Land Value Taxation will solve many of the 21st century's most serious social, economic and environmental problems, and promote justice, fairness and sustainability. We CAN have a world in which all can prosper.
Progress and Poverty, by Henry George Here are links to online editions of George's landmark book, Progress & Poverty, including audio and a number of abridgments -- the shortest is 30 words! I commend this book to your attention, if you are concerned about economic justice, poverty, sprawl, energy use, pollution, wages, housing affordability. Its observations will change how you approach all these problems. A mind-opening experience!
Henry George: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy This is perhaps the most important book ever written on the subjects of poverty, political economy, how we might live together in a society dedicated to the ideals Americans claim to believe are self-evident. It will provide you new lenses through which to view many of our most serious problems and how we might go about solving them: poverty, sprawl, long commutes, despoilation of the environment, housing affordability, wealth concentration, income concentration, concentration of power, low wages, etc. Read it online, or in hardcopy.
Bob Drake's abridgement of Henry George's original: Progress and Poverty: Why There Are Recessions and Poverty Amid Plenty -- And What To Do About It! This is a very readable thought-by-thought updating of Henry George's longer book, written in the language of a newsweekly. A fine way to get to know Henry George's ideas. Available online at progressandpoverty.org and http://www.henrygeorge.org/pcontents.htm
Where Else Might You Look?
Wealth and Want The URL comes from the subtitle to Progress & Poverty -- and the goal is widely shared prosperity in the 21st century. How do we get there from here? A roadmap and a reference source.
Reforming the Property Tax for the Common Good I'm a tax reform activist who seeks to promote fairness and reduce poverty. Let's start with the enabling legislation and state requirements for the property tax. There are opportunities for great good!
John Rawls, the brilliant 20th-century philosopher, argued for a society that seems fair if we consider it from behind a “veil of ignorance” — meaning we don’t know whether we’ll be born to an investment banker or a teenage mom, in a leafy suburb or a gang-ridden inner city, healthy or disabled, smart or struggling, privileged or disadvantaged. That’s a shrewd analytical tool — and who among us would argue for food stamp cuts if we thought we might be among the hungry children?
As we celebrate Thanksgiving, let’s remember that the difference between being surrounded by a loving family or being homeless on the street is determined not just by our own level of virtue or self-discipline, but also by an inextricable mix of luck, biography, brain chemistry and genetics.
For those who are well-off, it may be easier to castigate the irresponsibility of the poor than to recognize that success in life is a reflection not only of enterprise and willpower, but also of random chance and early upbringing.
And perhaps Mr. Kristof might consider also that the same forces and structures which make some people poor make others rich, very rich. Henry George described a wedge being driven through society. Random chance may help determine whether one falls into one group of the other. I take the liberty of lifting a long list of quotes from Henry George's book "Progress and Poverty:"
Yes, in certain ways, the poorest now enjoy what the richest could not a century ago. But this does not demonstrate an improvement – not so long as the ability to obtain the necessities of life has not increased.
What we call progress does not improve the conditions of the lowest class in the essentials of healthy, happy human life. In fact it tends to depress their conditions even more.
These new forces do not act on society from underneath. Rather, it is as though an immense wedge is being driven through the middle. Those above are elevated, but those below are crushed.
So long as the increased wealth that progress brings goes to building great fortunes and increased luxury, progress is not real. When the contrast between the haves and the have-nots grows ever sharper, progress cannot be permanent.
To base a state with glaring social inequalities on political institutions where people are supposed to be equal is to stand a pyramid on its head. Eventually it will fall.
The old theory of wages had the support of the highest authorities, and was firmly rooted in common prejudices. Until proven groundless, it prevented any other theory from even being considered. Similarly the theory that the earth was the centre of the universe prevented any consideration that the earth circled the sun. There is in fact a striking resemblance between the science of political economy, as currently taught, and astronomy prior to Copernicus.
We are able to explain social phenomena that have appalled philanthropists and perplexed statesmen all over the civilised world. We have found the reason why wages constantly tend to a minimum, giving but a bare living, despite increase in productive power.
As productive power increases, rent (the price of monopoly rising from individual ownership of the natural elements which human exertion can neither produce or increase) tends to increase even more – constantly forcing down wages.
Rent (as understood above) does not in any way, represent any aid or advantage to production. Rent is simply the power to take part of the results of production.
Land is required for the exertion of labour in the production of wealth. Therefore, to control the land is to command all the fruits of labour, except only enough to enable labour to exist.
The simple truth, and its application to social and political problems, is hidden from the masses – hidden partly by its very simplicity and in greater part by widespread fallacies and erroneous habits of thought. These lead us to look in every direction but the right one for an explanation of the evils that oppose and threaten the civilised world.
In the back of these elaborate fallacies in misleading theories is an active, energetic power. This is the power that writes the laws and moulds thought. It operates in every country, no matter what its political forms may be. It is the power of a vast and dominant financial interest.
The great cause of inequality in the distribution of wealth is inequality in the ownership of land.
Unequal ownership of land causes unequal distribution of wealth and because unequal ownership of land is inseparable from the recondition of individual property in land, it necessarily follows that there is only one remedy for the unjust distribution of wealth:
We must make land common property.
But this is a truth that will arouse the most bitter antagonism, given the present state of society.
Vice and misery, poverty and pauperism, are not the legitimate results of growing populations and industrial development. They follow them only because land is treated as private property. They are the direct and necessary result of violating the supreme law of justice – giving to the excusive possession of a few, what nature has provided for all.
The unjust distribution of wealth stemming from this fundamental wrong is separating modern society into the very rich and the very poor. The continuous increase of rent is the price labour is forced to pay for the use of land. It strips the many of wealth they justly earn and heaps it in the hands of the few who do nothing to earn it. The few receive without producing while others produce without receiving. One is unjustly enriched – the other is robbed.
Ownership of land is the basis of aristocracy. It was not nobility that gave land, but the possession of land that gave nobility. All the enormous privileges of the nobility of medieval Europe flowed from their position as owners of the soil. This simple principal of ownership produced the lord on one side and the vassal on the other. One having all the rights, the other having none.
Of all kinds of slavery, this is probably the most cruel and relentless. Labours are robbed of their production and forced to toil for mere subsistence. But their taskmasters assume the form of inescapable demands. It does not seem to be one human who drives another but ‘the inevitable laws of supply and demand.’ And for this, no one in particular is responsible. Even the selfish interest that prompted the master to look after the well-being of his slaves is lost.
It seems to be the inexorable laws of supply and demand that forces the lower classes into the slavery of poverty. And an individual can no more dispute this power than the winds and the tides.
But in reality it is the same cause that always has and always must result in slavery:
The monopolisation by some of what nature meant for all.
We are so used to treating land as individual property that the vast majority of people never thing about questioning it. It is thoroughly recognised in our laws, manners and customs.
The dangerous classes politically are the very rich and the very poor.
A tax on land values is the only tax that cannot be passed on to others. It falls only on the landowners. There is no way they can shift the burden to anyone else. Hence, a large and powerful interest is opposed to taxing land values.
Businesses do not oppose taxes they can easily shift from their own shoulders. In fact, they frequently try to maintain them. So do other powerful interests that might profit from the higher prices such taxes bring about. A multitude of taxes had been imposed with a view toward private advantage, rather than raising revenue.
The ingenuity of politicians has been applied to devising taxes that drain the wages of labour and the earnings of capital. Nearly all these taxes are ultimately paid by that indefinable being, ‘the consumer’.
All civilised countries have unequal distribution of wealth that grows steadily worse. The cause… is that ownership of land provides greater and greater power to appropriate the wealth produced by labour and capital as the material progress goes on. We can counteract this tendency by removing all taxes on labour and capital – and putting them on rent. If we went so far as to take all the rent in taxes, the cause of inequality would be totally destroyed.
If it were possible to calculate the full cost of poverty, it would be appalling…Yet spending by government, private charities and individuals combined is merely the smallest item on the agenda. Consider the following items: the lost earnings of wasted labour; the social costs of reckless and idle habits; the appalling statistics on mortality, especially infant mortality, among the poor; the proliferation of liquor stores and bars as poverty deepens; the thieves, prostitutes, beggars and tramps bred by poverty; and the cost of guarding society against them.
These are just part of the full burden that unjust distribution of wealth places on the aggregate society. The ignorance and vice produced by inequality show themselves in the stupidity and corruption of government and the waste of public funds.
(Tax on land value would mean that) Wealth would no longer concentrate in those who do not produce, taken from those who do. The idle rich would no longer lounge in luxury while those who actually produce settle for the barest necessities…The great cause of inequality - monopoly of land - would be gone.
We could eliminate an immense and complicated network of government machinery needed to collect taxes, prevent and punish evasion and check revenue from many different sources.
A similar saving would occur in the administration of justice. Much or the business of civil courts arises from disputes over the ownership of land. If all occupants were essentially rent-paying tenants of the state, such cases would cease.
Wages would rise and everyone would be able to make an easy and comfortable living. This would immediately reduce…thieves, swindlers and other criminals who arise from the unequal distribution of wealth. This would lighten the administration of criminal law, with all its paraphernalia of police, prisons and penitentiaries. We should eliminate not only many judges, bailiffs, clerks and jailers, but also the great host of lawyers now maintained at the expense of those who actually produce wealth.
