|Wealth and Want|
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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)
Henry George: Thou Shalt Not Steal (1887 speech)
Crowded! Is it any wonder that people are crowded together as they are in this city, when we see other people taking up far more land than they can by any possibility use, and holding it for enormous prices? Why, what would have happened if, when these doors were opened, the first people who came in had claimed all the seats around them, and demanded a price of others who afterwards came in by the same equal right? Yet that is precisely the way we are treating this continent.
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. ...
A few weeks ago when I was traveling in Illinois a young fellow got into the car at one of the mining towns. Entering into conversation with him, he said he was going to another place to try to get work. He told me of the condition of the miners, that they could scarcely make a living, getting very small wages, and only working about half the time. I said to him: "There is plenty of coal in the ground; why don’t you employ yourselves in digging coal?" He replied: "We did get up a co-operative company, and we went to see the owner of the land to ask what he would take to let us sink a shaft and get out some coal. He wanted $7,500 a year. We could not raise that much." Tax land up to its full value, and how long can such dogs-in-the-manger afford to hold that coal land away from these men? And when people who want work can go and employ themselves, then there will be no million or no thousand unemployed people in all the United States. ... read the whole articleHenry George: How to Help the Unemployed (1894)
AN EPIDEMIC of what passes for charity is sweeping over the land. ...
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.
The scarcity that is distressing and frightening the whole country is a scarcity of employment. ...
Yet why is it that men able to work and willing to work cannot find work? ...
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.
What more unnatural than that alms should be asked, not for the maimed, the halt and the blind, the helpless widow and the tender orphan, but for grown men, strong men, skilful men, men able to work and anxious to work! What more unnatural than that labor -- the producer of all food, all clothing, all shelter -- should not be exchangeable for its full equivalent in food, clothing, and shelter; that while the things it produces have value, labor, the giver of all value, should seem valueless!
For willingness to work depends on what can be had by work and what can be had without work, and the personal and social estimate of the relation. Work is in itself painful and repellent. ... What keeps any of us at work are our desires and hopes -- our wants and our pride. Kill hope and lessen desire by crucifying the feeling of personal independence and accustoming your man to a life maintained by alms, and you will make of the most industrious a tramp. For the law of our being is that we seek the gratification of our desires with the least exertion. Why should charity be offered the unemployed? It is not alms they ask. They are insulted and embittered and degraded by being forced to accept as paupers what they would gladly earn as workers. What they ask is not charity, but the opportunity to use their own labor in satisfying their own wants. Why can they not have that? ...
Charity can only palliate present suffering a little at the risk of fatal disease. For charity cannot right a wrong; only justice can do that. ...
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.
What do we mean when we say that it is scarcity of employment from which the masses are suffering? Not what we mean when we say of the idle rich that they suffer from want of employment. ... Nor yet do we mean that there is scarcity of the natural materials and forces necessary for work. ... What we really mean by "scarcity of employment " is such scarcity as would be brought about were an ice sheet continued into the summer to shut out the farmer from the fertile field he was anxious to cultivate; such a scarcity as was brought about in Lancashire when our blockade of the Southern ports raised suddenly and enormously the price of the staple that English operatives were anxious to turn into cloth.
What answers to the ice sheet or the blockade? Need we ask? May it not be seen, from our greatest cities to our newest territories, in the speculation which has everywhere been driving up the price of land -- that is to say, the toll that the active factor in all production must pay for permission to use the indispensable passive factor. ...
If there are any who do not see the relation of these facts, it is because they have become accustomed to think of labor as deriving employment from capital, instead of, which is the true and natural relation, capital being the product and tool of labor. ...
So that, whether we begin at the right or the wrong end, any analysis brings us at last to the conclusion that the opportunities of finding employment and the rate of all wages depend ultimately upon the freedom of access to land; the price that labor must pay for its use.
... If three families settled a virgin continent, one family could command the services of the others as laborers for hire just as fully as though they were its chattel slaves, if it was accorded the ownership of the land and could put its own price on its use. ... Today, as the last census reports show, the majority of American farmers are rack-rented tenants, or hold under mortgage, the first form of tenancy; and the great majority of our people are landless men, without right to employ their own labor and without stake in the land they still foolishly speak of as their country. This is the reason why the army of the unemployed has appeared among us, why by pauperism has already become chronic, and why in the tramp we have in more dangerous type the proletarian of ancient Rome. ...
