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"The neoclassical economists' view of their proper role is rather like that in The Realtor's Oath, which includes a vow 'To protect the individual right of real estate ownership.' The word 'individual' is construed broadly to include corporations, estates, trusts, anonymous offshore funds, schools, government agencies, institutions, partnerships, cooperatives, the Duke of Westminster, the Sultan of Brunei, the Medellin Cartel, Saddam Hussein, congregations, Archbishops, families (including criminal families) and so on, but 'individual' sounds more all-American and subsumes them all. This is a potent chant that stirs people to extremes of self-righteousness and siege mentality when challenged." - Professor Mason Gaffney, US Geonomic academic
We pay rent to the landlord. In small towns, most of the rent is for the value of the improvement. But the same improvement (a house, a fast food restaurant, a grocery store of a certain size) rents for considerably more in a larger town, more yet in a small city, and yet more — significantly more — in a large city. It isn't the building or its contents whose value is many times higher: it is the site on which it sits. To some extent, you'll see this reflected in retail prices: a burger or a submarine sandwich may cost a lot less in a small town than the identical item does in a large city. Some of that is a result of higher wages paid in the city, but most of it relates to the higher value of the land, the site, where many times the number of customers are available. But the landlord didn't create the land, nor did the previous owner of the site. So why should he collect for his own purse so much more than his small-town counterpart does? The difference between the big city and the small town is not of his making, and therefore a system which enriches him makes little sense. It leaves the entrepreneur with far less money for wages and for return on capital. Labor and capital are entitled to a decent return; the landlord shouldn't be pocketing that. Declare him a buildinglord, and let him have the return on what he did create.
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 12. Effect of Remedy Upon Various Economic Classes (in the unabridged P&P: Part IX: Effects of the Remedy — Chapter 3. Of the effect upon individuals and classes)
Robert H. Browne: Abraham Lincoln and the Men of His Time
Henry George: The Land Question (1881)
The best measure of rent is, of course, its proportion to the produce. The only estimate of Irish rent as a proportion of which I know is that of Buckle, who puts it at one-fourth of the produce. In this country I am inclined to think one-fourth would generally be considered a moderate rent. Even in California there is considerable land rented for one-third the crop, and some that rents for one-half the crop; while, according to a writer in the Atlantic Monthly, the common rent in that great wheat-growing section of the New Northwest now being opened up is one-half the crop!
In New York, in San Francisco, in Washington, Boston, Chicago, and St. Louis, live men who own large tracts of land which they seldom or never see. A resident of Rochester is said to own no less than four hundred farms in different States, one of which (I believe in Kentucky) comprises thirty-five thousand acres. Under the plantation system of farming and that of stock-raising on a grand scale, which are developing so rapidly in our new States, very much of the profits go to professional men and capitalists who live in distant cities. Corporations whose stock is held in the East or in Europe own much greater bodies of land, at much greater distances, than do the London corporations possessing landed estates in Ireland. To say nothing of the great land-grant railroad companies, the Standard Oil Company probably owns more acres of Western land than all the London companies put together own of Irish land. And, although landlordism in its grosser forms is only beginning in the United States, there is probably no American, wherever he may live, who cannot in his immediate vicinity see some instance of absentee landlordism. The tendency to concentration born of the new era ushered in by the application of steam shows itself in this way as in many others. To those who can live where they please, the great cities are becoming more and more attractive. ...
Either the land of Ireland rightfully belongs to the Irish landlords, or it rightfully belongs to the Irish people; there can be no middle ground. If it rightfully belongs to the landlords, then is the whole agitation wrong, and every scheme for interfering in any way with the landlords is condemned.
To propose to pay the landlords for it is to deny the right of the people to it. The real fight for Irish rights must he made outside of Ireland; and, above all things, the Irish agitators ought to take a logical position, based upon a broad, clear principle which can be everywhere understood and appreciated. To ask for tenant-right or peasant proprietorship is not to take such a position; to concede that the landlords ought to be paid is utterly to abandon the principle that the land belongs rightfully to the people. ...
The Great-Great-Grandson of Captain Kidd.
I APOLOGIZE to the Irish landlords and to all other landlords for likening them to thieves and robbers.
I trust they will understand that I do not consider them as personally worse than other men, but that I am obliged to use such illustrations because no others will fit the case. I am concerned not with individuals, but with the system. What I want to do is, to point out a distinction that in the plea for the vested rights of landowners is ignored – a distinction which arises from the essential difference between land and things that are the produce of human labor, and which is obscured by our habit of classing them all together as property. ... read the whole articleHenry George: The Crime of Poverty (1885 speech)
As I say, the man that owns the land is the master of those who must live on it. Here is a modern instance: you who are familiar with the history of the Scottish Church know that in the forties there was a disruption in the church. You who have read Hugh Miller's work on "The Cruise of the Betsey" know something about it; how a great body, led by Dr. Chalmers, came out from the Established Church and said they would set up a Free Church. In the Established Church were a great many of the landowners. Some of them, like the Duke of Buccleugh, owning miles and miles of land on which no common Scotsman had a right to put his foot, save by the Duke of Buccleugh's permission. These landowners refused not only to allow these Free Churchmen to have ground upon which to erect a church, but they would not let them stand on their land and worship God. You who have read "The Cruise of the Betsey" know that it is the story of a clergyman who was obliged to make his home in a boat on that wild sea because he was not allowed to have land enough to live on. In many places the people had to take the sacrament with the tide coming to their knees — many a man lost his life worshipping on the roads in rain and snow. They were not permitted to go on Mr. Landlord's land and worship God, and had to take to the roads. The Duke of Buccleugh stood out for seven years compelling people to worship in the roads, until finally relenting a little, he allowed them to worship God in a gravel pit; whereupon they passed a resolution of thanks to His Grace.
But that is not what I wanted to tell you. The thing that struck me was this significant fact: As soon as the disruption occurred, the Free Church, composed of a great many able men, at once sent a delegation to the landlords to ask permission for Scotsmen to worship God in Scotland and in their own way. This delegation set out for London — they had to go to London, England, to get permission for Scotsmen to worship God in Scotland, and in their own native home!
But that is not the most absurd thing. In one place where they were refused land upon which to stand and worship God, the late landowner had died and his estate was in the hands of the trustees, and the answer of the trustees was, that so far as they were concerned they would exceedingly like to allow them to have a place to put up a church to worship God, but they could not conscientiously do it because they knew that such a course would be very displeasing to the late Mr. Monaltie! Now this dead man had gone to heaven, let us hope; at any rate he had gone away from this world, but lest it might displease him men yet living could not worship God. Is it possible for absurdity to go any further?
You may say that those Scotch people are very absurd people, but they are not a whit more so than we are. I read only a little while ago of some Long Island fishermen who had been paying as rent for the privilege of fishing there, a certain part of the catch. They paid it because they believed that James II, a dead man centuries ago, a man who never put his foot in America, a king who was kicked off the English throne, had said they had to pay it, and they got up a committee, went to the county town and searched the records. They could not find anything in the records to show that James II had ever ordered that they should give any of their fish to anybody, and so they refused to pay any longer. But if they had found that James II had really said they should they would have gone on paying. Can anything be more absurd?
There is a square in New York—Stuyvesant Square that is locked up at six o'clock every evening, even on the long summer evenings. Why is it locked up? Why are the children not allowed to play there? Why because old Mr. Stuyvesant, dead and gone I don't know how many years ago, so willed it. Now can anything be more absurd?*
... Poverty! Can there be any doubt of its cause? Go, into the old countries — go into western Ireland, into the highlands of Scotland — these are purely primitive communities. There you will find people as poor as poor can be — living year after year on oatmeal or on potatoes, and often going hungry. I could tell you many a pathetic story. Speaking to a Scottish physician who was telling me how this diet was inducing among these people a disease similar to that which from the same cause is ravaging Italy (the Pellagra), I said to him: "There is plenty of fish; why don't they catch fish? There is plenty of game; I know the laws are against it, but cannot they take it on the sly?" "That," he said, "never enters their heads. Why, if a man was even suspected of having a taste for trout or grouse he would have to leave at once."
There is no difficulty in discovering what makes those people poor. They have no right to anything that nature gives them. All they can make above a living they must pay to the landlord. They not only have to pay for the land that they use, but they have to pay for the seaweed that comes ashore and for the turf they dig from the bogs. They dare not improve, for any improvements they make are made an excuse for putting up the rent. These people who work hard live in hovels, and the landlords, who do not work at all — oh! they live in luxury in London or Paris. If they have hunting boxes there, why they are magnificent castles as compared with the hovels in which the men live who do the work. Is there any question as to the cause of poverty there?... read the whole speech
Henry George: Thou Shalt Not Steal (1887 speech)
We are selling land now in large quantities to certain English lords, who are coming over here and buying greater estates than the greatest in Great Britain or Ireland. We are selling them land; they are buying land. Did it ever occur to you that they do not want that land? They have no use whatever for American land; they do not propose to come over here and live on it. They cannot carry it over there to where they do live.
It is not the land that they want. What they want is the income from it. They are buying it not because they themselves want to use it, but because by and by, as population increases, numbers of American citizens will want to use it, and then they can say to these American citizens: "You can use this land provided you pay us one-half of all you make upon it." What we are selling those foreign lords is not really land; we are selling them the labor of American citizens; we are selling them the privilege of taking, without any return for it, the proceeds of the toil of our children.
So, here in New York, you will read in the papers every day that the price of land is going up. John Jones or Robert Brown has made a hundred thousand dollars within a year in the increase in the value of land in New York. What does that mean? It means he has the power of getting many more coats, many more cigars, dry goods, horses and carriages, houses or much more food and wine. He has gained the power of taking for his own a great number of these products of human labor.
But what has he done? He has not done anything. He may have been off in Europe or out west, or he may have been sitting at home taking it easy. If he has done nothing to get this increased income, where does it come from? The things I speak of are all products of human labor — someone has to work for them. When a man who does no work can get them, necessarily the people who do work to produce them must have less of the products of human labor than they ought to have. ... read the whole article
Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)
Winston Churchill: The Mother of All Monopolies
All goes back to the land, and the landowner, who, in many cases, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit however important or however pitiful those benefits may be.
I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally a worse man than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do, it is the State which would be blameworthy were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law.
Take the case to which I have already referred, of the man who keeps a large plot in or near a growing town idle for years, while it is "ripening" - that is to say, while it is rising in price through the exertions of the surrounding community and the need of that community for more room to live. Take that case. I daresay you have formed your own opinion upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party generally, think that that is an admirable arrangement. They speak of the profits of the land monopolist, as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate.
We do not take that view of the process. We think it is a dog-in-the-manger game. We see the evil, we see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and in congested centres of population, and we say here and now to the land monopolist who is holding up his land -- and the pity is it was not said before -- you shall judge for yourselves whether it is a fair offer or not-we say to the land monopolist -- "This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at 10 times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment then at least you shall be taxed at the true selling value in the meanwhile." ...
"You who shall liberate the land," said Mr. Cobden, "will do more for your country than we have done in the the liberation of its commerce." Read the entire article
Winston Churchill: The People's Land
Every form of enterprise only undertaken after the land monopolist has skimmed the cream off for himself It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and everywhere today the man or the public body who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry. A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord's pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway or the institution of an improved service of workmen's trains or a lowering of fares or a new invention or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there.
The system to be attacked, not individuals. I hope you will understand that when I speak of the land monopolist I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally a worse man than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law. ... Read the whole piece
William Ogilvie: An Essay on the Right of Property in Land (Scotland, 1782)
It were unjust to censure the proprietors of land, however, for retaining and exercising, as they do, a right whose foundations have not been inquired into, and whose extent no one has ever yet controverted. It is the situation in which they find themselves placed that prompts their conduct; nor can they readily conceive either the injustice or the detriment which the public suffers, by permitting such rights to be exercised. On the other hand, the farmers and cultivators have no clear perception of the injustice and oppression which they suffer. They feel indeed, and they complain, but do not understand, or dare not consider steadily, from what cause their grievances take their rise. The oppressive rights of the one order, and the patient submission of the other, have grown up together insensibly from remote ages, in which the present state of human affairs could not have been foreseen. ... Read the entire essay
Henry George: The Land Question (1881)
What I want to impress upon those who may read this book is this:
The land question is nowhere a mere local question; it is a universal question. It involves the great problem of the distribution of wealth, which is everywhere forcing itself upon attention.
It cannot be settled by measures which in their nature can have but local application. It can be settled only by measures which in their nature will apply everywhere.
It cannot be settled by half-way measures. It can be settled only by the acknowledgment of equal rights to land. Upon this basis it can be settled easily and permanently.
If the Irish reformers take this ground, they will make their fight the common fight of all the peoples; they will concentrate strength and divide opposition. They will turn the flank of the system that oppresses them, and awake the struggle in its very intrenchments. They will rouse against it a force that is like the force of rising tides.
What I urge the men of Ireland to do is to proclaim, without limitation or evasion, that the land, of natural right, is the common property of the whole people, and to propose practical measures which will recognize this right in all countries as well as in Ireland.
