Government's Proper Role

Is it the purpose of our government and our elected representatives to protect privilege, or is it to protect the rights of each member of society to their fair share of the commons and to equal opportunity?

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

IN socialism as distinguished from individualism there is an unquestionable truth — and that a truth to which (especially by those most identified with free-trade principles) too little attention has been paid. Man is primarily an individual — a separate entity, differing from his fellows in desires and powers, and requiring for the exercise of those powers and the gratification of those desires individual play and freedom. But he is also a social being, having desires that harmonize with those of his fellows, and powers that can only be brought out in concerted action. There is thus a domain of individual action and a domain of social action — some things which can best be done when each acts for himself, and some things which can best be done when society acts for all its members. And the natural tendency of advancing civilization is to make social conditions relatively more important, and more and more to enlarge the domain of social action. This has not been sufficiently regarded, and at the present time, evil unquestionably results from leaving to individual action functions that by reason of the growth of society and the developments of the arts have passed into the domain of social action; just as, on the other hand, evil unquestionably results from social interference with what properly belongs to the individual. Society ought not to leave the telegraph and the railway to the management and control of individuals; nor yet ought society to step in and collect individual debts or attempt to direct individual industry. — Protection or Free Trade, Chapter 28 econlib

THE primary purpose and end of government being to secure the natural rights and equal liberty of each, all businesses that involve monopoly are within the necessary province of governmental regulation, and businesses that are in their nature complete monopolies become properly functions of the State. As society develops, the State must assume these functions, in their nature co-operative, in order to secure the equal rights and liberty of all. That is to say, as, in the process of integration, the individual becomes more and more dependent upon and subordinate to the all, it becomes necessary for government, which is properly that social organ by which alone the whole body of individuals can act, to take upon itself, in the interest of all, certain functions which cannot safely be left to individuals. — Social Problems — Chapter 17, The Functions of Government

IT is not the business of government to make men virtuous or religious, or to preserve the fool from the consequences of his own folly. Government should be repressive no further than is necessary to secure liberty by protecting the equal rights of each from aggression on the part of others, and the moment governmental prohibitions extend beyond this line they are in danger of defeating the very ends they are intended to serve.— Social Problems — Chapter 17, The Functions of Government

ALL schemes for securing equality in the conditions of men by placing the distribution of wealth in the hands of government have the fatal defect of beginning at the wrong end. They pre-suppose pure government; but it is not government that makes society; it is society that makes government; and until there is something like substantial equality in the distribution of wealth, we cannot expect pure government. — Protection or Free Trade, Chapter 28 econlib ... go to "Gems from George"

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

3. THE SINGLE TAX FALLS IN PROPORTION TO BENEFITS

To perceive that the single tax would justly measure the value of government service we have only to realize that the mass of individuals everywhere and now, in paying for the land they use, actually pay for government service in proportion to what they receive. He who would enjoy the benefits of a government must use land within its jurisdiction. He cannot carry land from where government is poor to where it is good; neither can he carry it from where the benefits of good government are few or enjoyed with difficulty to where they are many and fully enjoyed. He must rent or buy land where the benefits of government are available, or forego them. And unless he buys or rents where they are greatest and most available he must forego them in degree. Consequently, if he would work or live where the benefits of government are available, and does not already own land there, he will be compelled to rent or buy at a valuation which, other things being equal, will depend upon the value of the government service that the site he selects enables him to enjoy. 14 Thus does he pay for the service of government in proportion to its value to him. But he does not pay the public which provides the service; he is required to pay land-owners.

14. Land values are lower in all countries of poor government than in any country of better government, other things being equal. They are lower in cities of poor government, other things being equal, than in cities of better government. Land values are lower, for example, in Juarez, on the Mexican side of the Rio Grande, where government is bad, than in El Paso, the neighboring city on the American side, where government is better. They are lower in the same city under bad government than under improved government. When Seth Low, after a reform campaign, was elected mayor of Brooklyn, N.Y., rents advanced before he took the oath of office, upon the bare expectation that he would eradicate municipal abuses. Let the city authorities anywhere pave a street, put water through it and sewer it, or do any of these things, and lots in the neighborhood rise in value. Everywhere that the "good roads" agitation of wheel men has borne fruit in better highways, the value of adjacent land has increased. Instances of this effect as results of public improvements might be collected in abundance. Every man must be able to recall some within his own experience.

And it is perfectly reasonable that it should be so. Land and not other property must rise in value with desired improvements in government, because, while any tendency on the part of other kinds of property to rise in value is checked by greater production, land can not be reproduced.

Imagine an utterly lawless place, where life and property are constantly threatened by desperadoes. He must be either a very bold man or a very avaricious one who will build a store in such a community and stock it with goods; but suppose such a man should appear. His store costs him more than the same building would cost in a civilized community; mechanics are not plentiful in such a place, and materials are hard to get. The building is finally erected, however, and stocked. And now what about this merchant's prices for goods? Competition is weak, because there are few men who will take the chances he has taken, and he charges all that his customers will pay. A hundred per cent, five hundred per cent, perhaps one or two thousand per cent profit rewards him for his pains and risk. His goods are dear, enormously dear — dear enough to satisfy the most contemptuous enemy of cheapness; and if any one should wish to buy his store that would be dear too, for the difficulties in the way of building continue. But land is cheap! This is the type of community in which may be found that land, so often mentioned and so seldom seen, which "the owners actually can't give away, you know!"

But suppose that government improves. An efficient administration of justice rids the place of desperadoes, and life and property are safe. What about prices then? It would no longer require a bold or desperately avaricious man to engage in selling goods in that community, and competition would set in. High profits would soon come down. Goods would be cheap — as cheap as anywhere in the world, the cost of transportation considered. Builders and building materials could be had without difficulty, and stores would be cheap, too. But land would be dear! Improvement in government increases the value of that, and of that alone.

