Wealth and Want
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Land Monopoly Capitalism
Capitalism is a very fine system, and the U.S. really ought to try it sometime! That is one of the themes of this website.

What we have now is Capitalism on a Tilted Playing Field. No wonder so many of us are struggling to earn enough to support our selves and our families.

It isn't that capitalism isn't the best system (I'm persuaded that it is), but rather that we aren't yet operating under a truly capitalist system. "Land monopoly capitalism" seems to me to be the best shorthand description of what we have now — and it isn't producing widely shared prosperity or genuine equality of opportunity, both of which are key criteria on which a system should be judged. Ours is lacking, and I believe that Henry George points to the remedy which will correct the tilt.

As long as we permit individuals, families, trusts and corporations to privatize economic value that rightly belongs to all of us, and then to fund government spending via taxes on wages and products, we are permitting a system designed to concentrate income and wealth in a small segment of our population. This is theft of the worst sort — legalized theft. A fresh robbery every day.

 

Rousseau

The first man who, having enclosed a piece of ground, bethought himself of saying, “This is mine”, and found people simple enough to believe him, was the real founder of civil society.
From how many crimes, wars and murders, from how many horrors and misfortunes, might not anyone have saved mankind by pulling up the stakes, filling in the ditch, and crying to his fellows, “BEWARE OF LISTENING TO THIS IMPOSTOR; YOU ARE UNDONE IF YOU ONCE FORGET THAT THE FRUITS OF THE EARTH BELONG TO US ALL, AND THE EARTH ITSELF TO NOBODY.”

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty, Chapter 5: The Basic Cause of Poverty (in the unabridged: Book V: The Problem Solved)

... For land is the habitation of man, the storehouse upon which he must draw for all his needs, the material to which his labor must be applied for the supply of all his desires; for even the products of the sea cannot be taken, the light of the sun enjoyed, or any of the forces of nature utilized, without the use of land or its products. On the land we are born, from it we live, to it we return again — children of the soil as truly as is the blade of grass or the flower of the field. Take away from man all that belongs to land, and he is but a disembodied spirit. Material progress cannot rid us of our dependence upon land; it can but add to the power of producing wealth from land; and hence, when land is monopolized, it might go on to infinity without increasing wages or improving the condition of those who have but their labor. It can but add to the value of land and the power which its possession gives. Everywhere, in all times, among all peoples, the possession of land is the base of aristocracy, the foundation of great fortunes, the source of power. ... read the whole chapter

The elder Mirabeau, we are told, ranked the proposition of Quesnay, to substitute one single tax on rent (the impôt unique) for all other taxes, as a discovery equal in utility to the invention of writing or the substitution of the use of money for barter.

To whosoever will think over the matter, this saying will appear an evidence of penetration rather than of extravagance. The advantages which would be gained by substituting for the numerous taxes by which the public revenues are now raised, a single tax levied upon the value of land, will appear more and more important the more they are considered. ...

Consider the effect upon the production of wealth.

To abolish the taxation which, acting and reacting, now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy, production would start into new life, and trade would receive a stimulus which would be felt to the remotest arteries. The present method of taxation operates upon exchange like artificial deserts and mountains;

  • it costs more to get goods through a custom house than it does to carry them around the world.

  • It operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities.

  • If I have worked harder and built myself a good house while you have been contented to live in a hovel, the taxgatherer now comes annually to make me pay a penalty for my energy and industry, by taxing me more than you.

  • If I have saved while you wasted, I am mulct, while you are exempt.

  • If a man build a ship we make him pay for his temerity, as though he had done an injury to the state;

  • if a railroad be opened, down comes the tax collector upon it, as though it were a public nuisance;

  • if a manufactory be erected we levy upon it an annual sum which would go far toward making a handsome profit.

  • We say we want capital, but if any one accumulate it, or bring it among us, we charge him for it as though we were giving him a privilege.

  • We punish with a tax the man who covers barren fields with ripening grain,

  • we fine him who puts up machinery, and him who drains a swamp.

How heavily these taxes burden production only those realize who have attempted to follow our system of taxation through its ramifications, for, as I have before said, the heaviest part of taxation is that which falls in increased prices.

To abolish these taxes would be to lift the whole enormous weight of taxation from productive industry. The needle of the seamstress and the great manufactory; the cart horse and the locomotive; the fishing boat and the steamship; the farmer's plow and the merchant's stock, would be alike untaxed. All would be free to make or to save, to buy or to sell, unfined by taxes, unannoyed by the taxgatherer. Instead of saying to the producer, as it does now, "The more you add to the general wealth the more shall you be taxed!" the state would say to the producer, "Be as industrious, as thrifty, as enterprising as you choose, you shall have your full reward! You shall not be fined for making two blades of grass grow where one grew before; you shall not be taxed for adding to the aggregate wealth."

And will not the community gain by thus refusing to kill the goose that lays the golden eggs; by thus refraining from muzzling the ox that treadeth out the corn; by thus leaving to industry, and thrift, and skill, their natural reward, full and unimpaired? For there is to the community also a natural reward. The law of society is, each for all, as well as all for each. No one can keep to himself the good he may do, any more than he can keep the bad. Every productive enterprise, besides its return to those who undertake it, yields collateral advantages to others. If a man plant a fruit tree, his gain is that he gathers the fruit in its time and season. But in addition to his gain, there is a gain to the whole community. Others than the owner are benefited by the increased supply of fruit; the birds which it shelters fly far and wide; the rain which it helps to attract falls not alone on his field; and, even to the eye which rests upon it from a distance, it brings a sense of beauty. And so with everything else. The building of a house, a factory, a ship, or a railroad, benefits others besides those who get the direct profits.

Well may the community leave to the individual producer all that prompts him to exertion; well may it let the laborer have the full reward of his labor, and the capitalist the full return of his capital. For the more that labor and capital produce, the greater grows the common wealth in which all may share. And in the value or rent of land is this general gain expressed in a definite and concrete form. Here is a fund which the state may take while leaving to labor and capital their full reward. With increased activity of production this would commensurately increase.

And to shift the burden of taxation from production and exchange to the value or rent of land would not merely be to give new stimulus to the production of wealth; it would be to open new opportunities. For under this system no one would care to hold land unless to use it, and land now withheld from use would everywhere be thrown open to improvement. ...

And it must be remembered that this would apply, not merely to agricultural land, but to all land. Mineral land would be thrown open to use, just as agricultural land; and in the heart of a city no one could afford to keep land from its most profitable use, or on the outskirts to demand more for it than the use to which it could at the time be put would warrant. Everywhere that land had attained a value, taxation, instead of operating, as now, as a fine upon improvement, would operate to force improvement. Whoever planted an orchard, or sowed a field, or built a house, or erected a manufactory, no matter how costly, would have no more to pay in taxes than if he kept so much land idle.

  • The monopolist of agricultural land would be taxed as much as though his land were covered with houses and barns, with crops and with stock.

  • The owner of a vacant city lot would have to pay as much for the privilege of keeping other people off of it until he wanted to use it, as his neighbor who has a fine house upon his lot.

  • It would cost as much to keep a row of tumble-down shanties upon valuable land as though it were covered with a grand hotel or a pile of great warehouses filled with costly goods.

Thus, the bonus that wherever labor is most productive must now be paid before labor can be exerted would disappear.

  • The farmer would not have to pay out half his means, or mortgage his labor for years, in order to obtain land to cultivate;

  • the builder of a city homestead would not have to lay out as much for a small lot as for the house he puts upon it*;

  • the company that proposed to erect a manufactory would not have to expend a great part of its capital for a site.

  • And what would be paid from year to year to the state would be in lieu of all the taxes now levied upon improvements, machinery, and stock. ... read the whole chapter

But great as they thus appear, the advantages of a transference of all public burdens to a tax upon the value of land cannot be fully appreciated until we consider the effect upon the distribution of wealth.

Tracing out the cause of the unequal distribution of wealth which appears in all civilized countries, with a constant tendency to greater and greater inequality as material progress goes on, we have found it in the fact that, as civilization advances, the ownership of land, now in private hands, gives a greater and greater power of appropriating the wealth produced by labor and capital.

Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be, as far as it went, to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality. Labor and capital would then receive the whole produce, minus that portion taken by the state in the taxation of land values, which, being applied to public purposes, would be equally distributed in public benefits.

That is to say, the wealth produced in every community would be divided into two portions.

  • One part would be distributed in wages and interest between individual producers, according to the part each had taken in the work of production;

  • the other part would go to the community as a whole, to be distributed in public benefits to all its members.

In this all would share equally — the weak with the strong, young children and decrepit old men, the maimed, the halt, and the blind, as well as the vigorous. And justly so — for while one part represents the result of individual effort in production, the other represents the increased power with which the community as a whole aids the individual.

Thus, as material progress tends to increase rent, were rent taken by the community for common purposes the very cause which now tends to produce inequality as material progress goes on would then tend to produce greater and greater equality.

Who can say to what infinite powers the wealth-producing capacity of labor may not be raised by social adjustments which will give to the producers of wealth their fair proportion of its advantages and enjoyments! With present processes the gain would be simply incalculable, but just as wages are high, so do the invention and utilization of improved processes and machinery go on with greater rapidity and ease.

But I shall not deny, and do not wish to lose sight of the fact, that while thus preventing waste and thus adding to the efficiency of labor, the equalization in the distribution of wealth that would result from the simple plan of taxation that I propose, must lessen the intensity with which wealth is pursued. It seems to me that in a condition of society in which no one need fear poverty, no one would desire great wealth — at least, no one would take the trouble to strive and to strain for it as men do now. For, certainly, the spectacle of men who have only a few years to live, slaving away their time for the sake of dying rich, is in itself so unnatural and absurd, that in a state of society where the abolition of the fear of want had dissipated the envious admiration with which the masses of men now regard the possession of great riches, whoever would toil to acquire more than he cared to use would be looked upon as we would now look on a man who would thatch his head with half a dozen hats.

And though this incentive to production be withdrawn, can we not spare it? Whatever may have been its office in an earlier stage of development, it is not needed now. The dangers that menace our civilization do not come from the weakness of the springs of production. What it suffers from, and what, if a remedy be not applied, it must die from, is unequal distribution!

Nor would the removal of this incentive, regarded only from the standpoint of production, be an unmixed loss. For, that the aggregate of production is greatly reduced by the greed with which riches are pursued, is one of the most obtrusive facts of modern society. While, were this insane desire to get rich at any cost lessened, mental activities now devoted to scraping together riches would be translated into far higher spheres of usefulness. ... read the whole chapter

The truth to which we were led in the politico-economic branch of our inquiry is as clearly apparent in the rise and fall of nations and the growth and decay of civilizations, and it accords with those deep-seated recognitions of relation and sequence that we denominate moral perceptions. Thus are given to our conclusions the greatest certitude and highest sanction.

This truth involves both a menace and a promise. It shows that the evils arising from the unjust and unequal distribution of wealth, which are becoming more and more apparent as modern civilization goes on, are not incidents of progress, but tendencies which must bring progress to a halt; that they will not cure themselves, but, on the contrary, must, unless their cause is removed, grow greater and greater, until they sweep us back into barbarism by the road every previous civilization has trod. But it also shows that these evils are not imposed by natural laws; that they spring solely from social maladjustments which ignore natural laws, and that in removing their cause we shall be giving an enormous impetus to progress.

The poverty which in the midst of abundance pinches and embrutes men, and all the manifold evils which flow from it, spring from a denial of justice. In permitting the monopolization of the opportunities which nature freely offers to all, we have ignored the fundamental law of justice — for, so far as we can see, when we view things upon a large scale, justice seems to be the supreme law of the universe. But by sweeping away this injustice and asserting the rights of all men to natural opportunities, we shall conform ourselves to the law —

  • we shall remove the great cause of unnatural inequality in the distribution of wealth and power;

  • we shall abolish poverty;

  • tame the ruthless passions of greed;

  • dry up the springs of vice and misery;

  • light in dark places the lamp of knowledge;

  • give new vigor to invention and a fresh impulse to discovery;

  • substitute political strength for political weakness; and

  • make tyranny and anarchy impossible.

The reform I have proposed accords with all that is politically, socially, or morally desirable. It has the qualities of a true reform, for it will make all other reforms easier. What is it but the carrying out in letter and spirit of the truth enunciated in the Declaration of Independence — the "self-evident" truth that is the heart and soul of the Declaration —"That all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness!"

These rights are denied when the equal right to land — on which and by which men alone can live — is denied. Equality of political rights will not compensate for the denial of the equal right to the bounty of nature. Political liberty, when the equal right to land is denied, becomes, as population increases and invention goes on, merely the liberty to compete for employment at starvation wages. ...

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.

It is this that turns the blessings of material progress into a curse. It is this that crowds human beings into noisome cellars and squalid tenement houses; that fills prisons and brothels; that goads men with want and consumes them with greed; that robs women of the grace and beauty of perfect womanhood; that takes from little children the joy and innocence of life's morning.

Civilization so based cannot continue. The eternal laws of the universe forbid it. Ruins of dead empires testify, and the witness that is in every soul answers, that it cannot be. It is something grander than Benevolence, something more august than Charity — it is Justice herself that demands of us to right this wrong. Justice that will not be denied; that cannot be put off — Justice that with the scales carries the sword. Shall we ward the stroke with liturgies and prayers? Shall we avert the decrees of immutable law by raising churches when hungry infants moan and weary mothers weep?

Though it may take the language of prayer, it is blasphemy that attributes to the inscrutable decrees of Providence the suffering and brutishness that come of poverty; that turns with folded hands to the All-Father and lays on Him the responsibility for the want and crime of our great cities. We degrade the Everlasting. We slander the Just One. A merciful man would have better ordered the world; a just man would crush with his foot such an ulcerous ant-hill! It is not the Almighty, but we who are responsible for the vice and misery that fester amid our civilization. The Creator showers upon us his gifts — more than enough for all. But like swine scrambling for food, we tread them in the mire — tread them in the mire, while we tear and rend each other!... read the whole chapter

Henry George: Thou Shalt Not Steal  (1887 speech)

"Thou shalt not steal." That means, of course, that we ourselves must not steal. But does it not also mean that we must not suffer anybody else to steal if we can help it?

"Thou shalt not steal." Does it not also mean: "Thou shalt not suffer thyself or anybody else to be stolen from?" If it does, then we, all of us, rich and poor alike, are responsible for this social crime that produces poverty. Not merely the people who monopolize the land — they are not to blame above anyone else, but we who permit them to monopolize land are also parties to the theft. ...  read the whole article

Henry George:  The Land Question (1881)
A little Island or a little World
IMAGINE an island girt with ocean; imagine a little world swimming in space. Put on it, in imagination, human beings. Let them divide the land, share and share alike, as individual property. At first, while population is sparse and industrial processes rude and primitive, this will work well enough.

Turn away the eyes of the mind for a moment, let time pass, and look again. Some families will have died out, some have greatly multiplied; on the whole, population will have largely increased, and even supposing there have been no important inventions or improvements in the productive arts, the increase in population, by causing the division of labor, will have made industry more complex. During this time some of these people will have been careless, generous, improvident; some will have been thrifty and grasping. Some of them will have devoted much of their powers to thinking of how they themselves and the things they see around them came to be, to inquiries and speculations as to what there is in the universe beyond their little island or their little world, to making poems, painting pictures, or writing books; to noting the differences in rocks and trees and shrubs and grasses; to classifying beasts and birds and fishes and insects – to the doing, in short, of all the many things which add so largely to the sum of human knowledge and human happiness, without much or any gain of wealth to the doer. Others again will have devoted all their energies to the extending of their possessions. What, then, shall we see, land having been all this time treated as private property? Clearly, we shall see that the primitive equality has given way to inequality. Some will have very much more than one of the original shares into which the land was divided; very many will have no land at all. Suppose that, in all things save this, our little island or our little world is Utopia – that there are no wars or robberies; that the government is absolutely pure and taxes nominal; suppose, if you want to, any sort of a currency; imagine, if you can imagine such a world or island, that interest is utterly abolished; yet inequality in the ownership of land will have produced poverty and virtual slavery.

For the people we have supposed are human beings – that is to say, in their physical natures at least, they are animals who can live only on land and by the aid of the products of land. They may make machines which will enable them to float on the sea, or perhaps to fly in the air, but to build and equip these machines they must have land and the products of land, and must constantly come back to land. Therefore those who own the land must be the masters of the rest. Thus, if one man has come to own all the land, he is their absolute master even to life or death. If they can live on the land only on his terms, then they can live only on his terms, for without land they cannot live. They are his absolute slaves, and so long as his ownership is acknowledged, if they want to live, they must do in everything as he wills.

If, however, the concentration of landownership has not gone so far as to make one or a very few men the owners of all the land – if there are still so many landowners that there is competition between them as well as between those who have only their labor – then the terms on which these non-landholders can live will seem more like free contract. But it will not be free contract. Land can yield no wealth without the application of labor; labor can produce no wealth without land. These are the two equally necessary factors of production. Yet, to say that they are equally necessary factors of production is not to say that, in the making of contracts as to how the results of production are divided, the possessors of these two meet on equal terms. For the nature of these two factors is very different. Land is a natural element; the human being must have his stomach filled every few hours. Land can exist without labor, but labor cannot exist without land. If I own a piece of land, I can let it lie idle for a year or for years, and it will eat nothing. But the laborer must eat every day, and his family must eat. And so, in the making of terms between them, the landowner has an immense advantage over the laborer. It is on the side of the laborer that the intense pressure of competition comes, for in his case it is competition urged by hunger. And, further than this: As population increases, as the competition for the use of land becomes more and more intense, so are the owners of land enabled to get for the use of their land a larger and larger part of the wealth which labor exerted upon it produces. That is to say, the value of land steadily rises. Now, this steady rise in the value of land brings about a confident expectation of future increase of value, which produces among landowners all the effects of a combination to hold for higher prices. Thus there is a constant tendency to force mere laborers to take less and less or to give more and more (put it which way you please, it amounts to the same thing) of the products of their work for the opportunity to work. And thus, in the very nature of things, we should see on our little island or our little world that, after a time had passed, some of the people would be able to take and enjoy a superabundance of all the fruits of labor without doing any labor at all, while others would be forced to work the livelong day for a pitiful living.

But let us introduce another element into the supposition. Let us suppose great discoveries and inventions – such as the steam-engine, the power-loom, the Bessemer process, the reaping-machine, and the thousand and one labor-saving devices that are such a marked feature of our era. What would be the result?

Manifestly, the effect of all such discoveries and inventions is to increase the power of labor in producing wealth – to enable the same amount of wealth to be produced by less labor, or a greater amount with the same labor. But none of them lessen, or can lessen the necessity for land. Until we can discover some way of making something out of nothing – and that is so far beyond our powers as to be absolutely unthinkable – there is no possible discovery or invention which can lessen the dependence of labor upon land. And, this being the case, the effect of these labor-saving devices, land being the private property of some, would simply be to increase the proportion of the wealth produced that landowners could demand for the use of their land. The ultimate effect of these discoveries and inventions would be not to benefit the laborer, but to make him more dependent.

And, since we are imagining conditions, imagine laborsaving inventions to go to the farthest imaginable point, that is to say, to perfection. What then? Why then, the necessity for labor being done away with, all the wealth that the land could produce would go entire to the landowners. None of it whatever could be claimed by any one else. For the laborers there would be no use at all. If they continued to exist, it would be merely as paupers on the bounty of the landowners!  ... read the whole article

Henry George: The Wages of Labor
Nor can the State cure poverty by regulating wages. It is as much beyond the power of the State to regulate wages as it is to regulate the rates of interest. Usury laws have been tried again and again, but the only effect they have ever had has been to increase what the poorer borrowers must pay, and for the same reasons that all attempts to lower by regulation the price of goods have always resulted merely in increasing their price.

The general rate of wages is fixed by the ease or difficulty with which labor can obtain access to land, ranging from the full earnings of labor, where land is free; to the least on which laborers can live and reproduce, where land is fully monopolised....  read the whole article

Henry George: Concentrations of Wealth Harm America (excerpt from Social Problems)  (1883)
The Evils of Monopolists
Consider the important part in building up fortunes which the increase of land values has had, and is having, in the United States. This is, of course, monopoly, pure and simple. When land increases in value it does not mean that its owner has added to the general wealth. The owner may never have seen the land or done aught to improve it. He may, and often does, live in a distant city or in another country. Increase of land values simply means that the owners, by virtue of their appropriation of something that existed before man was, have the power of taking a larger share of the wealth produced by other people's labor. Consider
  • how much the monopolies created and the advantages given to the unscrupulous by the tariff and by our system of internal taxation --
  • how much the railroad (a business in its nature a monopoly), telegraph, gas, water and other similar monopolies, have done to concentrate wealth;
  • how special rates, pools, combinations, corners, stock-watering and stock-gambling, the destructive use of wealth in driving off or buying off opposition which the public must finally pay for, and many other things which these will suggest, have operated to build up large fortunes, and it will at least appear that the unequal distribution of wealth is due in great measure to sheer spoliation;
  • that the reason why those who work hard get so little, while so many who work little get so much, is, in very large measure, that the earnings of the one class are, in one way or another, filched away from them to swell the incomes of the other.

That individuals are constantly making their way from the ranks of those who get less than their earnings to the ranks of those who get more than their earnings, no more proves this state of things right than the fact that merchant sailors were constantly becoming pirates and participating in the profits of piracy, would prove that piracy was right and that no effort should be made to suppress it. ...   Read the entire article

Arthur J. Ogilvy: A Colonist's Plea for Land Nationalization (about 1890)

The increase of value in my land has arisen from the execution of public works and increase of population, causing an increased demand for the land; in other words, it has arisen from the national progress; and I, so far from aiding in this progress have actually hindered it, by keeping my property locked up and so forcing on intending producers to inferior or less accessible lands; and by holding so much land back have helped to make land so much scarcer, and, therefore, so much dearer, and so have helped to increase the tribute which industry has to pay to monopoly for the mere privilege of exerting itself. ...

Whether the value of land and the value of the improvements can be separated or not, they are quite distinct elements, just as in a glass of grog, the brandy is brandy and the water water, each with its own distinctive properties and effects, notwithstanding their indistinguishable com-mixture; and he therefore who lets land levies blackmail upon industry by charging for something which represents no service at all, none the less that at the same time he charges for something else that does represent service.

No doubt there are many other things besides land in which a monopoly of the article will enable the possessor to levy something resembling blackmail; but there are points of difference that distinguish them all from the pure and simple appropriation of land monopoly. ...

No doubt there are many other things besides land in which a monopoly of the article will enable the possessor to levy something resembling blackmail; but there are points of difference that distinguish them all from the pure and simple appropriation of land monopoly.

The first is that none of them excludes other people from making a living or from making earnings to any extent by other means than the article monopolised.

If by a day's labour or by pure accident I find a diamond, I may ask a price entirely disproportionate to the value of my labour; but then the public need not buy my diamond unless they like. My finding a diamond does not prevent other people from looking for diamonds with as much chance of finding them as I had, and, if they don't think they are likely to find any by looking for them they can go without, and be none the worse.

But every piece of land appropriated shuts out so many other people from that land, and as all the land (practically speaking) is appropriated, or in one way or another out of reach of the masses, they are at the mercy of the landholders, and have no choice but either to rent it from them as tenants or work for them as labourers on the hardest terms to which competition can drive them; which means that the landowner has the power of appropriating the greater part of their earnings in return for the mere permission to them to earn anything.

Or suppose that, instead of finding a diamond, I buy tin, and that next week the price goes up to double here there is an additional distinction between my gains and the land speculator's; for not only are the public under no compulsion to buy tin (while they are to rent land), and not only does tin represent the results of labour, and so represent earnings (which land does not), but the magnitude of my gain in most cases represents compensation for great risk.

The earnings of farmers and of miners may average the same, but the farmers' average is made up of pretty equal profits all round, while the miners' average is made up of a few big prizes and many blanks. And what applies to the miner applies also to the speculator in mining products. His occasional large profits represent compensation for great risks, and is thus as much of the nature of insurance as of profit.

No one would think of either mining or speculating in mining products, unless the many blanks were compensated by occasional large prizes. They are the necessary inducements to engage in those callings, and therefore fair earnings when they come. Land, however, is not a speculation in this sense (though even if it were, its profits would still be appropriation and not earnings for reasons already given); it is a sure investment in the sense that it is subject to no extraordinary risks: to no more risks, that is, than such as are inseparable from all human enterprise, even the safest. ...

Under the system prevailing all over the civilised world every country is appropriated by a (comparatively) few owners.

What these owners do with the land is a matter the State concerns itself very little about. Whether they occupy and use it themselves, or let it to a tenant and live in idleness on the fruits of his labour; whether they cultivate it like a garden, making it yield abundant wealth and maintain hundreds of families, or leave it in a state of nature to carry sheep, excluding the whole rising tide of population from the opportunity of developing its boundless resources because the sheep pay them rather better; whether they open out the mineral treasures hidden in its depths or lock them up by demanding such exorbitant royalties that enterprise either will not attempt the work, or attempts and fails; whether they construct factories and build cities upon it, or turn out the whole population and burn down their dwellings (as in the Scottish Highlands) because a foreign millionaire offers them a higher price for the privilege of turning it into a wilderness to shoot deer in than the children of the soil can give for the mere privilege of earning a living; all these things the State regards as matters of quite secondary consideration with which it is not called upon to interpose, because that would be interfering with the "sacred rights" of property. ...

As the landlord by virtue of his monopoly of the land holds the applicant for it at his mercy, so the applicant once in possession holds the labourer at his mercy.

The competition was first for possession of the land, it is now for employment on the land. The competition is in the one case open and direct, in the other disguised and indirect.

Labourers do not usually underbid each other for employment as tenants overbid each other for possession, but it comes to much the same thing as if they did: The more numerous the labourers in proportion to the work to be done the lower the wages, and vice versa.

If the landlords were to divide their land into as many pieces of equal value as there were applicants for it, and were to offer these pieces separately, there would be no competition to run rents up, and the landlord would have to take what he could get for it a merely nominal rent.

To make money by his monopoly he must keep up its character as a monopoly; that is, he must offer his land in a single block so to speak, and so compel competition.

And just as the landlord forces rents up by offering his whole land for one tenant's occupation, and so setting all to compete for the privilege of being that one, so the occupier in his turn forces wages down by employing as few labourers as he can, and so setting all to compete for the privilege of being among those few.

The secret of his power over the labourer is the same as that of his landlord over him. It is not in his capital as is generally supposed, but in his getting possession of more laud than he can use by his own personal labour, and preventing other people from using it by their personal labour, except for his profit.

The landlord makes the occupier give him his money; the occupier makes the labourer give him his work.

In so far as the occupier can keep his wage expenditure below the general level by doing the same work with fewer men, or paying them less wages, he can retain the savings to himself; but in so far as he only succeeds in keeping down the general cost of labour, he is only keeping down the recognised cost of working the land, and so increasing the value of land, and so raising rent; and the result of his efforts (as a rule), is only to keep down the general level, for all are playing the same game, and any saving effected by one is soon copied by all, and absorbed in a general reduced cost of production, increasing the value of land and raising rent. ...

Here is a farm, selected from the assessment roll of this district as a fair sample of a so-called agricultural farm consisting of 640 acres and rented at £150. It keeps, I believe, at the outside, two men at work the year round; any other applicants for employment being dismissed with the formula, "No work for you."

Two men to a whole square mile! And this on a farm within 15 miles of the port of Hobart, and containing hardly an acre unfit for cultivation.

All the produce that comes off this farm has to be raised by the labour of these two men. and must realise over and above their wages and keep and all collateral working expenses, a surplus of rent, £150; rates and taxes, £20; employer's profit (say), £100; total £270; being a profit of £135 to each man. No man, in short, is allowed the opportunity to earn a living on this square mile of cultivable land unless he produces, over and above the supply of his own modest wants, a net annual surplus of £135 to hand over to somebody else.

If employment is restricted, it is land monopoly that restricts it.

It is not that there is not abundance of land to use, abundance of use to put it to, and abundance of profit to be made from it, but that the tendency of monopoly is to keep hungry mouths off rather than to take willing hands on. It is naturally concerned only to get as big a share as possible to itself, and is not concerned whether other people have a chance to get a share or not. ...

But it ought to be clear by this time that if all existing landlords were swept away and all the land in use confirmed absolutely upon the occupiers, things would be no better than they are now.

For the evil that weighs upon society, hindering progress, forcing down earnings, and making life to all who have to live by work a struggle for existence is the monopoly of the land; and whether it is A or B who monopolises it, is of no consequence to anybody but A and B.

Wherever one man is allowed to acquire more land than he can use by his own labour for the purpose of preventing other people from using it by their labour except for his profit, that man is master of the situation, and the class of which he is the representative has the world at its feet. And whether the monopolist turns his monopoly to account as an occupying owner by working the labourers for his profit directly, or as a nonoccupier by selling to somebody else (called a tenant) for a yearly payment (called rent) the privilege of working them, is a difference not worth talking about. ... read the whole paper.

Mark Twain   Archimedes

"Give me whereon to stand", said Archimedes, "and I will move the earth." The boast was a pretty safe one, for he knew quite well that the standing place was wanting, and always would be wanting. But suppose he had moved the earth, what then? What benefit would it have been to anybody?
...  I know of a mechanical force more powerful than anything the vaunting engineer of Syracuse ever dreamed of. It is the force of land monopoly; it is a screw and lever all in one; it will screw the last penny out of a man's pocket, and bend everything on earth to its own despotic will. Give me the private ownership of all the land, and will I move the earth? No; but I will do more. I will undertake to make slaves of all the human beings on the face of it. Not chattel slaves exactly, but slaves nevertheless. Read the whole piece

" A. J. O."  (probably Mark Twain)  Slavery

... But I gain in other ways besides pecuniary benefit. I have lost the stigma of being a slave driver, and have, acquired instead the character of a man of energy and enterprise, of justice and benevolence. I am a "large employer of labour," to whom the whole country, and the labourer especially, is greatly indebted, and people say, "See the power of capital! These poor labourers, having no capital, could not use the land if they had it, so this great and far-seeing man wisely refuses to let them have it, and keeps it all for himself, but by providing them with employment his capital saves them from pauperism, and enables him to build up the wealth of the country, and his own fortune together."
Whereas it is not my capital that does any of these things. It is not my capital but the labourer’s toil that builds up my fortune and the wealth of the country. It is not my employment that keeps him from pauperism, but my monopoly of the land forcing him into my employment that keeps him on the brink of it. It is not want of capital that keeps the labourer from using the land, but my refusing him the use of the land that prevents him from acquiring capital. All the capital he wants to begin with is an axe and a spade, which a week’s earnings would buy him, and for his maintenance during the first year, and at any subsequent time, he could work for me or for others, turnabout, with his work on his own land. Henceforth with every year his capital would grow of itself, and his independence with it, and that this is no fancy sketch, anyone can see for himself by taking a trip into the country, where he will find well-to-do farmers who began with nothing but a spade and an axe (so to speak) and worked their way up in the manner described. 

Enter the landlord

But now another thought strikes me. Instead of paying an overseer to work these men for me, I will make him pay me for the privilege of doing it. I will let the land as it stands to him or to another – to whomsoever will give the most for the billet. He shall be called my tenant instead of my overseer, but the things he shall do for me are essentially the same, only done by contract instead of for yearly pay. He, not I, shall find all the capital, take all the risk, and engage and supervise the men, paying me a lump sum, called rent, out of the proceeds of their toil, and make what he can for himself out of the surplus. The competition is as keen in its way for the land, among people of his class, as it is among the labourers for employment, only that as they are all possessed of some little means (else they could not compete) they are in no danger of immediate want, and can stand out for rather better terms than the labourers, who are forced by necessity to take what terms they can get. The minimum in each case amounts practically to a "mere living", but the mere living they insist on is one of a rather higher standard than the labourers’; it means a rather more abundant supply and better quality of those little comforts which are next door to necessaries. It means, in short, a living of a kind to which people of that class are accustomed.

For a moderate reduction in my profits, then – a reduction equal to the tenant’s narrow margin of profit – I have all the toil and worry of management taken off my hands, and the risk too, for be the season good or bad, the rent is bound to be forthcoming, and I can sell him up to the last rag if he fails of the full amount, no matter for what reason; and my rent takes precedence of all other debts. All my capital is set free for investment elsewhere, and I am freed from the odium of a slave owner, notwithstanding that the men still toil for my enrichment as when they were slaves, and that I get more out of them than ever. If I wax rich while they toil from hand to mouth, and in depressed seasons find it hard to get work at all; it is not, to all appearances, my doing, but merely the force of circumstances, the law of nature, the state of the labour market – fine sounding names that hide the ugly reality.

If wages are forced down it is not I that do it; it is that greedy and merciless man the employer (my tenant) who does it. I am a lofty and superior being, dwelling apart and above such sordid considerations. I would never dream of grinding these poor labourers, not I! I have nothing to do with them at all; I only want my rent -- and get it. Like the lilies of the field, I toil not, neither do I spin, and yet (so kind is Providence!) my daily bread (well buttered) comes to me of itself. Nay, people bid against each other for the privilege of finding it for me; and no one seems to realise that the comfortable income that falls to me like the refreshing dew is dew indeed; but it is the dew of sweat wrung from the labourers’ toil. It is the fruit of their labour which they ought to have; which they would have if I did not take it from them.

This sketch illustrates the fact that chattel slavery is not the only nor even the worst form of bondage. When the use of the earth – the sole source of our daily bread – is denied unless one pays a fellow creature for permission to use it, people are bereft of economic freedom. The only way to regain that freedom is to collect the rent of land instead of taxes for the public domain.

Once upon a time, labour leaders in the USA, the UK and Australia understood these facts. The labour movements of those countries were filled with people who fought for the principles of ‘the single tax’ on land at the turn of the twentieth century. But since then and they have gradually yielded to the forces of privilege and power daring no longer to come to grips with this fundamental question, lest they, too, become ridiculed. And so the world continues to wallow in this particular ignorance – and in its ensuing poverty and debt.  Read the whole piece

Louis Post: Outlines of Louis F. Post's Lectures, with Illustrative Notes and Charts (1894)

Note 57: While in the Pennsylvania coal regions a few years ago I was told of an incident that illustrates the power of perpetuating poverty which resides in the absolute ownership of land.

The miners were in poverty. Despite the lavish protection bestowed upon them by tariff laws at the solicitation of monopolies which dictate our tariff policy, the men were afflicted with poverty in many forms. They were poor as to clothing, poor as to shelter, poor as to food, and to be more specific, they were in extreme poverty as to ice. When the summer months came they lacked this thing because they could not afford to buy, and they suffered.

Owing to the undermining of the ground and the caving in of the surface here and there, there were great holes into which the snow and the rain fell in winter and froze, forming a passable quality of ice. Now it is frequently said that intelligence, industry, and thrift will abolish poverty. But these virtues were not successful among the men of whom I speak. They were intelligent enough to see that this ice if they saved it would abolish their poverty as to ice, and they were industrious enough and thrifty enough not only to be willing to save it, but actually to begin the work. Preparing little caves to preserve the ice in, they went into the holes after a long day's work in the mines, and gathered what so far as the need of ice was concerned was to abolish their poverty in the ensuing summer. But the owner of this part of the earth — a man who had neither made the earth, nor the rain, nor the snow, nor the ice, nor even the hole — telegraphed his agent forbidding the removal of ice except upon payment of a certain sum per ton.

The miners couldn't afford the condition. They controlled the necessary Labor, and were willing to give it to abolish their poverty; but the Land was placed beyond their reach by an owner, and in consequence of that, and not from any lack of intelligence, industry, or thrift on their own part, their poverty as to ice was perpetuated. ...

d. Effect of Confiscating Rent to Private Use.

By giving Rent to individuals society ignores this most just law, 99 thereby creating social disorder and inviting social disease. Upon society alone, therefore, and not upon divine Providence which has provided bountifully, nor upon the disinherited poor, rests the responsibility for poverty and fear of poverty.

99. "Whatever dispute arouses the passions of men, the conflict is sure to rage, not so much as to the question 'Is it wise?' as to the question 'Is it right?'

"This tendency of popular discussions to take an ethical form has a cause. It springs from a law of the human mind; it rests upon a vague and instinctive recognition of what is probably the deepest truth we can grasp. That alone is wise which is just; that alone is enduring which is right. In the narrow scale of individual actions and individual life this truth may be often obscured, but in the wider field of national life it everywhere stands out.

"I bow to this arbitrament, and accept this test." — Progress and Poverty, book vii, ch. i.

The reader who has been deceived into believing that Mr. George's proposition is in any respect unjust, will find profit in a perusal of the entire chapter from which the foregoing extract is taken.

Let us try to trace the connection by means of a chart, beginning with the white spaces on page 68. As before, the first-comers take possession of the best land. But instead of leaving for others what they do not themselves need for use, as in the previous illustrations, they appropriate the whole space, using only part, but claiming ownership of the rest. We may distinguish the used part with red color, and that which is appropriated without use with blue. Thus: [chart]

But what motive is there for appropriating more of the space than is used? Simply that the appropriators may secure the pecuniary benefit of future social growth. What will enable them to secure that? Our system of confiscating Rent from the community that earns it, and giving it to land-owners who, as such, earn nothing.100

100. It is reported from Iowa that a few years ago a workman in that State saw a meteorite fall, and. securing possession of it after much digging, he was offered $105 by a college for his "find." But the owner of the land on which the meteorite fell claimed the money, and the two went to law about it. After an appeal to the highest court of the State, it was finally decided that neither by right of discovery, nor by right of labor, could the workman have the money, because the title to the meteorite was in the man who owned the land upon which it fell.

Observe the effect now upon Rent and Wages. When other men come, instead of finding half of the best land still common and free, as in the corresponding chart on page 68, they find all of it owned, and are obliged either to go upon poorer land or to buy or rent from owners of the best. How much will they pay for the best? Not more than 1, if they want it for use and not to hold for a higher price in the future, for that represents the full difference between its productiveness and the productiveness of the next best. But if the first-comers, reasoning that the next best land will soon be scarce and theirs will then rise in value, refuse to sell or to rent at that valuation, the newcomers must resort to land of the second grade, though the best be as yet only partly used. Consequently land of the first grade commands Rent before it otherwise would.

As the sellers' price, under these circumstances, is arbitrary it cannot be stated in the chart; but the buyers' price is limited by the superiority of the best land over that which can be had for nothing, and the chart may be made to show it: [chart]

And now, owing to the success of the appropriators of the best land in securing more than their fellows for the same expenditure of labor force, a rush is made for unappropriated land. It is not to use it that it is wanted, but to enable its appropriators to put Rent into their own pockets as soon as growing demand for land makes it valuable.101 We may, for illustration, suppose that all the remainder of the second space and the whole of the third are thus appropriated, and note the effect: [chart]

At this point Rent does not increase nor Wages fall, because there is no increased demand for land for use. The holding of inferior land for higher prices, when demand for use is at a standstill, is like owning lots in the moon — entertaining, perhaps, but not profitable. But let more land be needed for use, and matters promptly assume a different appearance. The new labor must either go to the space that yields but 1, or buy or rent from owners of better grades, or hire out. The effect would be the same in any case. Nobody for the given expenditure of labor force would get more than 1; the surplus of products would go to landowners as Rent, either directly in rent payments, or indirectly through lower Wages. Thus: [chart]

101. The text speaks of Rent only as a periodical or continuous payment — what would be called "ground rent." But actual or potential Rent may always be, and frequently is, capitalized for the purpose of selling the right to enjoy it, and it is to selling value that we usually refer when dealing in land.

Land which has the power of yielding Rent to its owner will have a selling value, whether it be used or not, and whether Rent is actually derived from it or not. This selling value will be the capitalization of its present or prospective power of producing Rent. In fact, much the larger proportion of laud that has a selling value is wholly or partly unused, producing no Rent at all, or less than it would if fully used. This condition is expressed in the chart by the blue color.

"The capitalized value of land is the actuarial 'discounted' value of all the net incomes which it is likely to afford, allowance being made on the one hand for all incidental expenses, including those of collecting the rents, and on the other for its mineral wealth, its capabilities of development for any kind of business, and its advantages, material, social, and aesthetic, for the purposes of residence." — Marshall's Prin., book vi, ch. ix, sec. 9.

"The value of land is commonly expressed as a certain number of times the current money rental, or in other words, a certain 'number of years' purchase' of that rental; and other things being equal, it will be the higher the more important these direct gratifications are, as well as the greater the chance that they and the money income afforded by the land will rise." — Id., note.

"Value . . . means not utility, not any quality inhering in the thing itself, but a quality which gives to the possession of a thing the power of obtaining other things, in return for it or for its use. . . Value in this sense — the usual sense — is purely relative. It exists from and is measured by the power of obtaining things for things by exchanging them. . . Utility is necessary to value, for nothing can be valuable unless it has the quality of gratifying some physical or mental desire of man, though it be but a fancy or whim. But utility of itself does not give value. . . If we ask ourselves the reason of . . . variations in . . . value . . . we see that things having some form of utility or desirability, are valuable or not valuable, as they are hard or easy to get. And if we ask further, we may see that with most of the things that have value this difficulty or ease of getting them, which determines value, depends on the amount of labor which must be expended in producing them ; i.e., bringing them into the place, form and condition in which they are desired. . . Value is simply an expression of the labor required for the production of such a thing. But there are some things as to which this is not so clear. Land is not produced by labor, yet land, irrespective of any improvements that labor has made on it, often has value. . . Yet a little examination will show that such facts are but exemplifications of the general principle, just as the rise of a balloon and the fall of a stone both exemplify the universal law of gravitation. . . The value of everything produced by labor, from a pound of chalk or a paper of pins to the elaborate structure and appurtenances of a first-class ocean steamer, is resolvable on analysis into an equivalent of the labor required to produce such a thing in form and place; while the value of things not produced by labor, but nevertheless susceptible of ownership, is in the same way resolvable into an equivalent of the labor which the ownership of such a thing enables the owner to obtain or save." — Perplexed Philosopher, ch. v.

The figure 1 in parenthesis, as an item of Rent, indicates potential Rent. Labor would give that much for the privilege of using the space, but the owners hold out for better terms; therefore neither Rent nor Wages is actually produced, though but for this both might be.

In this chart, notwithstanding that but little space is used, indicated with red, Wages are reduced to the same low point by the mere appropriation of space, indicated with blue, that they would reach if all the space above the poorest were fully used. It thereby appears that under a system which confiscates Rent to private uses, the demand for land for speculative purposes becomes so great that Wages fall to a minimum long before they would if land were appropriated only for use.

In illustrating the effect of confiscating Rent to private use we have as yet ignored the element of social growth. Let us now assume as before (page 73), that social growth increases the productive power of the given expenditure of labor force to 100 when applied to the best land, 50 when applied to the next best, 10 to the next, 3 to the next, and 1 to the poorest. Labor would not be benefited now, as it appeared to be when on page 73 we illustrated the appropriation of land for use only, although much less land is actually used. The prizes which expectation of future social growth dangles before men as the rewards of owning land, would raise demand so as to make it more than ever difficult to get land. All of the fourth grade would be taken up in expectation of future demand; and "surplus labor" would be crowded out to the open space that originally yielded nothing, but which in consequence of increased labor power now yields as much as the poorest closed space originally yielded, namely, 1 to the given expenditure of labor force.102 Wages would then be reduced to the present productiveness of the open space. Thus: [chart]

102. The paradise to which the youth of our country have so long been directed in the advice, "Go West, young man, go West," is truthfully described in "Progress and Poverty," book iv, ch. iv, as follows :

"The man who sets out from the eastern seaboard in search of the margin of cultivation, where he may obtain land without paying rent, must, like the man who swam the river to get a drink, pass for long distances through half-titled farms, and traverse vast areas of virgin soil, before he reaches the point where land can be had free of rent — i.e., by homestead entry or preemption."

If we assume that 1 for the given expenditure of labor force is the least that labor can take while exerting the same force, the downward movement of Wages will be here held in equilibrium. They cannot fall below 1; but neither can they rise above it, no matter how much productive power may increase, so long as it pays to hold land for higher values. Some laborers would continually be pushed back to land which increased productive power would have brought up in productiveness from 0 to 1, and by perpetual competition for work would so regulate the labor market that the given expenditure of labor force, however much it produced, could nowhere secure more than 1 in Wages.103 And this tendency would persist until some labor was forced upon land which, despite increase in productive power, would not yield the accustomed living without increase of labor force. Competition for work would then compel all laborers to increase their expenditure of labor force, and to do it over and over again as progress went on and lower and lower grades of land were monopolized, until human endurance could go no further.104 Either that, or they would be obliged to adapt themselves to a lower scale of living.105

103. Henry Fawcett, in his work on "Political Economy," book ii, ch. iii, observes with reference to improvements in agricultural implements which diminish the expense of cultivation, that they do not increase the profits of the farmer or the wages of his laborers, but that "the landlord will receive in addition to the rent already paid to him, all that is saved in the expense of cultivation." This is true not alone of improvements in agriculture, but also of improvements in all other branches of industry.

104. "The cause which limits speculation in commodities, the tendency of increasing price to draw forth additional supplies, cannot limit the speculative advance in land values, as land is a fixed quantity, which human agency can neither increase nor diminish; but there is nevertheless a limit to the price of land, in the minimum required by labor and capital as the condition of engaging in production. If it were possible to continuously reduce wages until zero were reached, it would be possible to continuously increase rent until it swallowed up the whole produce. But as wages cannot be permanently reduced below the point at which laborers will consent to work and reproduce, nor interest below the point at which capital will be devoted to production, there is a limit which restrains the speculative advance of rent. Hence, speculation cannot have the same scope to advance rent in countries where wages and interest are already near the minimum, as in countries where they are considerably above it. Yet that there is in all progressive countries a constant tendency in the speculative advance of rent to overpass the limit where production would cease, is, I think, shown by recurring seasons of industrial paralysis." — Progress and Poverty, book iv, ch. iv.

105. As Puck once put it, "the man who makes two blades of grass to grow where but one grew before, must not be surprised when ordered to 'keep off the grass.' "

They in fact do both, and the incidental disturbances of general readjustment are what we call "hard times." 106 These culminate in forcing unused land into the market, thereby reducing Rent and reviving industry. Thus increase of labor force, a lowering of the scale of living, and depression of Rent, co-operate to bring on what we call "good times." But no sooner do "good times" return than renewed demands for land set in, Rent rises again, Wages fall again, and "hard times" duly reappear. The end of every period of "hard times" finds Rent higher and Wages lower than at the end of the previous period.107

106. "That a speculative advance in rent or land values invariably precedes each of these seasons of industrial depression is everywhere clear. That they bear to each other the relation of cause and effect, is obvious to whoever considers the necessary relation between land and labor." — Progress and Poverty, book v, ch. i.

107. What are called "good times" reach a point at which an upward land market sets in. From that point there is a downward tendency of wages (or a rise in the cost of living, which is the same thing) in all departments of labor and with all grades of laborers. This tendency continues until the fictitious values of land give way. So long as the tendency is felt only by that class which is hired for wages, it is poverty merely; when the same tendency is felt by the class of labor that is distinguished as "the business interests of the country," it is "hard times." And "hard times" are periodical because land values, by falling, allow "good times" to set it, and by rising with "good times" bring "hard times" on again. The effect of "hard times" may be overcome, without much, if any, fall in land values, by sufficient increase in productive power to overtake the fictitious value of land.

The dishonest and disorderly system under which society confiscates Rent from common to individual uses, produces this result. That maladjustment is the fundamental cause of poverty. And progress, so long as the maladjustment continues, instead of tending to remove poverty as naturally it should, actually generates and intensifies it. Poverty persists with increase of productive power because land values, when Rent is privately appropriated, tend to even greater increase. There can be but one outcome if this continues: for individuals suffering and degradation, and for society destruction.

Q35. What would be the effect of the single tax if you still left railroad, telegraph, money, and other monopolies in private hands?
A. The real strength of all monopolies is in land monopoly. Observe, for example, the land holdings of the inside ring of such railroads as the Southern Pacific, to which the interests of the road are corruptly made subordinate. Abolish land monopoly, and the power of all the others will go, as Sampson's strength went with the cutting of his hair. ... read the book

Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)

Q28. How are landlords privileged?
A. Because, in so far as their land tax is an "old" tax, it is a burdenless tax, and because their buildings' tax is shifted upon their tenants; most landlords who let land and also the tenement houses and business blocks thereon avoid all share in the tax burden.

... read the whole article

Winston Churchill: Land Price as a Cause of Poverty (1909 speech in Parliament)

... I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year.

What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement.

Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener -- the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

What is the position disclosed by the argument? On the one hand, we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs -- and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads and who would not really be in the least injured. ... Read the whole piece

Clarence Darrow: How to Abolish Unfair Taxation (1913)

Everybody nowadays is anxious to help do something for the poor, especially they who are on the backs of the poor; they will do anything that is not fundamental. Nobody ever dreams of giving the poor a chance to help themselves. The reformers in this state have passed a law prohibiting women from working more than eight hours in one day in certain industries — so much do women love to work that they must be stopped by law. If any benevolent heathen see fit to come here and do work, we send them to gaol or send them back where they came from.
All these prohibitory laws are froth. You can only cure effects by curing the cause. Every sin and every wrong that exists in the world is the product of law, and you cannot cure it without curing the cause. Lawyers, as a class, are very stupid. What would you think of a doctor, who, finding a case of malaria, instead of draining the swamp, would send the patient to gaol, and leave the swamp where it is? We are seeking to improve conditions of life by improving symptoms.
Land Basic
No man created the earth, but to a large extent all take from the earth a portion of it and mould it into useful things for the use of man. Without land man cannot live; without access to it man cannot labor. First of all, he must have the earth, and this he cannot have access to until the single tax is applied. It has been proven by the history of the human race that the single tax does work, and that it will work as its advocates claim. For instance, man turned from Europe, filled with a population of the poor, and discovered the great continent of America. Here, when he could not get profitable employment, he went on the free land and worked for himself, and in those early days there were no problems of poverty, no wonderfully rich and no extremely poor — because there was cheap land. Men could go to work for themselves, and thus take the surplus off the labor market. There were no beggars in the early days. It was only when the landlord got in his work — when the earth monopoly was complete — that the great mass of men had to look to a boss for a job.
All the remedial laws on earth can scarcely help the poor when the earth is monopolized. Men must live from the earth, they must till the soil, dig the coal and iron and cut down the forest. Wise men know it, and cunning men know it, and so a few have reached out their hands and grasped the earth; and they say, "These mines of coal and iron, which it took nature ages and ages to store, belong to me; and no man can touch them until he sees fit to pay the tribute I demand." ... read the whole speech
About this matter of wages, George had had other testimony besides the old printer’s. On his way to Oregon a dozen years before, he fell in with a lot of miners who were talking about the Chinese, and ventured to ask what harm the Chinese were doing as long as they worked only the cheap diggings. “No harm now,” one of the miners said, “but wages will not always be as high as they are today in California. As the country grows, as people come in, wages will go down, and some day or other white people will be glad to get those diggings that the Chinamen are working.” George said that this idea, coming on top of what the printer had said, made a great impression on him — the idea that “as the country grew in all that we are hoping that it might grow, the condition of those who had to work for their living must become, not better, but worse.” Yet in the short space of a dozen years this was precisely what was taking place before his own eyes.
Still, though his two great questions became more and more pressing, he could not answer them. His thought was still inchoate. He went around and around his ultimate answer, like somebody fumbling after something on a table in the dark, often actually touching it without being aware that it was what he was after. Finally it came to him in a burst of true Cromwellian or Pauline drama out of “the commonplace reply of a passing teamster to a commonplace question.” One day in 1871 he went for a horseback ride, and as he stopped to rest his horse on a rise overlooking San Francisco Bay —
“I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, ’I don’t know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.’ Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege.”
Yes, there it was. Why had wages suddenly shot up so high in California in 1849 that cooks in the restaurants of San Francisco got $500 a month? The reason now was simple and clear. It was because the placer mines were found on land that did not belong to anybody. Any one could go to them and work them without having to pay an owner for the privilege. If the lands had been owned by somebody, it would have been land-values instead of wages that would have so suddenly shot up.
Exactly this was what had taken place on these grazing lands overlooking San Francisco Bay. The Central Pacific meant to make its terminus at Oakland, the increased population would need the land around Oakland to settle on, and land values had jumped up to a thousand dollars an acre. Naturally, then, George reasoned, the more public improvements there were, the better the transportation facilities, the larger the population, the more industry and commerce — the more of everything that makes for “prosperity” — the more would land values tend to rise, and the more would wages and interest tend to fall.
George rode home thoughtful, translating the teamster’s commonplace reply into the technical terms of economics. He reasoned that there are three factors in the production of wealth, and only three: natural resources, labor, and capital. When natural resources are unappropriated, obviously the whole yield of production is divided into wages, which go to labor, and interest, which goes to capital. But when they are appropriated, production has to carry a third charge — rent. Moreover, wages and interest, when there is no rent, are regulated strictly by free competition; but rent is a monopoly-charge, and hence is always “all the traffic will bear.”
Well, then, since natural resource values are purely social in their origin, created by the community, should not rent go to the community rather than to the Individual? Why tax industry and enterprise at all — why not just charge rent? There would be no need to interfere with the private ownership of natural resources. Let a man own all of them he can get his hands on, and make as much out of them as he may, untaxed; but let him pay the community their annual rental value, determined simply by what other people would be willing to pay for the use of the same holdings. George could see justification for wages and interest, on the ground of natural right; and for private ownership of natural resources, on the ground of public policy; but he could see none for the private appropriation of economic rent. In his view it was sheer theft. If he was right, then it also followed that as long as economic rent remains unconfiscated, the taxation of industry and enterprise is pure highwaymanry, especially tariff taxation, for this virtually delegates the government’s taxing power to private persons.
George worked out these ideas in a tentative way in a forty-eight page pamphlet with the title, “Our Land and Land Policy, National and State,” which did not reach many readers, but added something to his reputation as a tribune of the people. The subject mulled in his mind through five years of newspaper work, at the end of which he lost his paper and was once more on the ragged edge. He had begun a magazine article on the cause of industrial depressions, but was dissatisfied with it — one could do nothing with the topic in so little space. What was needed was a solid treatise which should recast the whole science of political economy.
He felt that he could write this treatise, but how were he and his family to live meanwhile? He had used his influence on the Democratic side in the last State campaign, and had been particularly instrumental in selecting the governor; so he wrote to Governor Irwin, asking him “to give me a place where there was little to do and something to get, so that I could devote myself to some important writing.” The governor gave him the State inspectorship of gas meters, which was a moderately well-paid job, and a sinecure. This was in January, 1876; and in March, 1879, he finished the manuscript of a book entitled Progress and Poverty: an Inquiry Into the Cause of Industrial Depressions, and of Increase of Want With Increase of Wealth; the Remedy. ...read the whole article
Go to the work of Henry George himself and learn how many of the troubles from which society still suffers, and suffers increasingly, are due to the fact that a few have monopolized the land, and that in consequence they have the power to dictate to others access to the land and to its products -- which include waterpower, electricity, coal, iron and all minerals, as well as the foods that sustain life -- and that they have the power to appropriate to their private use the values that the industry, the civilized order, the very benefactions, of others produce. This wrong is at the very basis of our present social and economic chaos, and until it is righted, all steps toward economic recovery may be temporarily helpful while in the long run useless. ... read the whole speech

Karl Williams:  Social Justice In Australia: INTERMEDIATE KIT
There are defenders of capitalism who attack Geonomics (Georgist economics) for being socialist. Similarly, socialists and communists criticise Geonomics for being capitalist - in fact, Marx called Henry George "capitalism's last ditch". Who is right?

"Capitalism" is a woolly word, meaning different things to different people. Geonomists wouldn't criticise capitalism per se, but rather decry "land monopoly capitalism".

WHEN TOO MUCH IS BARELY ENOUGH
Whatever is wrong with the acquisition of capital? Who would not want to afford a roof over one's head, adequate food and clothing, some means of transportation, a decent education, and to go travelling and see the world? I've put this question innumerable times to self-declared opponents of capitalism - many of them very well read - and have never received any sort of adequate rebuttal. The response is usually along the lines of: "Well, some capital like that is OK, but nobody should have too much capital". In the final analysis, "too much" capital means any amount more than the speaker's!

The flaw here, as we see it, is that socialists do not make the vital distinction between earned and unearned wealth when they attack the owners of capital.
  • Was this accumulated capital honestly earned in a free and a fair market?
  • Was there no monopolistic privilege?
  • Was there the creation of real wealth or was there merely the gaining of speculative profits?
NO WEALTH-ENVY FROM US!
As we see it, if someone is a rich "capitalist" who has accumulated a fortune, say, by being a great inventor, author, sportsperson or a plain hard worker who lives frugally, then "God bless him!" If they then want to live in a big house and drive a big car, then "Good luck to 'em!" They've provided services that actually benefit society in a truly free and fair market, and they'd pay their way in the form of LVT. We need more such capitalists!

The other capitalists are a different kettle of fish. Reaping where you don't sow is not in the Geonomic bible, and the full retention of the economic rent for the benefit of society would leave absolutely nothing for the cigar-chomping, would-be robber barons. But let's not forget the subtle forms of speculation and unearned wealth as practiced even by well-meaning citizens by speculating in one form or another. Unfortunately, the "quick bucks" culture is not promoted only in investment circles. Even the nightly news promotes, and even glorifies, speculative profits without ever questioning where the wealth comes from.  ... Read the entire article

Karl Williams:  Land Value Taxation: The Overlooked But Vital Eco-Tax
I. Historical overview
II. The problem of sprawl
III. Affordable and efficient public transport
IV. Agricultural benefits
V. Financial concerns
VI. Conclusion: A greater perspective
Appendix: "Natural Capitalism" -- A Case Study in Blindness to Land Value Taxation

LVT and its 19th-century champion, Henry George, achieved huge acclaim before being buried by the "purpose-built" body of neoclassical economics financed largely by rent-seeking American plutocrats.[18] In one form or another, Henry George's writings on the need to tax land values was preceded or endorsed by various biblical prophets, and by Carlyle, Churchill, Einstein, Franklin, Aldous Huxley, Jefferson, Lincoln, Locke, J.S. Mill, Paine, Penn, Rousseau, Bertrand Russell, Adam Smith, Spencer, Spinoza, Sun Yat Sen, James Tobin, Tolstoy, Twain, Voltaire, Winstanley, Frank Lloyd Wright and many more.[19] Just how this wisdom has been lost sight of is a long - too long for this paper - and tragic story.

Here, for this conference, is the quirk - environmental considerations played almost no part in the compelling endorsements lavished on LVT! The main bill, then and now, is its powerful explanation of the great causes of social injustice, with the second billing going to an exposure of a whole range of economic inefficiencies and deadweight losses of our present economic system, which should more accurately be termed land-monopoly capitalism. Support acts include libertarian ideals (non-intrusive tax systems), effective Third World Aid, an end to tax evasion, contributions to world peace, and an end to boom & bust cycles.

The appeal of LVT to some others is more its philosophical basis and how its implementation must turn the economy the right way up, such that the cause of the "madness" (because completely unnecessary) of involuntary unemployment is eliminated, which of necessity then leads to the range of benefits just mentioned.

This is not a meandering departure from the subject of this conference. No significant, effectual solutions can be made to our environment if the all-embracing economic system is only nibbled at, piecemeal, from the angle of taxation alone.

LVT is not a mere taxation solution, but an integrated economic solution, impacting on land management and cutting at the heart of privilege and injustice. Yes, environmental tax reformers must indeed address the looting of undervalued natural resources driven by bourgeois habits of overconsumption. Let us not, however, overlook the destruction resulting from short-term perspectives driven by poverty and desperation. LVT deals with both worlds.   read the entire article

Karl Williams:  Social Justice In Australia: ADVANCED KIT
THE MENACE OF MONOPOLY
Land effectively behaves as a monopoly good - the rent is not determined by any cost of production, for it is already the highest price that anyone will offer for it. There is no substitute for the valuable land that individuals and businesses need - one can't go out into the desert and haul in prime real estate!

The LVT would not somehow increase the willingness of anyone to pay more for the land than before, nor would it in any way add to the ability of the owner to demand more. To suppose that LVT could be just offloaded on tenants is to suppose that landowners did not already get for their land all that it brought. In other words, it supposes that, whenever they wanted to, landowners could put up prices as they please!

A PARADOX
Here's the paradoxical twist. As far as one can predict, LVT would - in a country like Australia, with so much valuable unused land - tend strongly to lower rents. Owners of unused land who previously were holding out for higher prices would now be driven by LVT to seek purchasers or tenants, thereby having to lower the asking price. And, for land which is being rented, the landowner would have to forfeit part or all of his cut to the government. However the selling price of land, determined by net rents to the landowner, would necessarily be much diminished (with full LVT collection, the selling price would be around zero).

Radical as Geonomics is, here - contrary to appearances - we are not arguing about anything contentious or new. It is generally conceded by knowledgeable economists that the landlord cannot transfer taxes levied upon rent to the tenant. It is accepted that a tax upon anything of which the supply is fixed or monopolised, and of which its cost of production is not therefore a determining element (since it has no effect in checking supply), does not increase prices and falls entirely on the owner.  ...   Read the entire article
Bill Batt: The Compatibility of Georgist Economics and Ecological Economics
The justice in the Georgist tradition grows out of the premise that one is entitled to what one makes with one’s own hands or mind, but one is not personally entitled to the gains that grow out of communal efforts. Those are owed to and should be returned to the community. The justice inherent in ecological economics, to the extent that it has solidified, involves a recognition that preservation of natural capital is in the interest of everyone. Both recognize and value the preservation of a world commons in nature. Both appreciate the diversity preserved in local community institutions and cultures. Both accept models based on self-regulating assumptions — in one case using the phrase “steady state” economics, in the other case the recovery of land rent in the pursuit of open and stable markets over monopoly control. There is great promise in the confluence of the two perspectives: they offer a solution to the age-old challenge of resolving what in the world ought to be public and common, and what else ought to be individual and private. It remains now for proponents of each perspective to continue exploring commonalities.

  Alternatives that have been tried in the past, both classic capitalism and socialism, suggest that neither has served the interests of humanity well in the long term. Ecological economics has no theory of property as such, and Georgism here offers a proven course of application. To Georgists, ownership is linked to use and not to freehold title. Holding individual property under license of the community, and under terms which the community stipulates, is an idea with a long tradition, well accepted, and needing only to be revived in contemporary political, legal and economic discourse. Combined with the pricing device of collecting land rent, ecological economics will have a tool by which to circumscribe and even reverse the centrifugal forces of a new economic imperialism. This is truly the beginning of a “Third Way” when other theories seem to be moribund. ... read the whole article

Bill Batt: Who Says Cities are Poor? They Just Don't Know How to Tax Their Wealth!

One could argue that the failure to tax every bit of economic rent that accretes to land sites also has destructive consequences, although this is somewhat open to debate. Classical economists agree that rent collection ought to be at least the sum of inflation plus interest, otherwise the public is facilitating speculation in ways that distorts urban configurations even more than they constitute an inequity. But land sites frequently rise in market price far more than the rate of inflation, especially in times (as is perhaps true today) that a "bubble" in an economic cycle is in full flower. Some municipalities, especially on the east and west coasts of US, are today claiming to have increases in housing prices of as high as 20 percent per annum, a fever that surely will not last and will be especially destructive when it collapses.[19] Land values are what create that bubble; buildings are subject to continuing depreciation just like cars, computers, refrigerators or any other manufactured (capital) item. Recovering the economic rent reduces and perhaps even eliminates the speculative bubbles and swings that (some argue) account for economic cycles, fostering stability and regularity in economic planning and development that make for improved financial health to all.

This reality brings into stark relief the choices which local political leaders have. They may suggest increasing taxes on economic rent (i.e., on land value) or recognize that most property owners are counting on treating their homes and other property not as places to live and work so much as investments and then lament the poverty of their cities. Owners expect to reap a gain from their property when they sell, and they are often positioned to make any threat to that entitlement politically unpalatable. Farmers sometimes regard selling their farms as their retirement security. Homeowners sell with the expectation that this gain will provide them the means to enter long term end-of-life facilities if necessary. Heirs also oppose that recapture just as with a reverse mortgage. But for every long-term property owner that walks away with a lifetime's benefit of increased rent attached to a land title, there are just as many — if not more — young households or emerging businesses that are prohibited from acquiring a property because of the prohibitively expensive costs. In this sense, a title to a socially created stream of rental benefits constitutes a monopoly privilege to an unearned windfall gain for a lucky few. It is both unjust and is socially and economically destructive to the greater good. ... read the whole article
Karl Williams: Two Cow Economics

NEOCLASSICAL LAND-MONOPOLY CAPITALIST
You have two cows and several hectares of land.

Your neighbour is a single mother, has no cows, no land and works a part-time job.

You tell her that if she works longer and harder she could buy one of your cows and become an enterprising capitalist. So she takes on full-time work so that, after 3 months, she has saved enough money to buy one of your cows.

But what use is a cow (or anything, for that matter) without a plot of your land, which is now worth $20,000?

So your neighbour takes on a night shift in addition to her day job, leaving for work after the kids are in bed and arriving home just in time to get them dressed for school.

After a year she has saved enough money to buy that land.

Expressing great regret you explain that, in the meantime, the taxes on her income have paid for the infrastructure that have boosted the value of your land, so that the current market price for that plot is now worth $30,000. Back to the grindstone, baby!

Another year of sweat and toil follows, after which she returns with the money. But, with hand on heart, you break the news that economic circumstances have recently driven most single and married mothers to bring in an extra income in order to save for the ever-escalating price of land. As no-one’s making any more land, the greater number of bidders has pushed up the price of the fixed amount of land (this is called a “healthy, buoyant property market”). It’s now worth $40,000 but it would be a lot easier if she just got a bank loan, you tell her. However, all those eager bidders for land have also bid up the rate of interest they’re prepared to suffer, so that interest rates are now prohibitive. Your neighbour collapses in tears at your feet, but what can you do? – you didn’t invent the system! Just as our poor mum relents and considers taking out a mortgage, she finally gets some good news – in a surprise move, the Reserve Bank has decided to make it easier on prospective home-owners by reducing interest rates. However, this has had the effect of making the owning of property more attractive, so – immediately the interest rate decision is announced – landowners raise the selling price of land. The “fair market price” of that plot is now $50,000.

However, under political pressure because of the unaffordability of property, the federal government announce that it will institute a First Home Owners’ grant of $7,000. Suddenly that plot is selling for $57,000.

GEOIST
You have two cows and several acres of land.

Your neighbour is a single mother, has no cows, no land and works a minimum wage job.

You’ve had an amazing vision wherein you see the geoist paradigm in all its glory and realise that all other reforms are just band-aids, so you become an activist with ProsperAustralia. You share your insight with your neighbour and so everyone pulls together to successfully reform our insane tax laws and system of land tenure. As a result:
(1) your neighbour can keep all of her hard-earned income, and
(2) those who have enclosed substantial amounts of the Common Wealth for their own private domain now pay fair land value taxation (LVT) to society.

Your LVT bill arrives and you realise you have been holding more land than you really need, so auction off the title to your land and the improvements on it. Because of genuine tax relief, your neighbour can now afford to buy the property.

And so - with LVT and trust and angel dust - they all live happily ever after.  ... read the whole article

Thomas Flavin, writing in The Iconoclast, 1897

Now, it is quite true that all taxes of whatever nature are paid out of the products of labor. But must they be for that reason a tax on labor products. Let us see.

I suppose you won't deny that a unit of labor applies to different kinds of land will give very different results. Suppose that a unit of labor produces on A's land 4, on B's 3, on C's 2 and on D's 1. A's land is the most, and D's is the least, productive land in use in the community to which they belong. B's and C's represent intermediate grades. Suppose each occupies the best land that was open to him when he entered into possession. Now, B, and C, and D have just as good a right to the use of the best land as A had.

Manifestly then, if this be the whole story, there cannot be equality of opportunity where a unit of labor produces such different results, all other things being equal except the land.

How is this equality to be secured? There is but one possible way. Each must surrender for the common use of all, himself included, whatever advantages accrues to him from the possession of land superior to that which falls to the lot of him who occupies the poorest.

In the case stated, what the unit of labor produces for D, is what it should produce for A, B and C, if these are not to have an advantage of natural opportunity over D.

Hence equity is secured when A pays 3, D, 2 and C, 1 into a common fund for the common use of all--to be expended, say in digging a well, making a road or bridge, building a school, or other public utility.

Is it not manifest that here the tax which A, B and C pay into a common fund, and from which D is exempt, is not a tax on their labor products (though paid out of them) but a tax on the superior advantage which they enjoy over D, and to which D has just as good a right as any of them.

The result of this arrangement is that each takes up as much of the best land open to him as he can put to gainful use, and what he cannot so use he leaves open for the next. Moreover, he is at no disadvantage with the rest who have come in ahead of him, for they provide for him, in proportion to their respective advantages, those public utilities which invariably arise wherever men live in communities. Of course he will in turn hold to those who come later the same relation that those who came earlier held to him.

Suppose now that taxes had been levied on labor products instead of land; all that any land-holder would have to do to avoid the tax is to produce little or nothing. He could just squat on his land, neither using it himself nor letting others use it, but he would not stop at this, for he would grab to the last acre all that he could possibly get hold of. Each of the others would do the same in turn, with the sure result that by and by, E, F and G would find no land left for them on which they might make a living.

So they would have to hire their labor to those who had already monopolized the land, or else buy or rent a piece of land from them. Behold now the devil of landlordism getting his hoof on God's handiwork! Exit justice, freedom, social peace and plenty. Enter robbery, slavery, social discontent, consuming grief, riotous but unearned wealth, degrading pauperism, crime breeding, want, the beggar's whine, and the tyrant's iron heel.

And how did it all come about? By the simple expedient of taxing labor products in order that precious landlordism might laugh and grow fat on the bovine stupidity of the community that contributes its own land values toward its own enslavement!

And yet men vacuously ask, "What difference does it make?"

O tempora! O mores! To be as plain as is necessary, it makes this four-fold difference.

  • First, it robs the community of its land values;
  • second, it robs labor of its wages in the name of taxation;
  • third, it sustains and fosters landlordism, a most conspicuously damnable difference;
  • fourth, it exhibits willing workers in enforced idleness; beholding their families in want on the one hand, and unused land that would yield them abundance on the other.

This last is a difference that cries to heaven for vengeance, and if it does not always cry in vain, will W. C. Brann be able to draw his robe close around him and with a good conscience exclaim, "It's none of my fault; I am not my brother's keeper."

 

Bill Batt: Comment on Parts of the NYS Legislative Tax Study Commission's 1985 study “Who Pays New York Taxes?”

Little justification exists for taxing buildings, or improvements of any sort, so this question is easily disposed of. The practice is explained largely as a matter of historical inertia. Only in the recent century or two have buildings represented any significant capital value; prior to the rise of major cities, the value of real property lay essentially in land. American cities today typically record aggregate assessed land values – at least when the valuations are well-done – at about 40% to 60% of total taxable value, that is, of land and buildings taken together.31 Skyscrapers reflect enormous capital investment, and this expenditure is warranted because of the enormous value of locational sites. Each site gets its market price from the fact that the total neighborhood context creates an attractive market presence and ambience. By taxing buildings, however, we impose a penalty on their optimum development as well as on the incentives for their maintenance. Moreover, taxes on buildings take away from whatever burden would otherwise be imposed on sites, with the result that incentives for their highest and best use is weakened. Lastly, the technical and administrative challenges of properly assessing the value of improvements is daunting, particularly since they must be depreciated for tax and accounting purposes, evaluated for potential replacement, and so on. In fact most costs associated with administration of property taxation and appeal litigation involve disputes over the valuation of structures, not land values.

Land value taxation, on the other hand, overcomes all these obstacles. Locations are the beneficiaries of community services whether they are improved or not. As has been forcefully argued by this writer and others elsewhere,32 a tax on land value conforms to all the textbook principles of sound tax theory. Some further considerations are worth reviewing, however, when looking at ground rent as a flow rather than as a “present value” stock. The technical ability to trace changes in the market prices of sites – or as can also be understood, the variable flow of ground rent to those sites – by the application of GIS (geographic information systems) real-time recording of sales transactions invites wholesale changes in the maintenance of cadastral data. The transmittal of sales records as typically received in the offices of local governments for purposes of title registration over to Assessors’ offices allows for the possibility of a running real-time mapping of market values. Given also that GIS algorithms can now calculate the land value proportions reasonably accurately, this means that “landvaluescapes” are easily created in ways analogous to maps that portray other common geographic features. These landvaluescapes reflect the flow of ground rent through local or regional economies, and can also be used to identify the areas of greatest market vitality and enterprise. The flow of economic rent can easily be taxed in ways that overcomes the mistaken notion that it is a stock. Just as income is recognized as a flow of money, rent too can (and should) be understood as such.

The question still begs to be answered, “why tax land?” And what happens when we don’t tax land? Henry George answered this more than a century ago more forcefully and clearly, perhaps, than anyone has since. He recognized full well that the economic surplus not expended by human hands or minds in the production of capital wealth gravitates to land. Particular land sites come to reflect the value of their strategic location for market exchanges by assuming a price for their monopoly use. Regardless whether those who acquire title to such sites use them to the full extent of their potential, the flow of rent to such locations is commensurate with their full capacity. This is why John Stuart Mill more than a century ago observed that, “Landlords grow richer in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.”33 Absent its recovery by taxation this rent becomes a “free lunch” to opportunistically situated titleholders. When offered for sale, the projected rental value is capitalized in the present value for purposes of attaching a market price and sold as a commodity. Yet simple justice calls for the recovery in taxes what is the community’s creation. Moreover, the failure to recover the land rent connected to sites makes it necessary to tax productive activities in our economy, and this leads to economic and technical inefficiency known as “deadweight loss.”34 It means that the economy performs suboptimally.

Land, and by this Henry George meant any natural factor of production not created by human hands or minds, is ours only to use, not to buy or sell as a commodity. In the equally immortal words of Jefferson a century earlier, “The earth belongs in usufruct to the living; . . . [It is] given as a common stock for men to labor and live on.”35 This passage likely needs a bit of parsing for the modern reader. The word usufruct, understood since Roman times, has almost passed from use today. It means “the right to use the property of another so long as its value is not diminished.”36 Note also that Jefferson regarded the earth as a “common stock;” not allotted to individuals with possessory titles. Only the phrase “to the living” might be subject to challenge by forward-looking environmentalists who, taking an idea from Native American cultures, argue that “we do not inherit the earth from our ancestors; we borrow it from our children.” The presumption that real property titles are acquired legitimately is a claim that does not withstand scrutiny; rather all such titles owe their origin ultimately to force or fraud.37

If we own the land sites that we occupy only in usufruct, and the rent that derives from those sites is due to community enterprise, it is not a large logical leap to argue that the community’s recovery of that rent should be the proper source of taxation. This is the Georgist argument: that the recapture of land rent is the proper – indeed the natural – source of taxation.38 ... read the whole commentary





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