Governments would change its character and become the administrator of a great cooperative society. It would merely be the agency by which common property was administered for the benefit of all.
We are apt to assume that greed is the strongest human motive and that fear of punishment is required to keep people honest. It seems selfish interests are always stronger than common interests. Nothing could be further from the truth.
The changes I have proposed would destroy the conditions that distort these impulses. It would transmute forces that now disintegrate society into forces that unite it. Take, for the benefit of the whole community that which growth of community creates. The poverty would vanish.
One thing alone prevents harmonious social development: the wrong that produces inequality.
Association in equality is the law of human progress.
But the greatest inequality is the natural monopoly given by possession of land.
When population is sparse, ownership of land merely ensures that the just reward of labour goes to the one who uses and improves it. As population becomes dense, rent appears. This institution ultimately operates to strip the producer of wages earned.
Once inequality is established, ownership of land tends to concentrate as development goes on. This finally counteracts the force by which improvements are made and society advances.
Inequality dried up the strength and destroyed the vigour of the Roman world. Long before Vandal of Goth broke through the legions, Rome was dead at heart. Great estates – latifundia – ruined Italy. The barbarism that overwhelmed Rome came not from without, but from within. It was the inevitable product of a system that carved provinces into estates for senatorial families. Serfs and slaves replaced independent farmers. Governance became dictatorship, patriotism became subservience… Everywhere inequality produced decay: political, mental, moral and material.
Civilisations advance as their social arrangements promote justice. They advance as they acknowledge equality of human rights. The advance as they insure equal liberty of every other person. As they fail in these, advancing civilisations come to a halt and recede.
Every pervious civilisation has been destroyed by the unequal distribution of wealth and power. When the first emperor was changing Rome from brick to marble and extending the frontier, who would have said Rome was entering its decline. Yet such was the case.
Yet anyone who looks will see that the same cause that doomed Rome is operating today – with increasing force. The more advanced the community, the greater the intensity. Wages and interest fall, while rents rise. The rich get richer, the poor get poorer and the middle class is swept away.
A representative government may become a dictatorship without formally changing its constitution or abandoning popular elections. Forms are nothing when substance had gone. From there despotism advances in the name of the people. Once that single source of power is secured, everything is secured. An aristocracy of wealth will never struggle while it can bribe a tyrant.
When the disparity of condition increases, democratic elections make it easy to seize power. Many feel no connection with the conduct of the government. Embittered by poverty, they are ready to sell their vote to the highest bidder or to follow the most blatant demagogue. One class has become too rich to be stripped of its luxuries, no matter how public affairs are administrated. Another class is so poor that promises of a few dollars will outweigh abstract considerations on election day. A few roll in wealth while the many seethe with discontent at things they don’t know how to remedy.
Honest and patriotism are handicapped, while dishonesty brings success. The best sink to the bottom, the worse float to the top. The vile are ousted only by the viler. Unequal distribution of wealth inevitably transforms popular government into despotism. Political parties are passing into the control of what might be considered oligarchies and dictatorships
Many believe that there is no honest person in public office; or worse, that if there were one, he or she would be a fool not to seize opportunities. Democratic government is running the course that must inevitably follow under conditions producing unequal distribution of wealth.
Civilisations do not decline along the same paths they came up. Governments will not take us back from democracy to monarchy and to feudalism. It will take us to dictatorship and anarchy
Invention marches on, our cities expand. Yet civilisation had began to wane when, in proportion to population, we have more prisons, more welfare, more mental illness. Society does not die from top to bottom; it dies from bottom to top.
The evils arising from the unequal and unjust distribution of wealth become more apparent as modern civilisation goes on.
Poverty, with all the evils that flow from it, springs from the denial of justice. By allowing the few to monopolise opportunities nature freely offers to all, we have ignored the fundamental law of justice.
Equal political rights will not compensate for denying equal rights to the gifts of nature. Without equal rights to land, political liberty is merely the right to compete for employment at starvation wages.
Allowing one person to own the land – on which and from which others must live – makes them slaves. The degree, or proportion, of slavery increases as material progress goes on.
This is what turns the blessing of material progress into a curse, what crowds human beings into squalid tenement houses, and what fills prisons and brothels. This is what plagues people with want and consumes them with greed.
It is a universal fact – seen everywhere – that the contrast between wealth and want grows as the value of land increases. The greatest luxury and the most pathetic poverty exist side by side where land values are highest.
In short, the value of land depends entirely on the power that ownership of land gives to appropriate the wealth created by labour. Land values always increase at the expense of labour. The reason greater productive power does not increase wages is because it increases the value of land. Rent swallows up the whole gain.
Interesting comments on a number of things, including doctors, slaves, soldiers, income inequality, sobriety, thrift, poverty,
Bad as we are, I believe that if we all understood how we are living,
and what we are doing daily, we should make a revolution before the end
of the week. But as we do not know; and as many of us, forseeing
unpleasant revelations, do not want to know; I can only assure you that I
am in perfect concord with standard economists when I state that
competition is the force that makes our industrial system self-acting.
It produces the effects which I have described without the conscious
contrivance or interference of either master on the one hand, or slave
on the other. It may be described as a seesaw, or lever of the first
order, having the fulcrum between the power and the weight.
The so-called right of private property is a convention that every man
should enjoy the product of his own labour, either to consume it or
exchange it for the equivalent product of his fellow labourer. But the
landlord and capitalist enjoy the product of the labour of others, which
they consume to the value of many millions sterling every year without
even a pretence of producing an equivalent. They daily violate the right to which they appeal when the socialist
attacks them. Nor is their inconsistency so obvious as might be
expected. If you violate a workman's right daily for centuries, and
daily respect the landlord's right, the workman's right will at last be
forgotten, whilst the landlord's right will appear more sacred as
successive years add to its antiquity. In this way the most illogical
distinctions come to be accepted as natural and inevitable. One man
enters a farmhouse secretly, helps himself to a share of the farm
produce, and leaves without giving the farmer an equivalent. We call him
a burglar, and send him to penal servitude. Another man does precisely
the same thing openly, has the impudence even to send a note to say when
he is coming, and repeats his foray twice a year, breaking forcibly
into the premises if his demand is not complied with. We call him a
landlord, respect him, and, if his freebooting extends over a large
district, make him deputy-lieutenant of the country or send him to
Parliament, to make laws to license his predatory habits.
Hoi oligoi. A new phrase for me, and one which made immediate sense. My Georgist grandparents sometimes referred to themselves as part of the hoi polloi, but at other times also used it to distinguish themselves, in a joking way, from the mass of people who didn't know George's ideas.
We are laying the foundations in this state for a greater
distinction of classes than exists in any state of the Union at the
present day — as great as that which exists in England, where one man
rolls in wealth and another can scarcely keep body and soul
together. We are not much over twenty years old, and have in this
great empire of our own hardly half a million people. Yet, there is
already one man among us who is worth nearly ten million dollars,
and quite a number who are worth from one to seven, while the best
part of our land is divided off into estates, which in a little
while, when population becomes denser, will make their owners as
rich as the Duke of Argyll, or the Marquis of Bute.
There is a constantly increasing tendency to the concentration of
wealth. The greater the fortune, the more rapidly it grows; and
though the people who hold these great aggregations of money may be
constantly changing, as they are changing in England, there will
constantly remain the distinction between the very rich and the very
poor. These two classes are the correlatives of each other; one man
cannot become enormously rich without other men becoming
proportionately poor. If not for our own sakes, at least for the
sake of our children, is it not time for us to stop and ask what is
the cause of this tendency of property to accumulate in a few hands? There is
certainly nothing in the laws of Nature which requires the giving to
one man of as much as can be had by ten thousand of his fellows.
-- Henry George, March 17, 1873, in the (San Francisco) Daily Evening Post, quoted by Kenneth Wenzer in Henry George: Collected Journalistic Writings, Volume 1, pp. 69-70
I wonder if Morgan the Pirate,
When plunder had glutted his heart,
Gave part of the junk from his ships he had sunk
To help some Museum of Art;
If he gave up the role of "collector of toll" And became a Collector of Art?
I wonder if Genghis the Butcher, When he'd trampled down nations like grass.
Retired with his share when he'd lost all his hair, And started a Sunday school class;
If he turned his past under and used half his plunder In running a Sunday school class?
I wonder if Roger the Rover,
When millions in looting he made,
Built libraries grand on the jolly mainland
To honor Success and "free trade;"
If he founded a college of natural knowledge Where Pirates could study their trade?
I wonder, I wonder, I wonder,
If Pirates were ever the same,
Ever trying to lend a respectable trend
To the jaunty old buccaneer game;
Or is it because of our Piracy Laws That philanthropists enter the game?
—Wallace Irwin, in Life. -- reprinted in The Painter and Decorator, a union journal, 1907
fact — the great fact that poverty and all its concomitants show
themselves in communities just as they develop into the conditions
toward which material progress tends — proves that the social
difficulties existing wherever a certain stage of progress has been
reached, do not arise from local circumstances, but are, in some way or
another, engendered by progress itself.
Quite belatedly, I found an interesting article on Taxi Medallions and Rent-Seeking. I particularly like the juxtaposition of the sidebar and the article's primary content; read the sidebar first.
