Real
Estate Fortunes
We tend to honor our rich. But should those who grew rich from land appreciation
be treated as if they had created something? Or have they — quite legally — privatized
something that is justly our common treasure?
Henry George: The
Land Question (1881)
... LET me be understood. I am not endeavoring to excuse or
belittle Irish distress. I am merely pointing out that distress of
the same kind exists elsewhere. This is a fact I want to make
clear, for it has hitherto, in most of the discussions of the Irish
Land Question, been ignored. And without an appreciation of this fact
the real nature of the Irish Land Question is not understood, nor the
real importance of the agitation seen.
What I contend for is this: That it is a mistake to consider the
Irish Land Question as a mere local question, arising out of
conditions peculiar to Ireland, and which can be settled by remedies
that can have but local application. ...
But it is not possible so to confine the discussion; no more
possible than it was possible to confine to France the questions
involved in the French Revolution; no more possible than it was
possible to keep the discussion which arose over slavery in the
Territories confined to the subject of slavery in the Territories.
And it is best that the truth be fully stated and clearly recognized.
He who sees the truth, let him proclaim it, without asking who is for
it or who is against it. This is not radicalism in the bad sense
which so many attach to the word. This is conservatism in the true
sense.
What gives to the Irish Land Question its supreme significance is
that it brings into attention and discussion – nay, that it forces
into attention and discussion, not a mere Irish question, but a
question of world-wide importance.
What has brought the land question to the front in Ireland, what
permits the relation between land and labor to be seen there with
such distinctness – to be seen even by those who cannot in other
places perceive them – is certain special conditions. ...
But does not the same relation exist between English pauperism and
English landlordism – between American tramps and the American
land system? Essentially the same land system as that of Ireland
exists elsewhere, and, wherever it exists, distress of essentially
the same kind is to be seen. And elsewhere, just as certainly as in
Ireland, is the connection between the two that of cause and
effect.
When the agent of the Irish landlord takes from the Irish cottier
for rent his pigs, his poultry, or his potatoes, or the money that he
gains by the sale of these things, it is clear enough that this rent
comes from the earnings of labor, and diminishes what the laborer
gets. But is not this in reality just as clear when a dozen middlemen
stand between laborer and landlord? Is it not just as clear when,
instead of being paid monthly or quarterly or yearly, rent is paid in
a lumped sum called purchase-money? Whence
come the incomes which the
owners of land in mining districts, in manufacturing districts, or in
commercial districts, receive for the use of their land? Manifestly,
they must come from the earnings of labor – there is no other
source from which they can come.
- From what are the revenues of
Trinity Church corporation drawn, if not from the earnings of labor?
- What is the source of the income of the Astors, if it is not the
labor of laboring-men, women, and children?
- When a man makes a
fortune by the rise of real estate, as in New York and elsewhere many
men have done within the past few months, what does it mean? It means
that he may have fine clothes, costly food, a grand house luxuriously
furnished, etc. Now, these things are not the spontaneous fruits of
the soil; neither do they fall from heaven, nor are they cast up by
the sea. They are products of labor – can be produced only by
labor. And hence, if
men who do no labor get them, it must
necessarily be at the expense of those who do labor.
It may seem as if I were needlessly dwelling upon a truth apparent
by mere statement. Yet, simple as this truth is, it is persistently
ignored. This is the reason that the true relation and true
importance of the question which has come to the front in Ireland are
so little realized.
