs to the individual; but upon the value of the land itself, irrespective of the improvements, so that an acre of land that has not been improved will pay as much tax as an acre of like land that has been improved. So that in a town a house site on which there is no building shall be called upon to pay just as much tax as a house site on which there is a house.
I said that rent is a natural thing. So it is. Where one man, all rights being equal, has a piece of land of better quality than another man, it is only fair to all that he should pay the difference. Where one man has a piece of land and others have none, it gives him a special advantage; it is only fair that he should pay into the common fund the value of that special privilege granted him by the community. That is what is called economic rent.
BUT over and above the economic rent there is the power that comes by monopoly, there is the power to extract a rent, which may be called monopoly rent. On this island that I have supposed we go and settle on, under the plan we have proposed each man should pay annually to the special fund in accordance with the special privilege the peculiar value of the piece of land he held, and those who had land of no peculiar value should pay nothing. That rent that would be payable by the individual to the community would only amount to the value of the special privilege that he enjoyed from the community. But if one man owned the island, and if we went there and you people were fools enough to allow me to lay claim to the ownership of the island and say it belonged to me, then I could charge a monopoly rent; I could make you pay me every penny that you earned, save just enough for you to live; and the reason I could not make you pay more is simply this, that if you would pay more you would die.
THE power to exact that monopoly rent comes from the power to hold land idle -- comes from the power to keep labor off the land. Tax up land to its full value and that power would be gone; the richest landowners could not afford to hold valuable land idle. Everywhere that simple plan would compel the landowner either to use his land or to sell out to some one who would; and the rent of land would then fall to its true economic rate--the value of the special privilege it gave would go not to individuals, but to the general community, to be used for the benefit of the whole community. Read the whole speech
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881)
The Whole People the True Owners of the Land.
When, therefore, a privileged class arrogantly claims a right of private property in the land of a country, that claim is simply unintelligible, except in the broad principle that the land of a country is not a free gift at all, but solely a family inheritance; that it is not a free gift which God has bestowed on His creatures, but an inheritance which he has left to His children; that they, therefore, being God's eldest sons, inherit this property by right of succession; that the rest of the world have no share or claim to it, on the ground that origin is tainted with the stain of illegitimacy. The world, however, will hardly submit to this shameful imputation of its own degradation, especially when it is not sustained by even a shadow of reason.
I infer, therefore, that no individual or class of individuals can hold a right of private property in the land of a country; that the people of that country, in their public corporate capacity, are, and always must be, the real owners of the land of their country -- holding an indisputable title to it, in the fact that they received it as a free gift from its Creator, and as a necessary means for preserving and enjoying the life He has bestowed upon them. ...
The Price of Land a Monopoly Price.
This privileged class not merely sells the use of God's gifts, but extorts for them a price which is most unjust and exorbitant; in fact, they hardly ever sell them at less than scarcity or famine prices. If a man wants to buy a suit of broadcloth, the price he will be required to pay for it will amount to very little more than what it cost to produce it -- and yet that suit of clothes may be a requirement of such necessity or utility to him that he would willingly pay three times the amount it actually cost rather than submit to the inconvenience of doing without it. On the other hand, the manufacturer would extort the last shilling he would be willing to give for it, only that he knows there are scores of other manufacturers ready to undersell him if he demanded much more than the cost of its production. The price, therefore, of commodities of all kinds that can be produced on a large scale, and to an indefinite extent, will depend on the cost required to produce them, or at least that part of them which is produced at the highest expense. ...
The Landlord the Greatest Burden on the Land.
The land is a commodity that strictly belongs to this class. It is limited in extent, and no human power can enlarge or extend its area. The competition for it is excessive, the competitors struggling for its attainment -- not for the purpose of satisfying a taste for the fine arts, or to gratify a passion for the rare or beautiful, but to secure a necessary means of existence: for they must live on and by the land, or they cannot live at all. The owner, therefore, of that land can put on it any rent he pleases, and the poor people competing for it have no choice but to accept his terms or die in a ditch or a poorhouse. Under the present system of Land Tenure, the owners are not only enabled, but actually exact for the use of the land the last shilling the tenant is able to pay, leaving him only what is barely sufficient to keep him from dying. ...
The essential and immutable principles of justice used certainly to be: --
That everyone had a right of property in the hard-earned fruits of his labour; that whatever property a man had made by the expenditure of his capital, his industry and his toil, was really his own; that he, and he alone, had a right to all the benefits, the advantages and enjoyments that that property yielded; and that if anyone else meddled with that property against his will, or interfered with him in its enjoyment, he was thereby guilty of the crimes of theft and of robbery, which the eternal law of God, as well as the laws of all nations, reprobated and punished with such severity.
But the principles which underlie the existing system of Land Tenure, and which impart to it its specific and distinctive character, are exactly the reverse of these. The principles on which that system is based are: --
That one privileged class do not require to labour for their livelihood at all: that they have an exclusive right to all the advantages, comforts and enjoyments that can be derived from a splendid property, which exacted no patient, painful or self-denying efforts of labour to create it or acquire it, and which, in fact, they inherited without any sacrifice at all: that, being a singularly favoured race, and being all God's eldest sons, the rest of the world must humbly acknowledge themselves to be their inferiors in rank, lineage, condition and dignity: that this superiority of rank gives them a right to sell out God's gifts as if they were purely the products of their own labour and industry, and that they can exact in exchange for them famine or scarcity prices. Finally, that they enjoy the enviable privilege of appropriating the hard-earned property of others against their wills, and do them no wrong even if they charge them a rent for the use of what would really appear to be their own. ... Read the whole letterDan Sullivan: Are you a Real Libertarian, or a ROYAL Libertarian?
...When the state granted land titles to a fraction of the population, it gave that fraction devices with which to levy, and pocket, tolls on the fruits of the labor of others. Those without land privileges must either buy or rent those privileges from the people who received the grants or from their assignees. Thus the state titles enable large landowners to collect a transfer payment, or "free lunch" from the actual land users. ...
It is a royal libertarian notion, and not a classical liberal ideal, to treat land as state property, for if land did not rightfully belong to the state, how could the state have granted it to favored citizens?
Classical liberals, not royal libertarians, are the ones who deny the state's right to appropriate the earth and allocate it to privileged individuals on favored terms. Classical liberals also who hold the key to abolishing taxation, by suggesting that the community (not the state) charge a user fee to landholders based on the value of the land. ... Read the whole pieceChuck Metalitz: Licenses to Steal Are Expensive
The electromagnetic spectrum is, economically, land, in that it is a natural resource which cannot be manufactured. Accordingly, the economic value of a license to use a portion of the spectrum is determined not by its cost of production, but by its usefulness in comparison to licenses available for free. And, due to anticipation of future increases, the market value of a perpetual (or any long-term) license can grow to levels higher than can be supported by current use of the license.
Using financial reports filed by owners of radio broadcast licenses, this Research Note shows that license values are approaching, or may even have reached, such levels. It also shows that the main asset on these companies’ books is their licenses. This means that, while Henry George would recommend that substantially all the rent of these licenses be collected thru taxation, such a policy would be a major inconvenience for such companies.
This Research Note also provides some information about auctions of radio broadcast licenses, and their role in the Federal budget.
This paper was written because I resented being sold for $17
The value of privilege is visible— but it isn’t going to the shareholders.
The Radio Broadcast Spectrum is Being Auctioned.
Large operators have the advantage in getting financing, but FCC pretends otherwise.
Not only the radio broadcast spectrum is being auctioned.
The outlook for radio broadcast license values
Henry George’s solution might cause some dislocation.
Table 1: Licenses, Assets, Revenues for Some Major Broadcasters
Table 2: Operating Income and Related Factors
Table 3: Operating Profit and Income Available to Common
Table 4: Assets and Long Term Debt
This paper stems1 from an event last year, shortly before the Des Moines conference. Chicago’s only remaining privately-owned classical music station, WNIB2, was sold for $165 million. Bonneville International Corporation bought the station not because they wanted to continue or improve its operation; what they really bought was a license to broadcast to a market of nearly 10 million people. In fact, they bought the market, at a cost of about $17 per person.
Well, I used to listen to WNIB, and I resented being sold for $17. I wanted to look into the business of broadcast radio, and try to analyse it in Georgist terms. George pointed out that those who could monopolize natural opportunities could exact a toll on users, and that speculation could lead to excessive costs of access which eventually make productive use impossible.
What I found is, first, that the major asset of broadcasters is privilege. Actually, I could have figured that out just by reading the Chicago Tribune3, who quoted the publisher of a radio trade magazine: “These radio stations are a license to steal. They’re gushing oil wells.”
And, second, I found that speculation in broadcast licenses does indeed appear to have reached a point where productive activity is quite difficult, though not yet impossible. One can make money in radio, but it’s mainly done by holding licenses rather than producing programming. ... read the whole articleWyn Achenbaum: Eminent Domain and Government Giveaways
... near me is a beautiful parkway which runs about 40 miles. For most of its length, it is a rather straight highway. But near its western end, the straight road has some huge curves, designed to take it around some properties which the builders of the highway did not seek to acquire via eminent domain after the owners chose not to sell. Every driver who uses the westernmost section of the Merritt Parkway must drive extra miles in order to protect those wealthy 1930s landholders and their successors. I estimate that at least 1.3 billion extra miles have been driven by the general public. Had the builders of the parkway exercised eminent domain, this mileage, and the pollution and expense involved, would have been saved. Instead, the costs are shifted onto every driver and onto the taxpayers who maintain the highway and its services. Eminent domain would, I think, have been an appropriate step to prevent that. Today, the properties are among the most valuable residences in Connecticut, but their owners don't compensate the rest of us for our inconvenience and expense. ... read the entire articleHenry George: The Land Question (1881)
Judge Samuel Seabury: An Address delivered upon the 100th anniversary of the birth of Henry George
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper