When social conservatives talk about poverty, one of the things they most commonly say is that the problem with poor people is that they don't work 50 weeks per year! Those who work year-round, they say, are seldom poor!

There is some truth to that last statement, assuming one accepts the Federal Poverty Guideline as having some relation to reality — an assumption that few who have examined the matter recently or closely would agree to, particularly if they are familiar with any of our large cities.

But under our current way of doing things, there isn't always enough work for everyone, and the work may not be steady, and it may not pay enough (or even half of enough) to support a family and allow the worker to live within a reasonable distance of that work.

Are we stuck with that? Is it a natural or necessary state of affairs, or is there something wrong with this picture, something we can remedy? Wealthandwant believes that this situation is wrong, and unnecessary, and can be remedied by a rather simple reform, first proposed 125 years ago by Henry George.

Read on to understand why and how!

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 10. Effect of Remedy Upon Wealth Production (in the unabridged P&P: Part IX — Effects of the Remedy: Chapter 1 — Of the effect upon the production of wealth)

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

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

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

• The farmer would not have to pay out half his means, or mortgage his labor for years, in order to obtain land to cultivate;
• the builder of a city homestead would not have to lay out as much for a small lot as for the house he puts upon it*;
• the company that proposed to erect a manufactory would not have to expend a great part of its capital for a site.
• And what would be paid from year to year to the state would be in lieu of all the taxes now levied upon improvements, machinery, and stock.

  *Many persons, and among them some professional economists, have never succeeded in getting a thorough comprehension of this point. Thus, the editor has heard the objection advanced that the greater cheapness of land is no advantage to the poor man who is trying to save enough from his earnings to buy a piece of land; for, it is said, the higher taxes on the land after it is acquired, offset the lower purchase price. What such objectors do not see is that even if the lower price of land does no more than balance the higher tax on it, (and this overlooks, for one thing, the discouragement to speculation in land), the reduction or removal of other taxes is all clear gain. It is easier to save in proportion as earnings and commodities are relieved of taxation. It is easier to buy land, because its selling price is lower, if the land is taxed. And although the land, after its purchase, continues to be taxed, not only can this tax be fully paid out of the annual interest on the saving in the purchase price, but also there is to be reckoned the saving in taxes on buildings and other improvements and in whatever other taxes are thus rendered unnecessary. H.G.B.

Consider the effect of such a change upon the labor market. Competition would no longer be one-sided, as now. Instead of laborers competing with each other for employment, and in their competition cutting down wages to the point of bare subsistence, employers would everywhere be competing for laborers, and wages would rise to the fair earnings of labor. For into the labor market would have entered the greatest of all competitors for the employment of labor, a competitor whose demand cannot be satisfied until want is satisfied — the demand of labor itself. The employers of labor would not have merely to bid against other employers, all feeling the stimulus of greater trade and increased profits, but against the ability of laborers to become their own employers upon the natural opportunities freely opened to them by the tax which prevented monopolization.

With natural opportunities thus free to labor;

• with capital and improvements exempt from tax, and exchange released from restrictions, the spectacle of willing men unable to turn their labor into the things they are suffering for would become impossible;
• the recurring paroxysms which paralyze industry would cease;
• every wheel of production would be set in motion;
• demand would keep pace with supply, and supply with demand;
• trade would increase in every direction, and wealth augment on every hand. ... read the whole chapter

Henry George: Thou Shalt Not Steal  (1887 speech)

That is the reason why people are huddled together in tenement houses; that is the reason why work is difficult to get; the reason that there seems, even in good times, a surplus of labor, and that in those times that we call bad, the times of industrial depression, there are all over the country thousands and hundreds of thousands of men tramping from place to place, unable to find employment.

Not work enough! Why, what is work? Productive work is simply the application of human labor to land, it is simply the transforming, into shapes adapted to gratify human desires, of the raw material that the Creator has placed here. Is there not opportunity enough for work in this country? Supposing that, when thousands of men are unemployed and there are hard times everywhere, we could send a committee up to the high court of heaven to represent the misery and the poverty of the people here, consequent on their not being able to find employment.

What answer would we get? "Are your lands all in use? Are your mines all worked out? Are there no natural opportunities for the employment of labor?" What could we ask the Creator to furnish us with that is not already here in abundance? He has given us the globe amply stocked with raw materials for our needs. He has given us the power of working up this raw material.