... read the whole article
Henry George: The Savannah (excerpt
from Progress & Poverty, Book IV: Chapter 2: The Effect of Increase
of Population
upon the Distribution of Wealth; also found in Significant
Paragraphs from Progress & Poverty, Chapter 3: Land Rent Grows as Community
Develops)
Here, let us imagine, is an unbounded savannah, stretching off in
unbroken sameness of grass and flower, tree and rill, till the traveler tires
of the monotony. Along comes the wagon of the first immigrant. Where to settle
he cannot tell — every acre seems as good as every other acre. As to
wood, as to water, as to fertility, as to situation, there is absolutely
no choice, and he is perplexed by the embarrassment of richness. Tired out
with the search for one place that is better than another, he stops — somewhere,
anywhere — and starts to make himself a home. The soil is virgin and
rich, game is abundant, the streams flash with the finest trout. Nature is
at her very best. He has what, were he in a populous district, would make
him rich; but he is very poor. To say nothing of the mental craving, which
would lead him to welcome the sorriest stranger, he labors under all the
material disadvantages of solitude. He can get no temporary assistance for
any work that requires a greater union of strength than that afforded by
his own family, or by such help as he can permanently keep. Though he has
cattle, he cannot often have fresh meat, for to get a beefsteak he must kill
a bullock. He must be his own blacksmith, wagonmaker, carpenter, and cobbler — in
short, a "jack of all trades and master of none." He cannot have his children
schooled, for, to do so, he must himself pay and maintain a teacher. Such
things as he cannot produce himself, he must buy in quantities and keep on
hand, or else go without, for he cannot be constantly leaving his work and
making a long journey to the verge of civilization; and when forced to do
so, the getting of a vial of medicine or the replacement of a broken auger
may cost him the labor of himself and horses for days. Under such circumstances,
though nature is prolific, the man is poor. It is an easy matter for him
to get enough to eat; but beyond this, his labor will suffice to satisfy
only the simplest wants in the rudest way.
Soon there comes another immigrant. Although every quarter section* of the
boundless plain is as good as every other quarter section, he is not beset
by any embarrassment as to where to settle. Though the land is the same,
there is one place that is clearly better for him than any other place, and
that is where there is already a settler and he may have a neighbor. He settles
by the side of the first comer, whose condition is at once greatly improved,
and to whom many things are now possible that were before impossible, for
two men may help each other to do things that one man could never do.
*The public prairie lands of
the United States were surveyed into sections of one mile square, and a
quarter section (160 acres) was the usual government allotment to a settler
under the Homestead Act.
Another immigrant comes, and, guided by the same attraction, settles where
there are already two. Another, and another, until around our first comer there
are a score of neighbors. Labor has now an effectiveness which, in the solitary
state, it could not approach. If heavy work is to be done, the settlers have
a logrolling, and together accomplish in a day what singly would require years.
When one kills a bullock, the others take part of it, returning when they kill,
and thus they have fresh meat all the time. Together they hire a schoolmaster,
and the children of each are taught for a fractional part of what similar teaching
would have cost the first settler. It becomes a comparatively easy matter to
send to the nearest town, for some one is always going. But there is less need
for such journeys. A blacksmith and a wheelwright soon set up shops, and our
settler can have his tools repaired for a small part of the labor it formerly
cost him. A store is opened and he can get what he wants as he wants it; a
postoffice, soon added, gives him regular communication with the rest of the
world. Then come a cobbler, a carpenter, a harness maker, a doctor; and a little
church soon arises. Satisfactions become possible that in the solitary state
were impossible. There are gratifications for the social and the intellectual
nature — for that part of the man that rises above the animal. The power
of sympathy, the sense of companionship, the emulation of comparison and contrast,
open a wider, and fuller, and more varied life. In rejoicing, there are others
to rejoice; in sorrow, the mourners do not mourn alone. There are husking bees,
and apple parings, and quilting parties. Though the ballroom be unplastered
and the orchestra but a fiddle, the notes of the magician are yet in the strain,
and Cupid dances with the dancers. At the wedding, there are others to admire
and enjoy; in the house of death, there are watchers; by the open grave, stands
human sympathy to sustain the mourners. Occasionally, comes a straggling lecturer
to open up glimpses of the world of science, of literature, or of art; in election
times, come stump speakers, and the citizen rises to a sense of dignity and
power, as the cause of empires is tried before him in the struggle of John
Doe and Richard Roe for his support and vote. And, by and by, comes the circus,
talked of months before, and opening to children whose horizon has been the
prairie, all the realms of the imagination — princes and princesses of
fairy tale, mailclad crusaders and turbaned Moors, Cinderella's fairy coach,
and the giants of nursery lore; lions such as crouched before Daniel, or in
circling Roman amphitheater tore the saints of God; ostriches who recall the
sandy deserts; camels such as stood around when the wicked brethren raised
Joseph from the well and sold him into bondage; elephants such as crossed the
Alps with Hannibal, or felt the sword of the Maccabees; and glorious music
that thrills and builds in the chambers of the mind as rose the sunny dome
of Kubla Khan.