Why did I include in the "categories" for this post "all benefits go to the landholder"? Because a taxi medallion is a privilege, which, in classical economics, is another form of "land." Read the sidebar!
There is an easy solution: auction off those privileges for limited periods of time. Lather, rinse, repeat!
The sidebar quotes Adam Smith "... the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce," which leads me to think about Henry George's axiom that
"The fundamental principle of human action — the law that is to political economy what the law of gravitation is to physics — is that men seek to gratify their desires with the least exertion." [Progress & Poverty Book III, Chapter 6 — The Laws of Distribution: Wages and the Law of Wages]
One quote from the body of the article:
Studies of economic losses due to rent-seeking and the resulting
monopolies have produced figures ranging from 3 to 12 percentage points
of national output for the US.
All of these are possible reasons why the city of Milwaukee might want
to limit the number of cab permits, but they do not imply that the
existing owners must have a permanent right to them.
The city could simply auction 321 licences every year or two and capture
all of the economic rents for itself. Another argument is that a permit
acts as a pension for drivers that would otherwise not have a business
they could sell on retirement. But that is true only for the first,
lucky generation of owners.
Here are the opening paragraphs of a recent article about the complexities of Ground Lease contracts. I commend the entire article to your attention. It helps flesh out why and how the entire FIRE sector -- Finance, Insurance and Real Estate (as well as their attorneys) -- is receiving such a large share of the profits produced by the productive sectors of the economy. The owner of land, and the entities which lend on land, and insure the buildings and the revenue flow, all reap significant shares of what the tenants labor to create. Modern sharecropping. And the recipients of the ground rent get to parade as self-made men, people of awesome foresight and wisdom -- and even philanthropists (think Brooke Astor, the Fishers, and others in your own community) when they donate a small share back to a charity! As you read this, think both of Manhattan land and of land in your community's central business district, and along its major roads. (Location, location, location!)
If one wonders why (true) small business struggles, one might consider the complexity and expense of their ground leases, and contrast that with the Georgist alternative: that one's taxes would be simply the current rental value of the land, while the value of the building remains one's private property, not subject to taxation or going pouf! at the end of a ground lease.
The land lord is "supplying" something he didn't create. We ought to ease him out. Land value taxation is the obvious tool for reducing, and -- slowly or not -- eliminating, his "take" on those who do create. Think what it would mean if working people had that spending power, instead of the lords of the land.
All that land rent could be used to fund our community's needs, instead of lining the pockets of a few very "lucky" -- privileged -- duckies. (The analogies to chattel slavery are not a long stretch, once one starts to think about it. We should all own ourselves, and reap the fruits of our own labors.)
A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for 50, 75, “99,” and even 500 years. That takes it beyond the life of the parties involved in its creation, and the future brings surprises. Neither Nostradamus nor Jules Verne got everything right.
Why a Ground Lease?
If a tenant has to build its own building (as is often the case), and has all of the burdens of ownership, why would it lease a property knowing that at the end of the lease term it has nothing left to show for its money and efforts? There are a number of common reasons, principal among them is that the owner won’t sell the land and the tenant has no alternative.
Real property often carries a long term unrealized gain, waiting to be taxed upon its sale.
Not every landowner is interested in making further active real property investments. This makes a like kind exchange unappealing.
Ground leasing the same land keeps ownership in the family. At the owner’s death, because of the current estate tax “stepped up basis” arrangement, the built in gain may never be taxed.
The hospitals (of England) are full of the ancient. . . . The
almshouses are filled with old laborers. Many there are who get
their living with bearing burdens, but more are fain to burden the
land with their whole bodies. Neither come these straits upon men
always through intemperance, ill-husbandry, indiscretion, etc.; but
even the most wise, sober and discreet men go often to the wall when
they have done their best. . . The rent-taker lives on the sweet
morsels, but the rent-payer eats a dry crust often with watery eyes.
—Robert Cushman, Plymouth, 1621, in Young's "Chronicles of the
When there is even one billionaire, there will be several
half-billionaires and many hundred-millionaires. The fact will
be an indication of a tremendous concentration of wealth, and of the
dwindling proportion of wealth held by the farmers and wage-earners
of this country. The billionaire will bring an army of paupers
in his train. Possibly the actual average wealth of farmers
and mechanics then may be a little greater than it is now.
Optimists of that day may assure them that they are richer, by ten
dollars each, than their ancestors were; and therefore that all is
for the best in this best of all possible worlds. But the
discontent of the masses, under a system which gives to one man a
larger amount of wealth than can ever be attained by a million of
his fellow citizens who are fully his equals in skill and merit and
far his superiors in industry, is certain to be great and ever
increasing. Indeed, universal experience demonstrates that
discontent among the masses is far greater than when the weight of
oppression is somewhat diminished than it was before.
The vast majority of any community must
always have incomes so small that they cannot help spending three
fourths of what they receive. But the small minority of large
property-owners do not need to spend one eighth of their incomes,
and as a rule they do not spend one half. Looking at the
subject with reference to accumulated wealth, the man who is worth
$1,000 usually spends at least $500 a year on the support of his
family, while the man who is worth $1,000,000 rarely spends
$50,000. Indirect taxation, therefore, obviously bears at
least ten times as heavily upon the former as upon the latter.
Under absolutely direct taxation, no poor man would ever pay a
larger share than a rich man, and, indeed, most of the working
classes would pay no taxes at all; because the collection of direct
taxes from them would be too laborious and expensive to be
Direct taxation, on a large scale, is near at hand. The men
who bought and paid for the present Congress can now choose what its
form shall be. They can have a general income tax, or they can
have something less open to fraud, less inquisitorial in its nature,
less oppressive upon honest men, and offering no premium to
perjury. But they know nothing about the science of taxation,
and they do not care to learn; so that the whole matter will be left
over to the new Congress, and a general income tax, objectionable as
it is, seems most likely to be adopted.
The Coming Billionaire
The Forum, January, 1891, page 546-557
In the FORUM for November, 1889, the question was asked, "Who owns
the United States?" and reasons were given for the belief that one
half of all the national wealth is owned by 40,000 families and that
three fourths of it is in the possession of fewer than 250,000
families. These estimates were based in part upon official tax
returns, but in part, also upon private information as to the wealth
of 70 estates, specifically named, each estimated to be worth
more than $20,000,000 and averaging $37,500,000. The
correctness of these statistics, as well as that of the inferences
drawn from them, has been somewhat bitterly denied. Hostile
critics have assumed that the estimates of individual wealth were
based entirely upon newspaper reports; and many newspaper editors,
acting presumably upon their own experience, have unhesitatingly
declared that such statistics are necessarily worthless.
But not one tenth of these names were given upon the authority of
newspaper estimates, while a large majority were given upon very
trustworthy private information. It has been said that no one
can tell what a man's wealth amounts to without access to his books,
which, it has been assumed, is impossible. In several
instances, however, the information came from persons who had access
to the necessary books or had been permitted to inspect the
securities; in some cases it was obtained from tax returns; and in
other cases it was taken from the oral or written statements of the
owners themselves. For example, one gentleman, whose wealth
was set down at $100,000,000 had actually exhibited $75,000,000 in
securities, and had testified in a court of law to the possession of
$10,000,000 more of one kind, all encumbered. During the year
which has now elapsed, not one tenth of these names have been
specified by any one as erroneously entered upon the list or as
seriously overrated, and in only three instances has any probable
error been established. These names might be omitted, and
their places might be supplied by others of the twenty million
grade. Errors of understatement have been discovered which
largely counterbalance all overstatements. The least that can
be said is that there are 70 American estates that average
$35,000,000 each, not including Trinity Church, which perhaps should
not be classed with strictly individual owners. During the
year, by the consolidation of two estates, one individual has become
worth at least $200,000,000. Two brothers, whose property is
held as a unit, together own even a larger amount than this.
Some great estates have been divided up by inheritance, but others
have been divided up by inheritance, but others have been still more
concentrated by that means.
are nearing the season of the year when the society columns of the
newspapers will report that "everybody is out of town." "Everybody!"
What a world of impertinence and aristocratic insolence there is in that
word! Yet no phrase is more commonly used on the piazzas and lawns and
beaches and golf links of our fashionable summer resorts.
a matter of fact, the whole great city goes straight along thru the
year, taking no heed of heat and cold, rains or droughts. All its myriad
enterprises move along as if there were no differences of weather or
street is as busy in the summer as it was in the winter. Not a single
trolley car has been taken from the rails. Every egg-box tenement is
packed as full as ever. Every shop and mill and factory and store is as
busy with its ordinary activities as if the thermometer registered fifty
instead of ninety degrees.
thru the sweltering days of June, July, and August, when even at the
cool beaches the idle pleasure-seekers are gasping for breath and
wishing themselves in Labrador, when the city has become a great oven of
brick and stone, there are still apparently as many workers as ever
jostling one another on the street cars and in the over-heated
truth is that those who leave the city for the summer are in most cases
not missed. The fashionable set is only a handful of dudes and dolls,
who can come and go whenever they please without having any effect upon
the serious work of the world.
speaking, they are the nobodies of our cities. They do no useful work
and their relation to the real worker is about the same as that of the
potato-bug to the potato. They are nobodies, yet such is this queer
social system of ours that if it were not for them the useful workers
would not have to work so hard and so long during the hot summer months.
There would be shorter hours and vacations for all. — Boyce's Weekly -- reprinted in "The American Cooperator."
I stumbled across an excerpt from this in The American Cooperator, and when I couldn't find the material in any of George's other books, I went looking for the source, an 1887 book with chapters by 16 authors.
Enjoy! (It prints out as about 9 pages, if you're so inclined)
THE HISTORY, PURPOSE AND
POSSIBILITIES OF LABOR ORGANIZATIONS
IN EUROPE AND AMERICA; GUILDS, TRADES-
UNIONS, AND KNIGHTS OF LABOR; WAGES AND PROFITS;
HOURS OF LABOR; FUNCTIONS OF CAPITAL; CHINESE LABOR:
COMPETITION; ARBITRATION; PROFIT-SHARING AND
CO-OPERATION; PRINCIPLES OF THE KNIGHTS OF
LABOR; MORAL AND EDUCATIONAL AS-
PECTS OF THE LABOR QUESTION.
EDITED BY GEORGE E. McNEILL,
First Deputy of Mass. Bureau of Statistics of Labor; Sec.-Treas. of D. A. 30, Knights of Labor.
ASSOCIATE AUTHORS: TERENCE V. POWDERLY, G. M. W., K. of L.; DR. EDMUND J. JAMES, University of Pennsylvania; HON. JOHN J. O'NEILL, of Missouri;
HON. J. M. FARQUHAR, of New York; HON. ROBERT HOWARD, of Massachusetts; HENRY GEORGE, of New York;
ADOLPH STRASSER, Pres. Cigar Makers' Union; JOHN JARRETT, of
Pennsylvania; REV. R. HEBER NEWTON, of New York; F K. FOSTER, of
Massachusetts; P. M. ARTHUR, Chief Engineer Locomotive Brotherhood; W.
W. STONE and W. W. MORROW, of California; FRANKLIN H. GIDDINGS,
"Springfield Union"; JOHN McBRIDE, Secretary Coal Miners' Union;
D.J.O'DONOGHUE, of Toronto, Canada; P. J. McGUIRE, Secretary Carpenters'
NEW YORK: THE M. W. HAZEN CO.
Copyright 1886, by
A M. BRIDGMAN & CO.
CHAPTER XXIII. THE LAND QUESTION.
MAGNITUDE OF THE QUESTION — FIRST PRINCIPLES — THE
LAND-OWNER THE ABSOLUTE MASTER OF MEN WHO MUST LIVE ON HIS LAND — THE
ORDER OF NATURE INVERTED — EQUAL RIGHTS TO THE USE OF THE EARTH —
SELFISHNESS, THE EVIL GENIUS OF MAN — THE IRISH PEOPLE FORCED TO BEG
PERMISSION TO TILL THE SOIL — APPROPRIATION OF THE CHURCH-LANDS — LAND
IN ITSELF HAS NO VALUE — THE GREAT CAUSE OF THE UNEQUAL DISTRIBUTION OF
WEALTH — NO HOPE FOR THE LABORER, SO LONG AS PRIVATE PROPERTY IN LAND
EXISTS — NOTHING MYSTERIOUS ABOUT THE LABOR QUESTION — THE DIFFICULTY IN
FINDING EMPLOYMENT — NATURE OFFERS FREELY TO LABOR — NATURAL MEANS OF
EMPLOYMENT MONOPOLIZED — SPECULATION IN THE BOUNTIES OF NATURE.
BENEATH all the great social questions of our time lies one of primary
and universal importance, the question of the rights of men to the use
of the earth.
The magnitude of the pecuniary interests involved, the fact that the
influential classes in all communities where private property in land
exists are interested in its maintenance, lead to a disposition to
ignore or belittle the land question: but it is impossible to give any
satisfactory explanation of the most important social phenomena without
reference to it; and the growing unrest of the masses of all civilized
countries, under conditions which they feel to be galling and unjust,
must at length lead them, as the only way of securing the rights of
labor, to turn to the land question.
To see that the land question does involve the problem of the equitable
distribution of wealth; that it lies at the root of all the vexed social
questions of our time, and is, indeed, but another name for the great
labor question in all its phases, it is only needful to revert to first
principles, and to consider the relations between men and the planet
We find ourselves on the surface of a sphere, circling through
immeasurable space. Beneath our feet, the diameter of the planet extends
for eight thousand miles; above our heads night reveals countless
points of light, which science tells us are suns, that blaze billions of
miles away. In this inconceivably vast universe, we are confined to the
surface of our sphere, as the mariner in mid-ocean is confined to the
deck of his ship. We are limited to that line where the exterior of the
planet meets the atmospheric envelope that surrounds it. We may look
beyond, but cannot pass. We are not denizens of one element, like the
fish; but while our bodies must be upheld by one element, they must be
laved in another. We live on the earth, and in the air. In the search
for minerals men are able to descend for a few thousand feet into the
earth's crust, provided communication with the surface be kept open, and
air thus supplied; and in balloons men have ascended to like distances
above the surface; but on a globe of thirty-five feet diameter, this
range would be represented by the thickness of a sheet of paper. And
though it is thus possible for man to ascend for a few thousand feet
above the surface, or to descend for a few thousand feet below it, it is
only on the surface of the earth that he can habitually live and supply
his wants; nor can he do this on all parts of the surface of the globe,
but only on that smaller part, which we call land, as distinguished
from the water, while considerable parts even of the land are
uninhabitable by him.
By constructing vessels of materials obtained from land, and
provisioning them with the produce of land, it is true that man is able
to traverse the fluid-surface of the globe; yet he is none the less
dependent upon land. If the land of the globe were again to be
submerged, human life could not long be maintained on the best-appointed
Man, in short, is a land-animal. Physically considered, he is as much a
product of land as is the tree. His body, composed of materials drawn
from land, can only be maintained by nutriment furnished by land; and
all the processes by which he secures food, clothing and shelter consist
but in the working up of land or the products of land. Labor is
possible only on condition of access to land, and all human production
is but the union of land and labor, the transportation or transformation
of previously existing matter into places or forms suited to the
satisfaction of man's needs.
Land, being thus indispensable to man, the most important of social
adjustments is that which fixes the relations between men with regard to
that element. Where all are accorded equal rights to the use of the
earth, no one needs ask another to give him employment, and no one can
stand in fear of being deprived of the opportunity to make, a living. In
such a community, there could be no "labor question." There could be
neither degrading poverty nor demoralizing wealth. And the personal
independence arising from such a condition of equality, in respect to
the ability to get a living, must give character to all social and
On the other hand, inequality of privilege in the use of the earth must
beget inequality of wealth and power, must divide men into those who can
command and those who are forced to serve. The rewards which nature
yields to labor no longer go to the laborers in proportion to industry
and skill; but a privileged class are enabled to live without labor by
compelling a disinherited class to give up some part of their earnings
for permission to live and work. Thus the order of nature is inverted,
those who do no work become rich, and "workingman" becomes synonymous,
with "poor man." Material progress tends to monstrous wealth on one
side, and abject poverty on the other; and society is differentiated
into masters and servants, rulers and ruled.
If one man were permitted to claim the land of the world as his
individual property, he would be the absolute master of all humanity.
All the rest of mankind could live only by his permission, and under
such conditions as he chose to prescribe. So, if one man be permitted to
treat as his own the land of any country, he becomes the absolute
sovereign of its people. Or, if the land of a country be made the
property of a class, a ruling aristocracy is created, who soon begin to
regard themselves, and to be regarded, as of nobler blood and superior
rights. That "God will think twice before he damns people of quality,"
is the natural feeling of those who are taught to believe that the land
on which all must live is legitimately their private property.
But yet in other scenes more fair to view,
When Plenty smiles — alas! she smiles for few —
And those who taste not, yet behold her store,
Are as the slaves that dig the golden ore —
The wealth around them makes them doubly poor.
U-z-r.-z-z.-7. went the bell every five minutes through- out the lower rents exhibit of the New York Congestion Committee. "Every time this bell rings." explained a pla- card, "land values increase $1,000 in New York. Who gets it? Land speculators. Who makes it? You. when you pay your rent." Oral Hygiene journal, January, 1914
The exhibit must have run for over a year, because I found a reference to a speech Mayor Gaynor gave on "The Single Tax" there on February 17, 1913.
... many Americans are facing the likelihood of not having sufficient income in retirement unless they increase their savings, work longer, or significantly decrease their expenditures in retirement if they hope to make ends meet.
The Employee Benefits Research Institute recently published an analysis of 2010 Survey of Consumer Finances data. It demonstrates how few people have the traditional defined-benefit retirement plans, and the account balances people of various demographics have in their individually-directed retirement accounts.
Here are some statistics worth considering as we think about the effects of a system which permits a few of us to capture a large share of the nation's net worth and a large share of its income, and to unduly influence our elections with advertising which works to conceal and reinforce the structures of that system:
38% of all families -- of all ages -- had a family member with a retirement plan. [Figure 2]
of those 38%, 18% had only a defined benefit plan; 61% had only a defined contribution plan; 21% had both. 82% had a 401(k) type plan, and of that 82%, 22% also had a defined benefit plan
Among those families whose head was 55-64, 43% had a member with a retirement plan; among those 45-54, 53% did.
Interestingly, the top 75% of the net worth spectrum all had rates in the 41% to 46% range; in the bottom 25%, only 21%.
Among families whose head was under 65 and working, 52% had a member participating in a retirement plan [Figure 3].
Among households with income abov e $100,000, 76% had retirement plans; in the $50,000 to $100,000 income range, 64%; in the lower income groups, the rate ranged from 44% down to 9%
In the 55-64 age group, 59% had a retirement plan; in the 45-54 group, 61%.
Within this working-age universe, similar trends held: the top 50% had roughly 61-67% availability of employment-related retirement plans; for the next 25%, only 53%; for the bottom 25% of working families, only 29%.
IRAs and Keogh plans: 28% had one or both; median value, $40,000 (up from $34,574 in 2007). Among those 55-64, 41% had one or both; median value $60,000 (down from $68,101); among those 45-54, 29% had one or both; median value $40,000, up from $37,717. [Figure 5]
Even among those in the top 10% of the net worth spectrum, only 77% had IRA or Keogh accounts, median value $200,,000, up from $142,487 in 2007; in the next 15% of the net worth spectrum, median value was $60,000.
Of all families, 64% had some sort of retirement account from a current or previous employer (down from 66% in 2007)
Retirement assets in Defined Contribution plans and IRAs typically [that is, at the median] represent 61% to 66% of total financial assets, which is to say that most have less in mutual funds, stocks, checking and other accounts than they do in their retirement accounts. [Figure 8]
Only in the top 10% do retirement assets represent less than half of financial assets.
As is typical of median/average ratios, average holdings are considerably higher -- that is, the holdings of the top few are huge, and most of us are below average. The average balance is $173,232; in the top 10% of the net worth spectrum, average balances are $519,034. For the next 15% of us, the average balance is 147,061 -- well below the average of all of us! [Figure 9] Recall from Figure 6 that 64% of us have such a plan; the other 36% have no balance at all (and likely a significant percentage have very small account balances).
For those in the 65-74 age group, the average balance is $324,199; for those in the 55-64 group, the average balance is $297,903.
For those in the top 10%, average account balance is $519,034. One might reasonably guess that the top 5% have the lion's share of this.
It might be worth noting that a 70 year old must withdraw at least 1/27 of his IRA per year. Based on that 65-74 age group average balance, that's $12,000 per year. (Another rule of thumb says that if one only withdraws 3% per year, one's account should last forever. That would be $9,725 per year, for that "average" -- not median -- family in the 65-74 age group.
Enough said. Time to circle back to the study's conclusion:
... many Americans are facing the likelihood of not having sufficient income in retirement unless they increase their savings, work longer, or significantly decrease their expenditures in retirement if they hope to make ends meet.
What public policy reforms might one suggest based on these data points?
Find a way to raise wages for ordinary workers
Find a way to lower the cost of living for ordinary workers and retirees
Find a way to reduce the sum of the taxes we pay and the costs of housing without reducing the public goods which those taxes provide (unless it is by reducing the demand for social safety net
If you have other suggestions, I'd like to hear them.
But the reason for this blog is that I believe I have found the public policy reform which would accomplish these goals, in collecting the lion's share of the annual rental value of our land, and in collecting for the commons certain other kinds of natural public revenue which our current system permits to accrue to individuals and corporations. I didn't invent it. Henry George is the clearest exponent of it, but not the first or last. Is it perfect? No, but it is vastly superior to what we've got now, and I believe it is consistent with the ideals to which Americans pay the most honor.
As I listen to the rhetoric of the presidential and vice-presidential candidates about equal opportunity for women -- seeking equal opportunities for their daughters and granddaughters as for their sons and grandsons -- it occurs to me that they haven't asked that their sons and daughters have opportunities equal to the sons and grandchildren of Mitt Romney, who apparently share a trust fund currently worth over $100 million.* Even divided among 5 sons and 18 grandchildren, that's about $4 million per descendant, enough to throw off $90,000 per person per year without diminishing (and without them working -- or even having finished grade school). And that's before we start to talk about the $100 million IRA they are likely to inherit, which continues to appreciate free of taxes.
The Earth-for-All Calendar contains a number of items which speak to equality of opportunity for all in our current generation, and for all in future generations. When some of us start life with all the advantages, and others, because of the design of our society's systems, have few or no advantages, how do we continue to maintain the fiction that we believe we are all created equal, that our nation is founded on this proposition and its laws and customs said to conform to and support this proposition?
The advantages of our wealthiest didn't come out of thin air. They aren't "no-cost" to the rest of us, and they don't benefit the rest of us by any form of "trickle down." The trickle flows the other direction. To the extent that our society pretends that this comes out of thin air, we are permitting ourselves to be fooled -- treated as fools, taught by rich people's useful idiots.
And when some of us have the money to devote to promoting points of view that benefit ourselves, at the expense of the common good, to influence elections, where does democracy get us?
Henry George is the most famous American popular economist you've never heard of, a 19th century cross between Michael Lewis, Howard Dean and Ron Paul. Progress and Poverty, George's most important book, sold three million copies and was translated into German, French, Dutch, Swedish, Danish, Spanish, Russian, Hungarian, Hebrew and Mandarin. During his lifetime, George was probably the third best-known American, eclipsed only by Thomas Edison and Mark Twain. He was admired by the foreign luminaries of the age, too -- Leo Tolstoy, Sun-Yat Sen and Albert Einstein, who wrote that "men like Henry George are unfortunately rare. One cannot image a more beautiful combination of intellectual keenness, artistic form and fervent love of justice." George Bernard Shaw described his own thinking about the political economy as a continuation of the ideas of George, whom he had once heard deliver a speech.
Later, she writes,
George found most mysterious about the economic consequences of the
industrial revolution was that its failure to deliver economic
prosperity was not uniform -- instead it had created a winner-take-all
society: "Some get an infinitely better and easier living, but others
find it hard to get a living at all. The 'tramp' comes with the
locomotives, and almshouses and prisons are as surely the marks of
'material progress' as are costly dwellings, rich warehouses and
magnificent churches. Upon streets lighted with gas and patrolled by
uniformed policeman, beggars wait for the passer-by, and in the shadow
of college, and library, and museum, are gathering the more hideous Huns
and fiercer Vandals of whom Macaulay prophesied."
diagnosis was beguilingly simple -- the fruits of innovation weren't
widely shared because they were going to the landlords. This was a very
American indictment of industrial capitalism: at a time when Marx was
responding to Europe's version of progress and poverty with a wholesale
denunciation of private property, George was an enthusiastic supporter
of industry, free trade and a limited role for government. His culprits
were the rentier rich, the landowners who profited hugely from
industrialization and urbanization, but did not contribute to it.
had such tremendous popular appeal because he addressed the obvious
inequity of 19th century American capitalism without disavowing
capitalism itself. George wasn't trying to build a communist utopia. His
campaign promise was to rescue America from the clutches of the robber
barons and to return it to "the democracy of Thomas Jefferson." That
ideal -- as much Tea Party as Occupy Wall Street -- won support not only
among working class voters and their leaders, like Samuel Gompers, but
also resonated with many small businessmen. Robert Ingersoll, a
Republican orator, attorney and intellectual, was a George supporter. He
urged his fellow Republicans to back his man and thereby "show that
their sympathies are not given to bankers, corporations and
I commend the entire post, adapted from Freeland's new book, Plutocrats. It ends with these paragraphs:
today urgently needs a 21st century Henry George -- a thinker who
embraces the wealth-creating power of capitalism, but squarely faces the
inequity of its current manifestation. That kind of thinking is missing
on the right, which is still relying on Reagan-era trickle-down
economics and hopes complaints about income inequality can be silenced
with accusations of class war. But the left isn't doing much better
either, preferring nostalgia for the high-wage, medium-skill
manufacturing jobs of the post-war era and China-bashing to a serious
and original effort to figure out how to make 21st century capitalism
work for the middle class.
and the technology revolution aren't going away -- and thank goodness
for that. Industrialization didn't go away either. But between 1886,
when George lost the mayoral race, and the presidency of FDR, American
progressives invented, fought for and implemented a broad range of new
social and political institutions to make capitalism serve the whole of
society -- ranging from trust-busting, to the income tax, to the welfare
are living in an era of comparably tumultuous economic change. The
great challenge of our time is to devise the new social and political
institutions we need to make the new economy work for everyone. So far,
that is a historic task neither party is taking on with enough energy,
honesty or originality."
Along the same lines, you might find interesting an earlier post here, an article by Thomas Shearman entitled "Henry George's Mistakes." (He was a co-founder of Shearman & Sterling, and went on to write some excellent articles on plutocracy in The Standard, October, 1887.)
His next task, and indeed the most hazardous he ever undertook, was
the making a new division of their lands. For there was an
extreme inequality among them, and their State was overloaded with a
multitude of indigent and necessitous persons, while its whole
wealth had centered upon a very few.
To such a point have we been brought by an artificial system of
society, that we must either deny altogether the right of the poor
to their just proportion of the fruits of the earth, or afford them
some means of subsistence out of them by the institution of positive
— SIR WALTER SCOTT, St. Ronan's
Well, Chap. XXXII., Note G.
Equity, therefore, does not permit property in land. For if
one portion of the earth's surface may justly become the
possession of an individual and may be held by him for his sole use
and benefit as a thing to which he has an exclusive right, then
other portions of the earth's surface may be so held; and eventually
the whole of the earth's surface may be so held; and our planet may
thus lapse into private hands.
— HERBERT SPENCER, in 1850, Social
Statics, Chap. IX.
A Sonoma-based real estate investment firm is buying a sizable chunk of downtown Tiburon, part of a prime portfolio that has been in the hands of a single family for more than half a century.
A & C Ventures Inc. of Sonoma is in escrow to purchase 10 properties in the waterfront town from Belvedere resident Barbara Abrams. The portfolio includes a highly visible building near the downtown fountain plaza that houses Caffe Acri, Guaymas and Servino restaurants and a candy store, several commercial spaces on Main Street, the Tiburon Playhouse, Shark's Deli and a number of commercial buildings on Tiburon Boulevard.
The sale price has not been disclosed but the portfolio is approximately 75,000 square feet,
according to Vincent Schwab of Marcus & Millichap Real Estate Investment Services in San Francisco, who has knowledge of the deal. A single office building at 1610 Tiburon Blvd. recently sold for $2.25 million, or $500 per square foot, according to Zohre Grothe of the Marin Land Co.
Such a price per foot would value Abrams' portfolio at $37.5 million, although the price could be much less because her properties need millions of dollars in repairs.
"Some of the buildings on Main Street just need to be totally, I don't want to say demolished, but totally overhauled," said Len Mastromonaco, a lawyer representing Abrams in the sale.
Abrams is the daughter of the late Fred Zelinsky, co-owner of a national painting company,
D. Zelinsky & Sons Inc., who bought up much of downtown Tiburon in the 1950s. In 2006 the portfolio was split up between Abrams and Fred Zelinsky's daughter-in-law, Laleh Zelinsky.
Laleh Zelinsky still owns numerous downtown properties, including the Main Street parking lot, which are not part of the sale.
The sale is expected to close next month.
Representatives from A & C Ventures did not return calls seeking comment. A & C is a "private real estate investment capital company that specializes in acquiring portfolios and individual properties of free-standing, single-tenant commercial and corporate real estate," according to its website. The company owns properties housing numerous chain stores such as Staples, Kohl's, Borders and CVS, according to the website.
Tiburon Mayor Jim Fraser said he and other Tiburon Town Council members have met individually with A & C representatives.
"I had a good conversation with them," Fraser said. "They seem very energized, very excited and very committed and I see that as a positive, particularly as we continue to work on our revitalization of downtown Tiburon."
So for 60+ years, one family has been collecting the rent for a significant portion of downtown Tiburon. And for 30+ years, since Proposition 13 passed, their property taxes have effectively been grandfathered at 1976 levels. The heirs will pocket a pretty sum -- which they and their family have NOT created. Most of it is land value, which is created by the community. Do we think it comes out of thin air? We act as if we do. And then we wonder at why we have so many problems with our economy.
NOT taxing land value forces us to tax wages, and sales, and buildings,
Did you notice that the article didn't even mention the word "Acres"? That's how messed up our understanding is of land economics.
In the early ages of society it would have been impossible to
maintain the exclusive ownership of a few persons in what seems at
first sight an equal gift to all (the land) — a thing to which
everyone has the same claim.
— WALTER BAGEHOT (1826-1877),
Economic Studies, Essay I., Part I., p. 31.
"The wages problem resolves itself into a very simple question, viz.: Which is the better for a community — to have 10,000,000 men earning $2.50 a day, with hours that enable them to read and rest and pass a fair proportion of their time with their families, and at the same time have no millionaires, or to have those 10,000,000 men working fifteen hours a day at $1.50, and have a few score millionaires?"
The Standardwas devoted to issues like this, and makes excellent reading in this decade and century.
It might be worth noting that in those days when one spoke of a millionaire, the reference was to someone whose assets totalled over $1 million. Today, it is commonly used to refer to someone whose annual income is over $1 million. But you'll notice what workmen's wages were in 1887 -- $1.50 a day is $468 per year*, and likely didn't leave much, if anything, for savings. [6 days a week.]
So which IS better for the community? The families making $1.50 or $2.50 a day are spending nearly every penny of that, just in order to get by. The millionaires can only spend so much on the necessities of daily life, plus some generous amount on luxuries. The rest they will invest, one way or another, and the wise ones, in our current structure, will "invest" in land -- particularly choice urban sites -- and natural resources, since we as a society are so generous about letting the owners of these assets keep most of what those assets earn, despite them having nothing to do with having created those assets, and being in no position to create more in response to demand, which will naturally increase with population!!
THAT is the problem with our current "generosity."
The spending of the 10 million on the necessities of daily life creates jobs for a lot of other people. (The portion that goes to their landlords in payment for the right to occupy bits of urban -- or other -- land, DOESN'T create any jobs; it simply enriches the landlord. I don't begrudge the landlord the portion that relates to the building, or to services he provides, such as, say, a doorman in the city.)
Any settlement of the land of a country that would exclude the
humblest man in that country from his share of the common
inheritance would be not only an injustice and a wrong to that man,
but moreover would be an impious resistance to the benevolent
intentions of the Creator.
One of my tenants I have just let off from his lease, because he
thought he could do better with less land. This takes off about a
sixth of my income. Another has not yet paid me a cent, and I
cannot ask him for it, since it seems to me that the man who tills
the land and makes it useful has a better right to it than he who
has merely inherited it.
— JAMES RUSSELL LOWELL (1848),
Letters, Vol. 1., p. 149.
I'm reading through the first issues of Henry George's newspaper, "The Standard," a weekly which was published in NYC beginning in January, 1887. It was started shortly after the mayoral race of 1886 (chronicled in Post & Leubuscher's December, 1886 book), and in the 4th issue there is a very explicit article about the role that Rome was attempting to play in NYC politics by removing from the priesthood an activist priest, the much-loved Dr. Edward McGlynn, of St. Stephen's Church, on 28th Street in Manhattan, the largest parish in the city. (This was before the creation of New York City by combining the five boroughs.)
For over 20 years, McGlynn had been living among New York's poor, hearing the confessions of the poor, and knew how hard their lives were. He knew the situation in Ireland which had brought many of them to the U. S., and when he read Henry George's 1879 book, "Progress and Poverty," he found the cause of their suffering, and saw how to correct the underlying cause of poverty.
The article to which I refer is entitled, "From a Brooklyn Priest"
The Body of the
Catholic Clergy Sympathize With Dr. McGlynn
The Brooklyn Times prints an interesting
interview with “a well known parish priest” of that city. His
name is not given "for obvious reasons,” but those acquainted
with the Catholic clerics of Brooklyn have little difficulty in
attributing it to the most popular and influential of the
Catholic clergy of that city. We make the following extracts:
“The sympathy of the body of the Catholic clergy in New
York and Brooklyn is undoubtedly with Dr. McGlynn. I have talked
with a great many of my brother priests of both cities on the
matter, and almost without exception, they have taken Dr.
McGlynn's side in the controversy, though they would be loth to
do so publicly for manifest reasons. The sentiment of the body
of the Catholic clergy of the two cities is that whatever has
been done in Dr. McGlynn's case has been done by inspiration from this side. Of course the question at issue does
not at all touch matters of faith. It is purely a question of
discipline. The authorities at Rome know little or nothing of
the real state of affairs at this side of the Atlantic except as
they are inspired by the archbishop of the different provinces.
Archbishop Corrigan is in daily communication with Rome by
cable, and the views of the controversy between Dr. McGlynn and
his superior that are entertained at Rome pending the personal
appearance of Dr. McGlynn in the Eternal City, are the views of
the archbishop of New York that are telegraphed and written
“I do not mean to imply that Archbishop Corrigan would
willfully misrepresent the situation here, but I do say that Dr.
McGlynn, with all his experience as a priest in the American
metropolis, with all his practical knowledge of the condition of
the poor and of the working classes in that city, is a better
judge of the political needs of the masses in New York than
Archbishop Corrigan is, who has spent the greater part of his
career as an ecclesiastic in the state of New Jersey; and I hold
that Dr. McGlynn and every other Catholic priest has the right
to take an active part in the politics of the country. To say
that a man of the acknowledged piety and the blameless life of
Dr. McGlynn sympathizes with anything that smacks of communism
or anarchy is the veriest nonsense to anyone who knows him — and
who does not know everything about him today? Dr. McGlynn, as a
priest, knows the awful burdens which the laboring classes of
New York city have to bear through political misrule and the
corrupt combination of capital to oppress them. He knows how
anomalous that condition of things is which allows one man to
accumulate a hundred millions of dollars within 25 years and compels another to work for a dollar a day, nay, while
thousands, anxious for work, are starving for the lack of it.
Hence his support of the candidate of the labor party for mayor.
Dr. McGlynn did not believe that anarchy or communism would
follow in the wake of the election of Henry George to the
mayoralty of New York any more than he believed that Mr. George,
as the chief executive of the municipal government across the
East river could put his land theories into practical operation
in the metropolis. Any possible change in the government of New
York city must be a change for the better, so far as the poor
“If the bishops of the dioceses in the United States
were taken by Rome from among the clergy of these dioceses who
thoroughly understand the social and political conditions of
their people, there would be none of these disciplinary
troubles. What sense is there in sending an Italian priest to
Canada or an Irish priest to Guatemala as bishop? Or why should
a bishop be transferred from a city in the state of New Jersey
to preside over the archdiocese of New York when there are many
able and holy priests in the metropolis worthy of election to
the prelacy who have spent their lives among the masses of the
people? In countries where the canonical law of the church is in
practical application the parish priests of a diocese in which
the bishopric becomes vacant send three names to Rome by majority
vote. One is set down as dignus, or worthy, another as dignior,
or more worthy, and a third as dignissimus, or most worthy. Any
one of the three may be selected, and it sometimes happens that
it is the lowest on the list who is chosen. The pope has the
absolute power to go outside the list sent to him from the
diocese in which a vacancy occurs, but it is a power rarely
exercised and only for the most exigent reasons. If the canon
law applied in America, which is only yet a missionary country
and subject to the propaganda at Rome, Dr. McGlynn could not
have been turned out of St. Stephen's church as he has been and
his salary would have run on despite his suspension until his
case was finally decided at Rome.
“It is most unfortunate that the canon law does not
apply in the United States, and that the political, social and
educational situation in this country is not better understood
at Rome. Wealthy Catholic politicians have too much to say on
church policy in this country; and unfortunately that is today
the trouble in New York city. The masses of the Catholic clergy
say, 'Hands off.' As long as bishops, with whom wealthy
politicians are most powerful, practically say who shall be
elected to the prelacy in the United States there will be a
chance for trouble among the laity.
“I am satisfied that if a majority of the Catholic
clergy of the dioceses of New York and Long Island could do it
Dr. McGlynn would have been elected archbishop and Archbishop
Corrigan would have been allowed to remain in New Jersey. I
unhesitatingly say that if the votes of the Catholic clergy in
these two dioceses could do it Dr. McGlynn would be restored to
St. Stephen's parish tomorrow. No old priest of New York city
wanted to succeed Dr. McGlynn in that parish, for they all knew
how his congregation idolized him. I am also free to say that if
Archbishop Corrigan had not been brought from the state of New
Jersey to New York city this trouble would never have occurred.
“Mgr. Preston is the bitterest foe that Dr. McGlynn has
in the diocese of New York. I do not mean to imply that the
monsignor entertains personal animosity toward the ex-rector of
St. Stephen's church, but he is utterly opposed to what Dr.
McGlynn stands for as an American citizen. Mgr. Preston is an
aristocrat and the associate of aristocrats. Even converts to
the Catholic church who know Father Preston well have admitted
that the monsignor dearly loves the privileges which attach to
church dignitaries in Catholic countries, and is inclined to ape
the civil ceremonial of such communities in his intercourse with
his flock. Dr. McGlynn is poor, is of the poor and loves to
associate with the poor. He is in this respect the antithesis
of Mgr. Preston, and the latter is a confidential adviser of
This article, more than anything else I've read, brings home to me the extent to which the rich manage even the Church for the benefit of the rich, to the detriment of the poor. When a priest who seeks to correct the unjust structures is deprived of his priesthood because he might upset the privileges of the rich, the country and the church are both in trouble.
When churches benefit from contributions from wealthy contributors, they will tend to act to enforce the structures which enrich those wealthy contributors, rather than rocking the boat in any way. When economic structures funnel the community's wealth into a relative few pockets, the Church will tend to embrace those pockets, not challenge the structures. Money in elections is not the only corrupting force.
I can easily imagine a great proprietor of ground rents in the metropolis calling attention to the habitations of the poor, to the evils of overcrowding, and to the scandals which the inquiry reveals, while his own income is greatly increased by the causes which make house-rent dear in London, and decent lodging hardly obtainable by thousands of laborers.
Sir, Joseph Stiglitz is concerned that America has become less egalitarian, and no longer the land of opportunity (June 26). He mentions reducing rent-seeking as a solution, but he does not mention the paradigmatic form of rent-seeking: collecting the ground rents of land. If an increasing share of gross national product is going to the top 1 per cent, it is at least in part because they are the people who own most of the valuable land, and the rents of land are absorbing a larger share of production. No one is making more land to keep the price down by competition.
I'll leave it to you to go read the rest. (Registration is free.)
Posted on Sat, Jun 16, 2012, 9:31 am by Michael Kinsley
The current debate about rich and poor — the 1 percent versus the 99 percent — is a bit misleading because the evidence usually is data about income, not wealth. Looking at wealth would make the comparison even starker.
There are some nice deals to be had in the income tax code these days, but most wealth accumulates and passes from generation to generation with no tax at all. Warren Buffett (who has selflessly taken on the role of all-purpose tape measure in these matters) is worth $45 billion or so. Do you think that all of that $45 billion, or even most of it, has appeared on any Form 1040 on its way to the cookie jar? Even at the special, low 15 percent rate the U.S. insanely confers on capital gains?
Unlikely. Much of that $45 billion is unrealized capital gains — increases in the value of Buffett’s stock that have never been cashed in, and therefore have never been taxed. I’m not saying that unrealized capital gains should be taxed (although it’s a thought). I’m just noting that you only pay income tax when an investment is liquidated, and very wealthy people don’t have to liquidate until they actually need to spend the money.
For most of the very rich, this time is never. When you die, any unrealized capital gains disappear for tax purposes. Your heirs, if and when they sell, pay taxes only on any increase in value since they got the money. And there is no estate tax at the moment on estates of $5.12 million or less.
The Federal Reserve released new numbers on Monday. Unsurprisingly, wealth distribution is even more skewed than income distribution. In 2010, the median family had assets (including their house but subtracting their mortgage) of $77,300. The top 10 percent had almost $1.2 million, or more than 15 times as much.
But the headlines — and rightly so — went to the dismal fact that household wealth has been sinking for all categories of Americans. As I said, the net worth of the median family in 2010 was $77,300. In 2007, the net worth of the median family was $126,400. That’s a drop of almost 40 percent in just three years. (All these numbers are corrected for inflation.)
Characteristically taking the longer view, the New York Times led with the fact that household savings were back to where they had been in the early 1990s, “erasing almost two decades of accumulated prosperity.”
Most of the lost household net worth of recent years is due to the drop in housing prices. This is comforting, in a way, because the price of land and things built on land — and what, ultimately, is not? — are different from the price of other goods and services.
Let me tell you about my favorite economist, an indulgence I allow myself every couple of decades. (The last time was 1989, pre-hyperlink, unfortunately.) He was an American named Henry George, who died in 1897 at the age of 58. If you took economics in college, there might have been one sentence about him in your textbook. He once ran for mayor of New York. (Fancy that. He lost.)
George would look at our present situation and ask: In what sense were we richer three or four years ago, when the exact same housing stock sold for up to twice as much? In what sense are we poorer now? Land is special because, as Realtors like to remind us, they aren’t making any more of it. This means that you can get rich owning land without doing anything productive with it.
(Henry George: “You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon, or down a hole in the ground. …”) The natural increase in population will do the trick.
This is also true, to varying degrees, of other investments. It is true to some extent of any product that can’t be easily and quickly reproduced. It is somewhat true of houses, once they are built. (As Tolstoy didn’t write, “Cans of tuna fish are all alike, but every house is a house in its own way.”) But it is especially true of land.
My Bloomberg View colleague Clive Crook claimed recently to be a “supply-side liberal.” So was Henry George. He was as concerned about income equality as the most bleeding-heart liberal and as concerned about economic growth as the noisiest supply-side conservative.
George’s solution to everything was to eliminate all taxes on working, saving and investing, and to put the entire tax burden on unproductive land, which can’t escape the tax by moving. There are problems with this idea. But it’s provocative.
I don’t have room to do George justice, but take a look at his masterwork, “Progress and Poverty.” For an economics tract, it’s actually a fun read. And, yes, you’re responsible for it on the final exam.
(Michael Kinsley is a Bloomberg View columnist. The opinions expressed are his own.)
But the colony multiplies, while the space still continues the same, the common rights, the equal inheritance of mankind, are engrossed by the bold and crafty; each field and forest is circumscribed by the landmarks of a jealous master. . . . In the progress from primitive equity to final injustice the steps are silent, the shades are almost imperceptible, and the absolute monopoly is guarded by positive laws and artificial reason.
— EDWARD GIBBON, Decline and Fall of the Roman Empire,
Wherever the ownership of the soil is so engrossed by a small part of the community that the far larger number are compelled to pay whatever the few may see fit to exact for the privilege of occupying and cultivating the earth, there is something very like slavery.
— HORACE GREELEY, Slavery at Home, in Hints Toward Reforms (1845), pp. 354-5.
The difference between serfdom as in Russia, and landownership as in England, and particularly between the serf, and the tenant, occupier, mortgagor, etc., is more in form than in fact. Whether I own the peasant, or the land from which he must obtain his nourishment, the bird or its food, the fruit or the tree, is practically a matter of small importance.
— SCHOPENHAUER, Parerga and Paralipomena, Vol. II., Sec. 126.
Place one hundred men on an island from which there is no escape, and whether you make one of these men the absolute owner of the other ninety-nine, or the absolute owner of the soil of the island, will make no difference either to him or to them.
— HENRY GEORGE, Progress and Poverty, Book VII., Chap. 2, p. 312.
Here is the fundamental error, the crude and monstrous assumption, that the land which God has given to our nation, is or can be the private property of anyone. It is a usurpation exactly similar to that of slavery.
