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On True Political Economy
(The Whole-Hog Book)
John Wilson Bengough
1908
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Notes and Links
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CHAPTER XVI: A STRAIGHT
LOOK AT THE "SHIELD" |
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The first aim of the High Tax plan is to "shield" the home trade; that
is to say, it seeks by means of a tax on the goods sent in to raise their
price, so that the firms which make the same class of goods at home can
raise their price, too, and thus make more than they could if there was
no tax. |
protectionist, prices,
cost of living |
| Of course, the price thus put on must be paid by those who buy the home
goods. |
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If the tax fails to raise the price it proves to be no good, for that
is what
it is for; that is its chief aim.
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| You might think, in view of this fact, that though it might be hard on
those who buy, the high tax scheme would be sure to make all the firms
it thus "shields" rich. Yet this is by no means the case. It is found,
in fact, that the gains are as small in these lines, and the chance of
loss as great, as in those that do not have the tax to help them. Nor is
it hard to see
why this is so. |
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| The rise in price is all they have to look to for gain. But they do not
get all of this. It costs them some part of it to get the tax they want
put through the House. They have to "see" the men who have votes and square
them, and pay all the costs of the game of pull and haul. All this work
comes high, and it must be done not once, but it may be year by year. Then
there is the loss that must cling to a trade so weak that it must be kept
up by the tax, and could not pay at all on its own base. Such trades as
a rule are run with great waste, and are not kept up to date, as they would
need to be if they had to "hoe their own row." So that, it is but a small
part of what the tax adds to the price of the goods that they get in the
end. |
deadweight loss |
| As for those who buy the goods, their case is, of course, much worse.
They have to pay (1) the price of the goods plus the tax, plus the charge
on the tax. (2) The loss that may come through those who dodge the tax,
and sneak goods in free. (3) All it costs to catch and try such crooks;
(4) the bribes paid to those who are set to guard the port and get the
tax. |
paying twice, corruption |
| Add it all up and the loss is a vast one. It is safe to say in each case, the
loss to all is far worse than the gain to the trade can be. But as the loss,
spread far and wide, can not be seen, while the gain to the Mill, or what not,
seems so plain, the plan on the
whole may look like a good one. |
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| A plan that will shield all trades by means of a tax has not yet seen
the light of day, nor will such a plan be found while the world lasts. |
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| More, a plan that will shield some trades and not hurt others can not
be made. If it helps one (by a rise in the price of its goods) it must
hurt all trades which have to make use of such goods. A tax on Steel is
a good thing for the Steel Mills, but it harms all forms of work in which
steel must be used; a tax on salt hurts those who cure fish or feed stock,
and so on. Both ends of a teeter board can not be kept up at the same time. |
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| A plan to be fair should shield all and hurt none. The High Tax plan
as it is is a gain but to the few, and this gain grows less with each new
trade that gets into the ring, since for each new line that gets aid, more
and more have to bear loss, and this is felt through the whole field of
trade. If all trades were dealt with in the same way (as, of course, they
should be by rights) then things would be in the same state as though none
got aid. The plan would be of no use if it were fair. And in fact the good
goes out of it at a point far short of aid to all. Say there are 100 lines
of trade, half of which are of a kind which you can aid by means of a tax;
and let us say that the part of the tax which they can get, that is, less
what it costs them, is one fourth. Now in the first place, half of these
trades can get no aid at all, since no goods of the kind they deal in are
brought in, but they have to help to pay the tax in aid of the rest in
the form of a rise in price. The whole tax is 100, and if but one of the
trades gets aid (less what it costs) it will get 25. If two get aid, each
will get 12 1/2; if three get aid, each will get 8¼, and so on.
When 25 trades come in each will get no aid at all that will be of any
use,
though in the mean time all the rest will be at a loss. When 26 come in
a loss comes in with it, and so on. |
special interests, barriers
to entry, |
One can not find out to a jot just how such a tax works out, but there
is no doubt there is a point at which such "aid" gets to be of no use;
and in the States, they have gone past that point. The high wall there
is a dead weight on the whole trade of the land; it is a dead weight on
those very trades the law seeks to shield and nurse and feed.
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deadweight loss |
| If the force of a tax on a class of goods is to start up works in that
line — and this is what we may count on — in due time rates
will be cut down till the "good thing" that was in it is gone; there then
is no great gain to be made by any, though the price that has to be paid
by those
who
buy is more than they would have to pay had there been no tax. As soon
as a tax is put on and there is a chance of big gains in any line, there
is a rush in to that line, and this tends to pull the gains down. But here
and there we note there is some force which serves to head off such a rush.
This force takes more than one shape. |
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| As a case in point, take that of the thing we call chrome. There is a tax on
chrome in the States, and as luck will have it, one man there owns the only
chrome mines that are known. By means of the tax he can, of course, add to
the price, and yet there can be no rush in to his line of trade. |
special interests, natural
resources, well-provisioned
ship, monopoly,
land monopoly, land monopoly capitalism |
| Then the same thing may be done by what we call patent rights. There
is a tax on wood pulp, and the man who owns the sole right to the plan
by which paper is made from this sort of stuff has what we may call a cinch;
and no fear of a rush. |
intellectual property, monopoly |
Then, once more, the force may take the shape of a trust, or pool or
ring, in which a lot of strong firms join hand in hand to crush out those
who are in their line, so as to keep up the price.
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special interests, monopoly |
| In each case it is clear that the gains made are not gains from work. If the
tax is to be a gain to you (with no fear that it will be cut down) you must
own some thing which no one else can get hold of. You then may be said to have
your feet on firm rock and can put forth your strength to keep off the crowd
that would rush in to share your gain. |
unearned increment |
| Now there ought to be clear thought on this point. Much turns on it. Yet strange
to say, there are few who seem to see that a line must be drawn to show that
gain from work is not the same as gain from a "cinch." A man who owns a toll
gate and does not have to keep up the road may make great gains, yet no one
would claim that he does any real work for it. If the same man has a shop in
which he makes boots and shoes, that, of course, is a fair form of work, and
what he makes at it he earns in a true sense. In such a case, what we claim
is that it is not fair to take his whole year's gain from both these lines,
though they are put in one purse, and call them the fruit of his toil. In so
far as he has hides and tools, wax and thread and so on, he is a capitalist;
in so far as he works he is a laborer, and the gains he thus makes are interest
and wages. But in so far as he owns the tollgate, he is a monopolist and his
gain from that source we call Toll or Rent. He is, in fact, two men in one,
for his wealth comes to him in two streams 'twixt which we must draw a clear
line. Yet there is a great fog these days on this plain point. |
monopoly, privilege, special
interests, unearned
increment, theft, privatization,
three hats, rent, |
| We hear shouts of wrath at Capitalists. It would be as good sense to
shout at Labor, for they are just two forms of the same thing. Those who
raise the shouts thus
prove that they have not clear thought, and do not see the line we have drawn
'twixt "work" and "cinch." In so far as men get wealth through their work,
no odds how much they get, they do no harm to the rest; but, in so far as they
get gain; not through work, but just by means of what they own — the
toll they take in some form — they may do harm, for what they thus get
some one else
who made the wealth must lose. Now, not a few both work and own — as
in the case of the tollgate man I have set forth. But we can see that when
we call
such
a man a "law made thief" we do not take note of what he gets by the trade of
boots and shoes, but of that part of his gain which comes from the tollgate
he owns. |
theft, he
who produces, three hats |
| It is not hard to see that as the whole race of man must live
on the ground — since they can not live in the air nor in the sea — the
man who owns land holds the prime key to wealth. For no wealth
at all can be
got but from the ground and from that but in one way — by toil.
This is true, as will at once be seen, of wealth in the form of crops,
on a farm.
And it is just as true of wealth in the form of sheep, cows, pigs and so
forth fed and bred on a farm. This is plain to all. But to some
it is not quite so clear that wealth is got out of the ground in the town
and city. To be sure, it is not got in just the same way;
but it comes in just as real a way out of the ground there. For a town
must stand on ground, must
it not? Is not the ground in a town worth much more per foot than the land
of a farm? And why so? This is why: A man can make more out of
land in towns. The wealth to be made in trade is as a rule more than is
to be made
on farms, and the work is not so hard. The chief worth of farm
land is in what it will grow. The chief worth of a town lot is
its site; that is, the part of the town in which it lies, with the chance
for trade
there
is in it. As a town grows large the chance grows with it, and
the lots go up in price, and in each town they range on a scale from low
to high.
Lots at the heart of a town are best for trade and so are worth much, from
there out to the bounds, less and less. Then, some parts of the town have
choice sites for homes, and these are of high worth, while less choice
sites are worth less. Of each town we may say — when we note the
chance there is for trade, the style of the streets, the cars, the schools,
and
all things which go to make up a full life — it is worth so and
so per year to live there. And we find that this "so and so" is, as it
were, writ in the land. That is to say, the land is worth just what it
is worth to
live in the town. In this sense, all that the town can gain in wealth through
trade comes out of the land, for, of course, if the land was not there,
there could be no town. Now, is it not plain that if John Smith owns the
site of the town he can take, by way of toll or rent from all who live
in it all that it is worth to live there? If he owns one lot can he not
take in the same way, all that lot is worth as a site for trade? And is
not this the same thing as for him to take, as the rent of a farm, (in
the form, it may be of a share of the crop) all that the farm is worth? |
all benefits..., landlord,
urban land value relative
to rural, the
Savannah,
rent, unearned increment, absentee
ownership, leakage |
| What we call Rent is in each case the Worth of the Chance, be it farm
or town lot, and the rent is there all the while, though John Smith works
the chance, or lets some one else work it. In one case he gets the rent
as well as the gain he makes by his work; in the other he gets the rent
and leaves the gain from work to the man who has the use of the land. |
urban land value relative
to rural, |
| The great thing to be borne in mind is that each jot of wealth through
the whole world, on farm, in mine, or in town, must be got out of the ground
by means of work, and in no way else; and that it is such share of this
wealth as goes to those who work to make it, and no more than such share,
that forms their "pay" and gives them heart of hope to work on — that,
in short builds up trade in the world. So it must be just as clear that
such
share of the wealth as goes to those who do not in any way help to make
it must come off the share of those who do, and is a mere toll on their
toil. This is the case with the whole share that goes in the form of Rent.
The men who "own" rent do no sort of work for it. They get it as a mere
toll on toil, and as the price for the use of the ground. They get it just
as the man who owns a toll gate on the high road gets it. What does he
give the man who comes up in the rig? He takes a toll, but what does he
give? Nought but leave to the man to drive on. So the man who owns the
ground gives nought but leave that work may be done. |
rent, ownership,
possession, privilege, labor,
land, wealth
concentration, in
one's sleep, all
benefits..., absentee
ownership, property rights,
theft, land
as common property, landlord, rack
rented |
| A man who owns ground and gets rent may, of course, work, too, but, if
so, what he gets for his work is a wage. The part he gets in the form of
Rent is not a wage, for he does no work for this. |
three hats, small business,
landlord |
| Now, let us see how all this bears on the case of the High Tax plan.
Here we find some smart folk in John Bull's land who strive to get rid
of what they now have by the name of "Free Trade," and urge that the old
plan of a tax on goods be a tax put on grain. This is to "shield" the farms
of the old land, and it will do so in so far as it lifts the price of grain.
As soon as that is done there will be a rush to the farms, of course, for
they will then have a chance to pay. There will be a call for farms. Lands
that have of late years been idle will be sought. Then what? Why, of course,
the lords of the soil — those who own the land — will raise
the rent (as the chances grow bright the rent goes up, you see — that
is the rule).
John Bull at large will have to pay more for his bread, since the price
of grain has had a rise, but the men who work the farms will in a short
time be just where they were, since all the fresh gain they make will have
to be paid out in fresh rent. The men who will gain by the move
in the end are those who toil not nor spin, but who own the land, and sit
in their
clubs and draw the rent. |
landlord, all
benefits..., absentee
ownership, rack
rented, wages, rent, |
| To own the ground is the short cut to get rich, and the High
Tax plan ever plays into the hands of those who own the ground. The ground may be
in the form of town lots or farms, or it may be what we call wild land,
it is all the same. In the States they have a tax on boards. Do you think
this helps the men whose trade it is to cut down trees and saw them up
in mills? That is what it was meant to do, they said. But some shrewd chaps
long since got hold of the land on which the trees grew, and it was, in
fact, they who got the tax put on. The tax keeps out logs from o'er the
lakes, and so, if the mills are not to close down, logs must be bought
from the ring, and the tax adds to their price. This is a straight blow
to the men who work at this trade, but it is a "snap" for those who own
the wild land. |
fruits, monopoly, privilege, special
interests, theft, |
| And so it works all through the list. |
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| Should mills spring up by the score, and call for scores and scores more of men
to work in them, so that vast stores of new goods would be brought forth, who
in the end would gain by it? So long as mills have to stand on ground, and
those who own ground have the right by law to own the rent as well, is there
need to ask who would gain? |