There is but one remedy, and that is what is now known as the single-tax -- the abolition of all taxes upon labor and capital, and of all taxes upon their processes and products, and the taking of economic rent, the unearned increment which now goes to the mere appropriator, for the payment of public expenses. Charity can merely demoralize and pauperize, while that indirect form of charity, the attempt to artificially "make work" by increasing public expenses and by charity woodyards and sewing-rooms, is still more dangerous. If, in this sense, work is to be made, it can be made more quickly by dynamite and kerosene. "Scarcity of employment" is a comparatively new complaint in the United States. In our earlier times it was never heard of or thought of. There was "scarcity of employment " in Europe, but on this side of the Atlantic the trouble -- so it was deemed by a certain class -- was "scarcity of labor."
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.
The country is suffering from "scarcity of employment." But let anyone to-day attempt to employ his own labor or that of others, whether in making two blades of grass grow where one grew before, or in erecting a factory, and he will at once meet the speculator to demand of him an unnatural price for the land he must use, and the tax-gatherer to fine him for his act in employing labor as if he had committed a crime. ... Read the entire article
Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)
Charles B. Fillebrown: A Catechism of Natural Taxation, from Principles of Natural Taxation (1917)
John Dewey: Steps to Economic Recovery
How is labour to get the land? How has labour got the land when it was much further off? Irish labourers have gone some 3,000 miles across the sea; and then in many cases 1,000 miles further west, by saving or by borrowing some member of the family has gone across, and their earnings have constituted an emigration fund for the rest of the family. That great emigration has been going on all these years, not by capital supplied by the Government, but by capital earned by the strong arm of labour. (Applause.) The whole development of the United States, the whole development of every new country, proves the fallacy of this assertion that labour cannot employ itself without capital, and proves the fallacy of the assertion, that the opening of land to labour would do nothing to improve wages. Go into a new country where land is free; go into a country where the price of land is not yet high, and there, you will find no such thing as an unemployed man; there you will find no such thing as a man begging for employment as though it were a boon. (Hear, hear.) ... Read the entire article
Henry George: Justice the Object -- Taxation the Means (1890)
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
Lindy Davies: Land and Justice
Tip O'Neil, the former Speaker of the US Congress, is oft-quoted that "All politics is local politics." One might say the same of market power. Some lands are sold or leased with covenants against competition, as Gimbel's Department Store holds a covenant on a lot adjoining its parent store on 3rd Street and Wisconsin Avenue, Milwaukee. Such anticompetitive arrangements, however blatant, are intra-state, and apparently immune from sanctions under US Federal anti-trust laws. Scholars of industrial organization, many of them doing outstanding work otherwise, pay these grass-roots matters little heed. Researchers and activists concentrate on commodity markets at national and world levels -- the ones subject to Federal sanctions, such as they are. They could probably find more severe and blatant market failure in local land markets.
Bargaining power increases with the number of options one has. A large landowner with a chain of holdings in different jurisdictions is positioned to bargain, to play off one against the other. Thus, the Disney Corporation, 1991-93, considered rebuilding and expanding Disneyland at its current site in Anaheim, or in Long Beach where it had tenure over another suitable site. Using this leverage it won concessions from both cities, "finally" choosing to expand in Anaheim. It has yet to do so, however, and nothing is really final. Disney has many other sites around the world.
Likewise, land is a basis for oligopsony power in local labor markets. A city's labor pool is often faced with a local employers' association whose membership is limited by the amount of industrial land within reach of the labor pool. Migrant farm labor is faced with statewide employers' associations who have the advantages of limited numbers, wealth, ancient roots and stability. Labor unions that organize a local plant are faced with the threat of the "runaway shop", or merely reallocating work among plants, when the employer owns plants elsewhere.
Custom has dulled us to it, but a corporation is a pool of separate individual landowners bargaining in concert. A century ago, corporations and limited liability were viewed with suspicion and apprehension. Today, hundreds and thousands of separate landowners pool their corporate strength against labor, as a matter of course. Some employees bargain through unions, but not as a matter of course, and hardly ever with international options. In the US, less than 20% of the labor force is unionized, yet many, probably most economists treat labor as the only threatening monopoly. They see corporations as benign; a prime cause carried by many economists today is to eliminate the corporate income tax completely. Would we saw such support for eliminating the payroll tax, the most obvious cause of unemployment. ... read the whole article
Nic Tideman: Applications of Land Value Taxation to Problems of Environmental Protection, Congestion, Efficient Resource Use, Population, and Economic Growth
VII. Economic Growth
Recognition of the equal rights of all to natural opportunities, through land value taxation and its extension to charges for the use of other resources, is not only just and efficient, but has the capacity to make a major contribution to economic growth. This occurs through a variety of paths.
