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Creating Global Economic Justice
Accepted for the first issue of Geophilos, Fall 2000
Humanity is emerging from eons of development during which survival has been promoted both by the ability to grab resources from others and by the ability of groups to cooperate and share natural resources within communities that occupied territorial homelands. In recent centuries we have been developing a consensus that taking from the weak is wrong, and that we ought to have a social order that prevents all such behavior. But we have not yet worked out how to do it.
Some people think of preventing grabbing in terms of preserving the status quo. There are two difficulties with this.
A practice of allowing an appropriation to be treated as just if it has survived long enough gives aggressors an incentive to see if they can grab and hold on long enough. The result is actions like Indonesia's seizure of East Timor and Iraq's invasion of Kuwait. Only if we have a standard of justice that is independent of history can we expect to end such actions.
Henry George's theory of economic justice--that every person has a right to his or her productive powers, and that all persons have equal rights to all natural opportunities--provides a simple formula around which opinion about the shape of a peaceful world can coalesce.
This may seem hopelessly optimistic. But no other theory that I have seen has anything like the clarity, coherence and power of this theory.
What is the use of a theory of justice? A theory is an abstraction. By itself, it can't make anything happen. But when a theory of justice takes root in us, it modulates our emotional responses to distributive outcomes. If you should come to realize that the theory of justice to which you subscribe says that something you thought you wanted to do is unjust, you will find that course of action no longer so appealing. If you come to a new realization that justice is on your side, you are likely to feel emboldened and ready to persist despite obstructions.
If you should come to the realization that justice requires of you a course of action that you had not planned on, you will feel a pull in that direction, and if you do not follow through, you are likely to feel guilty. If your theory of justice informs you that another person is treated unjustly, even a stranger, you are likely to feel compassion for that person, and you may also feel a chivalrous impulse to take up that person's cause and seek redress of the injustice. It was because of feelings of injustice that slavery was abolished and women were granted the right to vote.
As the world shrinks, nations impinge upon one another in more and more ways, providing applications for a theory of justice among nations. The fishing that one nation does leaves fewer fish in the oceans for others. When a river flows from one nation into another, the removal of water by the upstream nation leaves less water for the downstream nation. Near the borders of nations, the use of a frequency by one nation for radio or TV broadcasting precludes its use by the other. Geo-synchronous parking spaces for communications satellites are scarce. Air-borne and water-borne pollutants cross international borders and cause harm. The burning of fossil fuel produces global warming at rates and with consequences that are not yet understood. Chlorofluorocarbons emitted in the Northern Hemisphere enlarge the Antarctic ozone hole and cause skin cancer in Australia.
In most of these areas, the awareness of our global
interdependence has led to some agreements among nations. But
agreement is not always reached. Negotiations are intricate and
time-consuming. Sometimes key participants refuse to accept what is
agreeable to others. A shared theory of justice among nations would
point the way to agreement and shame those who refused to accept the
result. I will argue that a theory of justice inspired by Henry
George provides a simple and far-reaching framework for specifying
the requirements of justice among nations and within nations.
Henry George was one of the most famous reformers of the late 19th century. Ever since the 1879 publication of his book, Progress and Poverty, his ideas have inspired people working for economic and social reform all around the world. He is most famous for proposing the abolition of all taxes except for a tax on the value of land. But I will argue that the single tax on land was not George's most important contribution, and that the power of his thinking can be best appreciated by focusing on the theory of social justice that he used to explain why a single tax on land is just.
In the first chapter of Book VI of Progress and Poverty, George analyzes six different proposed remedies for persistent poverty and explains why they are inadequate. In the second chapter, which consists of just three pages, he asserts that the only effective remedy for the relief of poverty and the unacceptable distribution of wealth is to "make land common property."
George's choice of words here may have been unnecessarily inflammatory. When people see this phrase, they generally presume that George was proposing public ownership of land. In fact he rejected public ownership of land. What he actually meant was that we must recognize that land is everyone's common heritage, and we must develop institutions that reflect this. In any case, he recognized that his assertion would sound outrageous to many of his readers, and he promised to defend it:
The laws of the universe are harmonious. And if the remedy to which we have been led is the true one, it must be consistent with justice; it must be practical of application; it must accord with the tendencies of social development and must harmonize with other reforms.
Accordingly, Book VII is concerned with the justice of making land common property, Book VIII deals with the method and practicality of making land common property--not by public ownership of land, but by abolishing other taxes and financing government by public collection of the rent of land, and Book IX explores economic consequences of this remedy.
