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!
1. There are a lot of living costs that we don't pay for.
2. A higher gas tax could make the economy more efficient.
3. And so could taxes for all kinds of things.
4. But where do you draw the line?
Adam Davidson is asking some good questions here. Henry George provided some good answers to those questions. I recommend starting with "Social Problems" and then progressing to "Progress and Poverty."
Researching the post immediately below this one, I came across an interesting item which ends with these paragraphs. I've highlighted the piece that caught my eye:
WHY DO WE LOOK AT EACH NEW birth as the arrival on earth of another hungry mouth? Why are we incapable of seeing that along with each new mouth comes a pair of hands? The world does not have six billion mouths to feed — it has six billion hard-working human beings whose creativity and ingenuity must be unleashed.
In the next decade India and China will each add to the planet about 10 times as many people as the US. But the stress on the “world’s carrying capacity” caused by the new Americans will far exceed India’s and China’s combined.
In any case even if, as predicted by the UN, Asians and Africans will make up 80 per cent of humanity by 2050, they will simply have returned to being proportionately as numerous as they were before the Industrial Revolution.
The post below this one, "Mitt Romney's 'Fair Share' " refers to his fair share of the costs of providing public goods.
But perhaps an equally important question is the nature of one's fair share of the output of our economy and the output of the earth. Some of the former output is the result of individual efforts, and one ought to be able to keep that portion. But at the same time we must recognize how much comes from the division of labor, from drawing down on the non-infinite supply of non-renewable natural resources on which all of us today must depend and on which future generations of human beings must rely. Those who draw down more than their legitimate share owe something to the rest of the community. Our wealthiest tend, we suspect, to use many, many times their legitimate share, and the median American likely draws far more than their share, when one considers the planet as a whole.
Perhaps "legitimate" is not the right word here. It refers to what is permissible under current law. (The word gets misused a lot -- see the discussion on "legitimate rape," which seemed to be about the circumstances under which a woman has a right to make a specific very personal, decision, and when it is considered by some to not be left to her and is the province of government, legislators or others.)
What is one's "fair share" of natural resources? America is using a hugely disproportionate share of the world's resources. Are we entitled to it because we're somehow "exceptional"? Because "our" God is somehow better than other nation's Gods? Or do we genuinely believe that all people are created equal, and intend to live our lives accordingly?
Our output of greenhouse gases exceeds our share of the world's population. This is not without consequences for the world, and for peace on earth.
We ought to be re-examining our incentives so that they move us in the direction we ought to be going, which is, to my mind, using less. We can build transportation infrastructure which will permit many more of us to move around with less impact on the environment. We can fund that through collecting the increases in land value that infrastructure creates. We can correct the incentives which cause us to use today's inferior technologies to extract natural resources from the earth in ways which damage the environment, as if ours was the final generation, or the only one worth serious consideration.
Better incentives could reduce, eliminate, even reverse urban sprawl. I refer specifically to land value taxation as a replacement for the existing property tax, particularly in places where assessments are for one reason or another not consistent with current property values -- e.g., California and Florida, parts of Delaware and Pennsylvania which currently use assessments from the 1970s, and many other places where assessments are simply out of whack with current reality!) We should be replacing sales taxes, wage taxes, building taxes with taxes on land value and on natural resources. Most of that value is flowing generously into private or corporate pockets, to our detriment. It concentrates wealth, income, and, of course, political power.
Collecting the rent, instead of leaving the lion's share of it to be pocketed by the rent-seekers, would go a long way to making our society and our economy healthier. Eliminating the privilege of privatizing that which in a wisely designed society would be our common treasure would make our society a better place in which to live, a place in which all could thrive and prosper without victimizing their fellow human beings.
ON Sunday, the best climate policy in the world got even better: British Columbia’s carbon tax — a tax on the carbon content of all fossil fuels burned in the province — increased from $25 to $30 per metric ton of carbon dioxide, making it more expensive to pollute.
This was good news not only for the environment but for nearly everyone who pays taxes in British Columbia, because the carbon tax is used to reduce taxes for individuals and businesses. Thanks to this tax swap, British Columbia has lowered its corporate income tax rate to 10 percent from 12 percent, a rate that is among the lowest in the Group of 8 wealthy nations. Personal income taxes for people earning less than $119,000 per year are now the lowest in Canada, and there are targeted rebates for low-income and rural households.
The only bad news is that this is the last increase scheduled in British Columbia. In our view, the reason is simple: the province is waiting for the rest of North America to catch up so that its tax system will not become unbalanced or put energy-intensive industries at a competitive disadvantage.
Over dinner tonight, Milton Friedman's name came up, and I commented that in about 1978 and again in 2006, a few weeks before his death, Milton Friedman called land value taxation the "least bad" tax, but never lifted a finger in the intervening years to help promote it.
The carbon tax is another good, and wise, and just, tax.
How many economists will put their shoulder to getting it enacted?
How many will simply hang out in their ivory towers?
Let’s start with the economics. Substituting a carbon tax for some of our current taxes — on payroll, on investment, on businesses and on workers — is a no-brainer. Why tax good things when you can tax bad things, like emissions? The idea has support from economists across the political spectrum, from Arthur B. Laffer and N. Gregory Mankiw on the right to Peter Orszag and Joseph E. Stiglitz on the left. That’s because economists know that a carbon tax swap can reduce the economic drag created by our current tax system and increase long-run growth by nudging the economy away from consumption and borrowing and toward saving and investment.
What would a British Columbia-style carbon tax look like in the United States? According to our calculations, a British Columbia-style $30 carbon tax would generate about $145 billion a year in the United States. That could be used to reduce individual and corporate income taxes by 10 percent, and afterward there would still be $35 billion left over.
Why on earth should the privilege to pollute OUR air be be given away for free, or for less than the social costs it imposes on us? Who benefits from such a system?
A carbon tax makes sense whether you are a Republican or a Democrat, a climate change skeptic or a believer, a conservative or a conservationist (or both). We can move past the partisan fireworks over global warming by turning British Columbia’s carbon tax into a made-in-America solution.
It is well known that these materials and agencies, as fast as they become available, are in the main appropriated by individuals, through the agency or consent of the government, and are then held as private property. Such is the case with the soil and the minerals beneath it. The owners of this property charge as much for the use of it as if it were their own creation, and not that of nature.
— PROF. SIMON NEWCOMB, The Labor Question, North American Review, July, 1870, p. 151.
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).
A. The outlawing of abortion so that all embryos that implant are permitted to mature to full term.
B. The outlawing of some sorts of birth control so that all fertilized eggs have rights
C. The provision of full pre-natal care and healthy foods, air and water to all pregnant women until birth, so that all babies born have as good a start as possible
D. The provision of affordable healthy food, clean air and clean water until age 18, so that all young people have as healthy a start as possible
E. The provision of good schools, without regard for one's parents' ability to pay, for all children, including those with special needs
F. The provision of some reasonable income so that the families of children can afford to meet all of each child's most simply defined needs, including health care, education, nutritious good, a safe home
G. The provision of healthy air and water to all, of all ages
H. The acknowledgments that (a) every person has a right to himself or herself; and (b) that all persons have equal rights to the gifts of nature, even after they reach the age of 18 or 21
I. The notion that the born have more rights than the unborn if one comes into conflict with the other
28. Private-sector insurance companies are raising their rates for waterfront or near-waterfront property, or refusing to renew policies in hurricane-prone areas. States are stepping in to provide insurance of last resort. How should this be financed?
A. It should be self-financing, with rates designed to cover 100% of the risks. This might drive down the selling prices of the properties, but that is appropriate given the increased risks involved.
B. Taxpayers all over the state should subsidize the insurance rates, from taxes on wages
C. Taxpayers all over the state should subsidize the insurance rates, from taxes on sales
D. Taxpayers all over the state should subsidize the insurance rates, from taxes on their land values
E. Inland taxpayers should be taxed to pay for the subsidies to coastal propertyowners
F. Hotel and rental-car taxes should be used to pay for the subsidies to coastal homeowners and commercial property owners
G. Collect taxes in proportion to pollution which is producing slower-moving storms, which will have the effect of incentivizing reductions in that pollution
19. Storms continue to erode the resort beaches up and down our coasts. Who should pay for beach restoration every few years?
A. The federal government, from income tax revenues. (why?)
B. Taxes on pollution should be used to pay for this, on the basis that pollution produces the climatic conditions that make storms slower moving and more destructive.
C. State governments along the coasts.
D. Local governments, town by town, paid for by sales taxes.
E. County governments along the coasts.
F. Local governments, town by town, paid for by taxing wages.
G. Local governments, town by town, paid for by summer parking revenue, hotel bill taxes and taxes on rental properties' revenue;
H. Local governments, town by town, paid for by property taxes, taxing both buildings and land, in proportion to current market value
I. Local governments, town by town, paid for by land value taxation. Land values close to the beaches rise and fall with the sand, and properties further from the beaches are far less effected by the presence/absence of beach sand than those near the beaches.
J. Local governments, town by town, paid for by transfer taxes on sold properties, so as not to burden long-time owners who aren't selling.
7. The corporations which pollute the world's air through emissions from their US-based factories and refineries and electricity-generating plants will be asked to pay for carbon credits to offset the pollution they create. Where should the revenue go?
A. Back to the corporations and their shareholders
B. To the American people as a Citizen's Dividend (similar to the Alaska Permanent Fund)
C. To American workers and retirees in the form of revenue to support Social Security
D. To the American people as a reduction in federal income taxes, starting with the highest income people who pay the highest income taxes
E. Same, starting with the lowest-income workers who have the least left from their wages
F. To corporate shareholders in the form of a reduction on their dividend taxes
When the structures that our laws and traditions create provide opportunities for someone to capture a windfall, should we blame the fellow who "takes advantage" of those structures, or should we respond by studying and correcting those structures and laws?
Winston Churchill, in his speeches under the baanner "The People's Rights," in 1909, said this:
I hope you will understand that when I speak of the land monopolist I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally a worse man than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law.
The 99% need to start identifying the laws and structures that must be adjusted. This is not easy work.
What individuals produce, and corporations produce, should not be "there for the taking" -- be it by corporate management in the form of hugely generous compensation packages and golden parachutes, or by simply saying "these resources are OURS, not everyone's" or by establishing monopolies or duopolies or other such structures. We-the-people need to educate ourselves about how things are done now, who benefits from that, and what alternatives exist. It won't be easy. We'll be challenging special interests who somehow think they're entitled to their advantaged positions, and the rest of us exist to keep them comfortable.
Labor should get its share, and capital should get its share, and we-the-people should get land's share. That last could fund a large portion of our common spending, on infrastructure and services, and permit us to reduce or eliminate the dumb taxes which take which individuals and corporations legitimately create. That "keeping what we create" extends, also, to "externalities," to being responsible for the pollution we create, and setting up incentives so that it is minimized, for the good of all of us now here and the good of future generations.
I think it is quite possible, even likely, that a few years after we've made this shift in who gets what, we'll find that we don't need nearly so robust a social safety net, and that we-the-people may get some of "land's share" back in the form of a Citizen's Dividend, just as all permanent residents of Alaska receive an annual dividend from the Alaska Permanent Fund.
In any case, letting some corporations and some individuals grab that which we all create together is just plain wrong. Letting it be "there for the taking" is insanity and injustice. And don't we pledge "liberty and justice for all?"
Our ancestors may have granted some privileges to some lucky folks for one reason or another. That doesn't mean that we can't, politely and firmly, revoke those privileges. A couple of centuries is plenty. Experience has shown us that those privileges don't serve the greater good, and it is time to revoke them. Will the privileged give up those privileges graciously? Quite possibly not. But the first step is to identify them, and then to seek to change the system so that those rightly-common assets aren't "there for the taking."
I thought this opinion piece worthwhile -- and yet I see another layer one must consider, even if one were to be 100% persuaded that we are not yet overloading the carrying capacity of the environment:
It doesn't matter what the truth of the matter is, if enough poor people in other countries reach the conclusion that America, or the developed countries altogether, are guilty of activities and stances that are producing the weather -- and other -- miseries they are experiencing.
Why might they hate us? Count the reasons.
Here's the WaPo article:
By Bill McKibben, Published: May 23
Caution: It is vitally important not to make connections. When you see pictures of rubble like this week’s shots from Joplin, Mo., you should not wonder: Is this somehow related to the tornado outbreak three weeks ago in Tuscaloosa, Ala., or the enormous outbreak a couple of weeks before that (which, together, comprised the most active April for tornadoes in U.S. history). No, that doesn’t mean a thing.
It is far better to think of these as isolated, unpredictable, discrete events. It is not advisable to try to connect them in your mind with, say, the fires burning across Texas — fires that have burned more of America at this point this year than any wildfires have in previous years. Texas, and adjoining parts of Oklahoma and New Mexico, are drier than they’ve ever been — the drought is worse than that of the Dust Bowl. But do not wonder if they’re somehow connected.
If you did wonder, you see, you would also have to wonder about whether this year’s record snowfalls and rainfalls across the Midwest — resulting in record flooding along the Mississippi — could somehow be related. And then you might find your thoughts wandering to, oh, global warming, and to the fact that climatologists have been predicting for years that as we flood the atmosphere with carbon we will also start both drying and flooding the planet, since warm air holds more water vapor than cold air.
It’s far smarter to repeat to yourself the comforting mantra that no single weather event can ever be directly tied to climate change. There have been tornadoes before, and floods — that’s the important thing. Just be careful to make sure you don’t let yourself wonder why all these record-breaking events are happening in such proximity — that is, why there have been unprecedented megafloods in Australia, New Zealand and Pakistan in the past year. Why it’s just now that the Arctic has melted for the first time in thousands of years. No, better to focus on the immediate casualties, watch the videotape from the store cameras as the shelves are blown over. Look at the news anchorman standing in his waders in the rising river as the water approaches his chest.
Because if you asked yourself what it meant that the Amazon has just come through its second hundred-year drought in the past five years, or that the pine forests across the western part of this continent have been obliterated by a beetle in the past decade — well, you might have to ask other questions. Such as: Should President Obama really just have opened a huge swath of Wyoming to new coal mining? Should Secretary of State Hillary Clinton sign a permit this summer allowing a huge new pipeline to carry oil from the tar sands of Alberta? You might also have to ask yourself: Do we have a bigger problem than $4-a-gallon gasoline?
Better to join with the U.S. House of Representatives, which voted 240 to 184 this spring to defeat a resolution saying simply that “climate change is occurring, is caused largely by human activities, and poses significant risks for public health and welfare.” Propose your own physics; ignore physics altogether. Just don’t start asking yourself whether there might be some relation among last year’s failed grain harvest from the Russian heat wave, and Queensland’s failed grain harvest from its record flood, and France’s and Germany’s current drought-related crop failures, and the death of the winter wheat crop in Texas, and the inability of Midwestern farmers to get corn planted in their sodden fields. Surely the record food prices are just freak outliers, not signs of anything systemic.
It’s very important to stay calm. If you got upset about any of this, you might forget how important it is not to disrupt the record profits of our fossil fuel companies. If worst ever did come to worst, it’s reassuring to remember what the U.S. Chamber of Commerce told the Environmental Protection Agency in a recent filing: that there’s no need to worry because “populations can acclimatize to warmer climates via a range of behavioral, physiological, and technological adaptations.” I’m pretty sure that’s what residents are telling themselves in Joplin today.
Bill McKibben is founder of the global climate campaign 350.org and a distinguished scholar at Middlebury College in Vermont.
Verlyn Klinkenborg wrote a nice short piece about a factory farm in Clarion, Iowa. "The factory — no point calling it a farm — called Wright County Egg, is the source of 380 million of the more than 500 million recalled eggs."
When I was back a couple of years ago, I noted the most evident change, a significant population of Mexican workers. I hoped that they were able to love Clarion as much as I did. It’s unlikely, because I also saw where they worked.
When I was young, I thought I grasped the immensity of the Iowa landscape. The immensity of the soybean and corn fields has only grown because so many smaller farms have vanished as a result of government farm policy, which rewards economic concentration. As I turned off Highway 3 east of town, I saw that there was a newer immensity, the egg factories — an endless row of faceless buildings, as bland as a compound of colossal storage units but with the air of a prison.
It wasn’t simply that the operation is out of scale with the Iowa landscape. It is out of scale with any landscape, except perhaps the industrial districts of Los Angeles County. What shocked me most was the thought that this is where the logic of industrial farming gets us. Instead of people on the land, committed to the welfare of the agricultural enterprise and the resources that make it possible, there was this horror — a place where millions of chickens are crowded in tiny cages and hundreds of laborers work in dire conditions.
It takes only a little investigation to learn how bad things have been inside those buildings. The list of offenses for which the DeCosters and their farms have been fined in Iowa and Maine only begins with hiring children and illegal immigrants.
In 2000, Jack DeCoster, the operations’ founder, was named a “habitual violator” of Iowa’s environmental laws. His egg factories have been cited by OSHA for deplorable working conditions. In 2003, Mr. DeCoster paid more than $1.5 million to settle an employment discrimination suit charging that 11 women working in the Clarion plants had been subject to sexual harassment, including rape and threats of retaliation. There have been nearly 1,500 illnesses as a result of the salmonella outbreak. Every one of the billions of eggs produced this way has been tainted.
I am led to wonder whether this is the sort of "family farm" which those who campaigned to get rid of the estate tax sought to protect.
Let's think about what incentives we need to shift in order to return to a situation in which more people can earn a decent living off the land without mistreating creatures, polluting the earth, exploiting workers or endangering their customers. Or we can continue with the wealth-concentrating machine we've permitted.
What do we value? Whose voices will get our legislators' attention?
"I believe in the division of labor. You send us to Congress; we pass laws under which you make money ... and out of your profits, you further contribute to our campaign funds to send us back again to pass more laws to enable you to make more money."
-- Senator Boies Penrose (R-Pa.), 1896, citing the relationship between his politics and big business.
"For decades, poverty reduction and development programs have failed to
confront the different forms of power and the structural violence that
hold more than two-thirds of the world in dire straits. Our chosen economic
model has created a global situation in which today less than 25% of the
world's population uses more than 80% of the planet's resources while
creating 70% of its pollution."
So how do we reduce our demand for non-renewable natural resources? (I don't see much long-term upside in increasing the supply of energy by using more of our soil -- or water or fuel -- to provide biofuel, though it may be a boon in dealing with the supply problem short-term.)
The right question, I submit, is how we do we adjust our incentives to produce a reduction in demand for oil, coal, natural gas, so as to leave a decent quantity of each for all the future generations and for the people of other nations. (And, not so incidently, to reduce the pollution we produce which now shows signs of exceeding the ecosystem's ability to carry it.)
What is it that we do now that we can do differently?
Well, we can adopt measures that encourage people to
live closer to their work
use public transportation more
use cars less
live in modern homes constructed with energy-conserving technologies and design
We can adopt measures which make it affordable to live closer to their work -- if they choose that. I'm not talking about subsidies, incidently. More precisely, I'm not talking about adding subsidies.
Some will say, as George H. W. Bush did in 1992 at the Earth Summit, that "The American way of life is not negotiable."
Dick Cheney is quoted (May, 2001) as saying that "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy." As irritating as I found most of his pronouncements to be, I can see a germ of truth in this one.
I have friends who seek to reduce their water usage in order to save the environment. They save the water in which they wash vegetables, and measure their use by the cupful. It seems to me that while their efforts are admirable, in the absence of changes to the incentives which permit some people or other entities to continue to use water heedlessly to water lawns and rinse driveways, their efforts are pointless and maybe even counterproductive. (Problem? What problem? Why do we large users need to change our ways?) WE HAVE TO CORRECT THE INCENTIVES!
It seems to me that a carbon tax is a step in the right direction. Establish it, announce it, implement it on some predictable schedule. Industry will adjust. Individuals will adjust. And make sure that carbon tax applies to energy used in global commerce and travel, as well as domestically.
But the single reform which I think will make the biggest difference is a tax shift. If we were to shift our taxes off buildings, and onto land value, here's what we could expect to happen:
Urban land which now sits vacant or underused would be put to something approaching its highest and best use. That might be more housing, or more commercial venues, or some combination thereof.
Developers of well-located land would be competing with each other to provide what the market wants, be it housing or more grocery stores or more shops, or more office space. Landlords competing for tenants would lower their asking rents and tune their offerings to meet the demand, at all levels on the income spectrum, not just the high end.
The density this redevelopment would create would provide the platform for better public transportation -- more frequent buses, more subways, more commuter options.
People who would prefer to live closer to their work or to the cultural or other amenities which larger cities can offer would be able to find housing they can afford. Those who want to live in the suburbs on the 1-acre lot with the picket fence would have less competition for such homes, and be able to afford to buy one closer to the center of things for less of their income or a shorter mortgage.
I attend a liberal suburban church where every week the Prayers of the People include this statement: "The world now has the means to end extreme poverty. We pray that we have the will."
We need to act locally -- through basic tax reform -- to shift the incentives which currently nudge us toward using cars more, polluting more, living in older houses which consume more energy and create more pollution -- and rewarding land speculators more than we encourage the sorts of entrepreneurs who create jobs.
IT is ALL INTER-RELATED. But relatively few of us see the connectedness yet.
Almost a month ago (7/12), Martin Wolf, the Financial Times' chief economics commentator, posted a piece to his blog under this title. The last time I looked, perhaps 10 days after his initial post, there were about 150 responses. I circled back recently, and found that the comments count had risen to over 350.
This ended up as a heated debate. Nobody will be surprised if I conclude
that the result of the debate (often surprisingly ill-tempered) was
pro-LVT 10, anti-LVT zero. I am surprised by some of what the anti-LVT
proponents have said. I would have thought they would wish to open their
minds a bit. I did and was persuaded of the case, as a result. Is not
the purpose of such exchanges to learn from one another?
Some of the arguments addressed at the case for LVT are quite extraordinary.
The essential point is quite simple: the value of resources is created
by the economic activity of other factors of production. The owners of
these resources can become hugely wealthy and are often untaxed on that
increase in wealth: the Duke of Westminster is the richest Englishman
simply because he owns a large amount of land in a valuable part of
London. So why should he have command over the labour of so many other
That wealth is, in the strictest sense, unearned. If that rise in wealth
were taxed away, other taxes -- those on labour, capital and
entrepreneurship -- could fall. This would be both efficient (because
taxes on rent do not create distortions, as Ricardo showed) and also
just, because the wealth was unearned. Now, surprisingly, the UK allows
foreign landowners to enjoy the increase in value created by the British
economy, entirely tax-free. This is utterly crazy.
Let me add four other points.
First, throughout history, the main source of wealth was land-ownership.
The parasitic landowner became wealthy on the efforts of others --
peasants, tenants and even developers. Sometimes the parasite was also a
farmer or developer, but that does not change the fact that these are
two distinct economic roles. The parasite built fine castles and palaces
and often sponsored music and culture. But he was still a parasite. The
beauty of capitalism is that many of the wealthiest are no longer
parasites. This is good. But many of the wealthy still are parasites.
Moreover, now everybody wants to get rich by being a mini-landowner.
That is a huge diversion of effort.