If there seems scarcity, if there is want, if there are people starving in the midst of plenty, is it not simply because what the Creator intended for all has been made the property of the few? And in moving against this giant wrong, which denies to labor access to the natural opportunities for the employment of labor, we move against the cause of poverty. ...

Yet there has been no disaster of fire or flood, no convulsion of nature, no destruction by public enemies. The seasons have kept their order, we have had the former and the latter rain, and the earth has not refused her increase. Granaries are filled to overflowing, and commodities, even these we have tried to make dear by tariff, were never before so cheap.

This, however, is the question that the men of light and leading, the preachers, teachers, philanthropists, business men and editors of great newspapers, who all over the country are speaking and writing about the distress and raising funds for the unemployed, show no anxiety to discover. Indeed, they seem averse to such inquiry. "The cause of the want of employment," they say, tacitly or openly, "is not to be considered now. The present duty is to keep people from starving and freezing, or being driven to break in and steal. This is no time for theories. It is a time for alms."

This attitude, if one considers it, seems something more than strange. If in any village a traveller found the leading men clustered about the body of one who had clearly come to untimely death, yet anxious only to get it buried; making no inquiry into the cause of death, and even discouraging inquiry, would he not suspect them of knowing more of that cause than they cared to admit? Now, this army of unemployed is as unnatural as is death in the prime of life and vigor of every organ and faculty. Nay, it involves presumption of wrong as clearly as cut throat or shattered skull.

Yet this is to be expected. For the question of the unemployed is but a more than usually acute phase of the great labor question -- a question of the distribution of wealth. Now, given any wrong, no matter what, that affects the distribution of wealth, and it follows that the leading class must be averse to any examination or question of it. For, since wealth is power, the leading class is necessarily dominated by those who profit or imagine they profit by injustice in the distribution of wealth. Hence, the very indisposition to ask the cause of evils so great as to arouse and startle the whole community is but proof that they spring from some wide and deep injustice.

What that injustice is may be seen by whoever will really look. We have only to ask to find.

But there is no need for charity; no need for "making work." All that is needed is to remove the restrictions that prevent the natural demand for the products of work from availing itself of the natural supply. Remove them today, and every unemployed man in the country could find for himself employment tomorrow, and his "effective demand" for the things he desires would infuse new life into every subdivision of business and industry, even that of the dentist, the preacher, the magazine writer, or the actor.

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

WE talk about the supply of labor, and the demand for labor, but, evidently, these are only relative terms. The supply of labor is everywhere the same — two hands always come into the world with one mouth, twenty-one boys to every twenty girls; and the demand for labor must always exist as long as men want things which labor alone can procure. We talk about the "want of work," but, evidently it is not work that is short while want continues; evidently, the supply of labor cannot be too great, nor the demand for labor too small, when people suffer for the lack of things that labor produces. The real trouble must be that the supply is somehow prevented from satisfying demand, that somewhere there is an obstacle which prevents labor from producing the things that laborers want.

Take the case of anyone of these vast masses of unemployed men, to whom, though he never heard of Malthus, it today seems that there are too many people in the world. In his own wants, in the needs of his anxious wife, in the demands for his half cared for, perhaps even hungry and shivering, children, there is demand enough for labor, Heaven knows! In his own willing hands is the supply. Put him on a solitary island, and though cut off from all the enormous advantages which the co-operation, combination, and machinery of a civilized community give to the productive powers of man, yet his two hands can fill the mouths and keep warm the backs that depend upon them. Yet where productive power is at its highest development, he cannot. Why? Is it not because in the one case he has access to the material and forces of nature, and in the other this access is denied? — Progress & Poverty Book V, Chapter 1, The Problem Solved: The primary cause of recurring paroxysms of industrial depression

NOW, why is it that men, have to work for such low wages? Because, if they were to demand higher wages, there are plenty of unemployed men ready to step into their places. It is this mass of unemployed men who compel that fierce competition that drives wages down to the point of bare subsistence. Why is it that there are men who cannot get employment? Did you ever think what a strange thing it is that men cannot find employment?  If men cannot find an employer, why can they not employ themselves? Simply because they are shut out from the element on which human labor can alone be exerted; men are compelled to compete with each other for the wages of an employer, because they have been robbed of the natural opportunities of employing themselves; because they cannot find a piece of God's world on which to work without paying some other human creature for the privilege. — The Crime of Poverty

WE laud as public benefactors those who, as we say, "furnish employment." We are constantly talking as though this "furnishing of employment," this "giving of work" were the greatest boon that could be conferred upon society. To listen to much that is talked and much that is written, one would think that the cause of poverty is that there is not work enough for so many people, and that if the Creator had made the rock harder, the soil less fertile, iron as scarce as gold, and gold as diamonds; or if ships would sink and cities burn down oftener, there would be less poverty, because there would be more work to do. — Social Problems, Chapter 8 — That We All Might Be Rich

YOU assert the right of laborers to employment and their right to receive from their employers a certain indefinite wage. No such rights exist. No one has a right to demand employment of another, or to demand higher wages than the other is willing to give, or in any way to put pressure on another to make him raise such wages against his will. There can be no better moral justification for such demands on employers by working-men than there would be for employers demanding that working-men shall be compelled to work for them when they do not want to, and to accept wages lower than they are willing to take. — The Condition of Labor, an Open Letter to Pope Leo XIII 

THE natural right which each man has, is not that of demanding employment or wages from another man, but that of employing himself — that of applying by his own labor to the inexhaustible storehouse which the Creator has in the land provided for all men. Were that storehouse open, as by the single tax we would open it, the natural demand for labor would keep pace with the supply, the man who sold labor and the man who bought it would become free exchangers for mutual advantage, and all cause for dispute between workman and employer would be gone. For then, all being free to employ themselves, the mere opportunity to labor would cease to seem a boon; and since no one would work for another for less, all things considered, than he could earn by working for himself, wages would necessarily rise to their full value, and the relations of workman and employer be regulated by mutual interest and convenience. — The Condition of Labor, an Open Letter to Pope Leo XIII 

... go to "Gems from George"

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

Q58. What expected result of the single tax needs studious emphasis?
A. That it would unlock the land to labor at its present value for use, instead of locking out labor from the land by a prohibitive price based upon the future value for use.... read the whole article

John Dewey: Steps to Economic Recovery

You have heard much about various steps that should be taken to promote economic recovery. I propose this evening to concentrate attention upon one step, a step absolutely fundamental to permanent recovery of the sick patient, as distinct from remedies that dope the patient into a temporary hectic burst of activity; a step so simple and so basic as to be generally neglected.

The one thing uppermost in the minds of everybody today is the appalling existence of want in the midst of plenty, of millions of unemployed in the midst of idle billions of hoarded money and unused credit, as well as factories and mills deteriorating for lack of use, of hunger while farmers are burning grain for fuel.

No wonder people are asking what sort of a crazy economic system we have when at a time when millions are short of adequate food, when babies are going without the milk necessary for their growth, the best remedy that experts can think of and that the Federal Government can recommend is to pay a premium to farmers to grow less grain with which to make flour to feed the hungry, and pay a premium to dairymen to send less milk to market.

Henry George called attention to this situation over fifty years ago. The contradiction between increasing plenty, increase of potential security--and actual want and insecurity is stated in the title of his chief work, Progress and Poverty. That is what his book is about. It is a record of the fact that as the means and appliances of civilization increase, poverty and insecurity also increase. It is an exploration of why millionaires and tramps multiply together. It is a prediction of why this state of affairs will continue; it is a prediction of the plight in which the nation finds itself to-day. At the same time it is the explanation of why this condition is artificial, man-made, unnecessary, and how it can be remedied. So I suggest that as a beginning of the first steps to permanent recovery there be a nationwide revival of interest in the writings and teachings of Henry George and that there be such an enlightenment of public opinion that our representatives in legislatures and public places be compelled to adopt the changes he urged. ... read the whole speech

Henry George: The Great Debate: Single Tax vs Social Democracy  (1889)

What would be the direct result? Take this city, this State or the whole country; abolish all taxes on the production of wealth; let every man be free to plough, to sow, to build, in any way add to the common stock without being fined one penny. Say to every man who would improve, who would in any way add to the production of wealth: Go ahead, go ahead; produce, accumulate all you please; add to the common stock in any way you choose; you shall have it all; we shall not fine or tax you one penny. What would be the result of abolishing all these taxes that now depress industry; that now fall on labour; that now lessen the profits of those who are adding to the general wealth? Evidently to stimulate production; to increase wealth; to bring new life into every vocation of industry.

