Garrett Hardin's Lament

Forty years ago exactly, Science Magazine published ecologist Garrett Hardin's article, "The Tragedy of the Commons," now perhaps the most widely cited and reprinted scientific piece ever.1 As both history and parable, it purported to show how unattended and unprotected natural resources were exploited and ultimately destroyed by villagers. The context was 16th century Tudor England and the enclosure movement that drove peasants off the land into the cities and provided cheap labor for the ensuing industrial revolution. “The commons” was well understood as the shared land, usually pasture, that provided the space for grazing animals.2 Hardin recounted in metaphoric terms an explanation of an ecological history of resource overshoot that has since been replicated countless times over.

1 "The Tragedy of the Commons," Garrett Hardin, Science, 162(1968):1243-1248, and http://dieoff.org/page95.htm
2 After over half a century, the greatest single account of this period remains Karl Polanyi's book, The Great Transformation: The Political and Economic Origins of our Time. New York: Reinhart, 1944.

The article resonated with a public newly awakening to environmental dangers – Rachel Carson's Silent Spring3 was published just six years earlier, and to the growing public fascination with economics – the Nobel prize in Economics was added the following year.4 Hardin's article also offered, unintentionally, the perfect corroboration to neoclassical economics, which holds that the most stable, productive, and efficient market system is one in which resources are best protected by their privatization, and where the public sector, vulnerable to exploitation and abuse, should be reduced to a minimum.

3. Rachel Carson, Silent Spring. New York: Houghton Mifflin, 1962.
4. The Economics Nobel was not one of the original 1895 prizes; it was initiated only in 1968, and many now believe this was a mistake.

Neoclassical economic theory holds that wealth is best produced by competing interests vying with one another in open markets, prices then adjusting to supply and demand in ways that assure all participants and interests are served according to their enterprise and merit. It is a self-regulating equilibrium system assuming that human beings are wholly self-interested. One can trace its roots perhaps to the work of Bernard Mandeville, a Dutchman who wrote “The Fable of the Bees” in 1705, a notable piece of doggerel to test his English language prowess. It describes the division of labor of a hive, the efficiency and indeed the beauty by which its stability and continuance was assured. Adam Smith, intrigued and challenged by Mandeville's insight, incorporated this model of society in his 1776 work, An Inquiry into the Nature and Causes of the Wealth of Nations, a work people know today than by the phrase, “invisible hand.”

Mandeville, Smith, and Hardin have since been invoked to ratify the unfolding patterns of economic life, now more fervently than ever, as the apologists for privatization have continued their ascendancy and preeminence.5 The unfolding and increasing pace of private capture of common wealth has left doubters and opponents today hard put to respond. The Chicago School economists' use of Hardin may have disturbed him, as he was alarmed by the growing neglect and privatization of the commons.

5See especially the writing of Terry L Anderson and the Property and Environment Research Center, www.perc.org.

The Modern Era of the Land Grab

The year 1776, you recall, also marks the severing relationship between America and Great Britain, and it was in here where the new economic ideas saw their strongest application. To John Locke, property meant elements of nature with which one “mixed his labour,”6 essentially tools, clothes, and armaments. But the idea took hold in America that land also might be owned as a commodity, just like a horse or a house. The founding fathers, to a man, all quickly took to buying and selling land for speculative gain, and if they weren't involved in land dealing, they were likely making money litigating it like Patrick Henry and Abraham Lincoln. Robert Morris, one of the least scrupulous figures of the new Republic, wrote that "everyone with spare cash invested in land.” The new Secretary of State, Timothy Pickering, told his sister in 1796. “All I am now worth was gained by speculation in land. In 1785 I purchased about twelve thousand acres in Pennsylvania which cost me about one shilling [about fifteen cents] in lawful money an acre. ... The lowest value of the worst tract is now not below two dollars an acre." 7 Tocqueville wrote that, “the European emigrant always lands, therefore, in a country that is but half full, and where hands are in demand; he becomes a workman in easy circumstances, his son goes to seek his fortune in unpeopled regions and becomes a rich landowner. The former amasses the capital which the latter invests.”8 So, what Native Americans viewed as part of nature was quickly snatched up as property by western settlers, in what has been the greatest theft ever. New studies are now emerging about this era, and I predict that the impact of this research will be profound.9