Now, the economic principle pursuant to which land-owners are thus able to charge their fellow-citizens for the common benefits of their common government points to the true method of taxation. With the exception of such other monopoly property as is analogous to land titles, and which in the purview of the single tax is included with land for purposes of taxation, 15 land is the only kind of property that is increased in value by government; and the increase of value is in proportion, other influences aside, to the public service which its possession secures to the occupant. Therefore, by taxing land in proportion to its value, and exempting all other property, kindred monopolies excepted — that is to say, by adopting the single tax — we should be levying taxes according to benefits.16

15. Railroad franchises, for example, are not usually thought of as land titles, but that is what they are. By an act of sovereign authority they confer rights of control for transportation purposes over narrow strips of land between terminals and along trading points. The value of this right of way is a land value.

16. Each occupant would pay to his landlord the value of the public benefits in the way of highways, schools, courts, police and fire protection, etc., that his site enabled him to enjoy. The landlord would pay a tax proportioned to the pecuniary benefits conferred upon him by the public in raising and maintaining the value of his holding. And if occupant and owner were the same, he would pay directly according to the value of his land for all the public benefits he enjoyed, both intangible and pecuniary.

And in no sense would this be class taxation. Indeed, the cry of class taxation is a rather impudent one for owners of valuable land to raise against the single tax, when it is considered that under existing systems of taxation they are exempt. 17 Even the poorest and the most degraded classes in the community, besides paying land-owners for such public benefits as come their way, are compelled by indirect taxation to contribute to the support of government. But landowners as a class go free. They enjoy the protection of the courts, and of police and fire departments, and they have the use of schools and the benefit of highways and other public improvements, all in common with the most favored, and upon the same specific terms; yet, though they go through the form of paying taxes, and if their holdings are of considerable value pose as "the tax-payers" on all important occasions, they, in effect and considered as a class, pay no taxes, because government, by increasing the value of their land, enables them to recover back in higher rents and higher prices more than their taxes amount to. Enjoying the same tangible benefits of government that others do, many of them as individuals and all of them as a class receive in addition a tangible pecuniary benefit which government confers upon no other property-owners. The value of their property is enhanced in proportion to the benefits of government which its occupants enjoy. To tax them alone, therefore, is not to discriminate against them; it is to charge them for what they get.18

17. While the landholders of the City of Washington were paying something less than two per cent annually in taxes, a Congressional Committee (Report of the Select Committee to Investigate Tax Assessments in the District of Columbia, composed of Messrs. Johnson, of Ohio, Chairman, Wadsworth, of New York, and Washington, of Tennessee. Made to the House of Representatives, May 24, 1892. Report No. 1469), brought out the fact that the value of their land had been increasing at a minimum rate of ten per cent per annum. The Washington land-owners as a class thus appear to have received back in higher land values, actually and potentially, about ten dollars for every two dollars that as land-owners they paid in taxes. If any one supposes that this condition is peculiar to Washington let him make similar estimates for any progressive locality, and see if the land-owners there are not favored in like manner.

But the point is not dependent upon increase in the capitalized value of land. If the land yields or will yield to its owner an income in the nature of actual or potential ground rent, then to the extent that this actual or possible income is dependent upon government the landlord is in effect exempt from taxation. No matter what tax he pays on account of his ownership of land, the public gives it back to him to that extent.

18. Take for illustration two towns, one of excellent government and the other of inefficient government, but in all other respects alike. Suppose you are hunting for a place of residence and find a suitable site in the town of good government. For simplicity of illustration let us suppose that the land there is not sold outright but is let upon ground rent. You meet the owner of the lot you have selected and ask him his terms. He replies:

"Two hundred and fifty dollars a year."

"Two hundred and fifty dollars a year!" you exclaim. "Why, I can get just as good a site in that other town for a hundred dollars a year."

"Certainly you can," he will say. "But if you build a house there and it catches fire it will burn down; they have no fire department. If you go out after dark you will be 'held up' and robbed; they have no police force. If you ride out in the spring, your carriage will stick in the mud up to the hubs, and if you walk you may break your legs and will be lucky if you don t break your neck; they have no street pavements and their sidewalks are dangerously out of repair. When the moon doesn't shine the streets are in darkness, for they have no street lights. The water you need for your house you must get from a well; there is no water supply there. Now in our town it is different. We have a splendid fire department, and the best police force in the world. Our streets are macadamized, and lighted with electricity; our sidewalks are always in first class repair; we have a water system that equals that of New York; and in every way the public benefits in this town are unsurpassed. It is the best governed town in all this region. Isn't it worth a hundred and fifty dollars a year more for a building site here than over in that poorly governed town?"

You recognize the advantages and agree to the terms. But when your house is built and the assessor visits you officially, what would be the conversation if your sense of the fitness of things were not warped by familiarity with false systems of taxation? Would it not be something like what follows?

"How much do you regard this house as worth? " asks the assessor.

"What is that to you?" you inquire.

"I am the town assessor and am about to appraise your property for taxation."

"Am I to be taxed by this town? What for?"

"What for?" echoes the assessor in surprise. "What for? Is not your house protected from fire by our magnificent fire department? Are not you protected from robbery by the best police force in the world? Do not you have the use of macadamized pavements, and good sidewalks, and electric street lights, and a first class water supply? Don't you suppose these things cost something? And don't you think you ought to pay your share?"

"Yes," you answer, with more or less calmness; "I do have the benefit of these things, and I do think that I ought to pay my share toward supporting them. But I have already paid my share for this year. I have paid it to the owner of this lot. He charges me two hundred and fifty dollars a year -- one hundred and fifty dollars more than I should pay or he could get but for those very benefits. He has collected my share of this year's expense of maintaining town improvements; you go and collect from him. If you do not, but insist upon collecting from me, I shall be paying twice for these things, once to him and once to you; and he won't be paying at all, but will be making money out of them, although he derives the same benefits from them in all other respects that I do." ...

c. Significance of the Upward Tendency of Rent

Now, what is the meaning of this tendency of Rent to rise with social progress, while Wages tend to fall? Is it not a plain promise that if Rent be treated as common property, advances in productive power shall be steps in the direction of realizing through orderly and natural growth those grand conceptions of both the socialist and the individualist, which in the present condition of society are justly ranked as Utopian? Is it not likewise a plain warning that if Rent be treated as private property, advances in productive power will be steps in the direction of making slaves of the many laborers, and masters of a few land-owners? Does it not mean that common ownership of Rent is in harmony with natural law, and that its private appropriation is disorderly and degrading? When the cause of Rent and the tendency illustrated in the preceding chart are considered in connection with the self-evident truth that God made the earth for common use and not for private monopoly, how can a contrary inference hold? Caused and increased by social growth, 97 the benefits of which should be common, and attaching to land, the just right to which is equal, Rent must be the natural fund for public expenses. 98

97. Here, far away from civilization, is a solitary settler. Getting no benefits from government, he needs no public revenues, and none of the land about him has any value. Another settler comes, and another, until a village appears. Some public revenue is then required. Not much, but some. And the land has a little value, only a little; perhaps just enough to equal the need for public revenue. The village becomes a town. More revenues are needed, and land values are higher. It becomes a city. The public revenues required are enormous, and so are the land values.

98. Society, and society alone, causes Rent. Rising with the rise, advancing with the growth, and receding with the decline of society, it measures the earning power of society as a whole as distinguished from that of the individuals. Wages, on the other hand, measure the earning power of the individuals as distinguished from that of society as a whole. We have distinguished the parts into which Wealth is distributed as Wages and Rent; but it would be correct, indeed it is the same thing, to regard all wealth as earnings, and to distinguish the two kinds as Communal Earnings and Individual Earnings. How, then, can there be any question as to the fund from which society should be supported? How can it be justly supported in any other way than out of its own earnings?

If there be at all such a thing as design in the universe — and who can doubt it? — then has it been designed that Rent, the earnings of the community, shall be retained for the support of the community, and that Wages, the earnings of the individual, shall be left to the individual in proportion to the value of his service. This is the divine law, whether we trace it through complex moral and economic relations, or find it in the eighth commandment. ... read the book

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

Q1. Do you regard the single tax as a panacea for all social disease?
A. When William Lloyd Garrison announced his conversion to the single tax in a letter to Henry George, he took pains to state that he did not believe it to be a panacea, and Mr. George replied : "Neither do I; but I believe that freedom is." Your question may be answered in the same way. Freedom is the panacea for social wrongs and the ills they breed, and the single tax principle is the tap-root of freedom.

Q3. In an interior or frontier town, where land has but little value, how would you raise enough money for schools, highways, and other public needs?
A. There is no town whose finances are reasonably managed in which the land values are insufficient for local needs. Schools, highways, and so forth, are not local but general, and should be maintained from the land values of the state at large.

Q21. Do not the benefits of good government increase the value of houses as well as of land?
A. No. Houses are never worth any more than it costs to reproduce them. Good government tends to diminish the cost of house building; how, then, can good government increase the value of houses? You are confused by the fact that houses, being attached to land, seem to increase in value, when it is the land and not the house that really increases. It is the same mistake that a somewhat noted economic teacher, who advocates protection as his specialty, made when he tried to show that there is an "unearned increment" to houses as well as to lands. He did so by instancing a lot of vacant land which had risen in value from $5000 to $10,000, and comparing it with a house on a neighboring lot which, as he said, had also increased in value from $5000 to $10,000. At the moment when he wrote, the house to which he referred could have been reproduced for $5000; and had he been capable of thinking out a proposition he must have discovered that it was the lot on which the house stood, and not the house itself, which had increased in value.

Q26. Hasn't every man who needs it a right to be employed by the government?
A. No. But he has a right to have government secure him in the enjoyment of his equal right to the opportunities for employment that nature and social growth supply. When government secures him in that respect, if he cannot get work it is because (1) he does not offer the kind of service that people want; or (2) he is incapable. His remedy, if he does not offer the kind of service that people want, is either to make people see that they are mistaken, or go to work at something else; if he is incapable, his remedy is to improve himself. In no case has he a right to government interference in his behalf, either through schemes to make work, or by bounties or tariffs. ... read the book

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

Q3. What is meant by economic rent?
A. Gross ground rent -- the annual site value of land -- what land, including any quality or content of the land itself, is worth annually for use -- what the land does or would command for use per annum if offered in open market -- the annual value of the exclusive use in control of a given area of land, involving the enjoyment of those "rights and privileges thereto pertaining" which are stipulated in every title deed, and which, enumerated specifically, are as follows: right and ease of access to

* water, and
* health inspection,
* sewerage,
* fire protection,
* police,
* schools,
* libraries,
* museums,
* parks,
* playgrounds,
* steam and electric railway service,
* gas and electric lighting,
* telegraph and telephone service,
* subways,
* ferries,
* churches,
* public schools,
* private schools,
* colleges,
* universities,
* public buildings --

utilities which depend for their efficiency and economy on the character of the government; which collectively constitute the economic and social advantages of the land which are due to the presence and activity of population, and are inseparable therefrom, including the benefit of proximity to, and command of, facilities for commerce and communication with the world -- an artificial value created primarily through public expenditure of taxes. For the sake of brevity, the substance of this definition may be conveniently expressed as the value of "proximity." It is ordinarily measured by interest on investment plus taxes.