On the other side what would be the effect when abolishing all these taxes that now fall on labour or the products of labour, if we were to resort for public revenue to a tax upon land values; a tax that would fall on the owner of a vacant lot just as heavily as upon the man who has improved a lot by putting up a house; that would fall on the speculator who is holding 160 acres of agricultural land idle, waiting for a tenant or a purchaser, as heavily as it would fall upon the farmer who had made the 160 acres bloom? Why, the result would be everywhere that the dog in the manger would he checked; for the result everywhere would he that the men who are holding natural opportunities, not for use but simply for profit, by demanding a price of those who must use them, would have either to use their land or give way to somebody who would.

Everywhere from the Atlantic to the Pacific, from the lakes to the gulf, opportunities would be opened to labour; there would come into the labour market that demand for the products of labour that never can be satisfied — the demands of labour itself. We should cease to hear of the labour question. The notion of a man ready to work, anxious to work, and yet not able to find work, would be forgotten, would be a story of the misty past.   Read the entire article

Henry George: Progress & Poverty: Introductory: The Problem

Now, however, we are coming into collision with facts which there can be no mistaking. From all parts of the civilized world come complaints;

• of industrial depression;
• of labor condemned to involuntary idleness;
• of capital massed and wasting;
• of pecuniary distress among business men;
• of want and suffering and anxiety among the working classes.

All the dull, deadening pain, all the keen, maddening anguish, that to great masses of men are involved in the words "hard times," afflict the world today. This state of things, common to communities differing so widely in situation, in political institutions, in fiscal and financial systems, in density of population and in social organization can hardly be accounted for by local causes. ... read the entire chapter

Lindy Davies: Land and Justice

If we just look at the "ecological footprint," it's easy to be scared of the seemingly unavoidable damage we are doing to the earth. But seeing "the footprint" in terms of its components — subsistence, wealth, and illth — makes it clear that the fact of persistent and growing global poverty is not the inevitable result of population growth. I believe it’s true that the world cannot long support current levels of pollution, waste and habitat destruction — but these problems spring not from production itself — and certainly not from trade, itself — but from privileges, granted to individuals and corporations — things that we can correct, if we choose to.

To solve the problem of land and justice is to remove unjust privilege, by instituting an economic system that rewards production and prohibits extortion.

It’s all about the land: not only is land necessary for all life — land is also necessary for all production. So, as human population increases, and as the production of wealth gets more and more efficient, the demand for land goes up, and, of course, the land factories start cranking out more land!

Wait! They can't DO that, can they?

Wealth — products, widgets — these things are made by human beings. If customers are willing to buy more of them, then manufacturers will make more of them. But human beings can't make land. The supply of land cannot be increased. If the demand for land increases, only one thing can happen: its price will go up.

The owners of land see population and production go up, up, up — and no more land. So, they will only put their land to use if they have an immediate need for the cash. If they can afford to wait, they will wait, because they expect the land's value to increase with time.

That, in a nutshell, is the key to the land problem — the problem of poverty.

That is why millions upon millions of people who are willing and able to work cannot find work, even while millions upon millions of acres of useable land (city land, industrial land, farm land, you name it) are held idle.

This leads to no end of problems. In the United States, it brings urban blight and suburban sprawl, which disrupt communities, and waste energy and resources. You don’t think under-use of land is that big a deal? Consider the fact that in the five boroughs of New York City, 7.5% of its land, or 18.6 square miles, is vacant. That’s buildable land, not parks or streets. And, of course, a great deal more land in New York, as in every other city, is used somewhat, but far less than the local economy would support. New York City has about 80 people per acre of residential land. That means that New York’s vacant land could house another 956,000 people at current density levels, without even starting to use its vast stock of under-used land. ... read the whole speech

Mason Gaffney: Land as a Distinctive Factor of Production

The most important path is that public collection of the value of exclusive use of natural opportunities provides revenue that makes it possible to remove taxes from the earnings of labor and capital. When people are taxed less, they earn more. Using data that emerged from changes in U.S. tax rates, Feldstein has estimated that the elasticity of earnings with respect to the fraction of income not taken at the margin by federal taxes is at least 1.0 (and more for workers in higher tax brackets).6 When the entity that removes a tax on labor is less than global, this action also attract labor to the region.

When taxes are removed from capital, the effect is even more powerful, as long as the entity removing the tax is less than global. Capital is extremely mobile in response to regional changes in net returns. It is highly counterproductive for any locality or nation to tax capital, because there will be virtually no effect on the return to capital after taxes. Capital will merely be driven from the taxed region until the return after taxes matches what can be obtained elsewhere. If the whole world removes taxes from capital, the resulting increase in the rate of return to capital will increase the rate of saving, but the adjustment will occur over some years.