The first chapter of Book VII thus plays the crucial role of overcoming the reader's inclination toward knee-jerk rejection of George's startling idea. And George is prepared with a theory of justice in powerful language:
What constitutes the rightful basis of property? What is it that enables a man justly to say of a thing, "It is mine!" From what springs the sentiment which acknowledges his exclusive right against all the world? Is it not, primarily, the right of a man to himself, to the use of his own powers, to the enjoyment of the fruits of his own exertions? Is it not this individual right, which springs from and is testified to by the natural facts of individual organization--the fact that each particular pair of hands obey a particular brain and are related to a particular stomach; the fact that each man is a definite, coherent, independent whole--which alone justifies individual ownership? As a man belongs to himself, so his labor when put in concrete form belongs to him.2
George then argues that if ownership is derived from labor, then no one can own land, since no one produced it:
This right of ownership that springs from labor excludes the possibility of any other right of ownership. If a man be rightfully entitled to the produce of his own labor, then no one can be rightfully entitled to the ownership of anything which is not the produce of his labor, or the labor of someone else from whom the right has passed to him. If production give to the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not the production of labor, and the recognition of private property in land is a wrong. . . .
To summarize George's rights-based theory of justice: Each person has an exclusive right to his or her productive powers. We understand this intuitively, and on this basis accept the idea that people own what they produce. But if this is what ownership means, then no one can claim to own land, since no one produced it. People do have rights to the productive opportunities that nature offers, which are here for our use, but the rights of each person are limited by the equal rights of all other persons.
A careful analyst might object that there are some logical gaps in George's theory of justice. Logically, a right of ownership of things based on the right of each person to his or her productive powers does not preclude a right of ownership of natural opportunities on some other basis. We could mean by ownership only those rights that are derived from the right of each person to his or her productive powers, but we could also mean something broader and more complex.
The easiest way to repair this gap in George's theory is to specify that rather than having just one axiom, that each person has a right to his or her productive powers, he actually has two, the second one being that all persons have equal rights to natural opportunities.
A second logical gap occurs when George asserts that because people have rights to their productive powers, they own what they produce. This would follow only if they also had rights to the natural opportunities that they appropriate in the process of production. It is possible that the natural resources component of what a person produces is more than his share, considering the equal rights of everyone to all that nature offers. This caveat can be conceded without jeopardizing the two axioms, that
III. Applying the Theory of Justice to Land Rights Among Nations
In connecting his proposals for reform to his theory of justice, George made the implicit assumption that all of the people to whom the theory applies are citizens of the same nation. But it is interesting to ask, as George did not, what his theory of justice implies for relations among sovereign nations.
To rearrange and condense George's axiom about natural opportunities:
The equal right of every human being to the use of all that nature offers is natural, inalienable and limited only by the equal rights of others.
How would acceptance of this axiom affect relations among nations?
To see the matter clearly, suppose first that the world consists of just two agricultural island nations, with equal populations but different amounts of land of a uniform quality, and no rent differentials arising from differences in location. Suppose further that each island is initially governed by an oligarchy that collects all of the rent of land and provides no public services, but leaves the population otherwise free to produce what they choose. If the people of this world come to an understanding that the equal right of every human being to the use of all that nature offers is natural, inalienable and limited only by the equal rights of others, they will see that justice requires them to share the rent of land equally rather than have it collected by the oligarchies.
Would they then divide the rent of each island nation among the people of that nation? No, they would not. From the clear meaning of the words, the people of the nation with more land would understand that they, as a nation, were appropriating more than their share of a common heritage to which the people of the other nation had as much right as they did, and that they were therefore required to compensate the people of the other nation.
Consider some forms that such compensation might take. One possibility is that everyone with exclusive use of land would divide the rental value of his land equally among all persons. This would be equitable, but it would have a very high transactions cost. The conceptually simplest way to compensate for unequal appropriations of the common heritage is to have everyone send to a clearing house the full rental value of the land to which he has exclusive access. The clearinghouse would then divide the proceeds equally among all persons in both nations.
While this is conceptually simplest, it entails transferring more money than necessary. It would suffice for each person with more than his share to send the difference between the rental value of his land and the global average rental value per capita. This would provide a fund that would exactly suffice to compensate every person with less than the global average per capita amount, for the difference between the average and his holding.