Q15. What should be the limit of revenue under the single tax?
A. The same as under any other system of taxation, the cost of government economically administered.

Q16. Did not Henry George hold that the full ground rent of land should be taken in taxation?
A. No! Not only did he concede a margin of rent to the landlord, but as a matter of fact, as Thomas G. Shearman said, "not all the power of all governments" could collect in taxation all of ground rent.

... read the whole article

Albert Jay Nock — Henry Gorge: Unorthodox American

George held with Paine and Thomas Jefferson that government is at best a necessary evil, and the less of it the better. Hence the right thing was to decentralize it as far as possible, and reduce the functions and powers of the state to an absolute minimum, which, he said, the confiscation of rent would do automatically; whereas the collectivist proposal to confiscate and manage natural resources as a state enterprise would have precisely the opposite effect — it would tend to make the state everything and the individual nothing. ...read the whole article

Kris Feder: Progress and Poverty Today

Henry George: The Condition of Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)

As to the use of land, we hold: That —

While the right of ownership that justly attaches to things produced by labor cannot attach to land, there may attach to land a right of possession. As your Holiness says, “God has not granted the earth to mankind in general in the sense that all without distinction can deal with it as they please,” and regulations necessary for its best use may be fixed by human laws. But such regulations must conform to the moral law — must secure to all equal participation in the advantages of God’s general bounty. The principle is the same as where a human father leaves property equally to a number of children. Some of the things thus left may be incapable of common use or of specific division. Such things may properly be assigned to some of the children, but only under condition that the equality of benefit among them all be preserved.

In the rudest social state, while industry consists in hunting, fishing, and gathering the spontaneous fruits of the earth, private possession of land is not necessary. But as men begin to cultivate the ground and expend their labor in permanent works, private possession of the land on which labor is thus expended is needed to secure the right of property in the products of labor. For who would sow if not assured of the exclusive possession needed to enable him to reap? who would attach costly works to the soil without such exclusive possession of the soil as would enable him to secure the benefit?

This right of private possession in things created by God is however very different from the right of private ownership in things produced by labor. The one is limited, the other unlimited, save in cases when the dictate of self-preservation terminates all other rights. The purpose of the one, the exclusive possession of land, is merely to secure the other, the exclusive ownership of the products of labor; and it can never rightfully be carried so far as to impair or deny this. While any one may hold exclusive possession of land so far as it does not interfere with the equal rights of others, he can rightfully hold it no further.

Thus Cain and Abel, were there only two men on earth, might by agreement divide the earth between them. Under this compact each might claim exclusive right to his share as against the other. But neither could rightfully continue such claim against the next man born. For since no one comes into the world without God’s permission, his presence attests his equal right to the use of God’s bounty. For them to refuse him any use of the earth which they had divided between them would therefore be for them to commit murder. And for them to refuse him any use of the earth, unless by laboring for them or by giving them part of the products of his labor he bought it of them, would be for them to commit theft. ...

Nor do we hesitate to say that this way of securing the equal right to the bounty of the Creator and the exclusive right to the products of labor is the way intended by God for raising public revenues. For we are not atheists, who deny God; nor semi-atheists, who deny that he has any concern in politics and legislation.

It is true as you say — a salutary truth too often forgotten — that “man is older than the state, and he holds the right of providing for the life of his body prior to the formation of any state.” Yet, as you too perceive, it is also true that the state is in the divinely appointed order. For He who foresaw all things and provided for all things, foresaw and provided that with the increase of population and the development of industry the organization of human society into states or governments would become both expedient and necessary.

No sooner does the state arise than, as we all know, it needs revenues. This need for revenues is small at first, while population is sparse, industry rude and the functions of the state few and simple. But with growth of population and advance of civilization the functions of the state increase and larger and larger revenues are needed.

Now, He that made the world and placed man in it, He that pre-ordained civilization as the means whereby man might rise to higher powers and become more and more conscious of the works of his Creator, must have foreseen this increasing need for state revenues and have made provision for it. That is to say: The increasing need for public revenues with social advance, being a natural, God-ordained need, there must be a right way of raising them — some way that we can truly say is the way intended by God. It is clear that this right way of raising public revenues must accord with the moral law.

Hence:

It must not take from individuals what rightfully belongs to individuals.

It must not give some an advantage over others, as by increasing the prices of what some have to sell and others must buy.

It must not lead men into temptation, by requiring trivial oaths, by making it profitable to lie, to swear falsely, to bribe or to take bribes.

It must not confuse the distinctions of right and wrong, and weaken the sanctions of religion and the state by creating crimes that are not sins, and punishing men for doing what in itself they have an undoubted right to do.

It must not repress industry. It must not check commerce. It must not punish thrift. It must offer no impediment to the largest production and the fairest division of wealth.

Let me ask your Holiness to consider the taxes on the processes and products of industry by which through the civilized world public revenues are collected — the octroi duties that surround Italian cities with barriers; the monstrous customs duties that hamper intercourse between so-called Christian states; the taxes on occupations, on earnings, on investments, on the building of houses, on the cultivation of fields, on industry and thrift in all forms. Can these be the ways God has intended that governments should raise the means they need? Have any of them the characteristics indispensable in any plan we can deem a right one?

