Why on earth should some of us be paying others of us — as individuals, corporations, family trusts, etc. — for the right to use a piece of land, whether it be for a bit of land on which to live or to conduct business?

It isn't that economic rent shouldn't be paid — it should! Rather, it is a question of whether it is legitimate/just/right/ethical/logical/reasonable that SOME of us get to privatize that which is rightly our common treasure.

A lot of our most intractible social and economic problems stem from this distortion of justice and logic.

Is this a radical point of view? Yes — in the very finest sense of the word radical! It gets to the root of our problems. The next step is to eradicate the problem, through the simple reform this website proposes.

 

Henry George: The Condition of Labor — An Open Letter to Pope Leo XIII in response to Rerum Novarum (1891)

Thus Cain and Abel, were there only two men on earth, might by agreement divide the earth between them. Under this compact each might claim exclusive right to his share as against the other. But neither could rightfully continue such claim against the next man born. For since no one comes into the world without God’s permission, his presence attests his equal right to the use of God’s bounty. For them to refuse him any use of the earth which they had divided between them would therefore be for them to commit murder. And for them to refuse him any use of the earth, unless by laboring for them or by giving them part of the products of his labor he bought it of them, would be for them to commit theft. ... read the whole letter

A.J.O. [probably Mark Twain]: Slavery

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."

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.

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.

Joseph Stiglitz: October, 2002, interview

Q: In Globalization and its Discontents, you write (p. 81): "But land reform represents a fundamental change in the structure of society, one that those in the elite that populates the finance ministries, those with whom the international financial institutions interact, do not necessarily like."

JES: Yes. Let me try to approach the question a little more systematically. Once you take the perspective I just gave, that means the management should be done in such a way that it maximizes the amount of money available to the US government from natural resources because they are within its domain and control. So, looking at the United States, one of the implications of this is that a foundation such as yours [the Robert Schalkenbach Foundation, created to promote the ideas of Henry George, as expressed in Progress & Poverty] ought to be very much against the policies of the US government of giving away our natural resources. Here is a case where we not only are not taxing it much, we're actually giving it away.

Q: I assume you're speaking in particular of oil and mineral rights, but would not Broadband Spectrum rights also be included in that category?

JES: Yes, Broadband Spectrum rights as well. Now, giving away rights such as those would be anathema to the spirit of Henry George. And the second part is that when you sell them, you want to do so in such a way as to maximize the revenues. And whether you decide to sell it or whether you decide to rent it, would be the question of what is the way that maximizes the extraction of public revenues.

Q: And those revenues go to the people. Not to private concerns.

JES: Exactly. So you're trying to say, from the perspective of public management, how can we take this inelastic supply of public resources and maximize the rents that we can extract from it, consistent with other public objectives? That is a very deep philosophical approach, and requires a re-thinking of how we manage all aspects of those public resources. However, much of what we do is inconsistent with that. Now, the issue of land reform is a little bit different. There, it's a two-step analysis. My concern that I expressed about land is that in many developing countries, you have most land owned by a few rich people, and the land is relatively little taxed. But the land is worked in a system of sharecropping in which workers have to pay the landlord 50% of their output. In a way, you can look at that 50% as a tax. The sharecroppers are paying a 50% tax to the landlord. But it's worse than a tax. Because it's not a land tax, it's a tax on their labor. And it's a tax that goes to the landlord rather than to society. So the notion is that land reform could take a variety of different forms. For instance, the government could take over the land and rent it to the people. Or give it to the people and have a land tax that would not have the distortionary effect of land reform. So, in a way, these systems of share-cropping are worse even than anything that Henry George was worried about in terms of misuse of land. ... read the entire interview

The power of tax bias to keep land from its best use is starkly obvious by analyzing the economics of using marginal land. Any tax at all will sterilize such land completely, unless the taxes are so universal that the mobile factors, labor and capital, cannot escape them by moving.

“Who cares about marginal land?”, some may say. The distorting power of taxes has been demonstrated inadvertently by Chicago-School economists Gale Johnson and Stephen Cheung. They have shown that sharecropping, as a private arrangement, creates a bias on the part of tenants to substitute land for labor and equipment, almost without limit. This is because extra land costs the cropper nothing, unless it adds to output, so the cropper’s interest is to substitute land, which is free to him, for his labor and capital, which he pays for.

Taxes based on gross output affect all landowners the same way the cropshare lease affects croppers. They make every landowner a cropper of the state, giving every landowner a motive to substitute land for labor and capital indefinitely. Private landlords overcome this by limiting how much land to allow each cropper; but the state has no such offsetting control. Thus, each landowner’s motive to acquire excess land runs wild.

In conjunction, consider that taxes (other than property taxes) are based solely on cash flows, thus entirely exempting all the imputed income from and imputed consumption of the service flows of land – the “amenities.” Government tells the landed gentry, “Hold land as a totem, an heirloom, a private hunting and riding park, a dream of future retirement, a speculation, a hedge against inflation, an entry into high society, a beach access, a protection against future neighbors, a shooting range, a golf course, a ski hideaway, a drinking club, a private landing strip … anything private and narcissistic or exclusionary or snobbish … and your pleasures are tax exempt. Produce goods and services for others, though, and we will treat you like a sharecropper – and tax your employees, too.”

Now hark back to George’s second force holding labor off the better lands (Item A,3,b): holding land as a totem. He noted that tendency in an age before we even had an income tax, or state sales taxes. Our present tax system magnifies the tendency beyond all reason, resulting in the relegation of much of our best land to the indulgences of the landed gentry, old and new. Read the whole article

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

Note 56: The ownership of the land is essentially the ownership of the men who must use it.

"Let the circumstances be what they may — the ownership of land will always give the ownership of men to a degree measured by the necessity (real or artificial) for the use of land. Place one hundred men on an island from which there is no escape, and whether you make one of these men the absolute owner of the other ninety-nine, or the absolute owner of the soil of the island, will make no difference either to him or to them." — Progress and Poverty, book vii, ch. ii.

Let us imagine a shipwrecked sailor who, after battling with the waves, touches land upon an uninhabited but fertile island. Though hungry and naked and shelterless, he soon has food and clothing and a house — all of them rude, to be sure, but comfortable. How does he get them? By applying his Labor to the Land of the island. In a little while he lives as comfortably as an isolated man can.

Now let another shipwrecked sailor be washed ashore. As he is about to step out of the water the first man accosts him:

"Hello, there! If you want to come ashore you must agree to be my slave."

The second replies: "I can't. I come from the United States, where they don't believe in slavery."

"Oh, I beg your pardon. I didn't know you came from the United States. I had no intention of hurting your feelings, you know. But say, they believe in owning land in the United States, don't they?"

"Yes."

"Very well; you just agree that this island is mine, and you may come ashore a free man."

"But how does the island happen to be yours? Did you make it?"

"No, I didn't make it."

"Have you a title from its maker?"

"No, I haven't any title from its maker."

"Well, what is your title, anyhow?"

"Oh, my title is good enough. I got here first."

Of course he got there first. But he didn't mean to, and he wouldn't have done it if he could have helped it. But the newcomer is satisfied, and says:

"Well, that's a good United States title, so I guess I'll recognize it and come ashore. But remember, I am to be a free man."

"Certainly you are. Come right along up to my cabin."

For a time the two get along well enough together. But on some fine morning the proprietor concludes that he would rather lie abed than scurry around for his breakfast and not being in a good humor, perhaps, he somewhat roughly commands his "brother man" to cook him a bird.

"What?" exclaims the brother.

"I tell you to go and kill a bird and cook it for my breakfast."

"That sounds big," sneers the second free and equal member of the little community; "but what am I to get for doing this?"

"Oh," the first replies languidly, "if you kill me a fat bird and cook it nicely, then after I have had my breakfast off the bird you may cook the gizzard for your own breakfast. That's pay enough. The work is easy."

"But I want you to understand that I am not your slave, and I won't do that work for that pay. I'll do as much work for you as you do for me, and no more."

"Then, sir," the first comer shouts in virtuous wrath, "I want you to understand that my charity is at an end. I have treated you better than you deserved in the past, and this is your gratitude. Now I don't propose to have any loafers on my property. You will work for the wages I offer or get off my land! You are perfectly free. Take the wages or leave them. Do the work or let it alone. There is no slavery here. But if you are not satisfied with my terms, leave my island!"

The second man, if accustomed to the usages of the labor unions, would probably go out and, to the music of his own violent language about the "greed of capital," destroy as many bows and arrows as he could, so as to paralyze the bird-shooting industry; and this proceeding he would call a strike for honest wages and the dignity of labor. If he were accustomed to social reform notions of the namby-pamby variety, he would propose an arbitration, and be mildly indignant when told that there was nothing to arbitrate — that he had only to accept the other's offer or get off his property. But if a sensible man, he would notify his comrade that the privilege of owning islands in that latitude had expired. ...

c. The Law of Division of Labor and Trade

Now, what is it that leads men to conform their conduct to the principle illustrated by the last chart? Why do they divide their labor, and trade its products? A simple, universal and familiar law of human nature moves them. Whether men be isolated, or be living in primitive communities, or in advanced states of civilization, their demand for consumption determines the direction of Labor in production.67 That is the law. Considered in connection with a solitary individual, like Robinson Crusoe upon his island, it is obvious. What he demanded for consumption he was obliged to produce. Even as to the goods he collected from stranded ships — desiring to consume them, he was obliged to labor to produce them to places of safety. His demand for consumption always determined the direction of his labor in production.68 And when we remember that what Robinson Crusoe was to his island in the sea, civilized man as a whole is to this island in space, we may readily understand the application of the same simple law to the great body of labor in the civilized world.69 Nevertheless, the complexities of civilized life are so likely to obscure its operation and disguise its relations to social questions like that of the persistence of poverty as to make illustration desirable.

68. It is highly significant that while Robinson Crusoe had unsatisfied wants he was never out of a job.... read the book

Fred Foldvary: Geo-Rent: A Plea to Public Economists

Henry George:  The Land Question (1881)

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

PRIVATE property in land, no less than private property in slaves, is the violation of the true rights of property. They are different forms of the same robbery — twin devices, by which the perverted ingenuity of man has sought to enable the strong and the cunning to escape God's requirement of labor by forcing it on others. — The Condition of Labor, an Open Letter to Pope Leo XIII 

ROBINSON CRUSOE, as we all know, took Friday as his slave. Suppose, however, that instead of taking Friday as his slave, Robinson Crusoe had welcomed him as a man and a brother; had read him a Declaration of Independence, an Emancipation Proclamation and a Fifteenth Amendment, and informed him that he was a free and independent citizen, entitled to vote and hold office; but had at the same time also informed him that that particular island was his (Robinson Crusoe's) private and exclusive property. What would have been the difference? Since Friday could not fly up into the air nor swim off through the sea, since if he lived at all he must live on the island, he would have been in one case as much a slave as in the other. Crusoe's ownership of the island would be equivalent of his ownership of Friday. — Social Problems — Chapter 15, Slavery and Slavery

THEY no longer have to drive their slaves to work; want and the fear of want do that more effectually than the lash. They no longer have the trouble of looking out for their employment or hiring out their labor, or the expense of keeping them when they cannot work. That is thrown upon the slaves. The tribute that they still wring from labor seems like voluntary payment. In fact, they take it as their honest share of the rewards of production — since they furnish the land! And they find so-called political economists, to say nothing of so-called preachers of Christianity, to tell them so. — Social Problems — Chapter 15, Slavery and Slavery

IF the two young Englishmen I have spoken of had come over here and bought so many American citizens, they could not have got from them so much of the produce of labor as they now get by having bought land which American citizens are glad to be allowed to till for half the crop. And so, even if our laws permitted, it would be foolish for an English duke or marquis to come over here and contract for ten thousand American babies, born or to be born, in the expectation that when able to work he could get out of them a large return. For by purchasing or fencing in a million acres of land that cannot run away and do not need to be fed, clothed or educated, he can, in twenty or thirty years, have ten thousand full-grown Americans, ready to give him half of all that their labor can produce on his land for the privilege of supporting themselves and their families out of the other half. This gives him more of the produce of labor than he could exact from so many chattel slaves. — Protection or Free Trade — Chapter 25: The Robber That Takes All That Is Left - econlib 

OF the two systems of slavery, I think there can be no doubt that upon the same moral level, that which makes property of persons is more humane than that which results from making private property of land. The cruelties which are perpetrated under the system of chattel slavery are more striking and arouse more indignation because they are the conscious acts of individuals. But for the suffering of the poor under the more refined system no one in particular seems responsible. . . . But this very fact permits cruelties that would not be tolerated under the one system to pass almost unnoticed under the other. Human beings are overworked, are starved, are robbed of all the light and sweetness of life, are condemned to ignorance and brutishness, and to the infection of physical and moral disease; are driven to crime and suicide, not by other individuals, but by iron necessities for which it seems that no one in particular is responsible.

To match from the annals of chattel slavery the horrors that day after day transpire unnoticed in the heart of Christian civilization, it would be necessary to go back to ancient slavery, to the chronicles of Spanish conquest in the New World, or to stories of the Middle passage. — Social Problems — Chapter 15, Slavery and Slavery

... go to "Gems from George"

excerpt from The Soulful Science: What Economists Really Do and Why It Matters, by Diane Coyle, p. 151

"Both the transactions-costs and the rational-expectations approaches did in fact prove quite fruitful, but to Stiglitz and his fellow 2001 laureates, they were "Ptolemaic" — a reference to the bizarre complications Ptolemy had to introduce to the Earth-centered model of the Universe to keep it consistent with his astronomical observations of the Sun-centered reality (Stiglitz 2004). Both were seen by critics as brilliant but doomed attempts to preserve a false model. Akerlof, Stiglitz, and Spence drew inspiration instead from earlier work by James Mirrlees and William Vickrey. Mirrlees asked how a government should design a tax system. The ideal would be for everyone to be taxed according to his or her ability (and of course receive public services according to his or her needs); but the government doesn't know my ability, and if I'm a productive person I have every incentive to disguise this in order to minimize my tax bill. The tax system therefore has to use income as a proxy for ability (Mirrlees 1971).

All of these economists started by noting in their own field of interest an institution which was blatantly nonrational and even dysfunctional. They asked why people would accede to an institution which was so obviously flawed. For Stiglitz, the institution was sharecropping, where the tenant farmer pays the landowner a large share of the crop rather than a fixed rent, often half or two-thirds. It seems inefficient because it's equivalent to an enormous tax on labor, massively denting the farmer's incentive to produce as much as possible. However, for the worker it is a better arrangement than renting: even if he has the cash to pay rent, he doesn't know how good the harvest will be, so sharecropping splits the risk with the landowner. For the landowner it's better than paying a wage unrelated to his effort or the output of the crop. There's uncertainty about the future and asymmetric information about the worker's skill and effort. In these circumstances, sharecropping is rational. ..."