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.
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:
Karl Williams: Social Justice In Australia: INTRODUCTORY KIT
Here it's appropriate to introduce another grand claim - that unemployment is simply unnecessary. We hold that the mass of idle unemployed should complement (and mutually satisfy) all the many needs for more work - building better housing, looking after pre-schoolers and the elderly, cleaning up the environment, developing better infrastructure etc. etc. But why can't they obviously come together? Unemployment is unnecessary - it's economic insanity! This insanity only reveals itself in rare situations, such as a national crisis (a war or natural disaster), when suddenly the whole country can be "mysteriously" mobilised. The main reason we have unemployment is because we have a system of taxation and land tenure which encourages speculation and discourages the production of real wealth.Karl Williams: Social Justice In Australia: INTERMEDIATE KIT
Now, we don't expect that this brief explanation of unemployment is enough to satisfy anyone. But here we want to make the point that the detailed solution to the riddle of unemployment will be given after the general overview that is this Introductory Kit. Recognising the unique qualities of land and its tax implications turns the economic system the right way up, providing dynamic incentive rather than suffocation. This is just a sketch of an important piece of the Geonomic puzzle, but there's much more - particularly concerning social justice, the environment, civil liberties, reducing great wastage, the ending of tax evasion, booms & busts, and even world peace. Read the entire article
But - incredibly - who bothers to study economics today besides professionals? Yet is there anything more important to understand than economics - the great attempt to find out what makes our world go around - except the great Journey to understand our very selves?
All the facets you gaze upon are not of equal size or luminosity, and there's one area that clearly outshines all the rest. If this is the only facet upon which you gaze and understand, then the energy you've spent on Geonomics will have been amply rewarded. This facet is, in many ways, the keystone of the arch of economics. We refer to the mystery - some would say the madness - of unemployment.
The existence of unemployment should strike one as being quite absurd.
And yet, these two things can't presently come together to satisfy each other.Karl Williams: Social Justice In Australia: ADVANCED KIT - Part 2
So we're spiraling around, looking at all sorts of interesting aspects, but not haphazardly. For we're deliberately preparing ourselves to reach the top of the spiral, to find the great economic key which will impact on just about every other aspect. For if you solve unemployment then you unlock one of the mighty doors to prosperity, and if you abolish the great curse of poverty then you'll find that there are powerful and positive impacts on all the other problems concerning the environment, social problems, war, education and more.
Sounds mad, doesn't it? That we should claim to have an answer to something on which politicians can never deliver, over which think tanks continue to scratch their heads, that highly-educated academics cannot answer. Now just visualise all these important people striding back and forth, heads down and deep in thought over the Riddle of Unemployment. The wonderful irony is that they're looking at the solution! In fact, they're standing on it - it's the Earth itself! The Earth Belongs to Everyone! And, factoring into our economic theories the distinguishing features between land and capital, the laws of economics are turned the right way up and now stand out by themselves!
So, with that tantalising clue as to where we're ultimately headed in the Advanced Kit, let's do a bit of spiraling. ... Read the entire article
UNEMPLOYMENT -- THE PIECES OF THE PUZZLE
"Those who make private property of the gift of God pretend in vain to be innocent. For, in thus retaining the subsistence of the poor, they are the murderers of those who die every day for the want of it." (Cura Pastoralis) - Pope St. Gregory I (The Great), (540 - 604)
If only the solution to this and other economic problems was simple to explain... Then the world wouldn't be in this situation, people wouldn't be bamboozled by economics, and you wouldn't be reading this.
Of all economic problems, probably the most difficult to explain is unemployment, whose very existence is evidence of the madness of our present economic system. On the one hand we have all the work that badly needs doing, and on the other we have the countless millions of people who are prevented from doing that work. All the conventional think tanks in the world have not been able to solve this straightforward puzzle, because they are handicapped from the outset by their failure to distinguish between land and capital.
There are so many aspects to the problem of unemployment that we've had to take the long route, spiraling around and around until the big picture is built up. We've examined many other aspects of economics, but the problem of unemployment is such a curse - such an unnecessary curse - that it's worth trying to get clear about it by pulling together most of its strands here. Geonomics is not preoccupied with making everyone work long and hard. In fact, we're convinced that we're working far too hard for far too little return. Social justice, prosperity and much more leisure time can co-exist.