6 John Locke, Two Treatises of Government, 1690. Section 27.
7 Quoted in Andro Linklater, Measuring America: How and Untamed Wilderness Shaped the United States and Fulfilled the Promise of Democracy. New York: Walker & Co., 2002. p. 44.
8 Democracy in America, Book 1, Ch. XVII.
9 Three books particularly should be mentioned for their advancement of the historical and legal perspective: John C. Weaver, The Great Land Rush and the Making of the Modern World, 1650 – 1900. Montreal: McGill-Queens University Press, 2003; Lindsay G. Robertson, Conquest by Law: How the Discovery of America Dispossessed Indigenous People of their Lands. London: Oxford University Press, 2005; and Robert J. Miller, Native America, Discovered and Conquered: Thomas Jefferson, Lewis & Clark, and Manifest Destiny. Westport, CT: Praeger, 2006.

So began a view and practice which continues to this day, that speculating on the resources of nature is a wholly legitimate enterprise. A person today would think it strange not to be able to sell his home at a gain years after buying it, even though the building be largely depreciated. People see gains in land value as an assured way to “build equity.” The greatest fortunes of the 19th century were built on the capture and sale of natural resources, not only land but furs, lumber, coal, oil; even, for a time, slaves, that were viewed as much a part of nature as animals.10 It was easy to get rich harvesting the bounty of nature; costs of doing so involved mostly labor investment and a bit of capital. The sale price, driven by demand, might be many times as large. Consider how rich someone could become by striking oil; the only investment was the time involved in prospecting, and perhaps the expense of an oil derrick. Once found, it just gushed out of the earth and could be sold for whatever the market fetched.

10. Gustavus Myers, History of Great American Fortunes. New York: Random House, 1907 and later.

Today many other elements of nature command a market price, exploited under private auspices and title. Some minerals have incalculable value, uranium being just the best known. Consider also all the elements of the biota -- seeds, algae, topsoil, wild animals, domesticated breeds, various plants for food, medicine and beauty. When Jonas Salk identified the polio vaccine in 1955, he was interviewed shortly thereafter by Edward R. Murrow. “Who owns the patent on this vaccine?” he asked. “Well,” Salk answered, no doubt taken aback by the question. “The people, I would say. There is no patent. Could you patent the sun?”11 But less than two decades later things had changed. Close by here at the GE Global Research Center in Schenectady, Dr. A. M. Chakrabarty managed to genetically engineer an organism that could break down the crude oil at sites of spills. A patent was filed, and led to a court case that went all the way to the US Supreme Court.12 He won. Strains of rice and other grains that have been in the public domain for millennia are now being captured and successfully patented by corporations. A massive outcry has come, especially in developing nations like India, along with scientist Vandana Shiva's several books protesting such practices, with titles like Biopiracy, Stolen Harvest, and Protect or Plunder?13

11 Recounted on Wikipedia, Jonas Salk.
12 Diamond v Chakrabarty, 447 U.S. 303 (1980), and Who Owns Life? David Magnus, Arthur Kaplan, and Glenn McGee (eds), Amherst, NY: Prometheus Press, 2002.
13 Vandana Shiva, Biopiracy: The Plunder of Nature and Knowledge. Boston: South End Press, 1997; Stolen Harvest: The Hijacking of the Global Food Supply. South End Press, 200; and Protect or Plunder: Understanding Intellectual Property Rights. London: Zed Books, 2001.

We've typically thought of municipal water systems being part of the public domain, as well as that which our agricultural industry relies upon, as a “free good” from nature. But as it becomes more scarce, as aquifers drain, and as climate patterns become less predictable, water has become a commodity with a growing market price. Corporate interests have moved in to capture that resource for potential profit. It is not just the bottled water for sale; it is wholesale river systems, lakes, estuaries, and beaches. Boone Pickens is investing heavily in the arid regions of west Texas -- for the wind and aquifer potential it holds. Dozens of cities in the US have seen their municipal water supplies taken over by private industry.14 In the late '90s the water system of Cochabamba, Bolivia, was privatized upon the insistence of the World Bank as a way for it to settle international debts. Urban riots ensued after the Bechtel Corporation tripled the price of water. Not only did the people refuse, the action ultimately brought down the government itself.15

14 Alan Snitow, Deborah Kaufman, and Michael Fox, Thirst: Fighting the Corporate Theft of Our Water. Boston: John Wiley & Sons., 2007.
15 Maude Barlow and Tony Clarke, Blue Gold: The Fight to Stop the Corporate Theft of the World's Water. New York: The New Press. 2002.

We also hear that “The Public Owns the Airwaves.” But in fact the electromagnetic spectrum has been privately owned ever since 1928 when the radio corporations were freely given frequencies in exchange for a promise that the public interest would be served. Those frequencies have since been bought and sold among media conglomerates for millions! It is not the electronics in the station that explains their price; it is the monopoly ownership of those frequencies. As spectrum use changes from analog to digital signal, frequencies reclaimed or retained by the government are being auctioned off for a price, now to be owned as property much like earlier segments. Meanwhile, public expectations about media responsibility have largely fallen by the wayside, and spectrum owners are able to deploy those frequencies for radio, television, cell phone, and other uses with little oversight except as concerns technical efficiency. The Federal Communications Commission is viewed as industry-owned.

When natural resources come to have public utility and market value, private economic interests seek to confiscate them. When technology finds an application for them with commercial potential, pressures also grow for their privatization. This was even the case with oil, which was initially viewed as having no market potential at all. An interesting and revealing illustration of the confiscatory impulses of corporate powers is taking place with efforts to install free over-the-air Internet service (Wi-Fi) in several cities. Two or three years ago, the news media was abuzz with the number of places that were embarked on installing Wi-Fi that would be free to all the users within range. Albany was one of those cities. But, alas, the program to complete the service citywide has now been scuttled.16 What happened?

16 Ian Urbina, “Hopes for Wireless Cities Fade as Internet Providers Pull Out,” New York Times, March, 22, 2008.

Companies that originally agreed to provide such service under municipal contract, like Verizon, Earthlink, and others, decided that “the operations of the municipal Wi-Fi assets were no longer consistent with the company’s strategic direction.” So it looks like I will have to connect to the Internet through my Time-Warner Cable for about $50 a month. It could have been much cheaper, both for me and for the community.

We are now seeing the very air we breathe being auctioned off as private! New York State has made an alliance with other northeastern states in what is called the Regional Greenhouse Gas Initiative – RGGI. Shortly, the “pollution rights” will be auctioned off to own or trade as property and for use as a dump for the effluents of utilities! The public will set the tolerance thresholds but rest assured there will soon be pressure to relax them. The so-called “cap and trade” system will let industries own, buy and sell the air as a commodity, limited only insofar as the public is able to police and control its use. Suppose the air has an impact on climate change, or on the acidity of rainfall, or on fauna and flora in other ways? Will the public have the political means and wherewithal to reign in those corporate powers that now have a financial interest to protect? Property rights, once granted, are hard to rescind or to limit.

There are many other elements of what arguably are the birthrights of all humanity, resources that by tradition and logic are best defined as “the commons” but have now been privatized that one wonders what is left. Journalist James Ridgeway's book, It's All for Sale,17 lists elements of nature with market value that are now offered up for private bid. Among them are fresh water, fuels, metals, forests, fibers, fertilizers, foods, flowers, drugs, the sky, the oceans, biodiversity, and human beings themselves.

17 James Ridgeway, It's All for Sale: The Control of Global Resources. Durham: Duke University Press, 2004.

There is no shortage of commentary about the privatization of the commons, most of which is a lament. It typically sees the transformation as one of private greed and power, the theft of what rightfully belongs to all of us. David Bollier, for example, titled his book, Silent Theft,18 reflecting his view that the shift in ownership is not only unnoticed but pernicious. But his is a minority view; the dominant economic ideology now condones privatization as productive and efficient, therein serving a public interest, whereas the public realm is marginal and even parasitic.19 It isn't just that the private sector is by its nature compelled to internalize gains and externalize losses, that it drives the economy in directions that serve power. It has now been shown that neoclassical economics actually violates the laws of physics!20 Destructive as it is, viewing the world through this paradigm for a century is hard to overcome.

18 Silent Theft: The Private Plunder of our Common Wealth. New York: Routledge, 2003.
19 See especially the writing of the Competitive Enterprise Institute, www.cei.org.
20 Among the several books that explore the failings of neoclassical economics are especially the following:
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process. Cambridge: Harvard University Press, 1991.
Herman Daly, Beyond Growth: The Economics of Sustainable Development. Boston: Beacon Press, 1996.
Thomas Prugh, et al., Natural Capital and Human Economic Survival. Solomons, MD: International Society for Ecological Economics, 1995.

Understanding Economic Rent

Wherein arose the idea that pieces of nature should become owned? It can be traced, at least in theory, to Roman law, even though it was more often honored in the breech. Freehold title in land is a uniquely Western idea, even though it is now spreading worldwide. It was tempered initially by what is now known as Public Trust Doctrine, arising first in the Byzantine Empire in the sixth century. The law of trusts evolved from the Institutes of Justinian (535 A.D.), a part of which reads, “By the law of nature these things are common to mankind: the air, running water, the sea and consequently the shores of the sea.” These allodial (i.e., granted by God) elements were by extension the equivalent of the later-day commons, which distinguished those things made by man and those made or granted by God. Legal tradition off and on has made use of this concept ever since, most recently this year in Vermont where water is now proposed as a public trust.21 We have among our local colleagues one of the foremost US experts on public trust doctrine in attorney and news columnist Paul Bray.22 But law has limited capacity to contain attacks on the public interest, important as it is. I believe pricing designs can be an equally powerful and complementary influence. The key, however, is in getting the prices right, which means getting the economics right.

21“Regulating Vermont's Groundwater,” Vermont Public Radio, April 1, 2008; http://www.vpr.net/episode/43281/
22 See, for example, “The Public Trust Doctrine,” by Paul Bray, at http://www.geocities/Senate/3616/PublicTrustDoctrine.html.

A far more reasonable and effective check on the avarice underlying privatization of the commons exists in the framework growing out of classical economics, the founder of which was the same Adam Smith noted earlier. As classical tradition evolved, from Smith and other Scottish moralists, through Thomas Malthus, David Ricardo, John Stuart Mill, and finally with Henry George, the economy was based on three factors of production: land, labor and capital. Land meant “not merely the surface of the earth as distinguished from the water and the air, but the whole material universe outside of man himself.”23 Land was its own factor category. Capital was defined as all the products of labor and land, essentially tools. The most significant point to make about land, however, is that it yields a continuing flow of ground rent, which reflects the vitality of economic enterprise of proximate locations.

23 Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy. 1879, and afterwards, p. 38

Rent, moreover, is a phenomenon not of any one site's activity but due rather to a total community's or region's market vitality. The market value of your plot is due mostly to the value and activity of your neighbors'. It was this insight that led Smith to conclude that “Ground-rents and the ordinary rent of land are . . . the species of revenue which can best bear to have a peculiar tax imposed on them."24 Because the flow of rent is a continuing reflection of the economic activity of an area larger than a single site, it can't be eliminated or stemmed. Nor can it be shifted. But it can be recaptured in the form of a tax or capitalized in the exchange value of a parcel as a market price. It can also be captured in part through rent-seeking, a practice that reduces economic performance but is a high art of those looking to get something for nothing. But in any given area, and however it is cut up, the flow of rent is constant. Absent its being taxed or skimmed, the promise of a gain from capitalized parcel sites, or from any other element of “land” in the economy, speculative investment in titles all but guarantees an eventual increase in market return. The gain in market prices is a good bet due both to the demands of a growing population and economy and by speculative competition for titles. Leaving rent capitalized in property titles also makes their markets less liquid, thereby “gumming up the works” and making their performance less efficient. Recall that market economies are most productive when buyers and sellers are willing to make exchanges at any moment in time.

.24The Wealth of Nations, Section 18, page 833.

Failure to recapture the socially created ground rent by properly designed taxes leads by default to the inevitable growth in site values prompting “land grabs” that have been so evident in modern history. The word “land grab” has come to mean not just purchase of any element of nature that is arguably part of the commons; it means the wholesale privatization of resources by the most rapacious element of society. Contemporary neoclassical economic theory sanctions the notion that “greed is good,” that avarice leads to increased wealth and productivity, no matter its source. Classical economics at least rewarded a person for what he earned by his labor; neoclassical economics rewards unearned gains from rent captured from privatized titles of what had been part of the commons. Smith appreciated the significance of taxing land for how it tempered greed and protected and preserved the commons. Mill too saw that taxing land rent not only fostered a more productive economy; he also believed that it was far more just. “Landlords,” he observed, “grow richer in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”25

25Principles of Political Economy, bk.5, ch.2, sec.5.

The transposition from classical to neoclassical economics was momentous. This paradigm shift from three factor economics – land, labor, and capital – to two-factor economics where land was conflated into capital, has allowed economic rent to be hidden so the owners of natural resources escape their full duty. I discussed this about a decade ago in an earlier presentation to Torch,26 and how this is arguably the greatest instance of corruption in American history.27 It was due, after all, to the blandishments of the wealthiest corporate powers in the country that the founders of the American Economics Association were persuaded to change their definitions and formulas so that they would henceforth be advantaged. The concept of rent in the century since has been all but eliminated from discussion in American neoclassical economics texts. Even calculating the amount of rent as an amount or as a percent of the GDP is impossible except as a plausible guess. Texts typically put it as about 1 percent of the GDP.28

26“How the Railroads Got us on the Wrong Economic Track,” The Torch Magazine, Vol. 71. No. 3 (Winter 1997-98), on line at http://www.sbs.utexas.edu/resource/onlinetext/Definitions/LandValue.htm
27 Mason Gaffney, The Corruption of Economics, Shepheard Walwyn, 1995. and http://homepage.ntlworld.com/janusg/coe/index.htm
28 Rental income is $7.9 billion of a total GNP of $5,234 billion, or 1.5 percent. Table 7-5, p. 137. Baumol and Blinder's Economics: Principles and Policy, Fifth Edition. Harcourt Brace, 1991. Rental Income was 4.7 billion, or 0.079% of GDP in 1992. Table 22.3, p. 559. Karl Case and Ray Fair, Economics, Third Edition. Prentice Hall, 1994. Rent is 1% of U.S. economy in 2004. p. 283. Paul Krugman and Robin Wells, Economics. New York: Worth Publishers.

But that is far from the case. Although calculating rent in the American economy is impossible (due to the failure of our government to keep numbers properly), it is possible in Australia, and Professor Terry Dwyer, a Harvard-educated economist, has taken on this challenge for his native country. His analysis shows that economic rent is well over 30 percent of the Australian GDP, for real estate rent alone, ignoring other resource rents that exist.29 “The 'bottom line' reinforces the overall conclusion . . . that land-based tax revenues are indeed sufficient to allow total abolition of company and personal income tax. Further, to the extent that some taxes, such as rates, land tax, resource rent taxes and even part of income tax on land rents are already capitalized in lower market values for privately held land, the figures would tend to understate the capacity of land income to replace existing taxes.” I earlier explained how taxing rent would comport with all the textbook principles of sound tax theory, how it would stem and reverse sprawl development,30 and improve our society in many other ways.31

29 Terry Dwyer, "The Taxable Capacity of Australian Land and Resources," April 1, 2003, p 40, online at http://www.taxreform.com.au/dwyercapacity.pdf and http://www.prosper.org.au/evidence/
30“Stemming Sprawl: The Fiscal Approach,” Chapter 10 from the book, Suburban Sprawl: Culture, Theory, and Politics, edited by Matthew J. Lindstrom and Hugh Bartling; Rowman & Littlefield Publishers, Inc., 2003, online at http://www.cooperativeindividualism.org/batt-h-william_stemming_sprawl.html
31 See my articles as well as those of many others in the collection at http://www.wealthandwant.com.

Most of all, however, it is the moral argument that makes the recapture of socially created economic rent so compelling. First of all it removes the tax burden on that which we want and puts it on that which we eschew. In a word, it taxes bads, not goods, and taxes waste not work. Rent-seekers, like all those that speculate in resource gains, are freeloaders. John Houseman, an actor perhaps most widely known as Professor Kingsfield in the film and long-running television series, The Paper Chase, later became the pitchman for Smith Barney. In one advertisement, his tag line was "They make money the old-fashioned way — they earn it." That is economic justice! In the tradition of classical economics, Thomas Paine put it this way: “Men did not make the earth... it is the value of the improvements only, and not the earth itself, that is individual property... Every proprietor owes to the community a ground rent for the land which he holds.”32 Just possibly, our nation might have gone in this direction, and taxed rents instead of facilitating land grabs and speculation. Thomas Jefferson wavered in his view: "The earth,” he said, “belongs in usufruct to the living; the dead have neither powers nor rights over it. The portion occupied by any individual ceases to be his when he himself ceases to be, and reverts to society."33 Given the land grab fever of the era, the forces opposed to taxing rent were just too strong. Besides, economic theory, which always lags behind social reality, had not yet evolved as a coherent paradigm to make such arguments clear.

32 Agrarian Justice, 1797.
33 Jefferson letter to James Madison, September 6, 1789. Writings of Thomas Jefferson, 1892-99. Ford, Lesson IX.

As Jefferson understood them, usufructory titles are consistent with the idea of land rent. Property law abjures use of the word "ownership" in preference to the term "bundle of rights," that lawyers talk about in enumerating the privileges attaching to locations.34 The idea of “fee simple” title to real property is a misnomer; ownership is never absolute. Typically enumerated among the several contingent but partial rights that are linked to titles are the rights to sell, to mortgage, to bequeath, to lease, to use and occupy, to alter and install, and to subdivide and develop. Who has the right to ground rent is overlooked because it is an artifact of classical economic theory. But the power to recapture rent is an element of ownership that society should restore.

34 See, for example, Barron’s Educational Series: Dictionary of Real Estate Terms, Sixth Edition, Jack P. Friedman, et al. (editors). 2004; also at http://www.answers.com.

A New Commons of Recaptured Rent

The second argument for recapturing rents is that it offers to us a way to maintain and recover the commons. The commons wouldn't necessarily be a collection of the world's or the nation's natural resources as earlier held, but it would be comparable inasmuch as the economic yield from those resources would be recaptured by the taxation of rent. There would be a public realm, a commonwealth! It would be the proper corrective to a contemporary economy that is distorted and debilitated. Rent, after all, is a central element of the commons; as I earlier noted it is socially created, and by rights it should be communally owned. Recapturing the socially created land rent would provide sufficient revenue to government that the support of public services would not be so precarious. The taxes on our labor and our goods that we often evade and abhor could be scuttled. The income that we garner would be based on our earnings, not on our pursuit of windfall gains, the “unearned increment” that Henry George talked about. Such tax regimes would be essentially painless.35

35 I submitted a paper with these ideas in April, 2005 to the President's Advisory Panel on Federal Tax Reform. It is reprinted in Groundswell, May-June, 2005, on line at http://www.progress.org/cg/painless_0605.htm

I mentioned earlier that the economic rent generated by a nation's economy is as much as a third of its GDP, but a bit more elaboration of its elements could be helpful. We recognize first of all that natural resources generate rent that right now remains in the pockets of titleholders without regard to any merit on their part except by their having captured ownership. The manifold sources of rent-yielding resources is carefully enumerated in a new paper by Professor Mason Gaffney.36 To those sensitized to the concept, sources yielding rent are readily apparent. Discounting inflation, and with a 5 percent return on principle, one wouldn't even need to capture all of it.

36 “The Hidden Taxable Capacity of Land: Enough and to Spare,” forthcoming in the International Journal of Social Economics, Vol. 35, Issue 6 (Summer, 2008), on line as a working paper draft at http://www.economics.ucr.edu/papers/papers07/index.html

Author and entrepreneur Peter Barnes estimated a decade ago that a “sky trust” for the rental of pollution sinks in the US could generate from $140 to $280 billion annually beginning in the year 2010.37 The total value of the spectrum may be worth $3 trillion, which could provide a rental yield of $150 billion annually.38 The estimated rental value of the world market for water is in the neighborhood of $300 billion to $800 billion annually.39 Who knows what the total market value of land in the US is; the US Census of Housing recorded numbers based on assessment data until 1987, but data proved to be so inaccurate that the records were discontinued.

37 Peter Barnes, Who Owns the Sky? Our Common Assets and the Future of Capitalism. Island Press, 2001, p. 41.
38 J.H. Snider, “Who Owns the Airwaves? Four Theories of Spectrum Property Rights” New America Foundation, 2002.
39Ridgeway, p. 5, citing Barlow.

How simple is it in fact to institute a reform in tax regimes and in the economic design by which we live? Not hard, as it happens. Consider the way in which our present tax regimes are conceived. All tax revenue is drawn from one of three factors of production: land, labor, or capital. The price of labor is paid in wages; the price of capital is paid in interest, and the yield from land is paid in rent. What is involved is simply a tax shift; phasing out taxes on labor and capital and raising the taxes on sources that yield rents.40 For real property this is already being done in many places worldwide, twenty cities in Pennsylvania alone.41 The tax rate on improvements is reduced and the tax rate on the land values is increased in a revenue neutral schedule. The same shift could supplant sales and income taxes. How much rent to recapture is another question: left-wingers would take more for a larger role of government; right-wingers would capture less.

40 See Alan Durning and Yoram Bauman, Tax Shift: How to Help the Economy, Improve the Environment, and Get the Tax Man Off our Backs. Seattle: Northwest Environment Watch, April, 1998, online at http://www.sightline.org.
41 For more on this, see the work of the Center for the Study of Economics, on line at http://www.urbantools.org.

There has been a lot written recently about which elements of society are “free-riders,” and who is getting the “free lunch.”42 Right now, by our failing to collect economic rent, the title holder to land gets the “Free Lunch.” It was Adam Smith, again, who reminded us that rent was the natural and just source of revenue. A century ago proponents included Tolstoy, Churchill, Sun Yat Sen, John Dewey, Bernard Shaw, Teddy Roosevelt, and Clarence Darrow. Recent supporters number Bill Buckley, Molly Ivins, Steve Moore, Ralph Nader, Michael Kinsley, Jack Kemp, and George Gilder. Those today don't always espouse their views very publicly or often, as they may not understand the philosophy in great depth. But they have said many good things about it. What promise it holds is due largely to computer power and available data that now makes possible demonstration of the merit and feasibility of an idea that has been on the “back burner” for a century. Success may depend in part upon the collection of good financial and statistical data.43

42 The most recent use is by New York Times Tax reporter David Cay Johnston, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (And Stick you with the Bill). Portfolio Books, 2007. Professor Milton Friedman wrote a book in 1975, There is No Such Thing as a Free Lunch. Open Court Publishing.
43 See the draft of a proposed “Monetary Transparency Act,” at the American Monetary Institute. http://www.monetary.org.

The culmination of classical economic theory, defeated by its opponents just when it achieved full fruition and articulation, embodies an appreciation of a public realm, comparable to what existed in the pre-industrial era as “the commons.” At a time when neoclassical economics sees the greatest virtues in total privatization, classical economics now offers an opportunity to look once more at wisdom of the past. It is well expressed in a folk poem that is traceable at least to 1764:

They hang the man and flog the woman
That steal the goose from off the common.
But let the greater villain loose
That steals the common from the goose.

The law locks up the man or woman
Who steals the goose from off the common'
And geese will still a common lack
Till they go and steal it back.44

44 David Bollier, Silent Theft: The Private Plunder of our Common Wealth. New York: Routledge, 2003. frontispiece.