All these taxes violate the moral law. They take by force what belongs to the individual alone; they give to the unscrupulous an advantage over the scrupulous; they have the effect, nay are largely intended, to increase the price of what some have to sell and others must buy; they corrupt government; they make oaths a mockery; they shackle commerce; they fine industry and thrift; they lessen the wealth that men might enjoy, and enrich some by impoverishing others.

Yet what most strikingly shows how opposed to Christianity is this system of raising public revenues is its influence on thought.

Christianity teaches us that all men are brethren; that their true interests are harmonious, not antagonistic. It gives us, as the golden rule of life, that we should do to others as we would have others do to us. But out of the system of taxing the products and processes of labor, and out of its effects in increasing the price of what some have to sell and others must buy, has grown the theory of “protection,” which denies this gospel, which holds Christ ignorant of political economy and proclaims laws of national well-being utterly at variance with his teaching. This theory sanctifies national hatreds; it inculcates a universal war of hostile tariffs; it teaches peoples that their prosperity lies in imposing on the productions of other peoples restrictions they do not wish imposed on their own; and instead of the Christian doctrine of man’s brotherhood it makes injury of foreigners a civic virtue.

“By their fruits ye shall know them.” Can anything more clearly show that to tax the products and processes of industry is not the way God intended public revenues to be raised?

But to consider what we propose — the raising of public revenues by a single tax on the value of land irrespective of improvements — is to see that in all respects this does conform to the moral law.

Let me ask your Holiness to keep in mind that the value we propose to tax, the value of land irrespective of improvements, does not come from any exertion of labor or investment of capital on or in it — the values produced in this way being values of improvement which we would exempt. The value of land irrespective of improvement is the value that attaches to land by reason of increasing population and social progress. This is a value that always goes to the owner as owner, and never does and never can go to the user; for if the user be a different person from the owner he must always pay the owner for it in rent or in purchase-money; while if the user be also the owner, it is as owner, not as user, that he receives it, and by selling or renting the land he can, as owner, continue to receive it after he ceases to be a user.

Thus, taxes on land irrespective of improvement cannot lessen the rewards of industry, nor add to prices,* nor in any way take from the individual what belongs to the individual. They can take only the value that attaches to land by the growth of the community, and which therefore belongs to the community as a whole.

* As to this point it may be well to add that all economists are agreed that taxes on land values irrespective of improvement or use — or what in the terminology of political economy is styled rent, a term distinguished from the ordinary use of the word rent by being applied solely to payments for the use of land itself — must be paid by the owner and cannot be shifted by him on the user. To explain in another way the reason given in the text: Price is not determined by the will of the seller or the will of the buyer, but by the equation of demand and supply, and therefore as to things constantly demanded and constantly produced rests at a point determined by the cost of production — whatever tends to increase the cost of bringing fresh quantities of such articles to the consumer increasing price by checking supply, and whatever tends to reduce such cost decreasing price by increasing supply. Thus taxes on wheat or tobacco or cloth add to the price that the consumer must pay, and thus the cheapening in the cost of producing steel which improved processes have made in recent years has greatly reduced the price of steel. But land has no cost of production, since it is created by God, not produced by man. Its price therefore is fixed —

1 (monopoly rent), where land is held in close monopoly, by what the owners can extract from the users under penalty of deprivation and consequently of starvation, and amounts to all that common labor can earn on it beyond what is necessary to life;
2 (economic rent proper), where there is no special monopoly, by what the particular land will yield to common labor over and above what may be had by like expenditure and exertion on land having no special advantage and for which no rent is paid; and,
3 (speculative rent, which is a species of monopoly rent, telling particularly in selling price), by the expectation of future increase of value from social growth and improvement, which expectation causing landowners to withhold land at present prices has the same effect as combination.

Taxes on land values or economic rent can therefore never be shifted by the landowner to the land-user, since they in no wise increase the demand for land or enable landowners to check supply by withholding land from use. Where rent depends on mere monopolization, a case I mention because rent may in this way be demanded for the use of land even before economic or natural rent arises, the taking by taxation of what the landowners were able to extort from labor could not enable them to extort any more, since laborers, if not left enough to live on, will die. So, in the case of economic rent proper, to take from the landowners the premiums they receive, would in no way increase the superiority of their land and the demand for it. While, so far as price is affected by speculative rent, to compel the landowners to pay taxes on the value of land whether they were getting any income from it or not, would make it more difficult for them to withhold land from use; and to tax the full value would not merely destroy the power but the desire to do so.

To take land values for the state, abolishing all taxes on the products of labor, would therefore leave to the laborer the full produce of labor; to the individual all that rightfully belongs to the individual. It would impose no burden on industry, no check on commerce, no punishment on thrift; it would secure the largest production and the fairest distribution of wealth, by leaving men free to produce and to exchange as they please, without any artificial enhancement of prices; and by taking for public purposes a value that cannot be carried off, that cannot be hidden, that of all values is most easily ascertained and most certainly and cheaply collected, it would enormously lessen the number of officials, dispense with oaths, do away with temptations to bribery and evasion, and abolish man-made crimes in themselves innocent.

But, further: That God has intended the state to obtain the revenues it needs by the taxation of land values is shown by the same order and degree of evidence that shows that God has intended the milk of the mother for the nourishment of the babe.