Taxing land has an additional effect that increases the stock of capital. A tax on land represents a redistribution from living adults to the young and unborn, who will now be born with rights to land. Unless there is a perfectly offsetting reduction in the desire to accumulate assets to transfer to the next generation, this redistribution will induce the living, who now have fewer assets, to accumulate at a more rapid rate than they would otherwise do. That is, saving and capital accumulation will increase.

Taxing land also increases the efficiency with which land is used. This occurs through three paths.

• First, a tax on land reduces the return to land speculation, and therefore reduces the quantity of land speculation.
• Second, as taxes on land are capitalized into the selling price of land, the result is the substitution of a recurring cost (the annual tax) for a one-time cost (the purchase price). This makes land relatively more attractive to bidders with high discount rates and relatively less attractive to bidders with low discount rates. To the extent that the former are more entrepreneurial and the latter more passive investors, land will tend to flow into the hands of persons who will choose to use it more intensively.
• The third path by which a tax on land increases the efficiency with which land is used is that, for those who are using land inefficiently, it substitutes an explicit cost (the tax) for an implicit one (the income foregone by inefficient use).

Psychologically, explicit costs tend to be more effective in motivating efficient behavior than implicit ones.

VIII. An Estimate of the Magnitudes of the Consequences of Taxing Land

For all of the above reasons, the substitution of tax on land for taxes on labor and capital will increase the efficiency of an economy. To estimate the magnitudes of these consequences, one needs a model of the economy. Consider the following model. There is a three-factor CES (constant elasticity of substitution) production function:

Q = (aTà + bLà + cKà)(1/à). (1)

where Q is output, T is the quantity of land, L is the quantity of labor, K is the quantity of capital, a, b and c are coefficients, and à is related to the elasticity of substitution, å, by à = 1 - 1/å. Land has a completely fixed supply. Labor is assumed to have an elasticity of supply of 0.8 (adjusting Feldstein's number for the fact that he was considering only federal income taxes. Capital is assumed to be supplied perfectly elastically. Taking the ratio of compensation of employees to Net Domestic Product in National Income and Product Accounts, I assume that labor receives two thirds of output. Somewhat arbitrarily, I assume that the remaining third is divided equally between land and capital. I estimate that the marginal tax rate on labor is 43% (28% for the federal income tax, 12% for the combination of state income taxes indirect taxes, and 3% for the Medicare tax--I treat social security as having benefits equal to its costs, and therefore not a tax.) I estimate the marginal tax rate on land and capital at 50% (28% for the federal income tax, 12% for the combination of state income taxes and indirect taxes, plus 10% for profits taxes). The elasticity of substitution is a parameter that I am very unsure of. But Feldstein has estimated that the marginal welfare cost of taxation is 1.65, and I get that result with a å of 0.68, so I assume that å = 0.68.

I have a spreadsheet that takes parameters such as the ones named and determines what would happen (in a comparative static framework) if all taxes were removed from labor and capital, and 100% of the rent of land were taxed. Here are the results:

• The quantity of labor would increase by 55%.
• The quantity of capital would increase by 145%.
• Output would increase by 53%.
• The wage before taxes would fall by 1.7%, but the wage after taxes would increase by 72%.
• The rent of land would increase by 87%, and would provide more than enough revenue for all existing expenditures of all levels of government in the U.S., other than social security.
  
The aggregate improvement in well-being of citizens would be about 12.6% of output, or about $1 trillion per year. ... Read the entire article

• On the one hand there are millions of people - many highly-skilled - wanting to work, some desperately so.
• And on the other hand there is work aplenty to do - to care for the elderly, to clean up the environment, to build better housing, to improve our teacher-student ratio, to expand our infrastructure etc. etc.

• pay rent to somebody else ... or
• live in a caravan park or
• share a home with relatives or friends or
• have no place to call "home". 

• We have found that a high and burdensome tax rate on improvements will discourage residential construction, create unemployment, penalize home-ownership, aggravate the housing shortage and force up rents.
• Yet a low tax rate on land will have similar if not identical effects: it will lead to a rise in urban land values, which in turn will discourage residential construction, create unemployment, penalize home-ownership, aggravate the housing shortage and force up rents.