— PROF. F. W. NEWMAN, Lectures on Political Economy (1851), Lecture VI., p. 533.
... only 22 percent of workers 55 or older have more than $250,000 put away for retirement. Stunningly, 60 percent of workers in that same age bracket have less than $100,000 in a retirement account. Ghilarducci told me that the average savings for someone near retirement in America right now is $100,000.
So how do you think our current approach to things is working out for the average person?
And whose interests is our system designed to serve?
And why are we not more interested in learning enough about it to see what needs to be changed?
Readers of this blog know where I've found the answers I find most satisfying: the writings and ideas associated with Henry George. As I work my way around the wide collection of books and journals Google Books has put on line from the 1880 to 1920 period, I continue to be amazed at how widely known and understood George's ideas were during that period; they were the context of a wide range of discussions. Our great grandparents knew these ideas, and it is too bad that so few in our generation know them well enough to share them with the 99% who are looking for a better structure.
They ate up Earth and promised you The Heaven of an empty shell! 'Twas theirs to say: 'twas yours to do, On pain of everlasting Hell! They rob and leave you helplessly For help of Heaven to cry and call; Heaven did not make your misery; The Earth was given for all.
— GERALD MASSEY, The Earth for All, My Lyrical Life, 2d Series, p. 232.
This is a paragraph from a book written about 100 years ago about Dr. Edward McGlynn, a much-loved Roman Catholic priest in Manhattan (St. Stephen's Church) who, with Henry George, was active in the Anti-Poverty Society in the last 15 years of the 19th century. It comes from a section listing "Thoughts of Dr. McGlynn."
It was told of a recently deceased Judge of the Supreme Court of the United States, a man who sat in the Senate of the United States, one of the most eminent men of his generation, how he, a poor lawyer, in a comparatively poor western town, had been able to accumulate some two or three millions of dollars worth of property. How? By "sagacity" in investing in lands at some distance from villages and towns, with foresight that in the course of a few years the growth of those communities, the industry, thrift, talent, virtue, patience of large communities would all keep adding to the value of his property, and in course of time cities, towns and villages would grow up on these lands, and he would be able to command an enormous price for land that cost him but a song. Now, while the law tolerated or even sanctioned what he was doing, he was guilty of an iniquity, of reaping where he had not sown, of exacting tribute where he had contributed nothing.
Here's a piece from a 90 year old journal. There are acres in Manhattan whose value is far higher today -- and the landlords are still reaping what the working people and visitors to New York are sowing.
APPROPRIATING THE GIFTS OF NATURE By Walter Thomas Mills.
There are portions of New York City in which the land is valued at $40,000,000 an acre. That means $8000 each day from each acre for the landlord, and that entirely unearned by him, before there is a penny for any other purpose. Probably not less than two and one-half million dollars a day, or almost a billion dollars a year, must be earned by the people of New York City and turned over to landlords for permission to use the island, which is a gift of nature, and for the advantages that are protected and maintained by the industry and enterprise of all of the people.
In The Great Adventure, April, 1921
Think what NYC -- and America -- would be like if that "permission to use the island" money was treated as our logical public revenue source, instead of as individuals', corporations' and trusts' private revenue source.
Recall the wisdom of Leona Helmsley: "WE don't pay taxes. The little people pay taxes."
For ages sorcerers and magicians kept their secrets, their charms and enchantments to deceive the simple and unwary. At length most of such marvels are relegated to jugglers and sleight-of-hand performers, and we are amused to be deceived. We expect to see things come out of nothing; to see the unbroken eggs come out of the beaten scarf; the guinea pigs come out of the empty silk hat, the ducks come quacking out of the empty box; silver dollars come out of the boy’s ear or empty pocket. But there is yet one piece of magic in which many still believe. That is the magic of land values materializing from a vacant rubbish-covered lot or tract of land on which not a lick of work has been done.
Our modern sorcerers do the trick and roll up the hundreds of thousands of dollars out of nothing, and we look with gaping mouths, wondering where the big roll of bills came from. No question is asked. Something came out of nothing; that is all. Ah! if we could all learn the trick! No more work for anybody! Why should we work when we can produce money from nothing? Nobody investigates; we have the money on us, but sleep with untroubled mind, for no man can say “That is mine.” True, no man can say “That rake-off is mine”; but all the community could rise and say, “That rake-off is ours. We, all together, created the demand for the lands of the community by our presence and industry. Before we came, the values were not. If we should all go, they would disappear. Your money does not come from nothing, as some suppose. The whole community contributes to your roll. It should be ours to pay our taxes with. For lack of it we are ﬁned for our houses, furniture, machinery, crops, merchandise, etc.”
Oh, come off with your magic of getting something for nothing! Take your chances with the rest of us, who earn our money by work. We have been shown, and are on to your magic. We are going to vote for Amendment Number 20.” Thus will sorcery fade before reason. —Lona I. Robinson, in The Great Adventure, October 23, 1920
Wherever there is in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on.
— THOMAS JEFFERSON (1785), Ford's Writings of Jefferson, Vol. VII., 36.
Thou, O Lord, providest enough for all men with Thy most liberal and bountiful hand, but whereas Thy gifts are, in respect of Thy goodness and free favour, made common to all men, we (through our naughtiness, niggardship and distrust), do make them private and peculiar. Correct Thou the thing which our inequity hath put out of order, and let Thy goodness supply that which our niggardliness hath plucked away.
— A Prayer for Them That Be in Poverty, from Queen Elizabeth's Private Prayer Book (1578).
We are fully aware that there exists in the minds of many persons a vague apprehension, that if the present laws relating to landed property were to be disturbed, evils of the most malignant character would invade the society of Britain. Nothing could be more absurd, more puerile, more dastardly. The very same fears have prevailed with regard to every other change that has taken place.
— PATRICK EDWARD DOVE, Theory of Human Progression (1850),
These Islands are not very large. It is plainly conceivable that estates might grow to fifteen million acres or more. . . These things might be for the general advantage, but if not, does any man possessing anything which he is pleased to call his mind, deny that a state of law under which such mischiefs should exist, under which the country itself would exist, not for its people but for a mere handful of them, ought to be instantly and absolutely set aside?
— LORD CHIEF JUSTICE COLERIDGE, The Laws of Property,
"I find this vast net-work, which you call property, extending over the whole planet. I cannot occupy the bleakest crag of the White Hills or the Allegheny Range, but some man or corporation steps up to me to show me that it is his."
— EMERSON, The Conservative.
Extended excerpts from The Conservative (an 1841 speech) follow ...
36. He worked hard. He played by the rules. He bought up land before the interstate highway was announced, and his widow and orphans now have a very valuable land portfolio, for which others will pay a high purchase price or high -- and rising -- lease prices, for generations. Is it right to change our tax code to tax -- heavily -- year in and year out, the economic value of that land?
Does the Single Tax discriminate between earned and unearned income?
It is the scientific way of doing what we have been feebly attempting to do in an unscientific way, that is, to distinguish between what Dr. Scott Nearing called "property income" and "services income," or between that form of wealth which is the result of individual effort in production and that which is purely the result of the collective effort of society; or between the two forms of wealth which Dr. Ellwood, of the University of Missouri, in a seemingly unwilling recognition of an unwelcome truth, calls "earnings" and "findings."
In the case of the great majority of us (whether as individuals or as partners in corporations) our incomes are so inextricably compounded of earnings and findings, of privilege income and service income, that it is hard for some of us to know whether we belong to the privileged or unprivileged classes, to the slave owners or the slaves, to the confiscators or the victims; and perhaps only those absolutely property less men at the bottom of the social scale can be said to have no share in the "findings" that spring from privilege. On the other hand it is equally true that all industry up to its highest strata, has to pay toll to privilege and provide those "findings" which distribute themselves with more or less inequality over almost the whole of society. How to distinguish between and separate these entirely different kinds of wealth is what all sincere sociologists and honest taxation commissioners have wanted to do and have hitherto failed in the doing.
If we take a handful of sand and a handful of iron filings and mix them thoroughly, and then set a man with the sharpest eyesight and the nimblest fingers to separate the particles, it will take him long to accomplish his task and he will never do it with more than an approximation to completeness. But apply a strong magnet to the mixture and the separation will be accomplished in ten minutes. Then see how the analogy applies to the economic problem in society. Let us imagine the return that should naturally flow to land in the form of rent to take the shape of blue coins made of steel. Let us fancy that the natural reward that goes to capital as interest takes the form of red coins made of wood. Finally let us figure the natural return to human service of all grades as being represented by white coins also made of wood. On examination it will be discovered that in the case of almost every member of society above the rank of the day laborer, his income is tri-colored or composed of all three coins. There are countless "captains of industry" among us who complacently assume their large incomes to be the rewards freely given by a free world in return for their invaluable services, who will be surprised to find how large a proportion of blue their income coins contain. There are multitudes of livers upon what they have called "interest" who will expect to find their coins red, who will be equally surprised to discover that they are almost entirely blue. To complete the parable, the taxation of land values will be like the application of the magnet which will draw away the blue steel coins in whatever stratum of society they may be found, and lay them aside for social purposes, being socially created wealth; leaving the red and white coins to be competed for in a world of free opportunity, without deduction or diminution by taxation or in any other way.