With people organized into two nations, it would probably be convenient to have the excess rent sent not to a global clearinghouse, but to a national clearinghouse. The clearinghouse of the larger nation would then send the clearinghouse of the smaller nation an amount of money equal to the rental value of the amount of land by which nation's area exceeded half of total land. Both clearinghouses would then have just enough money to compensate their citizens who had less than the global average per capita access to land.
The assumptions of just two nations, equal populations and land of uniform quality simplify the identification of what one nation owes the other. It is easy to dispense with these assumptions. When there are many countries, land quality varies, and population sizes differ, a nation is fully entitled to what it is using, taking account of the equal entitlements of the citizen of other nations to all that nature offers, if its average rent per capita is no greater than the global average rent per capita. If the nation's rent per capita is greater than this, it owes compensation equal to the excess of its aggregate rent above the product of its population and the global average rent per capita.
Note that an equal sharing of natural opportunities does not imply either that people derive equal satisfaction from their shares of natural opportunities or that what constituted one person's share will remain constant over time. If you are the only person who likes mountain top land, you may be able to obtain a great deal of it as your share of what nature offers, and be much more satisfied than those who like land in valleys and have to compete with many others who want valley land. If mountain top land becomes more popular, the amount that constitutes your share will decline.
Now suppose that nations are not entirely agricultural, but have cities as well as agricultural areas. Cities have streets, water systems, sewer systems, and a variety of other public services that raise the rental value of land. How does this additional source of rent affect the compensation process? Recall the principle:
The equal right of every human being to the use of all that nature offers is natural, inalienable and limited only by the equal rights of others.
Streets, water systems, sewer systems, and other public services are not offered by nature. The additions to the rental value of land that these services provide are the product of the human effort that goes into creating and sustaining them. Thus the increases in the rental value of land that arise from them are not part of what must, by the application of our axiom, be shared among nations.
This distinction between rent to which all persons have equal rights and rent that is properly the income of a particular community creates a problem of assessment. To fulfill their obligations to people in rest of the world, the people of a city must know what the rental value of the land they occupy would be if the city were not there. How can they know this?
This assessment problem is formidable, but not a reason to abandon the effort to achieve equal rights to natural opportunities. In principle, the pre-development value of the land beneath a city is the difference between the rental value of the land when developed optimally and the annual cost of that development. One might call upon city planners or the developers of new towns to make such estimates. Even if we could not achieve complete precision in such estimates, we might achieve substantial agreement. It would be a great step in the direction of equal rights to natural opportunities if each nation were to make a declaration of the form, "This is what we believe to be the pre-development value of our land, and of the land in the rest of the world, and this is the basis for our belief."
What has been established so far is that adherence to a principle
of equal rights to natural opportunities requires payments among
nations to offset inequalities in the value of natural opportunities
per capita, that natural opportunities are exemplified by the
pre-development rental value of land, that significant difficulties
can be expected in identifying these pre-development rental values,
and that such difficulties are not a sufficient reason to abandon all
efforts to identify the pre-development rental value of land.
The pre-development rental value of land is only the beginning of the natural opportunities to which all persons have equal rights. Consider fishing in the oceans. If there were so many fish in the oceans that the removal of some by the fishermen of one nation had no detectable impact on the opportunities available to the fishermen of other nations, then there would be no economic scarcity of fish in the oceans as a natural opportunity, and the value of fish would represent returns on the labor and capital of the fishermen, along with some luck. But when fishing by one nation leaves noticeably fewer fish for the others, the reduction in the value of fish stocks caused by fishing represents an appropriation by that nation of the common heritage of all, which needs to be accounted for in establishing what compensation is needed to achieve an equal division of natural opportunities. The pie to be divided now consists of the sum of the pre-development rental value of all land plus the depletion cost of the fishing that all nations do. A nation is fully entitled to the proportion of this total represented by the proportion of its population in total population.
The same logic that applies to fishing applies also to the rent component of the value of all things--the iron and other metals in products of all kinds, the gold and other resources in jewelry, the component of land rent in lumber, etc. Each nation's use of such resources must be included in the pie to be divided.
Sometimes rivers flow from one nation into another. If the withdrawal of water by the upstream nation reduces the value of the natural opportunities that are left to the downstream nation, then this reduction in the value of the downstream opportunities is part of what the upstream nation appropriates from the common heritage of all nations. The total value of the available natural opportunities is maximized while also achieving justice, if all withdrawals of water by both nations are charged at a price that equates supply and demand, the money so collected is counted as part of the pie to be divided, and land is valued according to the rental value it would have if unimproved,considering the price of water.