See how close is the analogy. In that primitive condition ere the need for the state arises there are no land values. The products of labor have value, but in the sparsity of population no value as yet attaches to land itself. But as increasing density of population and increasing elaboration of industry necessitate the organization of the state, with its need for revenues, value begins to attach to land. As population still increases and industry grows more elaborate, so the needs for public revenues increase. And at the same time and from the same causes land values increase. The connection is invariable. The value of things produced by labor tends to decline with social development, since the larger scale of production and the improvement of processes tend steadily to reduce their cost. But the value of land on which population centers goes up and up. Take Rome or Paris or London or New York or Melbourne. Consider the enormous value of land in such cities as compared with the value of land in sparsely settled parts of the same countries. To what is this due? Is it not due to the density and activity of the populations of those cities — to the very causes that require great public expenditure for streets, drains, public buildings, and all the many things needed for the health, convenience and safety of such great cities? See how with the growth of such cities the one thing that steadily increases in value is land; how the opening of roads, the building of railways, the making of any public improvement, adds to the value of land. Is it not clear that here is a natural law — that is to say a tendency willed by the Creator? Can it mean anything else than that He who ordained the state with its needs has in the values which attach to land provided the means to meet those needs?

That it does mean this and nothing else is confirmed if we look deeper still, and inquire not merely as to the intent, but as to the purpose of the intent. If we do so we may see in this natural law by which land values increase with the growth of society not only such a perfectly adapted provision for the needs of society as gratifies our intellectual perceptions by showing us the wisdom of the Creator, but a purpose with regard to the individual that gratifies our moral perceptions by opening to us a glimpse of his beneficence.

Consider: Here is a natural law by which as society advances the one thing that increases in value is land — a natural law by virtue of which all growth of population, all advance of the arts, all general improvements of whatever kind, add to a fund that both the commands of justice and the dictates of expediency prompt us to take for the common uses of society. Now, since increase in the fund available for the common uses of society is increase in the gain that goes equally to each member of society, is it not clear that the law by which land values increase with social advance while the value of the products of labor does not increase, tends with the advance of civilization to make the share that goes equally to each member of society more and more important as compared with what goes to him from his individual earnings, and thus to make the advance of civilization lessen relatively the differences that in a ruder social state must exist between the strong and the weak, the fortunate and the unfortunate? Does it not show the purpose of the Creator to be that the advance of man in civilization should be an advance not merely to larger powers but to a greater and greater equality, instead of what we, by our ignoring of his intent, are making it, an advance toward a more and more monstrous inequality? ...

With both anarchists and socialists, we, who for want of a better term have come to call ourselves single-tax men, fundamentally differ. We regard them as erring in opposite directions — the one in ignoring the social nature of man, the other in ignoring his individual nature. While we see that man is primarily an individual, and that nothing but evil has come or can come from the interference by the state with things that belong to individual action, we also see that he is a social being, or, as Aristotle called him, a political animal, and that the state is requisite to social advance, having an indispensable place in the natural order. Looking on the bodily organism as the analogue of the social organism, and on the proper functions of the state as akin to those that in the human organism are discharged by the conscious intelligence, while the play of individual impulse and interest performs functions akin to those discharged in the bodily organism by the unconscious instincts and involuntary motions, the anarchists seem to us like men who would try to get along without heads and the socialists like men who would try to rule the wonderfully complex and delicate internal relations of their frames by conscious will. ...

Take, for instance, protectionism. What support it has, beyond the mere selfish desire of sellers to compel buyers to pay them more than their goods are worth, springs from such superficial ideas as that production, not consumption, is the end of effort; that money is more valuable than money’s-worth, and to sell more profitable than to buy; and above all from a desire to limit competition, springing from an unanalyzing recognition of the phenomena that necessarily follow when men who have the need to labor are deprived by monopoly of access to the natural and indispensable element of all labor. Its methods involve the idea that governments can more wisely direct the expenditure of labor and the investment of capital than can laborers and capitalists, and that the men who control governments will use this power for the general good and not in their own interests. They tend to multiply officials, restrict liberty, invent crimes. They promote perjury, fraud and corruption. And they would, were the theory carried to its logical conclusion, destroy civilization and reduce mankind to savagery. ...

You state that you approach the subject with confidence, yet in all that greater part of the Encyclical (19-67) devoted to the remedy, while there is an abundance of moral reflections and injunctions, excellent in themselves but dead and meaningless as you apply them, the only definite practical proposals for the improvement of the condition of labor are:

1. That the state should step in to prevent overwork, to restrict the employment of women and children, to secure in workshops conditions not unfavorable to health and morals, and, at least where there is danger of insufficient wages provoking strikes, to regulate wages (39-40).

2. That it should encourage the acquisition of property (in land) by working-men (50-51).

3. That working-men’s associations should be formed (52-67). These remedies so far as they go are socialistic, and though the Encyclical is not without recognition of the individual character of man and of the priority of the individual and the family to the state, yet the whole tendency and spirit of its remedial suggestions lean unmistakably to socialism — extremely moderate socialism it is true; socialism hampered and emasculated by a supreme respect for private possessions; yet socialism still. But, although you frequently use the ambiguous term “private property” when the context shows that you have in mind private property in land, the one thing clear on the surface and becoming clearer still with examination is that you insist that whatever else may be done, the private ownership of land shall be left untouched. ... read the whole letter

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 10. Effect of Remedy Upon Wealth Production (in the unabridged P&P: Part IX — Effects of the Remedy: Chapter 1 — Of the effect upon the production of wealth)

The elder Mirabeau, we are told, ranked the proposition of Quesnay, to substitute one single tax on rent (the impôt unique) for all other taxes, as a discovery equal in utility to the invention of writing or the substitution of the use of money for barter.

To whosoever will think over the matter, this saying will appear an evidence of penetration rather than of extravagance. The advantages which would be gained by substituting for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important the more they are considered.

• This is the secret which would transform the little village into the great city.*
• With all the burdens removed which now oppress industry and hamper exchange, the production of wealth would go on with a rapidity now undreamed of.
• This, in its turn, would lead to an increase in the value of land — a new surplus which society might take for general purposes.
• And released from the difficulties which attend the collection of revenue in a way that begets corruption and renders legislation the tool of special interests, society could assume functions which the increasing complexity of life makes it desirable to assume, but which the prospect of political demoralization under the present system now leads thoughtful men to shrink from.

  *At the beginning of Book IX of the complete Progress & Poverty, Henry George quotes from Themistocles: "I cannot play upon any stringed instrument, but I can tell you how of a little village to make a great and glorious city."

Consider the effect upon the production of wealth.

To abolish the taxation which, acting and reacting, now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. ... read the whole chapter

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

That is what we strive for — for the freedom of all, for self-government to all (hear, hear) — and for as little government as possible: (Laughter and cheers) We don't believe that tyranny is a thing alone of kings and monarchs; we know well that majorities can be as tyrannous as aristocracies (hear, hear); we know that mobs can persecute as well as crowned heads. (Hear, hear) What we ask for is freedom — that in each locality, large or small, the people of that locality shall be free to manage the affairs that pertain only to that locality (hear, hear, and cheers); that each individual shall be free to manage the affairs that relate to him; that government shall not presume to say of whom he shall buy or to whom he shall sell, shall not attempt to dictate to him in any way, but shall confine itself to its proper function of preserving the public peace, of preventing the strong from oppressing the weak, of utilizing for the public good all the revenues that belong of right to the public, and of managing those affairs that are best managed by the whole. (Cheers) Our doctrine is the doctrine of freedom, our gospel is the gospel of liberty, and we have faith in it, why should we not? (Cheers) ... read the whole speech

The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881) 

Judge Samuel Seabury: An Address delivered upon the 100th anniversary of the birth of Henry George

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

Henry George never wrote a line which could be tortured into the support of the principles of the totalitarian state, or that gave sanction to the theory that men in their individual and social activities should be regimented and directed by great bureaucracies such as all our modern states, including our so-called democracies, have set up.

Henry George believed in the state, but it was a state that was the servant, not the master, of the people: a state that was to be kept within bounds, and whose powers were strictly limited and to be exercised in subordination to the will of the people — a state, in short, such as is defined in our national and state constitutions.

Machiavelli and Hobbes in their writings expressed the foundations for despotism, and disclosed the cruelties, subterfuges and deceits by which alone a despotism can be achieved.

Marx and Lenin, because of their belief that the rights of the individual were fictional rather than real, built upon those principles of Machiavelli and Hobbes which constitute the foundation of the modern totalitarian state. 'The whole idea of the totalitarian state, whether it finds expression in a system of fascism, either of the Italian or the German variety, or in the equally odious system of a dictatorship of the proletariat, rests upon a disregard of fundamental human rights and the substitution of an autocratic will for the encouragement of individual initiative among the people. The tragic menace implicit in the despotism of the totalitarian state, which makes it an offense to God and man, is its claim of absolutism to crush the individuality and destroy the conscience of men.

The principles of freedom enunciated by Henry George are utterly inconsistent with the Marxian creed which ends in state socialism or in the totalitarian state, in principle identical with it. Indeed, the great French economist, Charles Gide, in his lecture on the cooperative program, contrasts a voluntary cooperative system, which retains individual initiative as the basis of all economic activity and preserves the spontaneity and inexhaustible reserves of invention and creation, with state socialism, which is proving daily more sterile both in economic production and in affording protection to public and private freedom.

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

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

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

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

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

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

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

I’m also a liberal, in the sense that I’m not averse to a role for government in society. Yet history has convinced me that representative government can’t adequately protect the interests of ordinary citizens. Even less can it protect the interests of future generations, ecosystems, and nonhuman species. The reason is that most — though not all — of the time, government puts the interests of private corporations first. This is a systemic problem of a capitalist democracy, not just a matter of electing new leaders.

If you identify with the preceding sentiments, then you might be confused and demoralized, as I have been lately. If capitalism as we know it is deeply flawed, and government is no savior, where lies hope? This strikes me as one of the great dilemmas of our time. For years the Right has been saying — nay, shouting — that government is flawed and that only privatization, deregulation, and tax cuts can save us. For just as long, the Left has been insisting that markets are flawed and that only government can save us. The trouble is that both sides are half-right and half-wrong. They’re both right that markets and state are flawed, and both wrong that salvation lies in either sphere. But if that’s the case, what are we to do? Is there, perhaps, a missing set of institutions that can help us? ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 3: The Limits of Government (pages 33-48)

In his essay “The Tragedy of the Commons,” Garrett Hardin envisioned only two ways to save the commons: statism and privatism. Either a coercive government would have to stop humans from mindlessly destroying the planet, or private property owners, operating in a free market, would have to do the job. In the next two chapters I’ll show why neither of these approaches suffices.

In considering the potential of governmental remedies, let’s clarify what we mean. We’re not talking about tyranny; we’re talking about legitimate forms of government activity such as regulation, taxation, and public ownership. Can these traditional methods effectively preserve common wealth for our children? ...

The notion that government should protect the commons goes back a long way. Sometimes this duty is considered so basic it’s taken for granted. At other times, it’s given a name: the public trust. Several states actually put this duty in writing. Pennsylvania’s constitution, for example, declares: “Pennsylvania’s public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.” Note that in this constitutional dictum, serving as trustee of natural resources isn’t an option for the state, it’s an affirmative duty.

Yet here as elsewhere, rhetoric and reality differ. Political institutions don’t function in a vacuum; they function in a world in which power is linked to property. This was true when fifty-five white male property owners wrote our Constitution, and it’s no less true today.

America has been engaged in two experiments simultaneously: one is called democracy, the other, capitalism. It would be nice if these experiments ran separately, but they don’t. They go on in the same bottle, and each affects the other. After two hundred years, we can draw some conclusions about how they interact. One is that capitalism distorts democracy more than the other way around.

The reason capitalism distorts democracy is simple. Democracy is an open system, and economic power can easily infect it. By contrast, capitalism is a gated system; its bastions aren’t easily accessed by the masses. Capital’s primacy thus isn’t an accident, nor the fault of George W. Bush. It’s what happens when capitalism inhabits democracy.

This isn’t to say the United States government can’t, at times, restrain corporations. It has a number of tools at its disposal, and has used them in the past with some success. But the measures it can take are woefully inadequate to the task of safeguarding the planet for our children. Let’s see why. ...

Does this mean there’s no hope? I don’t think so. The window of opportunity is small, but not nonexistent. Throughout American history, anticorporate forces have come to power once or twice per century. In the nineteenth century, we had the eras of Jackson and Lincoln; in the twentieth century, those of Theodore and Franklin Roosevelt. Twenty-first century equivalents will, I’m sure, arise. It may take a calamity of some sort — another war, a depression, or an ecological disaster — to trigger the next anticorporate ascendancy, but sooner or later it will come. Our job is to be ready when it comes.

What constitutes readiness? Three things, I believe.

• First, we must have a proper view of government’s role. That role isn’t to run the economy, or even to manage the commons directly; it’s to assign common property rights to trustworthy guardians who will.
• Second, we must have a plan to fix our economic operating system, not just to put patches on symptoms.
• And third, we must recognize that the duration of any anticorporate ascendancy will be brief, and that we must use that small window to build institutions that outlast it.

Laws, regulations, and taxes are easily rescinded or weakened when corporations don’t like them. Property rights, by contrast, tend to endure, as do institutions that own them. So we should focus on creating such institutions and endowing them with permanent property rights.

Make no mistake: it will take more than a few wand strokes to bring capitalism into harmony with nature and the human psyche. This is a thirty- to fifty-year project. During this time, we must be locked on a steady course. For this reason, I wouldn’t place much faith in slim and fickle majorities in Congress. As we’ll see, I would place it in the hands of commons trustees, empowered with property rights and bound as much as humanly possible to generations hence. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 9: Building the Commons Sector (pages 135-154)

One of the most valuable lessons I learned in business was, when you need something done, find the right person, give that person clear marching orders, authority, and resources, and get out of the way. In other words, delegate.

The same logic applies to government. When government wants to do things, it has to find people to do them. It can add people to its own bureaucracy, or it can contract with outsiders. It shouldn’t matter as long as the public purpose is met at reasonable cost.

When it comes to building the new commons sector, there’s plenty for everyone to do. Government in particular has four important roles to play:

1. Until it assigns responsibility for a commons to someone else, government is the default trustee, and should be held to trusteeship standards.
2. Government is the initial assigner and ultimate arbiter of property rights. Instead of privatizing nearly everything, it should assign more property rights to commons trusts and give commons rights precedence over capital’s.
3. Only government can broker inter- and intragenerational compacts like Social Security and Medicare. We need government to do this again for health insurance and the Children’s Opportunity Trust.
4. Government can help finance the reacquisition and restoration of previously privatized pieces of the commons. State and local governments in particular have the authority to issue long-term tax-exempt bonds, which can be used to acquire private land and water rights.

These four roles reflect government’s unique responsibilities and strengths. But there are areas where government doesn’t have a competitive advantage, and much of this book has been about one of them.

Earlier I discussed the trusteeship function — the work that someone must do to protect our shared inheritances. We need this function to work right, because if it doesn’t, our descendants, along with many other species’ offspring, are doomed. So we have to ask, who is best suited to perform this function? The evidence suggests that neither government nor private corporations can do this particular job well. So we’re left with trusts that are accountable to future generations.

I suggest to those who care about the future: it’s time to delegate the trusteeship function to trusts.We should give the trusts clear missions, authority, and resources, and then get out of their way. The trusts may not be perfect, but they’re likely to do a better job, for a longer time, than any of the known alternatives. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 10: What You Can Do (pages 155-166)

To build Capitalism 3.0, we each have unique roles to play. I therefore address the final pages of this book to a variety of people whose participation is critical. ...

POLITICIANS

Everyone wants your attention. Channel 5 is on line 3 and a powerful lobbyist is at your door. It’s hard for you to see the forest for the trees. What can I possibly tell you?

What I want to tell you is, there’s a fork in the road. On one side lies capitalism as we know it; on the other, an upgrade. You must decide which branch to take. Your choice has vast ramifications. Very possibly, the fate of the planet is in your hands. Trillions of dollars are also at stake. I want you to be courageous. I want you to choose the upgrade.

But that isn’t what one says to a politician. What one says is, we need to reduce our dependence on foreign oil, create jobs in America, and protect the environment. All those things cost money, and government doesn’t have enough. But here’s what government can do.

• First, delegate to an independent authority — something like the Fed — the power to cap U.S. carbon consumption. That way, when energy prices go up (which they inevitably will), you won’t get blamed. Also, make sure the carbon authority pays dividends, like the Alaska Permanent Fund. Then, when checks are mailed to your constituents, you can take credit.
• Second, talk about jobs and energy independence in your speeches. And push for an American Permanent Fund financed by sales of pollution permits. Within a few years, thousands of people in your district will be installing new energy systems and cashing dividend checks. You’ll be a hero.
• Finally, tell your donors not to worry. You’re a low-tax, small-government, pay-as-we-go kind of person. You think the environment should be protected through market mechanisms. You favor an ownership society in which every American has a tax-deferred savings account and no child is left behind. ... read the whole chapter