What I urge the Land Leagues of the United States to do is to announce this great principle as of universal application; to give their movement a reference to America as well as to Ireland; to broaden and deepen and strengthen it by making it a movement for the regeneration of the world – a movement which shall concentrate and give shape to aspirations that are stirring among all nations.
Ask not for Ireland mere charity or sympathy. Let her call be the call of fraternity: "For yourselves, O brothers, as well as for us!" Let her rallying cry awake all who slumber, and rouse to a common struggle all who are oppressed. Let it breathe not old hates; let it ring and echo with the new hope!
In many lands her sons are true to her; under many skies her daughters burn with the love of her. Lo! the ages bring their opportunity. Let those who would honor her bear her banner to the front!
The harp and the shamrock, the golden sunburst on the field of living green! emblems of a country without nationality; standard of a people downtrodden and oppressed! The hour has come when they may lead the van of the great world-struggle. Types of harmony and of ever-springing hope, of light and of life! The hour has come when they may stand for something higher than local patriotism; something grander than national independence. The hour has come when they may stand forth to speak the world's hope, to lead the world's advance!
Torn away by pirates, tending in a strange land a heathen master's swine, the slave boy, with the spirit of Christ in his heart, praying in the snow for those who had enslaved him, and returning to bring to his oppressors the message of the gospel, returning with good to give where evil had been received, to kindle in the darkness a great light–this is Ireland's patron saint. In his spirit let Ireland's struggle be. Not merely through Irish vales and hamlets, but into England, into Scotland, into Wales, wherever our common tongue is spoken, let the torch be carried and the word be preached. And beyond! The brotherhood of man stops not with differences of speech any more than with seas or mountain-chains. A century ago it was ours to speak the ringing word. Then it was France's. Now it may be Ireland's, if her sons be true.
But wherever, or by whom, the word must be spoken, the standard will be raised. No matter what the Irish leaders do or do not do, it is too late to settle permanently the question on any basis short of the recognition of equal natural right. And, whether the Land Leagues move forward or slink back, the agitation must spread to this side of the Atlantic. The Republic, the true Republic, is not yet here. But her birth-struggle must soon begin. Already, with the hope of her, men's thoughts are stirring.
Not a republic of landlords and peasants; not a republic of millionaires and tramps; not a republic in which some are masters and some serve. But a republic of equal citizens, where competition becomes cooperation, and the interdependence of all gives true independence to each; where moral progress goes hand in hand with intellectual progress, and material progress elevates and enfranchises even the poorest and weakest and lowliest.
And the gospel of deliverance, let us not forget it: it is the gospel of love, not of hate. He whom it emancipates will know neither Jew nor Gentile, nor Irishman nor Englishman, nor German nor Frenchman, nor European nor American, nor difference of color or of race, nor animosities of class or condition. Let us set our feet on old prejudices, let us bury the old hates. There have been "Holy Alliances" of kings. Let us strive for the Holy Alliance of the people.
Liberty, equality, fraternity! Write them on the banners. Let them be for sign and countersign. Without equality, liberty cannot be; without fraternity, neither equality nor liberty can be achieved.
"By this sign shall ye conquer!"
But although the sun shines ceaselessly, and man's labour follows him steadily in his course, the flow of blessings which such evolutions naturally produce is polluted and diverted by the influence of landlordism, which, like a upas tree, poisons the surrounding atmosphere, spreads desolation in the country, and crowds the town with vice, want, disease, misery, and crime, far beyond the power of churches, charities, hospitals, divorce courts, and police courts to cure. There is only one cure - “Cut it down: why cumbereth it the ground?” ... Read the entire preface
Mason Gaffney: For Want of a Landlord
A. J. O. Slavery
Suppose I am the owner of an estate and 100 slaves, all the land about being held in the same way by people of the same class as myself. It is a profitable business, but there are many expenses and annoyances attached to it. ...
Suddenly a brilliant idea strikes me. I reflect that there is no unoccupied land in the neighbourhood, so that if my laborers were free they would still have to look to me for work somehow. So one day I announce to them that they are all free, intimating at the same time I will be ready to employ as many as I may require on such terms as we may mutually and independently agree. What could be fairer? They are overjoyed, and falling on their knees, bless me as their benefactor. Then they go away and have a jollification, and next day come back to me to arrange the new terms.
Most of them think they would like to have a piece of land and work it for themselves, and be their own masters. ...
"But," softly I observe, "you are going too fast. Your proposals about the tools and seed and your maintenance are all right enough, but the land, you remember, belongs to me. You cannot expect me to give you your liberty and my own land for nothing. That would not be reasonable, would it?" ...
Still I am ready to do what I promised — "to employ as many as I may require, on such terms as we may mutually and independently agree." ...
So they all set to at the old work at the old place, and on the old terms, only a little differently administered; that is, that whereas I formerly supplied them with food, clothes, etc., direct from my stores, I now give them a weekly wage representing the value of those articles, which they will henceforth have to buy for themselves.
There is a difference, too, in some other respects, indicating a moral improvement in our relations. I can no longer curse and flog them. But then I don't want to; it's no longer necessary; the threat of dismissal is quite as effective, even more so; and much pleasanter for me. ...
When the man is worn out with long service I can turn him out with a clear business conscience, knowing that the State will see that he does not starve.
Instead of being forced to keep my men in brutish ignorance, I find public schools established at other people's expense to stimulate their intelligence and improve their minds, to my great advantage, and their children compelled to attend these schools. The service I get, too, being now voluntarily rendered (or apparently so) is much improved in quality. In short, the arrangement pays me better in many ways.
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.
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. ...
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. ...
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 lillies 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, it has been ridiculed, and they have gradually yielded to the forces of privilege and power — captives of the current hegemony — 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 article
Clarence Darrow: How to Abolish Unfair Taxation (1913)
Mason Gaffney: Land as a
Distinctive Factor of Production
Landownership imparts superior bargaining power Labor starves, in contests of endurance; land endures.
A landowner is also a person with labor power. He or she can earn income like any worker. Landownership gives income above that, which gives discretionary spending or waiting power.
In contests with capital, land has the greater waiting power because over time capital depreciates, while land appreciates. Thus landowners (when free of heavy taxation) are noted for their patience. Patience is the essence of bargaining power.
Because land is fixed, more ownership by one person or group means less ownership by others. To expand is to preempt, unavoidably. Thus, the expanding agent necessarily weakens others by the same stroke that strengthens himself. Landownership often gives market power in the sale of specific commodities and services. ....
Waiting landholders collectively also impose costs on the public, which has at the very least a prior investment in national appropriation and defense of the land, and usually heavy investments in public infrastructure which await private response. It is a situation where the gains of waiting accrue to
Walter Rybeck: The Uncertain Future of the Metropolis
The single element that makes me apprehensive about the future of our cities is our land system. Tentacles of our misguided land policies are choking almost every vital aspect of metropolitan life. This is doubly worrisome, because the full dimensions of the land problem have barely surfaced in the public consciousness. To put it in the vernacular, most of us don't know what's eating us.Mason Gaffney: Sounding the Revenue Potential of Land: Fifteen Lost Elements
We have scarcely begun to identify the causes of today's city land problems. This is not to denigrate the legions of good folk -- officials and citizens alike -- who are trying desperately to cope with the daily disasters. But without a better notion of what is producing these disasters, we are unlikely to stem the flood.
A major problem, certainly, is our distorted land system that operates around the clock and around the calendar, and under the full sanction of the law. It rips off the poor, saps small business, and deprives municipalities of their rightful revenue.
The people as a whole create land values, not only by their presence, but also through participation in government, as taxpayers. Schools, firehouses, streets, police, water lines -- the whole gamut of public works and services that enhance a neighborhood are converted into higher land values. The taxpayers of the entire country, through federal aid for our multi-billion-dollar Metrorail project, have been boosting Washington, D.C. land values mightily.
Not all land values are manmade. Inherent qualities also give land special advantages: fertile soils in farming districts, scenic views in residential areas, subsurface riches of coal, oil, and minerals. None of us, as landlords, tenants, or governments, can lay claim to having created these values. The people who have been drawing up an international law of the Seas have characterized these natural endowments as "the common heritage of mankind", where no people, individually or collectively, produce these land values, it is difficult to argue with the conclusion that they belong to all people equally.
If the institution of private property has a sound foundation, and I believe it does, then it rests on the principle that people have a right to reap what they sow, to retain for themselves what they themselves produce or earn. Land values, produced by all of society, and by nature, do not conform to this prescription. ...
Decade after decade, billions of dollars in urban land values are being siphoned off by a narrowing class that has no ethical or economic claim to them. To be outraged when a few ghetto dwellers, in an occasional frenzy of despair, engage in looting on a relatively miniscule scale, but to remain indifferent to this massive, wholesale looting, is worse than hypocritical. It is to ignore a catastrophic social maladjustment, more severe, I believe, than anything the U.S. has experienced since slavery. ...
But I sense that we are drifting rapidly towards a landlord-dominated society. ...
Before that happens, the opportunity awaits to see whether a reasonably free economy can still be made to work. Unless we tackle the land question, and the looting of America, that game may be forfeited.
The future of the metropolis is uncertain. The choice is ours. We can intervene in the way society is now headed, to preserve the American dream. Or, we can continue along the present path and await the American nightmare. Read the whole article
Many economists rely on data generated by the IRS, taken from tax returns, to tell them the sources of income in the U.S. This is an exercise in crediting bad data. The standard tax procedure of landlords is to deduct alleged “depreciation” from their net operating rents (“cash flow”) to arrive at taxable rents. They accelerate depreciation enough, usually, to report little or no taxable rent. This is what the IRS then aggregates and reports as the sum of all rents. To accept such fiction as fact is inexcusable, but economists do it anyway. Their credulity lends their authority to the IRS, while the IRS “official” status helps legitimize the economists -- mutual validation of mutual error, the curse of science.
When owner A has exhausted his tax “basis” by overdepreciating, he sells to B for a price well above the remaining basis. B then depreciates the same building all over again, then sells to C, who sells to D, and so on, so each building is tax-depreciated several times during its economic life. In any given year, most income properties in the U.S.A. are being tax-depreciated, even though most have already been depreciated once or more.
In addition, all owners after the original builder are in a position to depreciate some of the land value, as well. This is because the owners control the “allocation of basis” between depreciable building and non-depreciable land. The IRS has no defense against secondary owners who overallocate value to the depreciable building. Congress has never authorized the IRS to develop any in-house capacity to value land. The most the agency does, if it will not accept the word of the tax filer, is to look at allocations used by local assessors. These parties, in turn (with a few notable exceptions), underassess land relative to buildings, by using the erroneous “land-residual” method of dividing land from building value. This is partly to accommodate their local constituents - assessors are locally elected or appointed, and do not report to the IRS. A little math will tell you that to depreciate land just once is to achieve perpetual tax exemption. To depreciate it again and again is a continuing subsidy for holding land.
When A sells to B there is a large excess of the sales price over the remaining or “undepreciated” basis. This excess is, to be sure, taxable income. However, Congress has defined this kind of income as a “capital gain.” Most rents, therefore, show up as capital gains. These, in turn, are subject to lower tax rates, deferral of tax, forgiveness at time of death, constant pressure to lower rates to zero, and a dozen additional avoidance devices. These are known to every lawyer and accountant and Congressman, but not, apparently, to most economists, who lazily report from “official” data that rents are a low fraction of national income. Read the whole article
Karl Williams: Landlording It Over Us
Geoism holds that there’s nothing necessarily wrong with being rich – indeed, an economic system exists whereby we could ALL be rich (in wealth, education or leisure time). The justification for riches all depends on whether a wealthy person has become so through creating wealth (in the form of goods and services that people willingly buy in a free and fair market) or through living off the wealth really created by others. Earned wealth might arise through talented or arduous inventing, writing, sports ability, entertaining, entrepreneurialship or whatever. Such examples of fairly earned wealth should not be subject to any (confiscatory) taxation, which would be legalised robbery. ...
Geoism seeks to expose the many forms of unearned wealth, or privilege, that exist in our monstrous economic system. Monopoly rights are the more obvious examples of economic privilege, but less noticeable is the massive wealth to be gained by using the Global Commons (especially land) without reimbursing the rest of us. Where such wealth is purely misappropriated (as opposed to created), Geoism maintains that the whole lot be given over to community coffers through natural resource charges (such as land value taxation or eco-taxes).
Here we’re going to look at one of the most obvious examples of unearned wealth – the massive riches accumulated by the great landowners of Britain. Remember, it’s not the acreage of land that is important, but the value of the land. ...
But the rewards of land go far beyond status, evidenced by how, over the centuries, the land-owning elite has pulled the levers of power in society, politics and the world of commerce. The Earl of Derby’s 1881 candid analysis of the benefits of owning land perhaps says it best,
Since then, the reform of the House of Lords has dented the political influence that was previously wielded by the landowning class (titles and land were once synonymous). But who needs status? – let’s get crass and just go for the cash. The great windfall profits which are dropped into landowners’ laps (which rightly belongs to the community) occurs with rezoning and the growth in residential/industrial values. In the UK between 1991 and 2001, the total return by this measure (including capital growth and rental income) averaged a healthy 12.6% per year.Michael Hudson and Kris Feder: Real Estate and the Capital Gains Debate
The gross injustice of handing over community-created values to landowners is revealed by cold, hard figures. According to Yolande Barnes, head of research at FPD Savills, the average UK building plot – at £709,650 for a greenfield acre – is worth around 403 times the equivalent agricultural land. Nationwide, through this form of rezoning, around £5bn. windfall profit is handed over to UK landowners each year.