If nations are close enough together that effective use of parts of the frequency spectrum by one requires that others refrain from using those parts, and if bandwidth on the spectrum is scarce, then any recognition that one nation will have exclusive use of a portion of the frequency spectrum should be accompanied by a payment into the fund to be divided, equal to what others give up by not using it.
If geo-synchronous parking spaces for satellites are scarce, then each nation that has the use of such parking spaces should include a payment for their market value in the pie to be divided.
When a nation generates air and water pollution that reduces the value of land in neighboring countries, these reductions in the rental value of land become components of what the polluting nation must include in its calculation of the value of natural opportunities that it appropriates, while the recipients of pollution may make corresponding reductions in the reported totals of the natural opportunities they appropriate.
If scientists reach a consensus that emissions of greenhouse gases are harmful, then each nation should include its emissions of such gases among the natural opportunities it appropriates, valuing each emission according to the harm that additional emissions do.
When we become aware of a global problem like the ozone hole increasing as a result of atmospheric emissions of particular gases, if any of the harmful activities are continued, the nations that permit such continuations of harmful activities should include the value of the resulting harm as additional components of the natural opportunities that they appropriate.<>In sum, all of the things that a nation does that limit the ability of other nations to use natural opportunities or that reduce the productivity of other nations are charges on that nation's account. This includes claiming land, claiming exclusive extra-territorial use of portions of the frequency spectrum, claiming geo-synchronous orbits, appropriating water in international rivers, appropriating fish in the oceans, appropriating rent in the form of the use of resources that are incorporated into goods, and any form of pollution with international consequences. The axiom that all persons have equal rights to natural opportunities implies that each nation has a right to a share of the total of all such appropriations equal to its share in world population. Any nation that appropriates more than its share has an obligation to compensate those who have less than average per capita shares.
Suppose that a nation appropriates only its share of natural opportunities but is richer than other nations because its citizens are on average harder working or more highly talented than the citizens of other nations are. Does justice require the richer nation to compensate the others? By this theory of social justice, definitely not! Each person has an exclusive right to his or her productive powers. Therefore the nation as a whole has a right to the product of its citizens' talents, no matter how greatly this product exceeds that of the citizens of other nations. The citizens of a rich nation may feel compassion for those who are poorer than themselves, and therefore contribute to poor nations as a matter of charity, but justice does not compel them to do so.
What about greater incomes that arise from greater wealth? These require more elaborate analysis. When greater wealth is the result of greater saving from the product of talent or from the product of a nation's share of natural opportunities, then a nation with greater wealth is fully entitled to the greater income that comes from it. However, when greater wealth is the result of a history of theft or of unjustifiably large appropriations from the natural opportunities that are everyone's common heritage, then the nation that possesses that wealth cannot rightly claim either the income from the wealth or the wealth itself. To achieve justice, the wrongful appropriations must be rectified. The unjustly acquired wealth must be restored from those from whom it was taken, or if that is not possible, shared among all nations. To the extent that persons who are still alive received past income from this wealth, that income must be disgorged.
When George addressed this issue in Progress and Poverty, he suggested that all such past misappropriations be forgiven, that the generation that he addressed be content to receive their shares of future rent. But the desirability of such a policy is a matter that the dispossessed of any era must decide for themselves. Justice does not require them to forego such rectification.Suppose that differences in incomes lead to differences in the rental value of land. To make the example simple, go back to the case of two island nations, and this time suppose that they have equal amounts of land of the same quality as well as equal populations. But the people on one island have a stronger taste for work, or they have accumulated more capital, and as a result of this the rental value of land on their island is greater. Are they obliged to make payments to the people on the other island? No, they are not. They are appropriating only their share of natural opportunities, so they have no debt to the people of the other island.
The natural opportunities that have been considered to this point are ones that, to a first approximation, yield constant returns over time. A new set of issues arises when this theory of social justice is applied to resources that yield returns that necessarily vary over time. Now the issue of intergenerational justice arises along with that of international justice.
Consider first the issue of intergenerational justice without the complication of international concerns. The efficient use of depletable natural opportunities requires that they be allocated over time in such a way as to maximize the present value of net revenue from sales. As economists have long known, this requires that prices charged for resources that are being depleted rise at the rate of interest. But this is just efficiency. It says nothing about who should get the money.