Go to our settler now, and say to him: "You have so many fruit trees which
you planted; so much fencing, such a well, a barn, a house — in short,
you have by your labor added so much value to this farm. Your land itself
is not quite so good. You have been cropping it, and by and by it will
need manure. I will give you the full value of all your improvements if
you will give it to me, and go again with your family beyond the verge
of settlement." He would laugh at you. His land yields no more wheat or
potatoes than before, but it does yield far more of all the necessaries
and comforts of life. His labor upon it will bring no heavier crops, and,
we will suppose, no more valuable crops, but it will bring far more of
all the other things for which men work. The presence of other settlers — the
increase of population — has added to the productiveness, in these
things, of labor bestowed upon it, and this added productiveness gives
it a superiority over land of equal natural quality where there are as
yet no settlers. If no land remains to be taken up, except such as is as
far removed from population as was our settler's land when he first went
upon it, the value or rent of this land will be measured by the whole of
this added capability. If, however, as we have supposed, there is a continuous
stretch of equal land, over which population is now spreading, it will
not be necessary for the new settler to go into the wilderness, as did
the first. He will settle just beyond the other settlers, and will get
the advantage of proximity to them. The value or rent of our settler's
land will thus depend on the advantage which it has, from being at the
center of population, over that on the verge. In the one case, the margin
of production will remain as before; in the other, the margin of production
will be raised.
Population still continues to increase, and as it increases so do the
economies which its increase permits, and which in effect add to the productiveness
of the land. Our first settler's land, being the center of population,
the store, the blacksmith's forge, the wheelwright's shop, are set up on
it, or on its margin, where soon arises a village, which rapidly grows
into a town, the center of exchanges for the people of the whole district.
With no greater agricultural productiveness than it had at first, this
land now begins to develop a productiveness of a higher kind. To
labor expended in raising corn, or wheat, or potatoes, it will yield no
more
of those things than at first; but to labor expended in the subdivided
branches of production which require proximity to other producers, and,
especially, to labor expended in that final part of production, which consists
in distribution, it will yield much larger returns. The wheatgrower may
go further on, and find land on which his labor will produce as much wheat,
and nearly as much wealth; but the artisan, the manufacturer, the storekeeper,
the professional man, find that their labor expended here, at the center
of exchanges, will yield them much more than if expended even at a little
distance away from it; and this excess of productiveness for such purposes
the landowner can claim just as he could an excess in its wheat-producing
power. And so our settler is able to sell in building lots a few of his
acres for prices which it would not bring for wheatgrowing if its fertility
had been multiplied many times. With the proceeds, he builds himself a
fine house, and furnishes it handsomely. That is to say, to reduce the
transaction to its lowest terms, the people who wish to use the land build
and furnish the house for him, on condition that he will let them avail
themselves of the superior productiveness which the increase of population
has given the land.
Population still keeps on increasing, giving greater and greater utility
to the land, and more and more wealth to its owner. The town has grown
into a city — a St. Louis, a Chicago or a San Francisco — and
still it grows. Production is here carried on upon a great scale, with
the best machinery and the most favorable facilities; the division of labor
becomes extremely minute, wonderfully multiplying efficiency; exchanges
are of such volume and rapidity that they are made with the minimum of
friction and loss. Here is the heart, the brain, of the vast social organism
that has grown up from the germ of the first settlement; here has developed
one of the great ganglia of the human world. Hither run all roads, hither
set all currents, through all the vast regions round about. Here, if you
have anything to sell, is the market; here, if you have anything to buy,
is the largest and the choicest stock. Here intellectual activity is gathered
into a focus, and here springs that stimulus which is born of the collision
of mind with mind. Here are the great libraries, the storehouses and granaries
of knowledge, the learned professors, the famous specialists. Here are
museums and art galleries, collections of philosophical apparatus, and
all things rare, and valuable, and best of their kind. Here come great
actors, and orators, and singers, from all over the world. Here, in short,
is a center of human life, in all its varied manifestations.
So enormous are the advantages which this land now offers for the application
of labor, that instead of one man — with a span of horses scratching
over acres, you may count in places thousands of workers to the acre, working
tier on tier, on floors raised one above the other, five, six, seven and
eight stories from the ground, while underneath the surface of the earth
engines are throbbing with pulsations that exert the force of thousands
of horses.
All these advantages attach to the land; it is on this land and no
other that they can be utilized, for here is the center of population — the
focus of exchanges, the market place and workshop of the highest forms
of industry. The productive powers which density of population has
attached to this land are equivalent to the multiplication of its original
fertility by the hundredfold and the thousandfold. And rent, which measures
the difference between this added productiveness and that of the least
productive land in use, has increased accordingly. Our settler, or whoever
has succeeded to his right to the land, is now a millionaire. Like another Rip
Van Winkle, he may have lain down and slept; still he is rich — not
from anything he has done, but from the increase of population. There
are lots from which for every foot of frontage the owner may draw more
than an average mechanic can earn; there are lots that will sell for
more than would suffice to pave them with gold coin. In the principal
streets are towering buildings, of granite, marble, iron, and plate glass,
finished in the most expensive style, replete with every convenience.
Yet they are not worth as much as the land upon which they rest — the
same land, in nothing changed, which when our first settler came upon
it had no value at all.
That this is the way in which the increase of population powerfully acts
in increasing rent, whoever, in a progressive country, will look around
him, may see for himself. The process is going on under his eyes. The increasing
difference in the productiveness of the land in use, which causes an increasing
rise in rent, results not so much from the necessities of increased population
compelling the resort to inferior land, as from the increased productiveness
which increased population gives to the lands already in use. The most
valuable lands on the globe, the lands which yield the highest rent, are
not lands of surpassing natural fertility, but lands to which a surpassing
utility has been given by the increase of population.
The increase of productiveness or utility which increase of population
gives to certain lands, in the way to which I have been calling attention,
attaches, as it were, to the mere quality of extension. The valuable quality
of land that has become a center of population is its superficial capacity — it
makes no difference whether it is fertile, alluvial soil like that of Philadelphia,
rich bottom land like that of New Orleans; a filled-in marsh like that
of St. Petersburg, or a sandy waste like the greater part of San Francisco.
And where value seems to arise from superior natural qualities, such
as deep water and good anchorage, rich deposits of coal and iron, or
heavy timber, observation also shows that these superior qualities are
brought out, rendered tangible, by population. The coal and iron
fields of Pennsylvania, that today [1879] are worth enormous sums, were
fifty years ago valueless. What is the efficient cause of the difference?
Simply the difference in population. The coal and iron beds of Wyoming
and Montana, which today are valueless, will, in fifty years from now,
be worth millions on millions, simply because, in the meantime, population
will have greatly increased.
It is a well-provisioned ship, this on which we sail through space. If
the bread and beef above decks seem to grow scarce, we but open a hatch
and there is a new supply, of which before we never dreamed. And
very great command over the services of others comes to those who as the
hatches are opened are permitted to say, "This is mine!" ... read
the whole chapter of Significant Paragraphs
Mason Gaffney: The Taxable
Capacity of Land
Another attractive feature
of land taxation is its interesting positive effect on the economic
base of a city. It strengthens it by its tendency to hit absentee
owners harder than resident owners. The
land fraction in real estate is generally highest in the CBD of any
city, so that is a favorite place for absentees to buy and hold.
They like the steady income, and the "trophy" quality. The
surplus in real estate is what attracts outside buyers, and land
is what yields the surplus. About 2/3 of downtown Los Angeles is owned
by non-resident aliens, for example. In a more workaday city, Milwaukee,
the absentee owners consist of former residents, or their heirs,
who grew too rich to abide the harsh winters.
Consider the effect on your
balance of payments. When you get more tax money from absentees, money
that used to flow to Tehran, Zurich, or Palm Beach now flows into your
local treasury to pay your local teachers and city workers, and relieve
your builders and building managers. In this way taxing land actually
acts to undergird the value of its own base. ... Read the whole article
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