Barnes explains further, “In many parts of the South and Southeast, it is certainly true that prices are paid for agricultural land that wouldn’t be justified by its agricultural value.” ... farmers buy around towns because they can’t lose. They’ll farm the land anyway, and if permission is given to build, they’ve won the lottery.
A great way to run a casino, but what sort of way to run an economy and a society? Read the whole article
Capital gains taxation has been a divisive issue in Congress at least since the debates surrounding the Tax Reform Act of 1986, which, aiming to eliminate tax loopholes and shelters and preferences, repealed preferentially low tax rates for long-term gains.1 To bring effective capital gains tax rates back down again was President Bush’s “top priority in tax policy.“2 In 1989, Senate Democrats blocked a determined drive to reduce effective tax rates on the part of Bush, Republican Senators Packwood, Dole and others, and a few Democratic allies.3 The administration argued that the tax cuts would stimulate economic growth and induce asset sales, thereby actually increasing federal tax revenues; Congressional Democrats countered that the plan benefited mainly the wealthy, and that tax revenues would in fact decline.4 The Joint Committee on Taxation projected that budget shortfalls beginning in 1991 would sum to about $24 billion by 1994 -- and that most of the direct benefits would go to individuals with over $200,000 in taxable income. House Speaker Thomas S. Foley said that a third of the savings would be enjoyed by those with gross incomes over one million dollars. ...
The most frequently heard arguments for reducing capital gains taxes are:
(1) to reduce the “lock-in” effect, by which high tax rates at realization deter asset sales;14
(2) to relieve a disproportionate burden on homeowners;
(3) to compensate for the erosion of capital gains by inflation, as an alternative to indexing;15
(4) to end alleged double taxation of both capital stocks and income flows;
(5) to spur productive enterprise and investment; and
(6) to generate more tax revenue from the consequent growth in asset sales and productivity.
14 Some argue that eliminating step-up of basis at death would do more to reduce lock-in than a rate cut. See Joint Committee on Taxation (1990), p. 2 1; Gaffney (1991).
15 For an analysis of the case for inflation indexing, see Gaffney (1991).
This report calls attention to a neglected aspect of the capital gains issue -- one which bears importantly on the fifth- and sixth-named consequences. ...
What is missing from the discussion is a sense of proportion as to how capital gains are made. Data that is available from the Department of Commerce, the IRS, and the Federal Reserve Board indicate that roughly two thirds of the economy's capital gains are taken, not in the stock market -- much less in new offerings -- but in real estate. ...
This policy brief seeks to elucidate the role of real estate in the capital gains issue, indicating the quantitative orders of magnitude involved.. We offer two main observations.
A central conclusion of our study is that better statistics on asset values and capital gains are needed -- or, more to the point, a better accounting format. The economic effects of a capital gains tax depend upon how the gains are made. ...
Our second major conclusion is that, at least until re-depreciation of second-hand buildings is disallowed, a capital gains tax cut would be unlikely to stimulate much new investment and employment from its largest beneficiary, the real estate industry. Depreciation allowances and mortgage interest absorb so much of the ongoing cash flow as to leave little taxable income. Mortgage interest payments, which now consume the lion’s share of cash flow, are tax-deductible, while CCAs offset much of what remains of rental income. On an industry-wide basis, in fact, NIPA statistics reveal that depreciation offsets more than the total reported income. As Charts 2a, 2b, and 2c illustrate, real estate corporations and partnerships have recently reported net losses year after year. ...
The result is that real estate corporations pay minimal income taxes -- some $1.3 billion in 1988, just one percent of the $137 billion paid by corporate America as a whole.21 Comparable figures are not available on non-corporate income tax liability, but the FIRE sector (finance, insurance, and real estate) reported negative income of $3.4 billion in 1988, out of a total $267 billion of non-farm proprietors’ income.22 These three symbiotically linked sectors thus were left with only capital gains taxes to pay on their cash flow.
21 US Bureau of Economic Analysis, NIPA Table 6.18.
22 NIPA Table 6.12.
The central point for capital gains tax policy is that taxable capital gains in real estate consist of more than just the increase in land and building prices. They represent the widening margin of sales price over the property’s depreciated value. The tax accountant’s book-value gains result from charging off capital consumption allowances as a tax credit against cash flow. The more generous are the capital consumption write-offs for real estate, the more rapidly a property’s book value is written down. The fiction of fast write-off is eventually “caught” as a capital gain when the real estate is either sold or refinanced.
Excessive depreciation allowances thus convert ordinary income into capital gains. Moreover, capital gains are the only point at which most real estate income is taxed To abolish the capital gains tax would annul the entire accumulated income tax liability which real estate owners have converted into a capital gains obligation. The income written off over the years as over-depreciation would not be caught at all. The economy's largest industry would have its income rendered tax-free. ...
Depreciation and Capital Gains
Much of the statistical measurement problem derives from the fact that capital gains in real estate differ from those in other industries. While all investors presumably would prefer to take their income in non-taxable forms and to defer whatever tax obligation is due, the tax benefits to the real estate industry have no analog in manufacturing, agriculture, power generation, transportation, wholesale and retail trade, or other services. Corporations in these sectors pay taxes on their net incomes. Out of their after-tax earnings they then pay dividends, on which stockholders in turn must pay income tax. By contrast, little or none of the rental cash flow received by real estate investors is taxable, because generous capital consumption allowances are treated as costs and deducted from the net income reported to the IRS.
The effect of calculating capital gains for real estate on the basis of depreciated book values may be illustrated by the following example. A building bought in 1985 has probably been fully written off today, thanks to the generous CCAs enacted by the 1981 tax code that remained in place through 1986. For a parcel bought in 1985 for $100 million and sold today for $110 million, the recorded gain is not merely the 10 percent increase in market price, but the entire value of the building, perhaps $65 million based on the real estate industry’s average land-to-building assessment ratios. ...
Thus the putative beneficiaries of cutting capital gains taxes -- direct investors -- suffer less from high capital gains tax rates than from the treatment of much of their capital gain as ordinary income, which is taxed at higher rates. In real estate, on the other hand, depreciation effectively converts much of ordinary income to capital gains. Whereas industrial investors pay tax on rising investment in unsold inventories, even when no sales revenue is received, real estate investors pay tax neither on rental income nor on increases in property values as they accrue. The industry actually receives cash income, but for tax purposes reports a cash loss. Because real estate and manufacturing face such different cash flow tax treatment, it is misleading to take the manufacturing industry as a proxy for real estate in discussing the effect of cutting capital gains tax rates.