The axiom that all persons have equal rights to natural opportunities suggests that when we deplete a resource such as oil, there are two steps that must be taken to achieve intergenerational equity. In the first step, when oil is sold we must share the proceeds over generations in such a way that every person in every generation can receive a payment of the same real value every year. To satisfy this obligation when the number of people alive in different years is not proportional to the amount of oil used in those years, we need to invest the proceeds of oil sales in a fund that would make annual payments to all persons of a size that could be maintained for all generations.
This first step provides intergenerational equity with respect to oil revenue, but it does nothing about the fact that, if oil is allocated efficiently over time, later generations will face a higher price of oil than early generations. To provide equity with respect to the changing price of access to natural opportunities, there must be a second step that redistributes money among generations to offset the changing price.
This second step implicitly assumes a world with no change in technology. If an early generation provides later generations with improved technology, then the later generations are treated justly if the combination of prices of commodities, technology and money received from the earlier generation permits them to attain the same overall level of satisfaction as the earlier generation. This specification of justice presumes that everyone has the same tastes. When tastes differ, an improvement in technology that more than compensates some persons for a greater scarcity of some natural resources will provide inadequate compensation for others. Such inequality cannot be avoided. All that can be expected is that those who use exhaustible resources will, by limiting their use and providing endowments for future generations, make it possible for the typical member of every future generation to attain the same level of well-being as the typical members of the earlier generations of resource users. Success in such an effort cannot be guaranteed. We don't know the tastes of future generations. We don't know the rate at which technology will advance. We don't know the rate at which new resources will be discovered. Estimates of all these things must be made to determine the proper rate of resource use and the proper endowments of future generations. The most that can be asked for is a good-faith effort to achieve the standard required by justice.
Now consider the international dimension of intergenerational equity. What one nation owes to others with respect to intergenerational equity is compensation for making it more difficult for the other nations to provide adequately for their future generations. If all nations are using the same amount of oil per capita, then no nation can complain about what the others are doing. But if one nation is using more oil per capita than the others, then it owes compensation to the others for making it harder for the others to provide all of their future generations with equal rights to natural opportunities. If oil is being allocated efficiently and equitably among generations, the amount of compensation that an excessively consuming nation owes will be the market value of its excess oil consumption, valued in terms of the price of oil in the ground. The same result is obtained if all nations include the resource value of all oil that they consume, and all other depletable resources, in the calculation of what they appropriate for themselves from everyone's common heritage.
One of the ways that a nation can compensate other nations for disproportionate use of natural opportunities is by creating technology that other nations can use to compensate their future generations for scarcer natural resources. If gasoline costs twice as much but cars are twice as efficient, people are not, on net, disadvantaged by the higher price of gasoline. This line of reasoning requires contestable judgements about the value of new technology and how long it would have taken before someone else would have made the same discovery. Nevertheless, technological improvements are a valid form of compensation for resource scarcity.
One issue that arises when technological improvements are used as compensation is that not all nations place the same value on technology. If some island nation wishes to maintain a way of life that does not involve cars, then that nation is not compensated for an increased scarcity of fish by increased efficiency of car engines. What compensates a particular nation must reflect the typical preferences of that nation.Another troublesome issue with respect to natural opportunities is that people have different ideas about which creatures are properly treated simply as resources and which deserve a higher level of respect. When creatures are non-migratory, the right to control them can simply go with the land they occupy, and bids for the land will reflect values with respect to the creatures that occupy the land. However, with migratory creatures such as whales and songbirds, a different mechanism must be created to deal with desires to protect. If nations representing 80% of the world's population want to protect whales, then they should be able to protect 80% of whales. How such a rule would be implemented in practice is a problem that I leave for others to wrestle with.
If the population of one nation grows faster than the populations of other nations, then in the future the citizens of the more rapidly growing nation will be able to say to the other nations, "We constitute a greater percentage of the world's population than our forebears. We deserve a correspondingly larger proportion of the value of using the world's scarce natural opportunities." It would not be just for the rest of the world to reply, "It's not our fault that your parents had so many children. You only get as a nation the same fraction that your parents got. You must each do with less." This would not be just because the equal right of every person to natural opportunities is not contingent on having had parents who were not excessively prolific. The equal right is an equal right of persons. But this means that at the earlier time when the population was growing, the citizens of the less rapidly growing nation could say to those of the more rapidly growing nation, "Your decision to have a population that grows more rapidly than the world population requires us to set aside a greater quantity of resources for future generations, as their shares of depletable resources, and as compensation for greater scarcity of land in the future. This cost that you are imposing on us must be counted in the calculation of your share of natural opportunities." Thus the costs of differences in population growth rates are counted in the calculation of compensation for unequal appropriations of natural opportunities. Similarly, those nations whose populations grow more slowly than average can claim a credit for their slower growth.<>The analysis above takes no account of the possible benefits of a greater population. With a greater population, there will be additional economies of scale that will lower the prices of some goods and make it feasible to bring to market other goods that would be unavailable if population did not grow. A nation with a population that grows at an above-average rate had a right to credit from this source of benefits to others. Such a nation might also expect to find that it has a greater number of highly talented people who produce innovations, permitting the nation to claim credit for the value of those innovations to future generations.
Humanity needs a system for deciding what belongs to which nation
and for managing the unintended impacts that nations have on one
another. It can be expected that any workable system will be based on
principles of justice. This paper has outlined such a system, based
on two axioms, namely that people have rights to themselves and that
all persons have equal rights to natural opportunities. A companion
paper in the next volume of this journal will explore the implication
of this system for justice within nations and the processes that
might be used to gain recognition for such a system.
1 Henry George, Progress and Poverty, Book VI, Ch. 2, p. 329 in editions published by the Robert Schalkenbach Foundation.
2 Ibid., Book VII, Ch. 1, p. 334.
3 Ibid., Book VII, Ch. 1, pp. 336, 338-9.
Published in Geophilos Spring 2001
If humanity achieves substantial consensus on the meaning of economic justice with respect to relationships among nations, how might we turn that developing consensus into practical politics?
In Part 1 of this essay in the previous issue of Geophilos, Nicolaus Tideman argued that it is reasonable to develop an understanding of the meaning of global economic justice on the basis of two axioms:
These axioms imply that whenever a nation appropriates natural opportunities for itself to the possible detriment of other nations, it has an obligation to attend to the rights of those nations. If it appropriates more than its share of natural opportunities, it has an obligation to compensate those who thereby have less than their shares. A nation's share of natural opportunities is a collection of natural opportunities with a market value that is equal to the product of the nation's population and the value of resource use that could feasibly be used by all persons in all generations.
The natural opportunities include the pre-development rental value of land, the depletion cost of fishing, mineral extractions, and water appropriations, the harm from cross-border pollution, the scarcity value of the electro-magnetic spectrum and geo-synchronous orbits. If an increase in the population of one nation reduces the value of the opportunities of other nations once the new citizens are granted equal rights to natural opportunities, then this cost should be counted as well. The value to other nations of innovations would provide the innovating nation with credits to offset its appropriations of scarce natural opportunities.
In Part II, the author addresses two questions:
SUPPOSE THAT a nation accepted the principles that every person has a right to himself or herself, and that all persons have equal rights to natural opportunities. What would be implied for economic arrangements and the rights of citizens within that country?
As an acknowledgement of the right of every person to himself or herself, such a nation would allow any citizen who wished to emigrate to do so. Whenever someone exercised this right, the claim of his former fellow citizens on natural opportunities would be reduced, and the claim of his new fellow citizens would be increased. This fact would tend to make nations more welcoming toward immigrants.
The freedom of individuals to move, and the fact that those who moved would carry with them their claims to equal rights to natural opportunities, would tend to permit a political majority in a nation to justify its adoption of policies that were opposed by minorities, not by a claim that because they were a majority they were right-a nonsensical claim-but rather with the explanation that they were simply seeking to express, with their shares of everyone's common heritage, their conception of what a nation ought to be.
This would not be a completely satisfactory explanation, because if a majority changed a long-established tradition, they would require the minority who opposed the change to either accept a change that they did not desire, or bear the costs of breaking their ties to their traditional homes. But the only way to completely avoid the costs of such dislocations would be to prohibit all change, and that is not sensible. One can reasonably expect sensitive accommodation on the part of both majorities and minorities-majorities not to disregard the feelings of minorities just because they are a majority, and minorities not to expect perpetual extension of the status quo ante.
If a very sharp and deeply felt division of opinion about the proper role of the state developed, then it would be sensible to allow the minority to secede. There is nothing sacred or inevitable about any particular number of nations or their borders. If a majority allows a disgruntled minority, who are a majority in a particular region, to leave and take territory with them, then the remaining majority will avoid a potential problem of underpopulation and excessive claims to natural opportunity that would occur if the minority were to simply emigrate.
The dissatisfied minority can make a claim for an opportunity to secede on the following basis: The prior claim to territory is based on the rights of the minority as well as the majority to equal shares of natural opportunities. The minority have rights to themselves. They should not be obliged to live in a type of nation they do not want. They may find all other nations unacceptable, or other nations may find the dissatisfied minority unacceptable. Justice requires that there be some way in which the dissatisfied minority can receive their rightful share of natural opportunities, free of obligations that entangle them with others, so it is proper for them to expect to be able to sever their share from the territorial rights that belong jointly to the majority and the minority.
The majority could justly require the minority to take their share of rights in whatever territory the majority wished to cede, provided that the ratio of the value of the territory so ceded to the value of the territory retained was roughly equal to the ratio of the minority to the majority, with any discrepancy settled by periodic cash payments. The majority might also reasonably require the minority to pay any costs of the separation.
When the people of a nation ensure that they do not claim more than their shares of natural opportunities, when they permit any citizen who desires to leave to do so, and they stand ready to allow any substantial majority within a reasonably compact subarea to succeed, then the people of that nation can justly say, "The laws we choose to live under represent our conception of what a nation ought to be. If you don't like it, create your own nation somewhere else. We claim for ourselves no more than our share of what nature provides." Thus a wide variety of arrangements within nations are consistent with justice.
Economic theory can say something about the types of nations that can be expected to emerge in such a world. As mentioned previously, one would expect fewer barriers to immigration, since immigrants would arrive with claims to their shares of natural opportunities. Also, nations could expect to have greater difficulty retaining citizens when they had either low wages, low returns to saving, or laws that people found oppressive.Nations would acquire more of the characteristics of competitive firms. To attract or retain citizens, they would need to offer citizens wages and rates of return on their capital that were close to what they could get elsewhere. Taxes on wages and on the return to capital would tend to be precluded by the need to attract people and capital. What would be left as sources of public revenue would be charges for exclusive access to natural opportunities-land, natural resources, water rights, fishing rights, the frequency spectrum, etc., plus charges for activities that imposed costs on others (emitting pollutants, using crowded highways). We would see a world that approximated the one that Henry George advocated, not as something that was imposed on everyone, but rather as a competitive equilibrium among nations.
WOULD THERE be enough revenue for the public sector? To address this question, one should consider different types of public activities separately. The type of public activity that can most readily be financed by charges for exclusive access to natural opportunities is local public services. When these are desired by voters and provided efficiently, they tend to raise the rental value of land by enough to pay for themselves, since a local public service provides a benefit in a limited region, and people will bid up the rental value of that land by the value of access to the service.2 Thus local services can be financed without even beginning to draw on the value of opportunities provided by nature.
Another broad area of public spending is national defense. While defense increases the value of land in a dangerous world, one might reasonably hope that the need for defense spending would be greatly reduced in a world that had adopted a general norm of acknowledging the equal rights of all persons to natural opportunities.
To the extent that defense costs are raised when a nation becomes a more attractive target-- because of increases in its stock of capital or in the productivity of its citizens--it would be efficient and not unreasonable to have an annual charge on capital and on talent (an asset protection fee) to defray these costs. Such a fee could be collected by a self-assessed tax. For capital, the tax could be enforced by an obligation to sell the capital at the self-assessed price. For talent, the tax could be enforced by a rule that if a person was injured in an accident and wished to sue for loss of earning power, the self-assessed value of the person's talent would be the upper limit on the damages that could be claimed. It is likely that a tax rate of two or three tenths of one percent per year would suffice to fund the current level of U.S. defense spending. But I would hope and expect that defense spending would fall substantially. Between the reduced need for defense spending and an efficient asset protection fee for the extra defense costs generated by increases in capital and talent, it should be possible to finance defense without exhausting the rental value of exclusive access to natural opportunities.
The next major area of government spending to consider is social welfare programs-welfare, social security, unemployment compensation, health insurance, etc. These would tend to raise the rental value of land to some extent, but they would generally not raise land rents by enough to pay for themselves, because their perceived value to individuals tends to be highly disparate, so that those who value access to such programs generally do not need to offer the full value of such programs in rent premiums in order to get access to them. Thus one cannot count on financing such programs by increases in rent. The disparate value of public education to families makes this public service subject to the same analysis.
Social welfare programs often have an insurance component, requiring payments by potential beneficiaries. If a program is so close to a true insurance program that virtually everyone receives an expected benefit that is as great as his or her assigned contribution, then it can be financed by the assigned contributions, and few will find the program objectionable. But social welfare programs rarely approximate true insurance programs.
The difficulty with financing social welfare programs with rent arises because those who design such programs usually seek to require some people to pay more than the expected value of their benefits. In a world that recognizes the equal rights of all persons to natural opportunities and the right of any person to emigrate, social welfare programs of this sort will be possible only to the extent that they reflect shared community values. If such a program draws on shared feelings of community responsibility, then people will be happy to contribute part of their shares of the value of natural opportunities, or even part of their earnings to such programs. If an attempt is made to implement social insurance that exceeds what people are prepared to pay for out of a sense of community, people will tend to emigrate or secede. Thus in a world that operates on principles of global economic justice, people will not be required to pay for social insurance that they object to. If people have potential needs that exceed what their fellow citizens are willing to provide, they will have to buy their own insurance before the need arises or rely on friends and family. If those who are never able to provide for themselves are to be provided for in a just world of limited generosity, parents will need to buy insurance against having children with special needs before they conceive those children. But I believe that feelings of community are sufficiently extensive that those who need help would receive it. Unlike the present situation, in a just world every person would have a share of the value of exclusive access to natural opportunities, which would provide a guaranteed income that would provide for many contingencies.
What to Do When Some Nations Fail to Fulfill Their Obligations
THE THEORY that has been developed incorporates all of the ways that nations impinge upon one another by their appropriations of natural opportunities-through their claims to land, natural resources, the frequency spectrum, and geosynchronous orbits, through their appropriations of fish in the ocean, through their use of natural resources that are embedded in goods, through their emissions of pollutants that cross international borders, including the ones that produce global warming and ozone depletion, through their decisions to have population growth rates that differ from the world average, and in any other way that nations appropriate scarce natural opportunities. The theory describes what nations must do to fulfill their obligations to other nations. But how will unwilling nations be compelled to fulfill their obligations if they do not wish to do so?
The theory is not designed to coerce recalcitrant nations. The theory is designed to describe what must be done by those who wish to fulfill their obligations. But universal acceptance is not needed for the theory to work. In the first place, under the theory that has been presented only some nations have obligations. The others have claims. Until a careful analysis is done, it is not possible to specify which nations have the obligations and which have the claims. But only the nations with obligations need to be persuaded to fulfill their obligations under the theory, and these are likely to be predominantly rich nations. Because the magnitudes of transfers to recipient nations depend on what those nations do, they receive incentives to economize on their appropriations of natural opportunities, even if they do not agree with the theory.
But suppose that only some of the nations with net obligations are willing to honor those obligations. How should these nations respond to the lack of cooperation by others?
What if a nation refuses to share the value of natural opportunities among its citizens? A reasonable test of whether a nation can properly be treated as the agent of its citizens and the appropriate recipient of its citizens' shares of the value of natural opportunities is whether the nation allows its citizens to leave. If a nation does not allow its citizens to leave, then it is not proper to treat the nation as the agent of its citizens. The citizens are effectively imprisoned. We have no way of honoring our obligations to them. We might put their shares in trust, but if they are not allowed to leave, then we should not trust their government to use their shares of the value of natural opportunities as they would wish. On the other hand, if the citizens could leave and decline to do so, and if there are some other nations that would accept them, then we are justified in regarding their continued citizenship as evidence of their implied consent to the decisions of their government about how their shares of natural opportunities will be used. This rule may induce governments that would otherwise keep their citizens captive within their borders to instead allow them liberty.
Thus the proper application of a principle of equal rights of all persons to natural opportunities will generate incentives for increased compliance and increased liberty for all. It is not necessary to have a world government that has the power to coerce all nations to abide by a single authority's determination of what they owe. Every nation can make its own determination of what, if anything, they owe to others. Within broad limits people can accept differing interpretations of obligations. If some nation exceeds the limits of tolerance, other nations can reasonably respond by declining to regard that nation or its citizens as the true owners of the things they seek to trade. What is created is a diverse, tolerant, and responsible international community.
It is not necessary to achieve universal acceptance of this theory for it to be effective. What is necessary is acceptance by the major economic powers, plus a willingness to condition economic relations on an assurance that traded goods are not unjustly appropriated from nature, and are not made with the labor of persons who are deprived of their liberty to migrate if they choose.
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper