also known as Social Salary, Basic Income
Henry George: The Crime
of Poverty (1885 speech)
But I have not time to enter
into further details. I can only ask
you to think upon this thing, and the more you will see its
desirability. As an English friend of mine puts it: "No taxes
and a pension for everybody;" and why should it not be? To take
land values for public purposes is not really to impose a tax, but to
take for public purposes a value created by the community. And out of
the fund which would thus accrue from the common property, we might,
without degradation to anybody, provide enough to actually secure
from want all who were deprived of their natural protectors or met
with accident, or any man who should grow so old that he could not
work. All prating that is heard from some quarters about its hurting
the common people to give them what they do not work for is humbug.
The truth is, that anything that injures self-respect, degrades, does
harm; but if you give it as a right, as something to which every
citizen is entitled to, it does not degrade. Charity schools do
degrade children that are sent to them, but public schools do not. ... read the whole speech
Alanna Hartzok: CITIZEN
DIVIDENDS AND OIL RESOURCE RENTS
Abstract: Citizens of
Alaska have been receiving
individual dividend checks from an oil rent trust fund since 1982.
Norway¹s citizens receive substantial social services and invest
oil rents in a permanent fund for the future. Nigeria has yet to
establish a similar fund for its oil revenue stream. This paper
explores the oil rent institutions of Alaska, Norway and Nigeria with
a focus on these questions:
- Are citizen dividends from oil rent funds
currently or potentially a source of substantial basic income?
oil rent funds the best source for citizen dividends or should CDs be
based on other types of resource rents?
The paper recommends full use
of information and communication
technologies for transparency in extractive resource industries,
that resource rent from non-renewable resources should be invested in
socially and environmentally responsible ways and primarily in the
needed transition to renewable energy based economies, and that oil
and other non-renewable resource rent funds should transition towards
capturing substantial resource rents from surface land site values
(ground rent) and other permanent and sustainable sources of rent for
possible distribution of citizen dividends.
Nic Tideman: Using Tax
Policy to Promote Urban Growth
The efficiency that is entailed
in using the rent of land to
finance public activities applies to certain other sources of public
revenue as well:
Jeff Smith and Kris Nelson: Giving
Life to the Property Tax Shift (PTS)
1. Charges on any publicly granted privileges, such
as the exclusive right to use a portion of the frequency spectrum for
radio and TV broadcasts.
2. Payments for extractions of natural resources. Such
payments should be set at levels that yield the greatest possible
revenue of the resources, in present value terms.
3. Taxes on pollution. Every individual or enterprise that
pollutes the air, water or ground should be required to pay the
estimated cost of the pollution it generates. The effect of pollution
on the rental value of surrounding land is one possible measure of its
4. Taxes on any other activities that reduce the rental
value of surrounding land.
5. Taxes on activities such as driving or parking in
crowded streets, where one person's activities reduce opportunities for
others. The administration of such charges may be so expensive that it
is not worth implementing them, but if the administration can be
handled sufficiently cheaply, these charges are efficient to the extent
that they only charge people for costs imposed on others.
6. Taxes on activities, such as the consumption of alcohol,
which impose costs on others (e.g., higher traffic fatalities).
7. Charges for local public services, such as water,
electricity, sewer connections, etc. It is not generally desirable to
make every service completely self-financing. Rather, what is desirable
is that each user be required to pay the marginal cost of the service
he receives. Extensions of service networks are efficient when they
increase publicly collected land rents by enough to cover the costs not
covered by user charges.
8. A self-assessed tax on permanent improvements to land,
at a very low rate (perhaps 1/10 of 1% per year). With a self-assessed
tax, each possessor of land names a price at which he would be willing
to part with the land he possesses (and any immovable improvements). He
pays a tax proportional to the value he names, and anyone who wishes to
may take over possession at that price. The value of such a tax is that
it makes it much easier to assemble land for redevelopment, and to
identify appropriate compensation when land is taken for public
of the above taxes are positively beneficial and should be
collected even if the revenue is not needed for public purposes. Any
excess can be returned to the population on an equal per capita
basis. If these attractive sources of revenue do not suffice to
finance necessary public expenditures, then the least damaging
additional tax would probably be a "poll tax," a uniform charge on
all residents. If some residents are regarded to be incapable of
paying such a tax, then the next most efficient tax is a proportional
tax on income up to some specified amount. Then there is no
disincentive effect for all persons who reach the tax limit. The next
most efficient tax is a proportional tax on all income.
It is important not to tax
the profits of corporations. Capital
moves from where it is taxed to where it is not, until the same rate
of return is earned everywhere. If the city refrains from taxing
corporations they will invest more in St. Petersburg. Wages will be
higher, and the rent of land, collected by the government, will be
higher. The least damaging tax on corporations is one that provides a
complete write-off of investments, with a carry-over of tax credits
to future years. Such a tax has the effect of making the government a
partner in all new investments. With such a tax the government
provides, through tax credits, the same share of costs that it later
receives in revenues. However, the tax does diminish the incentive
for entrepreneurial activity, and it raises no revenue when
investment is expanding rapidly. Furthermore, the efficiency of such
a tax requires that everyone believe that the tax rate will never
change. Thus it is best not to tax the profits of corporations at
all. If the people of St. Petersburg want to share in the profits of
corporations, then they should invest directly in the corporations,
either privately or publicly. The residents of St. Petersburg would
be best served by refraining from taxing the profits of corporations.
Creating a place where profits are not taxed can be expected to
attract so much capital that the resulting rises in wages and in
government-collected rents will more than offset what might have been
collected by taxing profits.