The greatest accounting distortion for the real estate industry occurs in the case of re-depreciation of buildings that already have been depreciated at least once. This redepreciation occurs following ownership transfers; the CCA is attached not to the physical asset, but to the change of ownership. As the building is resold at rising prices, investors are allowed to re-depreciate them again and again -- and to write off these CCAs against their income, as if they were suffering an erosion of wealth. Thus, most capital gains in real estate represent “repeat gains” over unrealistically written-down book values. This accounting fiction enables real estate investors to continue indefinitely to take their income in the lightly taxed form of capital gains.26
26 Another kind of subsidy occurs in the sphere of farm real estate. Speculation in farmland is reflected in the high ratio of farm prices to gross receipts. This suggests that, on the one hand, “gentleman fanning” occurs in near-suburban areas as a means of minimizing property taxes (thanks to the lower appraisals of land zoned for agricultural use), and on the other hand, speculation in anticipation that the land subsequently will be rezoned for commercial and residential development.
Landlords already deduct from earnings as normal business expenses their maintenance and repair expenditures, undertaken to counteract the wear and tear of buildings. A rule of thumb in the real estate industry is that such expenditures typically consume about ten percent of rental revenue. More importantly, although nearly all land gains are made fully taxable, there is little reason to assume that physical deterioration should be compensated by a special allowance to enable the landlord to recover his capital investment within a given number of years.
Even when overall real estate values fell in the early 1990s, the IRS nonetheless recorded capital gains taken on properties built before the frantic price run-up of the late 1980s. Over a fifteen year period, the value of the building in our example might have been written down to near zero. If it were sold for just its original purchase price, the entire sales price of the building would be reported as a capital gain.
Although the 1981 depreciation giveaway was replaced by the 1986 revision of the tax code, buildings already under construction and about to come onto the rental market were grandfathered into the old code. Significantly, today these buildings have been fully depreciated and therefore are probably about to be sold, at least for book-keeping purposes -- owners may buy their own buildings under different partnerships, or swap them for similar buildings with other owners. Their new owners can begin to depreciate them all over again, after duly paying capital gains taxes on the buildings’ increase over their near-zero book value. If they do not sell and re-depreciate their buildings, the owners will have to begin paying income taxes on their operating cash flow that hitherto was sheltered by depreciation allowances that have now run out. This lends a renewed note of urgency to the persistent campaign to cut capital gains tax rates.
Because excessive depreciation allowances favor real estate speculation relative to industrial production, they discourage new direct investment and employment. To reduce the capital gains tax -- the only significant remaining source of federal revenue from real estate -- would divert even more savings into the purchase and sale of existing buildings. ...
How Mortgage Debt Converts Rent into Interest
Depreciation rules are not the only reason why the real estate sector declares little taxable income. Out of their gross rental income, landlords pay state and local property taxes, a tiny modicum of income tax, and interest on their mortgage debt. A large proportion of cash flow is turned over to lenders as mortgage payments. Since the early 1970s, interest paid by the real estate industry has been much larger than the figures reported for net rental income. As Charts 3a, 3b, 3c, and 3d illustrate, real estate investors and homeowners have become the financial sector’s prime customers. According to the Federal Reserve Board, 1994 mortgage debt of $4.3 trillion represented some 46 percent of the economy's $9.3 trillion private nonfinancial debt, and a third of the total $12.8 trillion U.S. debt.27 NIPA statistics indicate that about 70 percent of loans to business borrowers currently are made to the real estate sector, making it the major absorber of savings and payer of interest. ...
Most cash flow now ends up neither with developers nor with the tax authorities, but as interest paid to banks, insurance companies and other mortgage lenders. In fact, mortgage interest now absorbs seven percent of national income, up from just one percent in the late 1940s. In 1993 (the most recent year for which NIPA statistics are available) the real estate sector generated some $326 billion in interest payments, more than it contributed in income taxes and state and local property taxes together. Meanwhile, over the past half century, net declarable income plus capital consumption allowances and property taxes have been cut in half as a proportion of national income, from over ten percent to less than five percent. Thus interest is the real estate industry’s major cost, and as such, has helped to minimize the real estate industry’s income tax liability.
One effect of favorable depreciation and capital gains tax treatment is to spur debt pyramiding for the real estate industry. The tax structure provides a distortionary incentive for real estate holders to borrow excessively, converting rental income into a nontaxable mortgage interest cost while waiting for capital gains to accrue. This, alongside financial deregulation of the nation’s S&Ls, was a major factor in the over-building spree of the 80's. ...
Real estate is pledged to mortgage lenders as collateral in case the promised interest payments fail to materialize. Capital gains have been collateralized into new and larger loans decade after decade, increasing the mortgage burden that transforms rental income and depreciation allowances into interest payments. Ultimately, the financial rentiers end up with most of the cash flow which landlords -- and government tax collectors -- relinquish. ...
No capital gains duties are levied on estates passing to heirs. Indeed, inheritors of real estate may begin re-depreciating their income-yielding buildings afresh at the new (typically higher) transfer price. The estates bequeathed by the richest one percent of the population (over $600,000 in value) are now taxed at a 55 percent rate if not sheltered, but of course these are the estates most likely to shelter inheritance and gift bequests. For instance, assets given as gifts are taxed only at the time they come to be sold.30 If the capital gains tax were reduced or abolished, the deferral would become permanent.
Most capital gains reaped by business partnerships accrue to real estate firms, which shelter personal income by avoiding incorporation. IRS statistics ranking capital gains in terms of how long the assets were held show that many of these gains represent quick “flips." Often these are land that has been rezoned from a low-value to a high-value use. Retaining the capital gains tax would have little effect on deterring such speculation.
Properties held for longer periods of time by these partnerships typically are sold or swapped after having been fully depreciated. Swaps’ have long been permitted to the real, many almost perpetually free of income taxation. The logic for this loophole seems at first glance to be much like that for personal homeowners’ exemptions in selling a home to move somewhere else, without having to pay a capital gain tax in the process; but the analogy is specious. Homeowners cannot take a depreciation tax credit unless their property generates rental income, and most do not generate any income against which to claim CCAs31. In contrast, the capital gains which commercial real estate investors record for income-tax purposes are calculated, not merely on the gain in the property’s market price (as with owner-occupied homes), but on the excess of selling price over depreciated book value.
31 Homeowners do receive imputed rental income, which is not subject to the income tax.
Major commercial real estate investors such as pension funds, insurance companies and other large institutions are exempt from capital gains taxes, as are foreign investors. In addition to playing a dominant role in real estate, these institutional investors own nearly half of all U.S. equities. ... Read the whole article
The Most Rev. Dr Thomas Nulty, Roman Catholic Bishop of Meath (Ireland): Back to the Land (1881)
Land Rent for the Community a Design of Divine Providence.
I think, therefore, that I may fairly infer, on the strength of authority as well as of reason, that the people are and always must be the real owners of the land of their country.
This great social fact appears to me to be of incalculable importance, and it is fortunate indeed that on the strictest principles of justice it is not clouded even by a shadow of uncertainty or doubt. There is, moreover, a charm and a peculiar beauty in the clearness with which it reveals the wisdom and the benevolence of the designs of Providence in the admirable provision He has made for the wants and the necessities of that state of social existence of which He is the author, and in which the very instincts of nature tell us we are to spend our lives.
A vast public property, a great national fund, has been placed under the dominion and at the disposal of the nation to supply itself abundantly with resources necessary to liquidate the expenses of its government, the administration of its laws and the education of its youth, and to enable it to provide for the suitable sustentation and support of its criminal and pauper population. One of the most interesting peculiarities of this property is that its value is never stationary; It is constantly progressive and increasing in a direct ratio to the growth of the population; and the very causes that increase and multiply the demands made on it increase proportionately its ability to meet them.
Landlordism Takes the Patrimony of the People.
Let the democracy of England as well as of Ireland, learn the melancholy fate that has overtaken this splendid inheritance which God has placed in their hands, and which would have saved them eighty millions sterling which they now annually pay by direct and indirect taxation for the government of the country. That patrimony was once theirs by right, and by right it is theirs still; but, in fact, it is theirs no longer: a class has wrested the land from the people of the country and now hold a strict monopoly in it. They sell it out to the people as if it were an ordinary article of private property and solely the result of their own capital and labour.
The rents which the landlords draw from their lands is an income which they derive from the sale of what are avowedly God's gifts, which "no man made." If they had only claimed the right of selling the use of the permanent improvements they had made in the soil, by the capital and labour they had expended on it, no one could dispute the Justice of their demand; but any element of income that might possibly be derived from this source is called in the language of political economy, not Rent, but Profit.
Political economists who have written with scientific precision on the nature and properties of Rent, confine it exclusively to the moneys which the landlord receives for allowing the tenant the use of the original and natural productiveness of the soil. ...
The Landlord the Greatest Burden on the Land.
The land is a commodity that strictly belongs to this class. It is limited in extent, and no human power can enlarge or extend its area. The competition for it is excessive, the competitors struggling for its attainment -- not for the purpose of satisfying a taste for the fine arts, or to gratify a passion for the rare or beautiful, but to secure a necessary means of existence: for they must live on and by the land, or they cannot live at all. The owner, therefore, of that land can put on it any rent he pleases, and the poor people competing for it have no choice but to accept his terms or die in a ditch or a poorhouse. Under the present system of Land Tenure, the owners are not only enabled, but actually exact for the use of the land the last shilling the tenant is able to pay, leaving him only what is barely sufficient to keep him from dying. ...
The essential and immutable principles of justice used certainly to be: --
That everyone had a right of property in the hard-earned fruits of his labour; that whatever property a man had made by the expenditure of his capital, his industry and his toil, was really his own; that he, and he alone, had a right to all the benefits, the advantages and enjoyments that that property yielded; and that if anyone else meddled with that property against his will, or interfered with him in its enjoyment, he was thereby guilty of the crimes of theft and of robbery, which the eternal law of God, as well as the laws of all nations, reprobated and punished with such severity.
But the principles which underlie the existing system of Land Tenure, and which impart to it its specific and distinctive character, are exactly the reverse of these. The principles on which that system is based are: --
That one privileged class do not require to labour for their livelihood at all: that they have an exclusive right to all the advantages, comforts and enjoyments that can be derived from a splendid property, which exacted no patient, painful or self-denying efforts of labour to create it or acquire it, and which, in fact, they inherited without any sacrifice at all: that, being a singularly favoured race, and being all God's eldest sons, the rest of the world must humbly acknowledge themselves to be their inferiors in rank, lineage, condition and dignity: that this superiority of rank gives them a right to sell out God's gifts as if they were purely the products of their own labour and industry, and that they can exact in exchange for them famine or scarcity prices. Finally, that they enjoy the enviable privilege of appropriating the hard-earned property of others against their wills, and do them no wrong even if they charge them a rent for the use of what would really appear to be their own.
Landlordism Robs All Classes.
Hitherto we have confined ourselves almost exclusively to the consideration of the various forms of injustice, and the spoliation of private property which the existing system of Land Tenure enables the proprietors of the soil to inflict on the tenant farmers of Ireland.
But the tenant farmers, though a numerous, influential and important section of the nation, are, after all not the nation. Despite our cruel misgovernment in the past, some few of our national industries still survive, as well as that of cultivation of the soil. Then there are, moreover, certain trades and professions whose services are indispensable to any nation that has any claims to be considered civilised. The vast numbers who are engaged and live by their labour, industry and skill in the various trades and professions form an important and an influential section of every civilised community.
Now, any form of injustice, oppression or wrong that can possibly exist in any of the great trades or industries of a nation is only felt by the individuals who belong to that industry or trade, and who earn their livelihood by their labour and skill in it. Outside, in the other greater or lesser of the national industries, it is hardly felt at all. But the Irish system of Land Tenure wrongs and impoverishes not only those who live by and of the land, but all other classes in the community as well! It robs not only the cultivators of the soil, but every man in the community, of a substantial portion of the hard-earned fruits of his labour, no matter in what trade or profession he may labour for his living. It is, therefore, not a local or a particular grievance, but a great national injustice, and that, I think, is its most objectionable peculiarity.
I have already shown that the land of every country is the public property of the people of that country, and consequently, that its exclusive appropriation by a class is a substantial injustice and wrong done to every man in that country", whom it robs of his fair share of the common inheritance. The injustice of this appropriation is enormously enhanced by the fact that it further enables the landlords, without any risk or trouble, and in fact makes it a matter of course for them, to appropriate a vast share of the earnings of the nation besides. They plundered the people first of God's gifts in the land, and that act of spoliation puts them under a sort of necessity of plundering them again of an enormous amount of their direct earnings and wages. The line of argument that leads directly to this conclusion seems abundantly clear.
Land Values intended by Providence for Public Purposes.
I have already observed that the chief peculiarity of the land of a country was that its value was never stationary, that it was always progressive and rising, that in fact it increased in a direct ratio with the growth of the population and the advancing progress of the industry of the nation.
It would seem as if Providence had destined the land to serve as a large economical reservoir, to catch, to collect and preserve the overflowing streams of wealth that are constantly escaping from the great public industrial works that are always going on in communities that are progressive and prosperous.
Besides the permanent improvements that are made in the land itself, and which increase its productiveness and value, there are other industrial works not carried out on the land itself, but on its surroundings and in its vicinity, and which enhance its value very considerably. A new road is made for the accommodation of a district; a new bridge is thrown across a river or a stream to make two important localities accessible to each other; a new railway passes close by and connects it with certain large and important centres of industry; a new factory or a new mill is erected, or a new town is built in the neighbourhood.
Industrial works like these add very materially to the value of all the land in their vicinity. It is a well-known fact that a new railway has in several instances doubled the value of the land through which it passed, in consequence of the increased facilities it had afforded for the sale of its agricultural products.
In every state of society, which is progressive and improving, such industrial works are continually going on, and hence the value of the land is rising also everywhere. But its value rises enormously with the enlarged growth of the population of a nation, and with the increased productiveness of its industry.
Wages Do Not Keep Pace.
The United Kingdom furnishes an example that is singularly illustrative of this fact. Says Mr. Cairnes: "A given exertion of British labour and capital will now produce in a great many directions five, ten or twenty times, in some instances perhaps a hundred times the result which an equal exertion would have produced a hundred years ago. It is not probable that industry is, in any direction whatever, less productive now than it was then; yet the rate of wages, as measured by the real well-being of the labourer, has certainly not advanced in anything like a corresponding degree; while it may be doubted if the rate of profit has advanced at all." A given amount, then, of British capital and labour is now ten or twenty times more effective than a hundred years ago, while, on the other hand, the quantity of such effective labour and capital now engaged in British industrial production is perhaps twenty times larger now than formerly. ...
Landlords Sow Not, But They Reap. ...
If the land had not been appropriated by individuals and diverted from the original purpose for which Providence had intended it, the high prices which the nation thus imposes on itself by the vastness of its numbers and the abundance of its wealth, in the purchase of the raw products of the soil, should be regarded as a most just and natural tax, which it instinctively levies on itself to realise the large sums that are necessary for the support of its public burdens.
The Great National Property Which Landlords Are Permitted to
Those who hold the ownership of the land hold also the ownership of all the accessions of value it receives from all quarters. This increase in the value of their property cost no sacrifice, demanded no painful effort of labour. Even while they slept their rent rolls went on increasing and multiplying.
The value continually imparted to the land by the industrial exertions of the community, in the construction of harbours and bridges, in the making of new roads and railways, in the erection of new factories, mills and houses, etc., has all gone with the land, has all been confiscated and appropriated by the owners of the soil. ... Read the whole letter
a synopsis of Robert V. Andelson and James M. Dawsey: From Wasteland to Promised land: Liberation Theology for a Post-Marxist World
To recognize that "the earth is the Lord's" is to see that the same God who established communities has also in his providence ordained for them, through the land itself, a just source of revenue. Yet, in the Wasteland in which we live, this revenue goes mainly into the pockets of monopolists, while communities meet their needs by extorting individuals the fruits of their honest toil. If ever there were any doubt that structural sin exists, our present system of taxation is the proof. Everywhere we see governments penalizing individuals for their industry and creativity, while the socially produced value of land is reaped by speculators in exact proportion to the land which they withhold. The greater the Wasteland, the greater the reward. Does this comport with any divine plan, or notion of justice and human rights? Or does it not, rather, perpetuate the Wasteland and prevent the realization of the Promised Land?
This not meant to suggest that land monopolists and speculators have a corner on acquisitiveness or the "profit motive," which is a well-nigh universal fact of human nature. As a group, they are no more sinful than are people at large, except to the degree that they knowingly obstruct reforms aimed at removing the basis of exploitation. Many abide by the dictum: "If one has to live under a corrupt system, it is better to be a beneficiary than a victim of it."
But they do not have to live under a corrupt system; no one does. The profit motive can be channeled in ways that are socially desirable as well as in ways that are socially destructive. Let us give testimony to our faith that the earth is the Lord's by building a social order in which there are no victims. Read the whole synopsis
Thomas Flavin, writing in The Iconoclast, 1897
Joseph Fels: True Christianity and
My Own Religious Beliefs
I believe that the Creator freely gave the earth to all of His children, that all may have equal rights to its use. Do you agree to that?
I believe that the injunction, "In the sweat of thy brow shalt thou eat bread," necessarily implies, "Thou shalt not eat bread in the sweat of thy brother's brow." Do you agree?
I believe that all are violating the divine law who live in idleness on wealth produced by others, since they eat bread in the sweat of their brothers' brows. Do you agree?
I believe that no man should have power to take wealth he has not produced or earned unless freely given to him by the producer. Do you agree?
I believe that brotherhood requires giving an equivalent for every service received from a brother. Do you agree?
I believe it is blasphemous to assert or insinuate that God has condemned some of His children to hopeless poverty, and to the Crimea, want, and misery resulting therefrom, and has, at the same time, awarded to others lives of ease and luxury, without labor. Do you agree?
I believe that involuntary poverty and involuntary idleness are unnatural, and are due to the denial by some of the right of others to use freely the gift of God to all. Do you agree?
Since labor products are needed to sustain life, and since labor must be applied to land in order to produce, I believe that every child comes into life with divine permission to use land without the consent of any other child of God. Do you agree?
Where men congregate in organized society, land has a value apart from the value of things produced by labor; as population and industry increase, the value of land increases, but the value of labor products does not. That increase in land value is community-made value. Inasmuch as your power to labor is a gift of God, all the wealth produced by your labor is yours, and no man nor collection of men has a right to take any of it from you. Do you agree to that?
I believe the community-made value of land belongs to the community, just as the wealth produced by you belongs to you. Do you agree to that?
Therefore, I believe that the fundamental evil, the great God-denying crime of society, is the iniquitous system under which men are permitted to put into their pocket, confiscate, in fact, the community-made values of land, while organized society confiscates for public purposes a part of the wealth created by individuals. Do you agree to that?
Using a concrete illustration: I own in the city of Philadelphia 11-1/2 acres of land, for which I paid 32,500 dollars a few years ago. On account of increase of population and industry in Philadelphia, that land is now worth about 125,000 dollars. I have expended no labor or money upon it. So I have done nothing to cause that increase of 92,500 dollars in a few years. My fellow-citizens in Philadelphia created it, and I believe it therefore belongs to them, not to me. I believe that the man-made law which gives to me and other landlords values we have not created is a violation of the divine law. I believe that Justice demands that these community-made values be taken by the community for common purposes instead of taxing enterprise and industry. Do you agree?... read the whole letter
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper