Inequality
"We hold these truths to be self-evident: that all men are created equal..."
How is it, that in a society dedicated to such a proposition, we have such
amazing inequality of results and inequality of opportunity? Income and
wealth are
both highly concentrated (though not in precisely the same groups of
people), and it is difficult to reconcile
that concentration with our ideals.
Henry George sought answers to the puzzle that
confronted him in 1870s America: why was it that, despite awesome increases
in technology, poverty was on the
increase in America, and why was it that poverty was largely an urban affair?
Since he made his observations and sought explanations, our society has
become far more urbanized, and technological
progress has spiraled upward
and outward — and
poverty has become far more serious a problem, and concentration of wealth
and income has also increased precipitously.
If we want to understand why we have so much poverty, we need to look beyond
the au courant explanations, and the "fences
and small bandages" solutions
that we persist in applying.
Georgists do not seek equality of results; we do seek genuine equality of
opportunity, and we seek to end systematic theft.
We want to create a society in which all of us have equal access to natural
opportunities, share in the natural resources our soil and airwaves have
to offer, and in which the social surplus is shared among all of us equally.
We see the natural creation as legitimately common property, and that which
individuals create as legitimately private property. We seek a society without
privilege, a society with no victims. And we know the first, most important
step for achieving that — something that most of our greatgrandparents
knew.
Henry George: Ode to
Liberty (1877 speech)
WE HONOR LIBERTY in name and in
form. We set up her statues and sound
her praises. But we have not fully trusted her. And with our growth so
grow her demands. She will have no half service! Liberty! it is a word
to conjure with, not to vex the ear in empty boastings. For Liberty
means Justice, and Justice is the natural law — the law of health and
symmetry and strength, of fraternity and co-operation.
They who look upon Liberty as having
accomplished her mission when she has abolished hereditary privileges
and given men the ballot, who think of her as having no further
relations to the everyday affairs of life, have not seen her real
grandeur — to them the poets who have sung of her must seem
rhapsodists, and her martyrs fools! ...
In our time, as in times before, creep on the insidious forces
that, producing inequality, destroy Liberty. On the horizon the
clouds begin to lower. Liberty calls to us again. We must follow her
further; we must trust her fully. Either we must wholly accept her or
she will not stay. It is not enough
that men should vote; it is not
enough that they should be theoretically equal before the law. They
must have liberty to avail themselves of the opportunities and means
of life; they must stand on equal terms with reference to the bounty
of nature. Either this, or Liberty withdraws her light! Either
this,
or darkness comes on, and the very forces that progress has evolved
turn to powers that work destruction. This is the universal law. This
is the lesson of the centuries. Unless its foundations be laid in
justice the social structure cannot stand.
Our primary social adjustment is a denial of justice. In
allowing one man to own the land on which and from which other men
must live, we have made them his bondsmen in a degree which increases
as material progress goes on. This is the subtle alchemy that
in
ways they do not realize is extracting from the masses in every
civilized country the fruits of their weary toil; that is instituting
a harder and more hopeless slavery in place of that which has been
destroyed; that is bringing political despotism out of political
freedom, and must soon transmute democratic institutions into
anarchy.... read the whole speech
Fred Foldvary: Well
being and being well off
I see three ways in which one
can define "well off."
First,
one is better or worse off relative to the distribution of wealth or
income in a particular society. ...
Secondly, being well off can be thought of as relative to
the typical person in the economy. ...
Third, one can define "well off" in absolute terms. ...
Being absolutely well off means,
- first, that one is able to rise substantially above
subsistence through peaceful and honest means, whether from one's
labor, from one's rightful share of natural and contractual benefits,
or from gifts.
- Secondly, to be absolutely well off requires complete liberty, so that the only legal
restriction is the prohibition of coercive harm to others. Liberty
includes security against attack, either by government or by private
persons, since one is not really free if one is under substantial
threats of death and theft against which one is helpless.
With liberty, one is free to
establish whatever relationships
one wishes, so long as others are also willing. With liberty and the
ability to obtain wealth, one can obtain assurance of future wealth
both because one is able to earn it and also because one is able to
store wealth and insure oneself against risk.
My Dictionary of Free-Market
Economics defines "well-being" as
"The amount and degree to which individuals in an economy are able to
pursue and attain their ends." The only requirement for absolute
well being, for someone who is mentally and physically able to
produce wealth, is liberty. With liberty, one can obtain wealth,
friends, and future security, express oneself as one pleases, and
enjoy life in accord with one's values and lifestyle preference.
Being absolutely well off does
not involve any particular
level of wealth beyond subsistence, since this depends on personal
preference. An artist may prefer to live at subsistence and devote
her time to art, and that person is absolutely well off because she
is pursuing happiness in her own way. As with relative well being,
one can be well off in the absolute sense without being happy, as for
example a person who has much wealth but has lost love or has a
serious illness.
What is required for there to be complete liberty? There must
be a basic law such that any act that does not invade the domain of
others is not prohibited or taxed. In liberty, there are only
prohibitions if there are victims who are coercively harmed, and
there is restitution for damages to others. In liberty, people have
equal rights and no special legal privileges. In a free society,
nobody starves, because one is able to save for the future, because
on obtains one's equal share of natural and civic benefits, and
because the sympathy of society will not let people starve.
The economic policy of liberty
has four rules:
- To the creator belongs the creation.
- The profit of nature's creation belongs equally to all.
- The benefit of what is created by government belongs to
all the people in its jurisdiction.
- When the initial distribution is just, the outcomes of
free exchange are just and should not be hampered. Read the whole article
Peter Barnes: Capitalism
3.0 — Chapter 5: Reinventing the Commons (pages 65-78)
Thus far I’ve argued that Capitalism 2.0 — or surplus capitalism — has
three tragic flaws: it devours nature, widens inequality, and fails to make
us happier in the end. It behaves this way because it’s programmed
to do so. It must make thneeds, reward property owners disproportionately,
and distract us from truer paths to happiness because its algorithms direct
it to do so. Neither enlightened managers nor the occasional zealous regulator
can make it behave much differently.
In this part of the book I advance a solution. The essence of it is to fix
capitalism’s operating system by adding a commons sector to balance
the corporate sector. The new sector would supply virtuous feedback loops
and proxies for unrepresented stakeholders: future generations, pollutees,
and nonhuman species. And would offset the corporate sector’s negative
externalities with positive externalities of comparable magnitude. If the
corporate sector devours nature, the commons sector would protect it. If
the corporate sector widens inequality, the commons sector would reduce it.
If the corporate sector turns us into self-obsessed consumers, the commons
sector would reconnect us to nature, community, and culture. All this would
happen automatically once the commons sector is set up. The result would
be a balanced economy that gives us the best of both sectors and the worst
of neither. ... 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
birthrights.
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
fairer.
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
empowers.
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. ... read
the whole chapter
Henry George: The Condition of
Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)
Nor do we hesitate to say that this way of securing the equal right to the
bounty of the Creator and the exclusive right to the products of labor is the
way intended by God for raising public revenues. For we are not atheists, who
deny God; nor semi-atheists, who deny that he has any concern in politics and
legislation.
It is true as you say — a salutary truth too often forgotten — that “man
is older than the state, and he holds the right of providing for the life of
his body prior to the formation of any state.” Yet, as you too perceive,
it is also true that the state is in the divinely appointed order. For
He who foresaw all things and provided for all things, foresaw and provided
that with
the increase of population and the development of industry the organization
of human society into states or governments would become both expedient
and necessary.
No sooner does the state arise than, as we all know, it needs revenues. This
need for revenues is small at first, while population is sparse, industry rude
and the functions of the state few and simple. But with growth of population
and advance of civilization the functions of the state increase and larger
and larger revenues are needed.
Now, He that made the world and placed man in it, He that pre-ordained civilization
as the means whereby man might rise to higher powers and become more and
more conscious of the works of his Creator, must have foreseen this increasing
need
for state revenues and have made provision for it. That is to say: The
increasing need for public revenues with social advance, being a natural,
God-ordained
need, there must be a right way of raising them — some way that we
can truly say is the way intended by God. It is clear that this right way
of raising
public revenues must accord with the moral law.
Hence:
It must not take from individuals what rightfully belongs to individuals.
It must not give some an advantage over others, as by increasing the prices
of what some have to sell and others must buy.
It must not lead men into temptation, by requiring trivial oaths, by making
it profitable to lie, to swear falsely, to bribe or to take bribes.
It must not confuse the distinctions of right and wrong, and weaken the sanctions
of religion and the state by creating crimes that are not sins, and punishing
men for doing what in itself they have an undoubted right to do.
It must not repress industry. It must not check commerce. It must not punish
thrift. It must offer no impediment to the largest production and the fairest
division of wealth.
Let me ask your Holiness to consider the taxes on the processes and products
of industry by which through the civilized world public revenues are collected — the
octroi duties that surround Italian cities with barriers; the monstrous
customs duties that hamper intercourse between so-called Christian states;
the taxes
on occupations, on earnings, on investments, on the building of houses,
on the cultivation of fields, on industry and thrift in all forms. Can
these be
the ways God has intended that governments should raise the means they
need? Have any of them the characteristics indispensable in any plan we
can deem
a right one?
All these taxes violate the moral law. They take by force what belongs to
the individual alone; they give to the unscrupulous an advantage over the scrupulous;
they have the effect, nay are largely intended, to increase the price of what
some have to sell and others must buy; they corrupt government; they make oaths
a mockery; they shackle commerce; they fine industry and thrift; they lessen
the wealth that men might enjoy, and enrich some by impoverishing others.
Yet what most strikingly shows how opposed to Christianity is this system
of raising public revenues is its influence on thought.
Christianity teaches us that all men are brethren; that their true interests
are harmonious, not antagonistic. It gives us, as the golden rule of life,
that we should do to others as we would have others do to us. But out of
the system of taxing the products and processes of labor, and out of its
effects
in increasing the price of what some have to sell and others must buy,
has grown the theory of “protection,” which denies this gospel, which
holds Christ ignorant of political economy and proclaims laws of national well-being
utterly at variance with his teaching. This theory sanctifies national hatreds;
it inculcates a universal war of hostile tariffs; it teaches peoples that their
prosperity lies in imposing on the productions of other peoples restrictions
they do not wish imposed on their own; and instead of the Christian doctrine
of man’s brotherhood it makes injury of foreigners a civic virtue.
“By their fruits ye shall know them.” Can anything more clearly
show that to tax the products and processes of industry is not the way
God intended public revenues to be raised?
But to consider what we propose — the raising of public revenues by
a single tax on the value of land irrespective of improvements — is
to see that in all respects this does conform to the moral law.
Let me ask your Holiness to keep in mind that the value we propose to tax,
the value of land irrespective of improvements, does not come from any
exertion of labor or investment of capital on or in it — the values
produced in this way being values of improvement which we would exempt. The
value of land
irrespective of improvement is the value that attaches to land by reason
of increasing population and social progress. This is a value that always
goes
to the owner as owner, and never does and never can go to the user; for
if the user be a different person from the owner he must always pay the owner
for it in rent or in purchase-money; while if the user be also the owner,
it
is as owner, not as user, that he receives it, and by selling or renting
the land he can, as owner, continue to receive it after he ceases to be a
user.
Thus, taxes on land irrespective of improvement cannot lessen the rewards
of industry, nor add to prices,* nor in any way take from the individual what
belongs to the individual. They can take only the value that attaches to land
by the growth of the community, and which therefore belongs to the community
as a whole.
* As to this point it may be well to add that all economists
are agreed that taxes on land values irrespective of improvement or use — or what in
the terminology of political economy is styled rent, a term distinguished from
the ordinary use of the word rent by being applied solely to payments for the
use of land itself — must be paid by the owner and cannot be shifted
by him on the user. To explain in another way the reason given in the text:
Price is not determined by the will of the seller or the will of the buyer,
but by the equation of demand and supply, and therefore as to things constantly
demanded and constantly produced rests at a point determined by the cost of
production — whatever tends to increase the cost of bringing fresh
quantities of such articles to the consumer increasing price by checking
supply, and whatever
tends to reduce such cost decreasing price by increasing supply. Thus taxes
on wheat or tobacco or cloth add to the price that the consumer must pay,
and thus the cheapening in the cost of producing steel which improved processes
have made in recent years has greatly reduced the price of steel. But land
has no cost of production, since it is created by God, not produced by
man.
Its price therefore is fixed —
1 (monopoly rent), where land is held in close monopoly, by what the owners
can extract from the users under penalty of deprivation and consequently of
starvation, and amounts to all that common labor can earn on it beyond what
is necessary to life;
2 (economic rent proper), where there is no special monopoly, by what the particular
land will yield to common labor over and above what may be had by like expenditure
and exertion on land having no special advantage and for which no rent is paid;
and,
3 (speculative rent, which is a species of monopoly rent, telling particularly
in selling price), by the expectation of future increase of value from social
growth and improvement, which expectation causing landowners to withhold land
at present prices has the same effect as combination.
Taxes on land values or economic rent can therefore never be shifted by the
landowner to the land-user, since they in no wise increase the demand for land
or enable landowners to check supply by withholding land from use. Where rent
depends on mere monopolization, a case I mention because rent may in this way
be demanded for the use of land even before economic or natural rent arises,
the taking by taxation of what the landowners were able to extort from labor
could not enable them to extort any more, since laborers, if not left enough
to live on, will die. So, in the case of economic rent proper, to take from
the landowners the premiums they receive, would in no way increase the superiority
of their land and the demand for it. While, so far as price is affected by
speculative rent, to compel the landowners to pay taxes on the value of land
whether they were getting any income from it or not, would make it more difficult
for them to withhold land from use; and to tax the full value would not merely
destroy the power but the desire to do so.
To take land values for the state, abolishing all taxes on the products of
labor, would therefore leave to the laborer the full produce of labor; to the
individual all that rightfully belongs to the individual. It would impose no
burden on industry, no check on commerce, no punishment on thrift; it would
secure the largest production and the fairest distribution of wealth, by leaving
men free to produce and to exchange as they please, without any artificial
enhancement of prices; and by taking for public purposes a value that cannot
be carried off, that cannot be hidden, that of all values is most easily ascertained
and most certainly and cheaply collected, it would enormously lessen the number
of officials, dispense with oaths, do away with temptations to bribery and
evasion, and abolish man-made crimes in themselves innocent.
But, further: That God has intended the state to obtain the revenues it needs
by the taxation of land values is shown by the same order and degree of evidence
that shows that God has intended the milk of the mother for the nourishment
of the babe.
See how close is the analogy. In that primitive condition ere the need for
the state arises there are no land values. The products of labor have value,
but in the sparsity of population no value as yet attaches to land itself.
But as increasing density of population and increasing elaboration of industry
necessitate the organization of the state, with its need for revenues,
value begins to attach to land. As population still increases and industry
grows
more elaborate, so the needs for public revenues increase. And at the same
time and from the same causes land values increase. The connection is invariable.
The value of things produced by labor tends to decline with social development,
since the larger scale of production and the improvement of processes tend
steadily to reduce their cost. But the value of land on which population
centers goes up and up. Take Rome or Paris or London or New York or Melbourne.
Consider
the enormous value of land in such cities as compared with the value of
land in sparsely settled parts of the same countries. To what is this due?
Is it
not due to the density and activity of the populations of those cities — to
the very causes that require great public expenditure for streets, drains,
public buildings, and all the many things needed for the health, convenience
and safety of such great cities? See how with the growth of such cities the
one thing that steadily increases in value is land; how the opening of roads,
the building of railways, the making of any public improvement, adds to the
value of land. Is it not clear that here is a natural law — that
is to say a tendency willed by the Creator? Can it mean anything else than
that He
who ordained the state with its needs has in the values which attach to
land provided the means to meet those needs?
That it does mean this and nothing else is confirmed if we look deeper still,
and inquire not merely as to the intent, but as to the purpose of the intent.
If we do so we may see in this natural law by which land values increase with
the growth of society not only such a perfectly adapted provision for the needs
of society as gratifies our intellectual perceptions by showing us the wisdom
of the Creator, but a purpose with regard to the individual that gratifies
our moral perceptions by opening to us a glimpse of his beneficence.
Consider: Here is a natural law by which as society advances the one thing
that increases in value is land — a natural law by virtue of which
all growth of population, all advance of the arts, all general improvements
of
whatever kind, add to a fund that both the commands of justice and the
dictates of expediency prompt us to take for the common uses of society.
Now, since
increase in the fund available for the common uses of society is increase
in the gain that goes equally to each member of society, is it not clear
that
the law by which land values increase with social advance while the value
of the products of labor does not increase, tends with the advance of civilization
to make the share that goes equally to each member of society more and
more
important as compared with what goes to him from his individual earnings,
and thus to make the advance of civilization lessen relatively the differences
that in a ruder social state must exist between the strong and the weak,
the
fortunate and the unfortunate? Does it not show the purpose of
the Creator to be that the advance of man in civilization should be an
advance not
merely to larger powers but to a greater and greater equality, instead
of what we,
by our ignoring of his intent, are making it, an advance toward a more
and more monstrous inequality? ...
That the value attaching to land with social growth is intended for social
needs is shown by the final proof. God is indeed a jealous God in the sense
that nothing but injury and disaster can attend the effort of men to do things
other than in the way he has intended; in the sense that where the blessings
he proffers to men are refused or misused they turn to evils that scourge
us. And just as for the mother to withhold the provision that fills her breast
with the birth of the child is to endanger physical health, so for society
to refuse to take for social uses the provision intended for them is to breed
social disease.
For refusal to take for public purposes the increasing values that attach
to land with social growth is to necessitate the getting of public revenues
by taxes that lessen production, distort distribution and corrupt society. It
is to leave some to take what justly belongs to all; it is to forego the
only means by which it is possible in an advanced civilization to combine
the security of possession that is necessary to improvement with the equality
of natural opportunity that is the most important of all natural rights.
It is thus at the basis of all social life to set up an unjust inequality
between man and man, compelling some to pay others for the privilege of living,
for the chance of working, for the advantages of civilization, for the gifts
of their God. But it is even more than this. The very robbery that the masses
of men thus suffer gives rise in advancing communities to a new robbery.
For the value that with the increase of population and social advance attaches
to land being suffered to go to individuals who have secured ownership of
the land, it prompts to a forestalling of and speculation in land wherever
there is any prospect of advancing population or of coming improvement, thus
producing an artificial scarcity of the natural elements of life and labor,
and a strangulation of production that shows itself in recurring spasms of
industrial depression as disastrous to the world as destructive wars. It
is this that is driving men from the old countries to the new countries,
only to bring there the same curses. It is this that causes our material
advance not merely to fail to improve the condition of the mere worker, but
to make the condition of large classes positively worse. It is this that
in our richest Christian countries is giving us a large population whose
lives are harder, more hopeless, more degraded than those of the veriest
savages. It is this that leads so many men to think that God is a bungler
and is constantly bringing more people into his world than he has made provision
for; or that there is no God, and that belief in him is a superstition which
the facts of life and the advance of science are dispelling.
... read
the whole letter
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