The taxes that promote urban growth have at least one of two
A city that confines itself to these taxes can expect to
attract capital rapidly, and therefore to experience rapid growth,
raising the wages of its citizens and the publicly-collected rent of
- The first feature that a growth-promoting tax can have is
that it can serve to allocate a naturally occurring resource among
competing potential users. Charges for the use of land, for the use
of the frequency spectrum and for depleting natural resources share
- The second feature that a growth-promoting tax can have
is that of being a charge for the costs imposed on the city by the
person who pays the tax. This feature is shared by taxes on
pollution, taxes on other activities that reduce the value of
surrounding land, taxes on imposing congestion and other costs on
other residents of the city, charges for the marginal cost of
publicly provided services, and a self-assessed tax on property,
reflecting the hindrance to future growth represented by existing
...Read the whole article
John Muir is right. "Tug on any
thing and find it connected to everything else in the universe." Tug on
the property tax and find it connected to urban slums, farmland loss,
political favoritism, and unearned equity with disrupted neighborhood
tenure. Echoing Thoreau, the more familiar reforms have failed to
address this many-headed hydra at its root. To think that the root
could be chopped by a mere shift in the property tax base -- from
buildings to land -- must seem like the epitome of unfounded faith. Yet
the evidence shows that state and local tax activists do have a
powerful, if subtle, tool at their disposal. The "stick" spurring
efficient use of land is a higher tax rate upon land, up to even the
site's full annual value. The "carrot" rewarding efficient use of land
is a lower or zero tax rate upon improvements. ...
problem needs a big solution which in turn
matching shift of our prevailing paradigm. Geonomics -- advocating that
we share the social value of sites and natural resources and untax
earnings -- does just that. Read the whole article
Jeff Smith: What the Left Must
Do: Share the Surplus
WHAT THE LEFT MUST NOT DO
RENT – THE STUFF OF FORTUNES – ROCKS AND RULES
HOW TO RECOVER RENTS
TAX SHIFT WORKS
EARNINGS DOESN’T WORK
WIDE-OPEN FIELD OF PLAY
What would you do if
you could work two days and take five off? Write?
Play soccer? Tend to the community garden? Time off is an option made
increasingly viable by our relentlessly rising rate of productivity.
French Marxist and media critic Jean Baudrillard, while still advancing
the interests of labor, implores the Left to move on from seeing humans
as workers to seeing workers as human beings, with more needs than
merely the material. Enabling people
to live their lives more fully is an issue made to order for
rescuing the Left from the doldrums that descended when “history
What would single mothers do with enough income to stay home?
would minorities do with the wherewithal to begin their own businesses?
What would communities do if they did not leak resources up to an upper
class and out to a distant lender or tax collector? What would the
elite do without our commonwealth? The means to these ends is an extra
income apart from labor or capital (savings), that is, a “social
salary” from society’s surplus, a “Citizens Dividend” from all the
rents, natural and governmental, that people pay for land and to the
privileged, redirected to everyone equally. Merely demanding a
fair sharing of the bounty from nature and modern society would raise
people’s self-esteem, a key component for political involvement.
Actually receiving an income supplement would transform our lives and
Unless humanity needs militarism, corporate welfare, and debt
it’s fair to say most public revenue gets wasted. Demanding a dividend
– similar to Alaska paying residents a share from oil royalties –
forces a new dialog on spending priorities. Beyond arguing “bread not
bombs”, a dividend replaces expenditures by politicians (necessarily
influenced by donors) with spending by citizens, the people who
surplus in the first place. With a dividend, citizens get to see
themselves as direct beneficiaries from reigning in the wild spending
spree on imperial aggression, disloyal
multinationals, and on “borrowing” money that never existed until
“lent” by the Federal Reserve. ...
Meanwhile, ignoring our common assets guarantees that we
pay rent rather than begin to receive rent. Conversely, insisting upon
a fair share could win us the world
we want. While it breaks an old habit to leave jobs behind in
favour of fair distribution, just recognizing surplus empowers people.
It reaffirms the very existence of our commonwealth and challenges the
narrow view of property as exclusively private. While the Left gets
excoriated for wanting to be big spenders, demanding a dividend in lieu
of waste and a shift of taxes from individual effort to social surplus
helps refurbish the Left’s image.
The call to share the commonwealth enjoys an unshakable moral
gets high marks for real world success, unlike taxes upon true
earnings. Once implemented, sharing rent will grant us leisure – time
enough to evolve and reconnect with friends, family, and neighbours –
and drain away fortunes rather than let the fortunate continue to soak
society. Hence support for shifting taxes and paying dividends to the
citizenry grows already, without the Left’s leadership. It’s time to
run with the banner of an extra income for everyone, in the halls and
capitols of governments everywhere. To liberate humans from exploitive
labor, let us advance the sharing of society’s surplus.
To prove I'm not tilting marx-ward, I fear I may one day soon
write "What the Right must do (or quit doing)," too. Read the whole article
Louis Post: Outlines of Louis F. Post's
Lectures, with Illustrative Notes and Charts (1894) — Appendix:
Q2. Would the single tax yield revenue sufficient for all kinds of government?
A. Thomas G. Shearman, Esq., of New York, estimates that sixty-five per cent
of the rent that the land in the United States now yields actually and
potentially to its owners, would be sufficient. But whether it would or
not is as yet an unimportant question. If all revenues ought to be raised
from land values, then no revenues should be drawn from other sources while
any land value remains in private possession. Until land values are exhausted
the taxation of labor cannot be excused.
Q4. What disposition would you make of the revenues that exceeded the needs
A. The people who ask this question ought to settle it with those who want
to know whether the single tax would yield revenue enough. I do not believe
that public revenues under the single tax would exceed the just needs of
economical government; in better highways, better sidewalks, better wharves,
better schools, better public service of various kinds, we should find sufficient
demand for all our revenues. But the question of deficiency or surplus is
one to be met and disposed of when it arises. The present question is the
wisdom and the justice of applying land values to common use, as far as they
will go or as much of them as may be needed as the case may prove to be.
... read the book
Dan Sullivan: Are you a Real
Libertarian, or a ROYAL Libertarian?
Fear of a funded
There is also a well founded libertarian concern that land rent
could provide funds enough to support a corrupt and oppressive
government. Most libertarian supporters of the governmental
collection of land rent therefore fall into two camps. One would give
the people power to limit how much money the government can take, but
would stipulate that all such money come entirely from ground rents
and natural resource severance royalties. The other would take the
full rent, but would stipulate that the government can still only
spend what the citizens authorize it to spend. The rest would be
distributed on a per-capita basis. ... Read
the whole piece
The Rev. Martin Luther King, Jr., Where Do
We Go From Here?
We must create full employment or we must create incomes. People must be
made consumers by one method or the other. Once they are placed in this position
we need to be concerned that the potential of the individual is not wasted.
New forms of work that enhance the social good will have to be devised for
those for whom traditional jobs are not available. In 1879 Henry George anticipated
this state of affairs when he wrote in Progress and Poverty:
The fact is that the work which improves the condition of mankind, the work
which extends knowledge and increases power and enriches literature and elevates
thought, is not done to secure a living. It is not the work of slaves driven
to their tasks either by the task, by the taskmaster, or by animal necessity.
It is the work of men who somehow find a form of work that brings a security
for its own sake and a state of society where want is abolished. [Book IX:
Effects of the Remedy; Chapter 4: Of the changes that would be wrought in
social organization and social life]
Work of this sort could be enormously increased, and we are likely to find
that the problems of housing and education, instead of preceding the elimination
of poverty, will themselves be affected if poverty is first abolished. The
poor transformed into purchasers will do a great deal on their own to alter
housing decay. Negroes who have a double disability will have a greater effect
on discrimination when they have the additional weapon of cash to use in
Beyond these advantages, a host of positive psychological changes inevitably
will result from widespread economic security. The dignity of the individual
will flourish when the decisions concerning his life are in his own hands,
when he has the means to seek self-improvement. Personal conflicts among husbands,
wives and children will diminish when the unjust measurement of human worth
on the scale of dollars is eliminated .
Now our country can do this. John Kenneth Galbraith said that a guaranteed
annual income could be done for about twenty billion dollars a year. And I
say to you today, that if our nation can spend thirty-five billion dollars
a year to fight an unjust, evil war in Vietnam, and twenty billion dollars
to put a man on the moon, it can spend billions of dollars to put God's children
on their own two feet right here on earth. ... read the whole chapter and speech
Bill Batt: The
Compatibility of Georgist Economics and Ecological Economics
Georgists today are
also frequently very divided on the role of
government in society. Many are vehemently anti-government and are
subscribers to libertarian views;35
others are rather conventional progressives in their belief and
confidence in the role of government to provide the full array of
public services which are typically found in modern democratic
societies. The axis of Georgist thought cuts completely across
conventional political party lines as a consequence: one finds hardline
conservatives and progressive “liberals” united only in the view that
economic land rent should not be left in the hands of titleholders.
Most would use such revenues to finance the support of government
services, abolishing completely the wide array of income, sales,
corporate franchise and other taxes that are currently used, keeping
only environmental fees and user fees.
Adherents of minimalist government believe that any extra rent
collected from holders of land should be returned to people
individually in the form of a “citizen’s dividend.” Given the choice of
using the full amount of surplus rent to support government services or
collecting only a portion, many libertarian Georgists would collect it
all; leaving it otherwise in the hands of property holders, they
believe, has more negative consequences than not collecting it. Not
collecting the economic rent, so they argue, is worse than throwing it
“into the sea” for all its distorting and destructive consequences.
Others advocates would prefer to
collect it not for financing the
services of government but rather to distribute it as a “citizen’s
dividend.” There is widespread recognition of the destructive
consequences of the failure to collect land rent. Some Georgists would
allow a token amount of rent to be retained by landholders so as to
facilitate real estate markets above and beyond what might otherwise be
realized. ... read the whole article
Mason Gaffney: Canada's System of Revenue
Another difference is that Canadians are much more restrained and self-controlled
than Americans, and therefore they've managed to build up enormous surpluses.
There's something called the Alberta Heritage Fund, where instead of
just blowing that money as it came in, they squirreled it away and saved it
up and it's now considered I believe the largest single block of available
capital in North America: $6-10 billion (I lost sight of the figures somewhere
as they were going up). But can imagine Howard Jarvis in Alberta with his beady
eyes on the Alberta Heritage Fund? Why, when we built up a surplus of just
a few million dollars in Sacramento Howard Jarvis climbed all over everybody,
'We've got to cut taxes.' And that's when we got 'Proposition 13'. Saskatchewan
has a Heritage Fund too, quite modest compared with Alberta's, but worth mentioning.
But the most delightful distinction
about Canadians is the strong and explicit recognition among almost everyone,
even if he's an economist, who discusses this subject, that different resource
endowments are the basis of inter-provincial differences. Equalisation
in Canadian politics means sharing the economic rent. Everybody talks
that way. Canadian economists even when they come to the States talk that
way. Just as though rent were a permissible word in polite discourse. It's
very refreshing. However there's a very selective attitude
towards rent -- towards what rents are shareable, I should say.
- Rents from oil and gas are fair game.
- Forest revenues are fair game.
- Mineral revenues of other kinds are fair game.
- Water power is fair game.
But now how about the rents that are
generated by the valuable lands of Montreal, or Toronto, or some of those
other big and powerful cities in the east? They are not fair game. As a
matter of fact, if you pore through the fine print of the equalization law,
which I did on the airplane, you find the most interesting exception to what's
included in the formula. I'll explain the formula to you in a moment if you
are still awake.
The formula says that the greater the capacity to raise taxes that a province
enjoys, the less will be its equalization payment. And various potential tax
bases are included in this formula. And one of those is the property tax. But
then you look at the fine print and only the improvements are included. The
land is specifically excluded. Very pecular. In the formula as it's
commonly printed you don't see that exclusion; it's only in the footnote. But
in the footnote it says 'Instead of the value of land we will substitute the
gross provincial product.' Of course, all right thinking people know that land
value is in direct proportion to the growth of the provincial product. Or do
they? I always thought that was the product of other inputs. What it
means is that if a province has a great deal of valuable land which is not
being used to a highest and best use, that valuable land will not be included
in its potential tax base, and it can continue to get subventions from the
federal government. Whereas on the other hand if its potential tax
base includes oil and gas, then the revenues that it receives from that, or
the ability it has to receive revenues from that, is counted against it in
the sharing formula. So this is a very peculiar sort of rent sharing. Some
rents are shared and others are not. You might even call it a conspiracy against
Alberta. I'm sure that's the way they look at it. ... read the whole article
Clarence Darrow: The Land Belongs
To The People (1916)
This earth is a little raft moving in the endless sea of space, and the
mass of its human inhabitants are hanging on as best they can. It is as if
raft filled with shipwrecked sailors should be floating on the ocean, and
a few of the strongest and most powerful would take all the raft they could
and leave the most of the people, especially the ones who did the work,
hanging to the edges by their eyebrows. These men who have taken possession
raft, this little planet in this endless space, are not even content with
taking all there is and leaving the rest barely enough to hold onto, but
so much of themselves and their brief day that while they live they must
make rules and laws and regulations that parcel out the earth for thousands
after they are dead and, gone, so that their descendants and others of
their kind may do in the tenth generation exactly what they are doing today — keeping
the earth and all the good things of the earth and compelling the great
mass of mankind to toil for them.
Now, the question is, how are you going to get it back? Everybody who thinks
knows that private ownership of the land is wrong. If ten thousand men
can own America, then one man can own it, and if one man may own it he may
all that the rest produce or he may kill them if he sees fit. It is inconsistent
with the spirit of manhood. No person who thinks can doubt but that he
was born upon this planet with the same birthright that came to every man
like him. And it is for him to defend that birthright. And the man who
will not defend it, whatever the cost, is fitted only to be a slave. The
to the people — if they can get it — because if you cannot
get it, it makes no difference whether you have a right to it or not, and
can get it, it makes no difference whether you have a right to it or not,
you just take it. The earth has been taken from the many by the few. It
difference that they had no right to it; they took it.
Now, there are some methods of getting access to the earth which are easier
than others. The easiest, perhaps, that has been contrived is by means of taxation
of the land values and land values alone; and I need only say a little upon
that question. One trouble with it which makes it almost impossible to achieve,
is that it is so simple and so easy. You cannot get people to do anything that
is simple; they want it complex so they can be fooled.
Now the theory of Henry George and of those who really believe in the common
ownership of land is that the public should take not alone taxation from
the land, but the public should take to itself the whole value of the land
has been created by the public — should take it all. It should be
a part of the public wealth, should be used for public improvements, for pensions,
and belong to the people who create the wealth — which is a strange doctrine
in these strange times. It can be done simply and easily; it can be done by
taxation. All the wealth created by the public could be taken back by the public
and then poverty would disappear, most of it at least. The method is so simple,
and so legal even — sometimes a thing is legal if it is simple — that
it is the easiest substantial reform for men to accomplish, and when it
is done this great problem of poverty, the problem of the ages, will be
solved. We may need go farther. ... read
the whole article
Peter Barnes: Capitalism
3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)
One observer of this transformation was Thomas Paine, America’s pro-independence
pamphleteer. Seeing how enclosure of the commons benefited a few and disinherited
many others, Paine proposed a remedy — not a reversal of enclosure,
which he considered necessary for economic reasons, but compensation for
Like Locke, Paine believed nature was a gift of God to all. “There
are two kinds of property,” he wrote. “Firstly, natural property,
or that which comes to us from the Creator of the universe — such as
the earth, air, water. Secondly, artificial or acquired property — the
invention of men.” In the latter, he went on, equality is impossible,
but in the former, “all individuals have legitimate birthrights.” Since
such birthrights were diminished by enclosure, there ought to be an “indemnification
for that loss.”
Paine therefore proposed a “national fund” that would do two
[Pay] to every person, when arrived at the age of twenty-one years, the
sum of fifteen pounds sterling, as a compensation in part, for the loss of
his or her natural inheritance, by the introduction of the system of landed
property: And also, the sum of ten pounds per annum, during life, to every
person now living, of the age of fifty years, and to all others as they shall
arrive at that age.
A century and a half later, America created a national fund to do part of
what Paine recommended — we call it Social Security. We’ve yet
to adopt the other part, but its basic principle — that enclosure of
a commons requires compensation — is as sound in our time as it was
in Paine’s. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 5: Reinventing the Commons (pages 65-78)
ONE PERSON, ONE SHARE
Modern democratic government is grounded on the principle of one person,
one vote. In the same way, the modern commons sector would be grounded
on the principle of one person, one share. In the case of scarce natural
assets, it will be necessary to distinguish between usage rights and
income rights. It’s impossible for everyone to use a limited commons
equally, but everyone should receive equal shares of the income derived from
limited usage rights.
INCLUDE SOME LIQUIDITY
Currently, private property owners enjoy a near-monopoly on the privilege
of receiving property income. But as the Alaska Permanent Fund shows,
possible for common property co-owners to receive income too.
Income sharing would end private property’s monopoly not only on
liquidity, but also on attention. People would notice common property if
they got income from it. They’d care about it, think about it,
and talk about it. Concern for invisible commons would soar.
Common property liquidity has to be designed carefully, though. Since
common property rights are birthrights, they shouldn’t be tradeable
the way corporate shares are. This means commons owners wouldn’t
reap capital gains. Instead, they’d retain their shared income
stakes throughout their lives, and through such stakes, share in rent,
interest, and dividends. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 6: Trusteeship of Creation (pages 79-100)
“Let us suppose,” economist Ronald Coase wrote in 1960, “that
a farmer and a cattle-raiser are operating on neighboring properties.” He
went on to suppose further that the cattle-raiser’s animals wander
onto the farmer’s land and damage his crops. From this hypothetical
starting point Coase examined the problem of externalities and proposed a
solution — the creation of rights to pollute or not be polluted upon.
Today, pollution rights are used throughout the world. In effect, Coase conjured
into existence a class of property rights that didn’t exist before,
and his leap of imagination eventually reduced real pollution.
“Let us suppose” is a wonderful way for anyone, economists included,
to begin thinking. It lets us adjust old assumptions and see what might happen.
And it lets us imagine things that don’t exist but could, and sometimes,
because we imagined them, later do.
Coase supposed that a single polluter or his neighboring pollutee possessed
a right to pollute or not be polluted upon. He further supposed that the
transaction costs involved in negotiations between the two neighbors were
negligible. He made these suppositions half a century ago, at a time when
aggregate pollution wasn’t planet-threatening, as it now is. Given
today’s altered reality, it might be worth updating Coase’s suppositions
to make them relevant to this aggregate problem. Here, in my mind, are the
appropriate new suppositions:
* Instead of one polluter, there are many, and instead of one pollutee,
there are millions — including many not yet born.
* The pollutees (including future generations) are collectively represented
* The initial pollution rights are assigned by government to these trusts.
* In deciding how many pollution permits to sell, the trustees’ duty
isn’t to maximize revenue but to preserve an ecosystem for future generations.
The trusts therefore establish safe levels of pollution and gradually reduce
the number of permits they sell until those levels are reached.
* Revenue from the sale of pollution permits is divided 50 percent for per
capita dividends (like the Alaska Permanent Fund) and 50 percent for public
goods such as education and ecological restoration.
If we make these suppositions, what then happens? We have, first of all,
an economic model with a second set of books. Not all, but many externalities
show up on these new ledgers. More importantly, we begin to imagine a world
in which nature and future generations are represented in real-time transactions,
corporations internalize previously externalized costs, prices of illth-causing
goods rise, and everyone receives some property income.
Here’s what such a world could look like:
* Degradation of key ecosystems is gradually reduced to sustainable levels
because the trustees who set commons usage levels are accountable to future
generations, not living shareholders or voters. When they fail to protect
their beneficiaries, they are sued.
* Thanks to per capita dividends, income is recycled from overusers of key
ecosystems to underusers, creating both incentives to conserve and greater
* Clean energy and organic farming are competitive because prices of fossil
fuels and agricultural chemicals are appropriately high.
* Investment in new technologies soars and new domestic jobs are created because
higher fuel and waste disposal prices boost demand for clean energy and waste
* Public goods are enhanced by permit revenue.
What has happened here? We’ve gone from a realistic set of assumptions
about how the world is — multiple polluters and pollutees, zero cost
of pollution, dangerous cumulative levels of pollution — to a reasonable
set of expectations about how the world could be if certain kinds of property
rights are introduced. These property rights go beyond Coase’s, but
are entirely compatible with market principles. The results of this thought
experiment show that the introduction of common property trusts can produce
a significant and long-lasting shift in economic outcomes without further
It shouldn’t be thought that the commons is, or ought to be, a money-free
zone. In fact, an important subject for economists (and the rest of us) to
understand is commons rent.
By this I don’t mean the monthly check you send to a landlord. In
economics, rent has a more precise meaning: it’s money paid because
of scarcity. If you’re not an economist, that may sound puzzling, but
consider this. A city has available a million apartments. In absolute terms,
that means apartments aren’t scarce. But the city is confined geographically
and demand for apartments is intense. In this economic sense, apartments
are scarce. Now think back to that check you pay your landlord, or the mortgage
you pay the bank. Part of it represents the landlord’s operating costs
or the bank’s cost of money, but part of it is pure rent — that
is, money paid for scarcity. That’s why New Yorkers and San Franciscans
write such large checks to landlords and banks, while people in Nebraska
Rent rises when an increase in demand bumps into a limit in supply. Rent
due to such bumping isn’t good or bad; it just is.We can (and should)
debate the distribution of that rent, but the rent itself arises automatically.
And it’s important that it does so, because this helps the larger economy
allocate scarce resources efficiently. Other methods of allocation are possible.
We can distribute scarce things on a first come, first served basis, or by
lottery, political power, seniority, or race. Experience has shown, though,
that selling scarce resources in open markets is usually the best approach,
and such selling inevitably creates rent.
Rent was of great interest to the early economists — Adam Smith, David
Ricardo, and John Stuart Mill, among others — because it constituted
most of the money earned by landowners, and land was then a major cost of
production. The supply of land, these economists noted, is limited, but demand
for it steadily increases. So, therefore, does its rent. Thus, landowners
benefit from what Mill called the unearned increment — the rise in
land value attributable not to any effort of the owner, but purely to a socially
created increase in demand bumping into a limited supply of good land.
The underappreciated American economist Henry George went further. Seeing
both the riches and the miseries of the Gilded Age, he asked a logical question:
Why does poverty persist despite economic growth? The answer, he believed,
was the appropriation of rent by landowners. Even as the economy grew, the
property rights system and the scarcity of land diverted almost all the gains
to a landowning minority. Whereas competition limited the gains of working
people, nothing kept down the landowners’ gains. As Mill had noted,
the value of their land just kept rising. To fix the problem, George advocated
a steep tax on land and the abolition of other taxes. His bestselling book
Progress and Poverty catapulted him to fame in the 1880s, but mainstream
economists never took him seriously.
By the twentieth century, economists had largely lost interest in rent;
it seemed a trivial factor in wealth production compared to capital and labor.
But the twenty-first century ecological crisis brings rent back to center-stage.
Now it’s not just land that’s scarce, but clean water, undisturbed
habitat, biological diversity, waste absorption capacity, and entire ecosystems.
This brings us back to common property rights. The definition and allocation
of property rights are the primary factors in determining who pays whom for
what. If, in the case of pollution rights, pollution rights are given free
to past polluters, the rent from the polluted ecosystem will also go to them.
That’s because prices for pollution-laden products will rise as pollution
is limited (remember, if demand is constant, a reduction in supply causes
prices to go up), and those higher prices will flow to producers (which is
to say, polluters).
By contrast, if pollution rights are assigned to trusts representing pollutees
and future generations, and if these trusts then sell these rights to polluters,
the trusts rather than the polluters will capture the commons rent. If the
trusts split this money between per capita dividends and expenditures on
public goods, everyone benefits.
At this moment, based on pollution rights allocated so far, polluting corporations
are getting most of the commons rent. But the case for trusts getting the
rent in the future is compelling. If this is done, consumers will pay commons
rent not to corporations or government, but to themselves as beneficiaries
of commons trusts. Each citizen’s dividend will be the same, but his
payments will depend on his purchases of pollution-laden products. The more
he pollutes, the more rent he’ll pay. High polluters will get back
less than they put in, while low polluters will get back more. The microeconomic
incentives, in other words, will be perfect. (See figure 6.1.)
What’s equally significant, though less obvious, is that the macroeconomic
incentives will be perfect too. That is, it will be in everyone’s interest
to reduce the total level of pollution. Remember how rent for scarce things
works: the lower the supply, the higher the rent. Now, imagine you’re
a trustee of an ecosystem, and leaving aside (for the sake of argument) your
responsibility to preserve the asset for future generations, you want to
increase dividends. Do you raise the number of pollution permits you sell,
or lower it? The correct, if counterintuitive answer is: you lower the number
This macroeconomic phenomenon — that less pollution yields more income
for citizens — is the ultimate knockout punch for commons trusts. It
aligns the interests of future generations with, rather than against, those
of living citizens. By so doing, it lets us chart a transition to sustainability
in which the political pressure is for faster pollution reduction rather
There’s one further argument for recycling commons rent through trusts.
As rent is recycled from overusers of the commons to underusers, income is
shifted from rich to poor. That’s because rich households, on average,
use the commons more than poor households. They drive SUVs, fly in jets,
and have large homes to heat and cool — thus they dump more waste into
the biosphere. Studies by Congress and independent economists have shown
that only a rent recycling system like the one just described can protect
the poor. Absent such a system, the poor will pay commons rent and get nothing
back. In other words, they’ll get poorer.
As always, there are a few caveats.
* First, to the extent commons rent is used for public goods rather than
per capita dividends, the income recycling effects are diminished. This is
offset, however, by the fact that public goods benefit everyone.
* Second, the less-pollution-equals-more-dividends formula doesn’t work
indefinitely. At some point after less polluting technologies have been widely
deployed, the demand for pollution absorption will become elastic. Then, lowering
the number of pollution permits sold will decrease income to citizens. But
that time is far in the future, and when it comes, the world will be a healthier
place. And even then, trustees won’t be able to increase the number of
pollution permits without violating their responsibility to future generations.
The Effect on Poverty
I’m now ready to make a bold assertion: sharing commons rent through
per capita dividends isn’t just the best way to bring our economy into
harmony with nature, it’s also the best way to reduce poverty. That’s
because there’s no other pool of money of comparable size to which
poor people have a legitimate claim.
The free market notion that those at the bottom of the ladder will somehow
lift themselves out of poverty, without any capital or property, just isn’t
credible any longer. Our economic operating system has long been stacked
against the poor, and globalization hasn’t made it any less so. The
prospects for taxing and spending the poor out of poverty aren’t much
brighter. Arguably, such policies reached their zenith in the Johnson era
of the 1960s, and didn’t get the job done.
The reason commons rent-sharing can work is that it’s driven not only — or
even primarily — by compassion for the poor. Rather, it’s driven
primarily by the need to preserve threatened ecosystems. When this problem
is tackled, the question of who gets commons rent will necessarily arise;
we can’t solve the first problem without addressing the latter. We’ll
then have to decide whether to take, once again, the commons from the poor,
or let them share in our joint inheritance.
The poor’s claim on commons rent is, of course, no different from
the claim of middle-income households or the rich: commons rent rightfully
belongs to everyone. But commons rent, if fully paid, would boost living
standards for the poor much more than for anyone else. And unlike other forms
of help for the poor, commons rent can’t be derided as welfare. It
is, technically, unearned income, but no more so than dividends received
by inheritors of private wealth. It’s property income, and should be
a universal property right. That, I believe, is a winnable political strategy,
as well as sound economic policy. ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 7: Universal Birthrights (pages 101-116)
The Idea of Birthrights
John Locke’s response to royalty’s claim of divine right was
the idea of everyone’s inherent right to life, liberty,
and property. Thomas Jefferson, in drafting America’s
Declaration of Independence, changed Locke’s trinity to life,
liberty, and the pursuit of happiness. These, Jefferson and
his collaborators agreed, are gifts from the creator that can’t be
taken away. Put slightly differently, they’re universal
The Constitution and its amendments added meat to these elegant bones. They
guaranteed such birthrights as free speech, due process, habeas corpus, speedy
public trials, and secure homes and property. Wisely, the Ninth Amendment
affirmed that “the enumeration in the Constitution, of certain rights,
shall not be construed to deny or disparage others retained by the people.” In
that spirit, others have since been added.
If we were to analyze the expansion of American birthrights, we’d
see a series of waves. The first wave consisted of rights against the state.
The second included rights against unequal treatment based on race, nationality,
gender, or sexual orientation. The third wave — which, historically
speaking, is just beginning — consists of rights not against things,
but for things — free public education, collective bargaining
for wages, security in old age. They can be thought of as rights necessary
for the pursuit of happiness.
What makes this latest wave of birthrights strengthen community is their
universality. If some Americans could enjoy free public education while others
couldn’t, the resulting inequities would divide rather than unite us
as a nation. The universality of these rights puts everyone in the same boat.
It spreads risk, responsibility, opportunity, and reward across race, gender,
economic classes, and generations. It makes us a nation rather than a collection
of isolated individuals.
Universality is also what distinguishes the commons sector from the corporate
sector. The starting condition for the corporate sector, as we’ve seen,
is that the top 5 percent owns more shares than everyone else. The starting
condition for the commons sector, by contrast, is one person, one share.
The standard argument against third wave universal birthrights is that,
while they might be nice in theory, in practice they are too expensive. They
impose an unbearable burden on “the economy” — that is,
on the winners in unfettered markets. Much better, therefore, to let everyone — including
poor children and the sick — fend for themselves. In fact, the opposite
is often true: universal birthrights, as we’ll see, can be cheaper
and more efficient than individual acquisition. Moreover, they are always
How far we might go down the path of extending universal birthrights is
anyone’s guess, but we’re now at the point where, economically
speaking, we can afford to go farther. Without great difficulty, we could
add three birthrights to our economic operating system: one would pay everyone
a regular dividend, the second would give every child a start-up stake, and
the third would reduce and share medical costs. Whether we add these birthrights
or not isn’t a matter of economic ability, but of attitude and politics.
Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to
give people “something for nothing,” despite the fact that corporations
take common wealth for nothing all the time. We believe the poor are poor
and the rich are rich because they deserve to be, but don’t consider
that millions of Americans work two or three jobs and still can’t make
ends meet. Plus, we think tinkering with the “natural” distribution
of income is “socialism,” or “big government,” or
some other manifestation of evil, despite the fact that our current distribution
of income isn’t “natural” at all, but rigged from the get-go
by maldistributed property.
The late John Rawls, one of America’s leading philosophers, distinguished
between pre distribution of property and re distribution
of income. Under income re distribution, money is taken from “winners” and
transferred to “losers.” Understandably, this isn’t popular
with winners, who tend to control government and the media. Under property pre distribution,
by contrast, the playing field is leveled by spreading property ownership
before income is generated. After that, there’s no need for income
redistribution; property itself distributes income to all. According to Rawls,
while income re distribution creates dependency, property predistribution
But how can we spread property ownership without taking property from some
and giving it to others? The answer lies in the commons — wealth that
already belongs to everyone. By propertizing (without privatizing) some of
that wealth, we can make everyone a property owner.
What’s interesting is that, for purely ecological reasons, we need to
propertize (without privatizing) some natural wealth now. This twenty-first
century necessity means we have a chance to save the planet, and as a bonus,
add a universal birthright.
Dividends from Common Assets
A cushion of reliable income is a wonderful thing. It can be saved for rainy
days or used to pursue happiness on sunny days. It can encourage people to
take risks, care for friends and relatives, or volunteer for community service.
For low-income families, it can pay for basic necessities.
Conversely, the absence of reliable income is a terrible thing. It heightens
anxiety and fear. It diminishes our ability to cope with crises and transitions.
It traps many families on the knife’s edge of poverty, and makes it
harder for the poor to rise.
So why don’t we, as Monopoly does, pay everyone some regular income — not
through redistribution of income, but through predistribution of common property?
One state — Alaska — already does this. As noted earlier, the
Alaska Permanent Fund uses revenue from state oil leases to invest in stocks,
bonds, and similar assets, and from those investments pays yearly dividends
to every resident. Alaska’s model can be extended to any state or nation,
whether or not they have oil. We could, for instance, have an American Permanent
Fund that pays equal dividends to long-term residents of all 50 states. The
reason is, we jointly own many valuable assets.
Recall our discussion about common property trusts. These trusts could crank
down pollution and earn money from selling ever-scarcer pollution permits.
The scarcer the permits get, the higher their prices would go. Less pollution
would equal more revenue. Over time, trillions of dollars could flow into
an American Permanent Fund.
What could we do with that common income? In Alaska the deal with oil revenue
is 75 percent to government and 25 percent to citizens. For an American Permanent
Fund, I’d favor a 50/50 split, because paying dividends to citizens
is so important. Also, when scarce ecosystems are priced above zero, the
cost of living will go up and people will need compensation; this wasn’t,
and isn’t, the case in Alaska. I’d also favor earmarking the
government’s dollars for specific public goods, rather than tossing
them into the general treasury. This not only ensures identifiable public
benefits; it also creates constituencies who’ll defend the revenue
Waste absorption isn’t the only common resource an American Permanent
Fund could tap. Consider also, the substantial contribution society makes
to stock market values. As noted earlier, private corporations can inflate
their value dramatically by selling shares on a regulated stock exchange.
The extra value derives from the enlarged market of investors who can now
buy the corporation’s shares. Given a total stock market valuation
of about $15 trillion, this socially created liquidity premium is worth roughly
At the moment, this $5 trillion gift flows mostly to the 5 percent of the
population that own more than half the private wealth. But if we wanted to,
we could spread it around. We could do that by charging corporations for
using the public trading system, just as investment bankers do. (For those
of you who haven’t been involved in a public stock offering, investment
bankers are like fancy doormen to a free palace. While the public charges
almost nothing to use the capital markets, investment bankers exact hefty
The public’s fee could be in cash or stock. Let’s say we required
publicly traded companies to deposit 1 percent of their shares each year
in the American Permanent Fund for ten years — reaching a total of
10 percent of their shares. This would be our price not just for using a
regulated stock exchange, but also for all the other privileges (limited
liability, perpetual life, copyrights and patents, and so on) that we currently
bestow on private corporations for free.
In due time, the American Permanent Fund would have a diversified portfolio
worth several trillion dollars. Like its Alaskan counterpart, it would pay
equal yearly dividends to everyone. As the stock market rose and fell, so
would everyone’s dividend checks. A rising tide would lift all boats.
America would truly be an “ownership society.” ... read
the whole chapter
Peter Barnes: Capitalism
3.0 — Chapter 10: What You Can Do (pages 155-166)
To build Capitalism 3.0, we each have unique roles to play. I therefore address
the final pages of this book to a variety of people whose participation
is critical. ...
You had it good for a while. Thanks to labor unions, you lifted yourselves
into the middle class. You got paid vacations, forty-hour workweeks, time-and-half
for overtime, health insurance, a pension, and most of all, job security.
Even companies without unions paid well and offered lifetime employment if
you wanted it. There was a social contract, if not a legal one, between employers,
workers, and communities. This was America’s version of the welfare
state, and if you were part of it, it wasn’t bad. But those days are
In today’s global marketplace, capital moves at the speed of light,
and you’re just a cost to be minimized. What management seeks — what
capital demands — is more profit next quarter. Did you give the best
years of your life to Acme Inc.? Too bad. Nothing boosts the bottom line
faster than downsizing, outsourcing, or playing games with your pension fund.
And forget about help from the union; it’s toothless now. We’re
all on our own.
What can you do? Truthfully, not much. In the era of global capital, your
form of income — wages — is at a serious competitive disadvantage.
But over time, things can get better. The way out — for your kids,
if not for you — is through a new version of capitalism that gives
you (and everyone else) property income from a share of common wealth. That
share is your birthright. It can’t be downsized or outsourced.
It pays some dividends in cash, and others in no-fuss health care, free
Internet access, healthy food, clean air, and lots of places to go fishing.
So claim your birthright, and your children’s. Claim it in living rooms,
at church, in barbershops, and hair salons. This is how movements begin.
the whole chapter
“Free to Choose: A Conversation with Milton Friedman” — July
2006: http://www.hillsdale.edu/imprimis/ The
following is an edited transcript of a conversation between Hillsdale College
President Larry Arnn and Milton Friedman, which took place on May 22, 2006,
at the Ritz-Carlton Hotel in San Francisco, California, during a two-day Hillsdale
College National Leadership Seminar celebrating the 25th anniversary of Milton
and Rose Friedman's book, Free to Choose: A Personal Statement. excerpt:
LA: Let me ask you about demographic trends.
Columnist Mark Steyn writes that in ten years, 40 percent of young men
in the world are going to be living in oppressed Muslim countries. What
do you think the effect of that is going to be?
MF: What happens will depend on whether we succeed in bringing
some element of greater economic freedom to those Muslim countries. Just
as India in 1955 had great but unrealized potential, I think the Middle East
is in a similar situation today. In part this is because of the curse of
oil. Oil has been a blessing from one point of view, but a curse from another.
Almost every country in the Middle East that is rich in oil is a despotism.
LA: Why do you think that is so?
MF: One reason, and one reason only — the oil is
owned by the governments in question. If that oil were privately owned and
thus someone's private property, the political outcome would be freedom rather
than tyranny. This is why I believe the first step following the
2003 invasion of Iraq should have been the privatization of the oil fields.
If the government had given every individual over 21 years of age equal shares
in a corporation that had the right and responsibility to make appropriate
arrangements with foreign oil companies for the purpose of discovering and
developing Iraq's oil reserves, the oil income would have flowed in the form
of dividends to the people — the shareholders — rather than into
government coffers. This would have provided an income to the whole
people of Iraq and thereby prevented the current disputes over oil between
the Sunnis, Shiites and Kurds, because oil income would have been distributed
on an individual rather than a group basis.
LA: Many Middle Eastern societies have a kind of tribal
or theocratic basis and long-held habits of despotic rule that make it
difficult to establish a system of contract between strangers. Is it your
view that the introduction of free markets in such places could overcome
MF: Eventually, yes. I think that nothing is so important for freedom as
recognizing in the law each individual's natural right to property, and giving
individuals a sense that they own something that they're responsible for,
that they have control over, and that they can dispose of.
Reprinted by permission from IMPRIMIS, the national speech digest of
Hillsdale College, www.hillsdale.edu.
Mason Gaffney: Cannan's Law
Public spending should feature
"Citizen Dividends." These are
social dividends limited to citizens, thus discouraging free or
illegal immigration that would dilute the dividends and erode their
voter support. (The degree, pace, and conditions of legal
immigration is an issue to treat separately.) Dividends take many
forms other than outright per head cash grants. The G.I. Bill was a
splendid example. Social Security payments are another. School
equalization payments based on a.d.a. are another. A state or
province cannot easily restrict benefits to its old time citizens, as
Zobel showed -- but a nation can.
At the same time, there should be
no more capital grants to
localities for public works. When cities pay for their own public
works they must attract population to justify the capital outlays and
service the debt. ... read
the whole article
Henry George, author of Progress and Poverty,
argued that, while some forms of wealth are produced by human activity,
and are rightly the property of the producers (or those who have obtained
them from the previous owners by voluntary gift or exchange), land and
natural resources are bestowed by God on the human race, and that every
one of the N inhabitants of the earth has a claim to 1/Nth of the coal
beds, 1/Nth of the oil wells, 1/Nth of the mines, and 1/Nth of the fertile
soil. God wills a society where everyone may sit in peace under his own
vine and his own fig tree.
The Law of Moses undertook to implement this by making the ownership of
land hereditary, with a man's land divided among his sons (or, in the absence
of sons, his daughters), and prohibiting the permanent sale of land. (See
Leviticus 25:13-17,23.) The most a man might do with his land is sell the
use of it until the next Jubilee year, an amnesty declared once every fifty
years, when all debts were cancelled and all land returned to its hereditary
Henry George's proposed implementation is to tax all land at about 99.99%
of its rental value, leaving the owner of record enough to cover his bookkeeping
expenses. The resulting revenues would be divided equally among the natural
owners of the land, viz. the people of the country, with everyone receiving
a dividend check regularly for the use of his share of the earth (here
I am anticipating what I think George would have suggested if he had written
in the 1990's rather than the 1870's).
This procedure would have the effect of making
the sale price of a piece of land, not including the price of buildings and
other improvements on
it, practically zero. The cost of being a landholder would be,
not the original sale price, but the tax, equivalent to rent. A man who chose
hold his "fair share," or 1/Nth of all the land, would
pay a land tax about equal to his dividend check, and so would
break even. By
1/Nth of the land is meant land with a value equal to 1/Nth of
the value of all the land in the country.
Naturally, an acre in the business district of a great city would be worth
as much as many square miles in the open country. Some would prefer to
hold more than one N'th of the land and pay for the privilege. Some would
prefer to hold less land, or no land at all, and get a small annual check
representing the dividend on their inheritance from their father Adam.
Note that, at least for the able-bodied, this solves the problem of poverty
at a stroke. If the total land and total labor of the world are enough
to feed and clothe the existing population, then 1/Nth of the land and
1/Nth of the labor are enough to feed and clothe 1/Nth of the population.
A family of 4 occupying 4/Nths of the land (which is what their dividend
checks will enable them to pay the tax on) will find that their labor applied
to that land is enough to enable them to feed and clothe themselves. Of
course, they may prefer to apply their labor elsewhere more profitably,
but the situation from which we start is one in which everyone has his
own plot of ground from which to wrest a living by the strength of his
own back, and any deviation from this is the result of voluntary exchanges
agreed to by the parties directly involved, who judge themselves to be
better off as the result of the exchanges.
Some readers may think this a very radical proposal.
In fact, it is extremely conservative, in the sense of being in agreement
with historic ideas about
land ownership as opposed to ownership of, say, tools or vehicles
or gold or domestic animals or other movables. The laws of English-speaking
uniformly distinguish between real property (land) and personal
property (everything else). In this context, "real" is not the opposite
of "imaginary." It is a form of the word "royal," and
means that the ultimate owner of the land is the king, as symbol of the
people. Note that English-derived law does not recognize "landowners." The
term is "landholders." The concept of eminent domain
is that the landholder may be forced to surrender his landholdings
to the government
for a public purpose. Historically, eminent domain does not apply
to property other than land, although complications arise when
there are buildings
on the land that is being seized.
I will mention in passing that the proposals of Henry George have attracted
support from persons as diverse as Felix Morley, Aldous
Huxley, Woodrow Wilson, Helen Keller, Winston
Churchill, Leo Tolstoy, William
F Buckley Jr, and Sun Yat-sen. To the Five Nobel Prizes authorized
by Alfred Nobel himself there has been added a sixth, in Economics, and
the Henry George Foundation claims eight
of the Economics Laureates as supporters, in whole or in part, of the
proposals of Henry George (Paul Samuelson, 1970; Milton
Friedman, 1976; Herbert A Simon, 1978; James Tobin, 1981; Franco Modigliani,
1985; James M Buchanan, 1986; Robert M Solow, 1987; William
S Vickrey, 1996).
The immediate concrete proposal favored by most
Georgists today is that cities shall tax land within their boundaries at
a higher rate than they
tax buildings and other improvements on the land. (In case anyone
is about to ask, "How can we possibly distinguish between the value of the
land and the value of the buildings on it?" let me assure
you that real estate assessors do it all the time. It is standard
practice to make
the two assessments separately, and a parcel of land in the business
district of a large city very often has a different owner from
the building on it.)
Many cities have moved to a system of taxing land more heavily
than improvements, and most have been pleased with the results,
finding that landholders are
more likely to use their land productively -- to their own benefit
and that of the public -- if their taxes do not automatically
go up when they
improve their land by constructing or maintaining buildings on
An advantage of this proposal in the eyes of
many is that it is a Fabian proposal, "evolution, not revolution," that it is incremental
and reversible. If a city or other jurisdiction does not like the results
of a two-level tax system, it can repeal the arrangement or reduce the
difference in levels with no great upheaval. It is not like some other
proposals of the form, "Distribute all wealth justly, and make me
absolute dictator of the world so that I can supervise the distribution,
and if it doesn't work, I promise to resign." The problem
is that absolute dictators seldom resign. ... read
the whole article