A summary of what we've said about unemployment goes like this. The unique qualities of land are not recognised by neoclassical economics. Whereas capital and labour are punished and discouraged by taxation, LVT doesn't provide a disincentive but rather compels landholders to use their land optimally. And with public sector investment, there are endless employment opportunities arising from the way LVT recycles the value of government investment back to the community for further investment.
In agricultural areas of developing nations we see some of the worst examples of unemployment (or underemployment) and grinding poverty. There, the power of land monopoly capitalism enables the traditional landowning families to sit back and wait until the desperate landless are forced to accept subsistence wages. The landless are landless because they can't create their own land, the first ingredient in any productive endeavour. But LVT would put the boot on the other foot, forcing huge amounts of underused land on to the market and forcing landowners to offer fair wages.
In the West, it's more often than not the high price of land which stifles production and employment. The full collection of LVT would actually eliminate that great obstacle to business and employment (or simply living!), the cost of land. We have been stooged by real estate dealers into thinking that high land prices are "healthy" rather than crippling. The diversion of investment funds from productive enterprises into purchasing land is another related cause of unemployment.
IDLE LAND, IDLE HANDS
Land speculation leads to idle land, and idle land to idle hands. LVT would prevent all forms of land speculation: would-be profiteers couldn't afford to wait for the community to build up the value of their idle land because all the time they would have to pay LVT.
The huge amount of present waste, inevitably arising from land monopoly capitalism, could instead be changed into employment-creating opportunities. Such waste results from undervalued natural resources, and can be seen in urban sprawl, in the huge inefficiency of our tax system with its crippling compliance costs and all the attempts to thwart it (including the black economy).
"The earth is given as a common stock for men to labor and to live on ... Wherever in any country there are idle lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right". - Thomas Jefferson, (1743 - 1846) ... Read the entire article
Jeff Smith: What the Left Must Do: Share the Surplus
What would you do if you could work two days and take five off? Write? Play soccer? Tend to the community garden? Time off is an option made increasingly viable by our relentlessly rising rate of productivity. French Marxist and media critic Jean Baudrillard, while still advancing the interests of labor, implores the Left to move on from seeing humans as workers to seeing workers as human beings, with more needs than merely the material. Enabling people to live their lives more fully is an issue made to order for rescuing the Left from the doldrums that descended when “history ended”.
What would single mothers do with enough income to stay home? What would minorities do with the wherewithal to begin their own businesses? What would communities do if they did not leak resources up to an upper class and out to a distant lender or tax collector? What would the elite do without our commonwealth? ...
The Left requests and the Right promises jobs – the Left for the income, the Right in order to keep people in their place. Workers want to be paid for going along with the program. Bosses want to accommodate them, albeit not fully; maintaining some unemployment spooks workers and keeps wages down. Since jobs are the knee-jerk cure of everyone, they can not be the signature issue of the Left. Nor can they lift our sights. The call for jobs does not come from a place of respect but from a willingness to accept the status quo, with prevailing hierarchy left intact.
To deliver a bigger pie, the Right touts efficiency and growth; to better distribute the pie, the Left urges equity and jobs. Yet jobs are less for distributing, more for producing – if that. As automation and globalisation expand the pie, they contract the workforce. Even when, or especially when, people take time off to go to war, output increases, proving we’re well over over-capacity. Juliet Schor in her Overworked American notes this rise in productivity does not bless us with leisure but curses us with unemployment.
However, even when employment is high, jobs still do a lousy job of distribution. They capture less than a fair return to labor while swallowing up our free time. Full employment with a liveable wage may mean jobs with justice for some, but not for those unable to work, and it reduces humans to workers, not players or creators.
Demanding jobs rather than a fair share of society’s surplus implies that there is no commonwealth or that expropriating it by a few is OK. Neither is true. Rents are real, and they are ours. There is a free lunch (just ask the privileged), as those downing it do get money for nothing. And since society, not lone owners, generates these values, that flow of funds belongs to everyone. ...
Whenever George’s followers convinced society to shift taxes off earnings, onto rents, that opened up opportunity. As collecting land rent knocks down land price, and as speculators turn into developers, and as formerly procrastinating governments become leasers, then the use of land rises. Using land requires labor, raising the demand for workers. More employment means higher wages. ...
As taxing land spurs employment, taxing labor and capital does just the opposite. Taxing salaries makes it more expensive to hire people. Taxing earned profits makes it more expensive to invest in firms that hire people. If you want jobs, don’t tax them. Demanding jobs while taxing wages is irrational. When we tax (or in other ways reduce) one’s efforts, most people naturally produce less. Less output not only shrinks private assets but also the formation of public assets downstream.
Unlike taxing earned incomes, which shrinks the pie, collecting rent grows the pie. While taxes on effort lessen the motivation to produce, charging people rent for what’s already been provided, by definition, does not diminish the motive to produce. Instead, recovering rent removes the private profit from speculating in land and resources. And once we redirect revenue from sweetheart deals (e.g., Pentagon contracts), tax breaks (e.g., depletion allowances), and subsidies (e.g., agri-business support) into a general dividend, then why bother currying favours from the state? Finding rent-seeking from both nature and the legislature less profitable, investors would turn to improving production: new technology and worker re-training, providing society more from less.
In The Nation, Robert Fitch ('90 Oct 29), author of The Assassination of New York(1993), stated,
"A tax levied on land used for commercial purposes is the ideal tax. It would fall on the richest families and institutions, it can't be shifted to consumers and owners can't move their property to another state. Almost invariably, if you tax something the capitalists will produce less of it and charge you more for it. But land is different. Most of it was produced once and for all by God."
Increasing taxes, fees, or dues upon land, resources, and privileges won’t force firms to raise prices; the ones who try to will lose customers to those who don’t; in the end, all will have to settle for smaller profits. On the other hand, de-taxing labor and capital, by lowering overhead, lets firms lower the price of their products, while competition drives them to. The resultant lower cost of living – coupled with higher wages and the social salary – lets those with enough stuff work less, so those without enough stuff can work more.
Given the collateral damage by most taxes, the Left must make clear that the extra income is to come not from taxes upon people’s legitimate earnings but from rent, making it a social salary from society’s surplus. While opponents will cry “redistribution”, the Left can point out that sharing the commonwealth is actually “predistribution.” Acting like a REIT (Real Estate Investment Trust) for the public, government would merely recover and disburse rents before the elite or their friendly politicians have a chance to misspend society’s surplus. ... Read the whole article
Maurie Fabrikant: An Open Letter to Wayne Swan
The "Great Australian Dream" now - as in preceding years - has been to own your own home. From their earliest years of adulthood, most citizens have attempted to purchase "a roof over their head." It used to be - no more than two human generations ago - "a three-bedroom weatherboard - or brick veneer, if you could afford it! - on a quarter-acre block in the suburbs." Most citizens - then - succeeded in realising that dream; at least they started repaying a loan that was large compared with their earnings. Nowadays, it's quite impossible for most. Why? Simply because land-price has escalated out of the reach of most. Allow me to give you a specific instance:- ...
As you can very clearly see, it now costs couples - or singles - a great deal more to own a residence. Naturally, if they don't own their own residence, they must
None of these alternatives lead to a high quality lifestyle and undoubtedly are potent factors in separation and divorce and reliance on drug abuse which, itself, leads to anti-social - even criminal - behaviour. We also know to our great regret that these aberrations are becoming increasingly prevalent. So is there a solution? And if so, what is it?
In my opinion, there certainly is a solution ... but, seemingly, very few want to know it. Judging by your article, I think you do. Here it is: ...
Modern conventional wisdom is that increasing land price signifies a healthy economy. Exactly the reverse is true! Increasing land price demonstrates that much money is being invested in real estate and that necessarily means that less money is being invested in productive ventures. Increasing land price causes increasing rents ... because the land owner must derive sufficient income to pay the interest charged on the loan needed to buy the land and its improvements. This makes it increasingly difficult for businesses to trade profitably ... especially when there is a plethora of complicated taxes that cause extremely high compliance costs. It's no wonder that more and more goods are now imported as local manufacturers choose to close their operations. In many places in Australia, land lies relatively idle. For example, in Melbourne's CBD, several large blocks have been idle for years and in the suburbs, shops remain empty for months, even years. Yet government-released figures on unemployment - the reality may well be much worse! - admit that unemployment exceeds 6%. The old adage, "Idle lands cause idle hands" is clearly demonstrated in Australia ... and elsewhere.
The only possible "winners" in this "game" are those who presently own land; the more they own, the more they have the potential to "win". Land owners enjoy enormous increase in the price of land they own simply because they were able to purchase it when its price was comparatively low. They do not - in their role as owners - contribute in any way to the prosperity of the nation. Indeed, because they grow wealthier without producing, they are, in fact, parasites! That sounds incredible but it is true nonetheless. How so? Simply because those owners receive part of the wealth earned by all citizens; at least some of that wealth is used to push up land prices but only owners enjoy those increased prices. Tenants certainly do not! All who labour - and this includes land owners who perform labour! - are thereby effectively robbed of some of their earnings. (Please note that I do not blame landowners personally; most would - I'm certain - be horrified to think that they are parasites. The fault lies in the parliamentary enactments that permit such a situation to prevail.)
Difficult as the situation is now, it will be worse still in another two human generations' time. How so? Because the same forces that have been exerted in the past continue unabated. In fact, these forces appear to be intensifying! Taxation is continuing to escalate as pressure groups clamour ever louder for financial assistance. The average rate at which personal income tax is levied is increasing - even though the maximum rate levied is falling - and sales taxes and the like are being applied to a widening range of goods and services. The wealthy continue to derive benefit from the tax-minimisation experts they employ - because they save more tax than they pay to those experts - leaving the relatively poorly-paid employees to carry most of the burden. Unless, of course, steps are taken to change these tendencies, Australia will become an increasingly unpleasant country in which to live. That's definitely not the future I want for my 3 children and 7 grandchildren. And I'm sure you don't, either!
The solution to this conundrum is, perhaps amazingly, incredibly simple; namely, require all owners of land - in fact, all natural resources, including intangibles such as broadcast bands, to pay to all Australians, via the government, an annual rental in exchange for exclusive ownership rights to those natural resources. What could be fairer? If a citizen has exclusive ownership rights to a natural resource, that obviously means that all others have no rights to it whatsoever. Therefore, that citizen must pay compensation - in the form of a periodic rent - to all others. Now that's a perfect manifestation of "user pays". How big is this periodic rent? That's simply answered, too. It's what the citizens, generally, think that natural resource is worth! And that's easily - and accurately - determined by valuers, individuals who have great experience because they simply note the prices at which similar natural resources in the vicinity - both in space and in time - are sold then use those prices to predict that of a similar resource.
This would constitute real tax reform and - when implemented - would obviate the need for income taxes and sales taxes. How is this? When a continuing rent is charged for ownership rights to a natural resource, that natural resource will have little or no purchase price. Setting up a business or residence will be much cheaper first up as only the improvements must be paid for initially. Money that presently must be borrowed to pay for access to natural resources will become available for productive purposes. Because rents will be payable on all natural resources that are privately owned - whether or not they are in use - those natural resources will become used or will return to the nation as public land. Speculation in natural resources will be immediately terminated thus eliminating a major factor in escalating price. The converse of the old adage quoted earlier is apposite:- Far less idle land will translate into far fewer idle hands! That will translate into a reduced need for social security expenditure. Additionally, lower levels of unemployment will cause reduced anti-social and criminal activity with consequent savings in law enforcement, punishment and rehabilitation. And elimination of most of our taxation regulations will cause compliance costs to all but disappear. The brakes that presently retard Australia's productivity will not merely be released; they will be discarded! ... read the entire article
Herbert J. G. Bab: Property Tax -- Cause of Unemployment (circa 1964)
To the extent that property taxes discourage residential construction and the improvement and modernization of homes they create unemployment. The housing construction industry employed about 2,200,000 people in 1962, that is about 1.4 persons per housing unit. Any change in the direction of home building employment is multiplied 2.57 times. Thus an increase in housing starts by 50% would give employment to 2.8 million persons. An increase by about 66.6% or by 2/3 would create about 3.6 million jobs. These figures do not take into consideration the investment in public utilities, streets, schools etc., that would be required to service these additional housing units. ...
We have analyzed the effects of property taxation on improvements as distinguished from those caused by the incidence of these taxes on land.
The paradox of property taxation consists in the fact that lower rates on improvements produce the same results as higher rates on land and conversely higher rates on improvements produce the same results as lower rates on land. Read the whole article
Mason Gaffney: Full Employment, Growth And Progress On A Small Planet: Relieving Poverty While Healing The Earth
1. Adequacy of land base. There is enough land, if only we use it well. Poverty and unemployment result from owners’ withholding better lands from full or any use, creating an artificial and specious scarcity of land relative to population.... read the whole article
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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper