Social Justice

Both for reasons of social justice and for reasons of economic efficiency, site value rating deserves a continued place in the programme of the Liberal Party.

The case for site value rating in terms of social justice is founded on two understandings: first, that the value of land in the absence of economic development is the common heritage of humanity, and second, that increases in the rental value of land arising from economic development and government expenditures should be collected by governments to finance those activities. What is meant by "land" is the unimproved value of sites and the value of extractable natural resources such as North Sea oil.

While there may someday be institutions capable of implementing a recognition of land as the heritage of all humanity on a worldwide basis, in the absence of such institutions each nation should implement a recognition that land within its boundaries is the common heritage of its citizens. This is accomplished not by making the nation a gigantic Common or by instituting government management of all land, but rather by requiring all persons and corporations that are granted the use of land to pay a fee or tax equal to what the rental value of the land they control would be if it were in an unimproved condition.

The case for site value rating in terms of economic efficiency is founded on the fact that a tax on resources that are not produced by human effort is one of the few sources of government revenue that does not reduce incentives for people to be productive. Two other revenue sources that have this virtue are taxes on other government-granted privileges such as exclusive use of radio frequencies and taxes on activities with harmful consequences, such as polluting the air. An economy will be more efficient if revenue sources that do not diminish productivity are employed to the greatest possible extent before any use is made of taxes that impede productivity.

What makes a tax efficient is that the amount of tax that is due cannot be reduced by reducing productive activities. When incomes are taxed, people can reduce the amount of taxes owed by working less. They do so, and the productivity of the economy falls. When houses are taxed, people can reduce the amount of taxes owed by building fewer house and smaller houses. They do so, and the housing shortage worsens. But when the unimproved value of land is taxed, there is no resulting diminution in the quantity of land. Thus taxes can be levied on land without diminishing the productivity of an economy. And shifting taxes from other, destructive bases to land will improve the productivity of an economy.

Subsequent sections explain in more detail these social justice and efficiency arguments for site value rating, describe procedures for implementing such a tax system, and explain why a variety of potential objections are without merit. ...

In primitive societies, land is generally regarded as not ownable. No one made the land, so how can anyone own it? Ownership generally originates in conquest. In England, titles to land originated in the claim of William the Conqueror to own all the land because he was king. He granted to dukes, earls, etc. the right to collect rent from designated territories in exchange for their promises to fulfill various obligations to him. In the seventeenth century the nobility succeeded in removing all of their obligations to the crown, but they retained their rights to land. A substantial part of the great inequality in wealth in the United Kingdom can be traced to ancient patents of nobility that granted rights to collect rent.

One highly visible consequence of allowing land rents to be privately appropriated is that young people find it nearly impossible to buy houses. The price of a "house," in the Southeast of Britain at least, is primarily the price of land. If the rent of land were collected publicly, the price of land would be inconsequential, and the price of a house would be the cost of the materials and labour that went into building it. It should be recognized that if the site value of land were taxed, the payment of such taxes would make it more expensive to live in large cities than in small towns, but young people would be better able to afford it because other taxes would be reduced, and the mortgages to which people would need to commit themselves would not be nearly as great. ...

Private appropriation of rent and other privileges makes it necessary for governments to look elsewhere for revenue, with the consequence that even persons with very low incomes are required to turn over part of what little they earn to the state. In justice we ought to allow everyone, but especially those whose earnings are lowest, to allocate what they produce as they themselves choose.

• Speculators can sit on large parcels of land and wait for the community to build up its value. Land Value Taxation (LVT) would prevent speculation, induce the land to be put to its best possible use, and instead divert the increased land value to the community coffers. Valuable natural resources, which often fall into private hands, would again become part of the common wealth.
• Current taxation is largely legalised robbery. But the rich, who often made their fortunes by misappropriating what should be the community's economic rent, have the means to set up tax shelters. LVT, in sharp contrast, is impossible to evade.
• At the moment, whoever is lucky (or powerful) enough to own land earns greater and greater rent while the base earnings are forced down as population growth pushes the point of marginal land out further and further.
• Our tax system rewards sloth and speculation while punishing industry, thrift, savings and honesty. Many public works, infrastructure and beautification projects are presently unaffordable because their value ends up in landowners' pockets rather than being recycled back to the community through LVT.
• Land monopoly is the "mother of all monopolies". Those without land still need it, and have to work on the terms of those who have laid their hands on it first.
• Involuntary unemployment is totally unnecessary. There are so many productive things that need to be done by those who presently are prevented from doing them. Additionally, many wage earners have their bargaining power and earning potential reduced by the threat of unemployment.
• In the late 19th and early 20th century, a number of the most influential American plutocrats applied their considerable resources to stifle the work (and especially the ideas) of Henry George, and bankrolled the installation of neoclassical economics. In academic and professional circles today there's nothing much conspiratorial - only ignorance and an unwillingness to admit that their "dismal science" has consistently failed to deliver any viable alternative. George's economic analysis has never been seriously or scientifically challenged, let alone undermined - and still holds as true today as it did one hundred years ago.
• The principles of our social justice proposals are radical and yet elegant: You don't get taxed on what you earn. What you rightly owe to society is based on what society does for you - in other words, on the physical and social infrastructure available to you. Nothing more, nothing less.
• In the Third World, where land ownership is often concentrated in the hands of a few families, things are worse. Vast tracts of land remain unused because, without the pressure of LVT forcing site holders to turn their sites to productive use in order to cover the cost of the LVT, the landowning families can afford to wait until the desperately poor work on the terms dictated to them.
• We'll have our birthrights restored! Geonomics effectively makes us co-owners of all the Global Commons. And land will be effectively free of a purchase price, as land price currently is the "capitalisation" of annual land values into private pockets. The great burden facing all entrants to this planet - having to save huge amounts to pay for what should be our inheritance - will no longer exist!

This is what economic policy can do. The basic impulses, however, the striving for justice and brotherhood, and the sense of personal ethics, come from within, and from family, community, schools, and religion. So does the sense of workmanship, the striving for excellence without which no system works.

There are city councilpersons who can corrupt the best system ever blueprinted. The Georgist program may even help to straighten them out. Lincoln Steffens taught us that the villain in Eden was neither Eve nor the serpent, but the apple! The apples of discord that corrupt city councils are unearned increments to land value, which they create or deny with every decision on extending sewers or changing zoning. Georgist tax dehydrates those apples by attaching higher tax to each unearned increment. Read the whole article

Henry George was one of the most famous reformers of the late 19th century. Ever since the 1879 publication of his book, Progress and Poverty, his ideas have inspired people working for economic and social reform all around the world. He is most famous for proposing the abolition of all taxes except for a tax on the value of land. But I will argue that the single tax on land was not George's most important contribution, and that the power of his thinking can be best appreciated by focusing on the theory of social justice that he used to explain why a single tax on land is just.

First I will argue that George's theory of social justice provides the dramatic climax as well as the logical foundation of Progress and Poverty.

Next, I will discuss the functions of a theory of justice.

Then I will address the question of what George's theory of social justice implies for relations among nations.

Finally, I will ask what constitutes justice within nations, in a world where relations among nations are governed by George's theory of social justice. ...

While George wrote a number of books -- the precise number depends on how you count -- the most powerful statement of his ideas is Progress and Poverty, a volume that he divided into ten Books.

• The work is in part a restatement of economic theory, (Books I, III and IV),
• part an examination of the causes of and proposed cures for persistent widespread poverty (Books II, V, and VI),
• part a brief for curing poverty and the unacceptable distribution of wealth by eliminating all taxes except a tax on the value of land (Books VII, VIII and IX), and
• part a theory of human progress (Book X).

I believe that the most significant lasting impact of Progress and Poverty will come from the conception of justice in Chapter 1 of Book VII, a chapter titled "The Injustice of Private Property in Land." From a dramatic perspective, this chapter is the cenptral component of the climax of the work.

The climax begins with the second of the two chapters of Book VI. In the first chapter of Book VI, George analyzes six different proposed remedies for persistent poverty and explains why they are inadequate. In the second chapter, which consists of just three pages, he asserts that the only effective remedy for the relief of poverty and the unacceptable distribution of wealth is to "make land common property."

George's choice of words here may have been unnecessarily inflammatory.

When people see this phrase, they generally presume that George was proposing public ownership of land. In fact he rejected public ownership of land. What he actually meant was that we must recognize that land is everyone's common heritage, and we must develop institutions that reflect this. In any case, he recognized that his assertion would sound outrageous to many of his readers, and he promises to defend it:

The laws of the universe are harmonious. And if the remedy to which we have been led is the true one, it must be consistent with justice; it must be practical of application; it must accord with the tendencies of social development and must harmonize with other reforms.

All this I propose to show.

Accordingly, Book VII is concerned with the justice of making land common property, Book VIII deals with the method and practicality of making land common property -- not by public ownership of land, but by abolishing other taxes and financing government by public collection of the rent of land, and Book IX explores economic consequences of this remedy.

The first chapter of Book VII thus plays the crucial role of overcoming the reader's inclination toward knee-jerk rejection of George's startling idea. And George is prepared with a theory of justice in powerful language:

What constitutes the rightful basis of property? What is it that enables a man justly to say of a thing, "It is mine!" From what springs the sentiment which acknowledges his exclusive right against all the world? Is it not, primarily, the right of a man to himself, to the use of his own powers, to the enjoyment of the fruits of his own exertions? Is it not this individual right, which springs from and is testified to by the natural facts of individual organization --the fact that each particular pair of hands obey a particular brain and are related to a particular stomach; the fact that each man is a definite, coherent, independent whole--which alone justifies individual ownership? As a man belongs to himself, so his labor when put in concrete form belongs to him.

This right of ownership that springs from labor excludes the possibility of any other right of ownership. If a man be rightfully entitled to the produce of his own labor, then no one can be rightfully entitled to the ownership of anything which is not the produce of his labor, or the labor of someone else from whom the right has passed to him. If production give to the producer the right to exclusive possession and enjoyment, there can rightfully be no exclusive possession and enjoyment of anything not the production of labor, and the recognition of private property in land is a wrong.

If we are all here by the equal permission of the creator, we are all here with an equal title to the enjoyment of his bounty -- with an equal right to the use of all that nature so impartially offers. This is a right which is natural and inalienable; it is a right which vests in every human being as he enters the world, and which during his continuance in the world can be limited only by the equal rights of others. There is in nature no such thing as a fee simple in land. There is on earth no power which can rightfully make a grant of exclusive ownership in land. If all existing men were to unite to grant away their equal rights, they could not grant away the right of those who follow them.

To summarize George's rights-based theory of justice: Each person has an exclusive right to his or her productive powers. We understand this intuitively, and on this basis accept the idea that people own what they produce. But if this is what ownership means, then no one can claim to own land, since no one produced it. People do have rights to the productive opportunities that nature offers, which are here for our use, but the rights of each person are limited by the equal rights of all other persons.

A careful analyst might object that there are some logical gaps in George's theory of justice. Logically, a right of ownership of things based on the right of each person to his or her productive powers does not preclude a right of ownership of natural opportunities on some other basis. We could mean by ownership only those rights that are derived from the right of each person to his or her productive powers, but we could also mean something broader and more complex.

The easiest way to repair this gap in George's theory is to specify that rather than having just one axiom, that each person has a right to his or her productive powers, he actually has two, the second one being that all persons have equal rights to natural opportunities.

A second logical gap occurs when George asserts that because people have rights to their productive powers, they own what they produce. This would follow only if they also had rights to the natural opportunities that they appropriate in the process of production. It is possible that the natural resources component of what a person produces is more than his share, considering the equal rights of everyone to all that nature offers. This caveat can be conceded without jeopardizing the two axioms, that each person has an exclusive right to his or her productive powers, and all persons have equal rights to the productive opportunities that nature offers.

This pair of axioms is the logical starting point of George's ideas. His proposal for the abolition of all taxes except a tax on land is a consequence that follows from them. Coercive taxes on the act of producing or on income from productive effort are unjust because people have rights to their productive powers. On the other hand, taxes on the rental value that land would have if it were not improved are not unjust, since this value is not produced by human effort. Support of government spending from this source is a convenient way of giving expression to the equal rights of all to natural opportunities. ...

V. Differences in Ability and in Wealth

Suppose that a nation appropriates only its share of natural opportunities but is richer than other nations because its citizens are, on average, more highly talented or harder working than the citizens of other nations. Does justice require the richer nation to compensate the others? By Henry George's theory of social justice, definitely not! Each person has an exclusive right to his or her productive powers. Therefore the nation as a whole has a right to the product of its citizens' talents, no matter how greatly this product exceeds that of the citizens of other nations. The citizens of a rich nation may feel compassion for those who are poorer than themselves, and therefore contribute to poor nations as a matter of charity, but justice does not compel them to do so.

What about a greater income that arise from greater wealth? This requires more elaborate analysis. When greater wealth is the result of greater saving from the product of talent or from the product of a nation's share of natural opportunities, then a nation with greater wealth is fully entitled to the greater income that comes from it. However, when greater wealth is the result of a history of theft or of unjustifiably large appropriations from the natural opportunities that are everyone's common heritage, then the nation that possesses that wealth cannot rightly claim either the income from the wealth or the wealth itself.

To achieve justice, the wrongful appropriations must be rectified. The unjustly acquired wealth must be restored from those from whom it was taken, or if that is not possible, shared among all nations. To the extent that persons who are still alive received past income from this wealth, that income must be disgorged.

Only if we have a standard of justice that is independent of history can we expect to end such actions. Henry George's theory of economic justice -- that every persons his a right to his or her productive powers, and that all persons have equal rights to all natural opportunities -- provides a simple formula around which opinion about the shape of a peaceful world can coalesce. This may seem hopelessly optimistic. But no other theory that I have seen has anything like the clarity, coherence and power of this theory.

The theory needs a simple name. I suggest calling this theory, this perspective on social justice the Geoliberal perspective. Liberal for its commitment to individual liberty. Geo- for its attention to land, for its planetary perspective, and for its reliance on the ideas of George. If you like these ideas, I invite you call yourself a geoliberal. I invite you to help me work out its implications, to explain geoliberalism to others, and develop a public dialogue about its value and implications. As Henry George said, "Until there be correct thought, there cannot be right action; and when there is correct thought, right action WILL follow."  Read the whole article