How should we treat scarce resources, natural resources that none of us can rightly claim as our private property? How do we justly share their value among all of us, while rewarding the effort of those who labor to extract them from the earth? How do we rightly share the huge value of our most choice urban land among all of us?

We can always create more buildings, but we can't create land, so we must treat it differently from that which we can create more of.

Henry George: Thou Shalt Not Steal

"Thou shalt not steal"; that is the law of God. What does it mean? Well, it does not merely mean that you shall not pick pockets! It does not merely mean that you shall not commit burglary or highway robbery! There are other forms of stealing which it prohibits as well. It certainly means (if it has any meaning) that we shall not take that to which we are not entitled, to the detriment of others.

Now, here is a desert. Here is a caravan going along over the desert. Here is a gang of robbers. They say: "Look! There is a rich caravan; let us go and rob it, kill the men if necessary, take their goods from them, their camels and horses, and walk off." But one of the robbers says:  "Oh, no; that is dangerous; besides, that would be stealing! Let us, instead of doing that, go ahead to where there is a spring, the only spring at which this caravan can get water in this desert. Let us put a wall around it and call it ours, and when they come up we won’t let them have any water until they have given us all the goods they have." That would be more gentlemanly, more polite, and more respectable; but would it not be theft all the same? And is it not theft of the same kind when people go ahead in advance of population and get land they have no use whatever for, and then, as people come into the world and population increases, will not let this increasing population use the land until they pay an exorbitant price?

That is the sort of theft on which our first families are founded. Do that under the false code of morality which exists here today and people will praise your forethought and your enterprise, and will say you have made money because you are a very superior person, and that all can make money if they will only work and be industrious! But is it not as clearly a violation of the command: "Thou shalt not steal," as taking the money out of a person’s pocket?

"Thou shalt not steal." That means, of course, that we ourselves must not steal. But does it not also mean that we must not suffer anybody else to steal if we can help it?

"Thou shalt not steal." Does it not also mean: "Thou shalt not suffer thyself or anybody else to be stolen from?" If it does, then we, all of us, rich and poor alike, are responsible for this social crime that produces poverty. Not merely the people who monopolize the land — they are not to blame above anyone else, but we who permit them to monopolize land are also parties to the theft. ... read the whole article

Henry George:  The Land Question (1881)

But there is a limited class of commodities whose selling price has no relation or dependence at all on the cost at which they have been produced; for example, rare wines that grow only on soils of limited extent; paintings by the old masters; statues at exquisite beauty and finish by celebrated sculptors; rare books, bronzes and medals, and provisions or articles of human food in cities during a siege, and more generally in times of scarcity and famine -- these commodities are limited in quantity, and it is physically impossible in the circumstances existing to increase, multiply, or augment them further. The seller of these commodities, not being afraid of competition, can put any price he pleases on them short of the purchasers' extreme estimate of the necessity, utility, or advantage to themselves of such commodities.

Fabulous sums of money, therefore, have been expended in the purchase of such commodities -- sometimes to indulge a taste for the fine arts; sometimes to satisfy a passion for the rare and the beautiful; and, sometimes, too, to gratify a feeling of vanity or ambition to be the sole proprietors of objects of antiquarian interest and curiosity. On the other hand, enormous sums of money have been paid in times of scarcity or during a siege for the commonest necessaries of life, or, failing these, for substitutes that have been requisitioned for human food, the use of which would make one shudder in circumstances of less pressing necessity.  Read the whole letter

Henry George: How to Help the Unemployed   (1894)

AN EPIDEMIC of what passes for charity is sweeping over the land. ... Yet there has been no disaster of fire or flood, no convulsion of nature, no destruction by public enemies. The seasons have kept their order, we have had the former and the latter rain, and the earth has not refused her increase. Granaries are filled to overflowing, and commodities, even these we have tried to make dear by tariff, were never before so cheap.

The scarcity that is distressing and frightening the whole country is a scarcity of employment. It is the unemployed for whom charity is asked: not those who cannot or will not work, but those able to work and anxious to work, who, through no fault of their own, cannot find work. So clear, indeed, is it that of the great masses who are suffering in this country to-day, by far the greater part are honest, sober, and industrious, that the pharisees who preach that poverty is due to laziness and thriftlessness, and the fanatics who attribute it to drink, are for the moment silent.

Yet why is it that men able to work and willing to work cannot find work? It is not strange that the failure to work should bring want, for it is only by work that human wants are satisfied. But to say that widespread distress comes from widespread inability to find employment no more explains the distress than to say that the man died from want of breath explains a sudden death. The pressing question, the real question, is, What causes the want of employment? ...

What more unnatural than that alms should be asked, not for the maimed, the halt and the blind, the helpless widow and the tender orphan, but for grown men, strong men, skilful men, men able to work and anxious to work! What more unnatural than that labor -- the producer of all food, all clothing, all shelter -- should not be exchangeable for its full equivalent in food, clothing, and shelter; that while the things it produces have value, labor, the giver of all value, should seem valueless!

Here are men, having the natural wants of man, having the natural powers of man -- powers adapted and intended and more than sufficient to supply those wants. To say that they are willing to use their powers for the satisfaction of their wants, yet cannot do so, is to say that there is a wrong. If it is not their fault, whose fault is it? Wrong somewhere there must be. ...

Why should charity be offered the unemployed? It is not alms they ask. They are insulted and embittered and degraded by being forced to accept as paupers what they would gladly earn as workers. What they ask is not charity, but the opportunity to use their own labor in satisfying their own wants. Why can they not have that? It is their natural right. He who made food and clothing and shelter necessary to man's life has also given to man, in the power of labor, the means of maintaining that life; and when, without fault of their own, men cannot exert that power, there is somewhere a wrong of the same kind as denial of the right of property and denial of the right of life -- a wrong equivalent to robbery and murder on the grandest scale.

Charity can only palliate present suffering a little at the risk of fatal disease. For charity cannot right a wrong; only justice can do that.

Yet this is to be expected. For the question of the unemployed is but a more than usually acute phase of the great labor question -- a question of the distribution of wealth.  ...

What do we mean when we say that it is scarcity of employment from which the masses are suffering? Not what we mean when we say of the idle rich that they suffer from want of employment. There is no scarcity of the need for work when so many are suffering for the want of things that work produces, when all of us would like more, and all but a very few of us could advantageously use more, of those things. Nor do we mean that there is scarcity of ability to work or willingness to work. Nor yet do we mean that there is scarcity of the natural materials and forces necessary for work. 'They are as abundant as they ever were or ever will be until the energy radiated by the sun upon our globe loses its intensity. What we really mean by "scarcity of employment " is such scarcity as would be brought about were an ice sheet continued into the summer to shut out the farmer from the fertile field he was anxious to cultivate; such a scarcity as was brought about in Lancashire when our blockade of the Southern ports raised suddenly and enormously the price of the staple that English operatives were anxious to turn into cloth.

What answers to the ice sheet or the blockade? Need we ask? May it not be seen, from our greatest cities to our newest territories, in the speculation which has everywhere been driving up the price of land -- that is to say, the toll that the active factor in all production must pay for permission to use the indispensable passive factor.  ...

If there are any who do not see the relation of these facts, it is because they have become accustomed to think of labor as deriving employment from capital, instead of, which is the true and natural relation, capital being the product and tool of labor. ...

So that, whether we begin at the right or the wrong end, any analysis brings us at last to the conclusion that the opportunities of finding employment and the rate of all wages depend ultimately upon the freedom of access to land; the price that labor must pay for its use.

"Scarcity of employment" is a comparatively new complaint in the United States. In our earlier times it was never heard of or thought of. There was "scarcity of employment " in Europe, but on this side of the Atlantic the trouble -- so it was deemed by a certain class -- was "scarcity of labor." ...

Today, as the last census reports show, the majority of American farmers are rack-rented tenants, or hold under mortgage, the first form of tenancy; and the great majority of our people are landless men, without right to employ their own labor and without stake in the land they still foolishly speak of as their country. This is the reason why the army of the unemployed has appeared among us, why by pauperism has already become chronic, and why in the tramp we have in more dangerous type the proletarian of ancient Rome.

These recurring spasms of business stagnation; these long-drawn periods of industrial depression, common to the civilized world, do not come from our treatment of money; are not caused and are not to be cured by changes of tariffs. Protection is a robbery of labor, and what is called free trade would give some temporary relief, but speculation in land would only set in the stronger, and at last labor and capital would again resist, by partial cessation, the blackmail demanded for their employment in production, and the same round would be run again. There is but one remedy, and that is what is now known as the single-tax -- the abolition of all taxes upon labor and capital, and of all taxes upon their processes and products, and the taking of economic rent, the unearned increment which now goes to the mere appropriator, for the payment of public expenses. Charity can merely demoralize and pauperize, while that indirect form of charity, the attempt to artificially "make work" by increasing public expenses and by charity woodyards and sewing-rooms, is still more dangerous. If, in this sense, work is to be made, it can be made more quickly by dynamite and kerosene.

But there is no need for charity; no need for "making work." All that is needed is to remove the restrictions that prevent the natural demand for the products of work from availing itself of the natural supply. Remove them today, and every unemployed man in the country could find for himself employment tomorrow, and his "effective demand" for the things he desires would infuse new life into every subdivision of business and industry, even that of the dentist, the preacher, the magazine writer, or the actor.

The country is suffering from "scarcity of employment." But let anyone to-day attempt to employ his own labor or that of others, whether in making two blades of grass grow where one grew before, or in erecting a factory, and he will at once meet the speculator to demand of him an unnatural price for the land he must use, and the tax-gatherer to fine him for his act in employing labor as if he had committed a crime. The common-sense way to cure "scarcity of employment" is to take taxes off the products and processes of employment and to impose in their stead the tax that would end speculation in land.  ... Read the entire article

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

Mason Gaffney: Full Employment, Growth And Progress On A Small Planet: Relieving Poverty While Healing The Earth

Now weave this pattern of scattered settlement into the whole system. It forces auto-dependency and truck-dependency, multiplying the need for fuels, pushing up their prices, and lowering the real wages of those who have to consume them in larger quantities at higher prices. Much of what looks like self-indulgent consumption of U.S. motorists is not joy-riding, but the forced consumption of commutation, forced by scattered urban sprawl, the product of land speculation. Auto-apologists get this backwards, of course, making joy-riding the cause and sprawl the effect.

Failure to put indigenous waters of southern California to full economical use creates the appearance of scarcity where there is actually enough water. It drives demand northwards to the Owens Valley and the Feather River, and eastward to the Colorado River, at enormous social cost, much of it for energy. Those who issue doomsday dessication scenarios, and deplore the loss of water to farming, also seem to have no idea of how a handful of giant landowners waste most of our water on low-valued uses like pasture, hay, small grains and rice, using primitive wasteful methods like flooding, or furrow irrigation. Only 2-3% of our irrigated lands use basic conservation techniques like drip emitters. Those who waste water in this way are basically substituting water, a limited natural resource, for the labor and capital others use to conserve water while growing higher-valued crops (Gaffney, 1997; Kahrl).

One could go on through a long list of natural resources, but once one gets the idea, those with understanding and imagination can fill in hundreds of details.  ... read the whole article

Ted Gwartney:  Estimating Land Values

UTILITY, SCARCITY AND DESIRABILITY

Land value can be thought of as the relationship between a desired location and a potential user. The ingredients that constitute land value are utility, scarcity and desirability. These factors must all be present for land to have value.

Land that lacks utility and scarcity also lacks value, since utility arouses desire for use and has the power to give satisfaction. The air we breathe has utility and is generally considered important, since it sustains and nourishes life. However, in the economic sense, air is not valuable because it hasn't been appropriated and there is enough for everyone. Thus there is no scarcity -- at least at the moment. This may not be true in the future, however, as knowledge of air pollution and its effect on human health make people aware that clean and breathable air may become scarce and subsequently valuable.

By themselves, utility and scarcity confer no value on land. User desire backed up by the ability to pay value must also exist in order to constitute effective demand. The potential user must be able to participate in the market to satisfy their desire.  ... Read the whole article

Peter Barnes: Capitalism 3.0: Preface (pages ix.-xvi)

I began pondering this dilemma about ten years ago after retiring from Working Assets, a business I cofounded in 1982. (Working Assets offers telephone and credit card services which automatically donate to nonprofit groups working for a better world.) My initial ruminations focused on climate change caused by human emissions of heat-trapping gases. Some analysts saw this as a “tragedy of the commons,” a concept popularized forty years ago by biologist Garrett Hardin. According to Hardin, people will always overuse a commons because it’s in their self-interest to do so. I saw the problem instead as a pair of tragedies: first a tragedy of the market, which has no way of curbing its own excesses, and second a tragedy of government, which fails to protect the atmosphere because polluting corporations are powerful and future generations don’t vote.

This way of viewing the situation led to a hypothesis: if the commons is a victim of market and government failures, rather than the cause of its own destruction, the remedy might lie in strengthening the commons. But how might that be done? According to prevailing wisdom, commons are inherently difficult to manage because no one effectively owns them. If Waste Management Inc. owned the atmosphere, it would charge dumpers a fee, just as it does for terrestrial landfills. But since no one has title to the atmosphere, dumping proceeds without limit or cost.

There’s a reason, of course, why no one has title to the atmosphere. For as long as anyone can remember there’s been more than enough air to go around, and thus no point in owning any of it. But nowadays, things are different. Our spacious skies aren’t empty anymore. We’ve filled them with invisible gases that are altering the climate patterns to which we and other species have adapted. In this new context, the atmosphere is a scarce resource, and having someone own it might not be a bad idea. ...
In retrospect, I realized the question I’d been asking since early adulthood was: Is capitalism a brilliant solution to the problem of scarcity, or is it itself modernity’s central problem? The question has many layers, but explorations of each layer led me to the same verdict. Although capitalism started as a brilliant solution, it has become the central problem of our day. It was right for its time, but times have changed.

When capitalism started, nature was abundant and capital was scarce; it thus made sense to reward capital above all else. Today we’re awash in capital and literally running out of nature. We’re also losing many social arrangements that bind us together as communities and enrich our lives in nonmonetary ways. This doesn’t mean capitalism is doomed or useless, but it does mean we have to modify it. We have to adapt it to the twenty-first century rather than the eighteenth. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

Sometime around 1950, capitalism entered a new phase. Until then, poverty was a widely shared American experience. Wages were low, hours were long, and unemployment was a wolf at almost every door. In the 1930s, it reached 25 percent.

This changed in the period following World War II. In 1958, economist John Kenneth Galbraith wrote a best-seller called The Affluent Society in which he noted that scarcity of goods was now a thing of the past for a majority of Americans. “The ordinary individual has access to amenities — foods, entertainment, personal transportation and plumbing — in which not even the rich rejoiced a century ago,” Galbraith observed. “So great has been the change that many of the desires of the individual are no longer even evident to him. They become so only as they are synthesized, elaborated, and nurtured by advertising and salesmanship, and these, in turn, have become among our most important and talented professions.”

This was a major phase change for capitalism. Before, people wanted more goods than the economy could provide. Demand, in other words, exceeded supply, and we lived in what might be called shortage capitalism. We could also call it Capitalism 1.0.

After the change, we shifted into surplus capitalism, or what I call Capitalism 2.0. In this version, there’s no limit to what corporations can produce; their problem is finding buyers. A sizeable chunk of GDP is spent to make people want this unneeded output. And credit is lavishly extended so they can buy it.

This historic shift can be described another way. A century ago, our chief scarcity was goods. It thus made sense to sacrifice other things in pursuit of goods, and capitalism was masterful at doing this. Today we’re waist-deep in thneeds, and our scarcities are different. Among the middle classes, the top scarcities, I’d say, are time, companionship, and community (see figure 2.2). Among the poor, there remains a lack of goods, but that lack isn’t due to a shortage of production capacity — it’s due to the poor’s inability to pay. The critical scarcity here, in other words, is income. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)

Commons Rent

It shouldn’t be thought that the commons is, or ought to be, a money-free zone. In fact, an important subject for economists (and the rest of us) to understand is commons rent.

By this I don’t mean the monthly check you send to a landlord. In economics, rent has a more precise meaning: it’s money paid because of scarcity. If you’re not an economist, that may sound puzzling, but consider this. A city has available a million apartments. In absolute terms, that means apartments aren’t scarce. But the city is confined geographically and demand for apartments is intense. In this economic sense, apartments are scarce. Now think back to that check you pay your landlord, or the mortgage you pay the bank. Part of it represents the landlord’s operating costs or the bank’s cost of money, but part of it is pure rent — that is, money paid for scarcity. That’s why New Yorkers and San Franciscans write such large checks to landlords and banks, while people in Nebraska don’t.

Rent rises when an increase in demand bumps into a limit in supply. Rent due to such bumping isn’t good or bad; it just is.We can (and should) debate the distribution of that rent, but the rent itself arises automatically. And it’s important that it does so, because this helps the larger economy allocate scarce resources efficiently. Other methods of allocation are possible. We can distribute scarce things on a first come, first served basis, or by lottery, political power, seniority, or race. Experience has shown, though, that selling scarce resources in open markets is usually the best approach, and such selling inevitably creates rent.

Rent was of great interest to the early economists — Adam Smith, David Ricardo, and John Stuart Mill, among others — because it constituted most of the money earned by landowners, and land was then a major cost of production. The supply of land, these economists noted, is limited, but demand for it steadily increases. So, therefore, does its rent. Thus, landowners benefit from what Mill called the unearned increment — the rise in land value attributable not to any effort of the owner, but purely to a socially created increase in demand bumping into a limited supply of good land.

The underappreciated American economist Henry George went further. Seeing both the riches and the miseries of the Gilded Age, he asked a logical question: Why does poverty persist despite economic growth? The answer, he believed, was the appropriation of rent by landowners. Even as the economy grew, the property rights system and the scarcity of land diverted almost all the gains to a landowning minority. Whereas competition limited the gains of working people, nothing kept down the landowners’ gains. As Mill had noted, the value of their land just kept rising. To fix the problem, George advocated a steep tax on land and the abolition of other taxes. His bestselling book Progress and Poverty catapulted him to fame in the 1880s, but mainstream economists never took him seriously.

By the twentieth century, economists had largely lost interest in rent; it seemed a trivial factor in wealth production compared to capital and labor. But the twenty-first century ecological crisis brings rent back to center-stage. Now it’s not just land that’s scarce, but clean water, undisturbed habitat, biological diversity, waste absorption capacity, and entire ecosystems.

This brings us back to common property rights. The definition and allocation of property rights are the primary factors in determining who pays whom for what. If, in the case of pollution rights, pollution rights are given free to past polluters, the rent from the polluted ecosystem will also go to them. That’s because prices for pollution-laden products will rise as pollution is limited (remember, if demand is constant, a reduction in supply causes prices to go up), and those higher prices will flow to producers (which is to say, polluters).

By contrast, if pollution rights are assigned to trusts representing pollutees and future generations, and if these trusts then sell these rights to polluters, the trusts rather than the polluters will capture the commons rent. If the trusts split this money between per capita dividends and expenditures on public goods, everyone benefits.

At this moment, based on pollution rights allocated so far, polluting corporations are getting most of the commons rent. But the case for trusts getting the rent in the future is compelling. If this is done, consumers will pay commons rent not to corporations or government, but to themselves as beneficiaries of commons trusts. Each citizen’s dividend will be the same, but his payments will depend on his purchases of pollution-laden products. The more he pollutes, the more rent he’ll pay. High polluters will get back less than they put in, while low polluters will get back more. The microeconomic incentives, in other words, will be perfect. (See figure 6.1.)

What’s equally significant, though less obvious, is that the macroeconomic incentives will be perfect too. That is, it will be in everyone’s interest to reduce the total level of pollution. Remember how rent for scarce things works: the lower the supply, the higher the rent. Now, imagine you’re a trustee of an ecosystem, and leaving aside (for the sake of argument) your responsibility to preserve the asset for future generations, you want to increase dividends. Do you raise the number of pollution permits you sell, or lower it? The correct, if counterintuitive answer is: you lower the number of permits. ... read the whole chapter

Hanno Beck:  Bathroom Policy

• We see people or corporations like Edward, taking more than their fair share of oil, fresh water, minerals, without compensating the rest of us.
• We see people or corporations like Charlie, polluting the land, water and air with toxic wastes, chemicals, carbon in the atmosphere, making the world less safe, forcing others to clean up, and they are not compensating the rest of us.
• We see people or corporations like Andrew, monopolizing resources such as land -– an urban land speculator who holds an acre out of use, anticipating a price rise, is displacing the rest of us, forcing development out into the countryside. A single acre of downtown land brought into use would save a dozen outside acres from premature sprawl development.