all benefits..., rent
as provisioning for all, privatization |
CHAPTER XVII:
THE "SHIELD" IS A HARM, NOT A HELP |
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| If mills and so forth can not be built up in a land which has no tax
wall, how comes it that in the States they had firms which made iron and
cloth goods and so forth ere the first High Tax Act in 1789? |
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| If it is true that a "poor" or "new" or "young" land can not hope to
grow in the way of mills and works if it has not a wall to bar out the
trade of a land that is near by and is full of big mills and the like,
with stores of cash, "hands" that have great skill at their work, and cheap
help, how comes it that this has not been the case with the West in the
U. S., though it has had no wall to shield it from the East? As the tide
of life has swept from East to West, these works have sprung up and have
gone with it. They have grown up just as there was call for them, with
no aid from tax laws. |
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| In fact, they have grown up in spite of such laws. There is no doubt these laws
have hurt the States as a whole. If free trade had gone on from the first the
States might rule the marts of the whole world, where now they make but a poor
show, and for the most part trade at a loss. When there is tax, tax, tax all
round, so that all parts of each piece of goods are made dear, how could such
goods hope to meet those made at a much less cost? What is the fact at this
time? That most of what the States sends out is raw stuff from the farms, and
most of what it brings in goods made in mills and works o'er the sea. There
is a trade with Brazil. Goods are brought from there; are goods sent from mills
and works in the States to pay for it? No. Wheat and so forth is sent to John
Bull, and John squares off the deal with Brazil. He sends goods which Sam buys
with his wheat. |
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| This is the queer way in which the high tax plan has "built up the trade
of the States with the world at large." It is well known that the "Yank" is
as shrewd a man, with as good brains, as can be found on earth. He ought
of right to lead the whole race in trade. Yet it is the fact that he does
not; he is down near the tail end of the list. Strange, you say. No, just
what one might look for when he loads tax weights on all things. To get
the trade of the world the first thing to do is to make things cheap, and
here this shrewd chap ties his own hands, or puts a clog on his own leg
in the race. We hear much just now of how he "dumps" goods in lands o'er
the sea. It is true he does a good deal in this line, but is it trade that
is square, and that has real gain in it to him? Not at all. For the most
part he sells these "dump" goods at cost, or less than cost, just to get
rid of them. How can he do this? you ask. Well, you see, the high wall
at home gives him the chance to hold his home trade and force the folks
there to pay him twice the price the goods are worth, so that he can keep
his mills on the go all the while, and when he finds more stuff on hand
than the home man can take he "dumps" it o'er the sea in this way at "any
old price." This, of course, is a good thing for those who get the goods;
let us hope the dear folk in the States like the plan. It seems to be most
kind on their part, does it not? "It is grand — but it is not trade." |
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| Then, too, the Yank's bright, shrewd brain works all the while on new
schemes, and brings forth ideas by which work may be done with less toil
and cost. If he could but get and hold the trade of the world in these
things when he had thought them out, it would be a fine thing for him.
But what takes place? Why the tax strings so tie him up that he cannot
do it. John Bull takes up these new ideas, and, as he is not bound up with
tax bands, makes the class of goods on the plan thought out by his smart
friend, cuts down the price, and takes the trade. Once more we must say
this looks kind on Sam's part. |
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| If you would see one case in which tax clogs have spoilt a great trade
for the States, take ships. Where will you find more brains and skill,
or more wood, iron, steel and all that goes to build a ship, than in the
States? Why, then, are no ships built there to speak of? Think that out.
It tells the whole tale. You will find that all the things that go into
a ship from keel to truck, from the wire in her stays to the brass in her
log, and all that goes to fit and store her, has to bear a tax load. Thus
once more has the kind Yank made a free gift to John Bull of the ship yard
trade of the world. |
barriers to entry |
| And then note the facts as to the coast trade. The law says that no ship
but one which flies the stars and stripes shall sail from port to port
on the coast of the States. The rates of freight from New York round the
Horn to the ports on the west coast are high. There is no doubt they could
be made much less, and yet be fair, if all ships were free to go in for
the trade, and this would be a gain to those who own the goods. But ships
cost so much to build at home that few are built, and that the rates may
be kept up, the "pool" which owns the lines of rails from east to west
pay the firm which owns the chief line of ships a large sum each month
to keep up its rates. Thus, once more, we see how the high tax scheme plays
into the hands of those who own land or right of way, or some "cinch" of
the kind. |
special interests, privilege |
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