Second, the financial system's ills are the result of unchecked
credit-creation. Yes. But unchecked credit-creation would be impossible
without collateral. Land is always the principal form of collateral
(buildings are a depreciating asset). That is why financial bubbles that
do not create credit booms (like the dotcom bubble) are economically
benign, while property bubbles are potentially catastrophic. When the
value of collateral collapses, the financial system implodes.
Third, there is really nothing new about this understanding of the role
of resource rents. They were central to the classical system, from which
modern economics, in its various forms, derives. Ricardo's analysis of
rent remains intellectually impeccable.
Finally, as Herman Daly has noted
(http://steadystate.org/modernizing-henry-george/), today economically valuable
resources are much more than just land (and what lies below it). They
include all the services of the biosphere - those that are appropriated,
those that are appropriable and those that are non-appropriable. If we
do not think seriously and intelligently about how to price resources,
we are likely to go seriously adrift, perhaps even into disaster. Here
land is the least of our problems -- it is appropriable and, by and
large, appropriated. So, at least, the price mechanism works, even
though the distribution of the gain is grossly unjust. But, in other
cases, no appropriation is possible, or at least it is not easy. Nobody
can appropriate the atmosphere. It is nigh on impossible to appropriate
the oceans. How do you own species diversity? These are serious
So, I conclude where I started: resources matter. It was a great mistake
to exclude them from the canonical neo-classical model. It is also a
great mistake not to tax their owners to the hilt.
The floods battered New England, then Nashville, then Arkansas, then Oklahoma — and were followed by a deluge in Pakistan that has upended the lives of 20 million people.
The summer’s heat waves baked the eastern United States, parts of Africa and eastern Asia, and above all Russia, which lost millions of acres of wheat and thousands of lives in a drought worse than any other in the historical record.
Seemingly disconnected, these far-flung disasters are reviving the question of whether global warming is causing more weather extremes.
The collective answer of the scientific community can be boiled down to a single word: probably.
“The climate is changing,” said Jay Lawrimore, chief of climate analysis at the National Climatic Data Center in Asheville, N.C. “Extreme events are occurring with greater frequency, and in many cases with greater intensity.”
He described excessive heat, in particular, as “consistent with our
understanding of how the climate responds to increasing greenhouse
Theory suggests that a world warming up because of those gases will
feature heavier rainstorms in summer, bigger snowstorms in winter, more
intense droughts in at least some places and more record-breaking heat
waves. Scientists and government reports say the statistical evidence
shows that much of this is starting to happen. . . .
If the earth were not warming, random variations in the weather should
cause about the same number of record-breaking high temperatures and
record-breaking low temperatures over a given period. But climatologists
have long theorized that in a warming world, the added heat would cause
more record highs and fewer record lows.
Recall that the US uses a disproportionate percentage of the world's oil and coal, and produces a disproportionate percentage of the world's greenhouse gases.
As poor people around the world -- and not-so-poor people, too -- contemplate America's place in the world, particularly when they are suffering from the effects of extremes of weather, are they likely to be willing to accept the notion that America is somehow special, and that it is the rest of the world that must adjust to us, or will they come to hold us accountable to the rest of the world's people?
When we wrap our minds around the implications of that question, we will come to the question of how we can reduce the demand for the kinds of energy which pollute the world's air.
Part of the answer will come from reducing, even reversing, urban sprawl, and setting our incentives so that our cities get re-developed more quickly and more effectively. This will also be good for the economy, creating jobs in the ongoing redevelopment process and then again in the new buildings created by this redevelopment.
What incentives? Start with the incentives which promote intense use of land well-served by taxpayer-provided infrastructure (highway systems, rail and subway systems, bridges, tunnels, air travel, etc.; water, sanitary sewer, stormwater management, etc.); and services (schools, police, ambulance, firefighting, street-cleaning, trash removal, recycling, public health, courts and prisons; public parking, etc.) Every one of those services serves to increase the value of land within the area served. Most of them contribute more to the land value than they cost. Yet we continue to fund them, in many places, with taxes not on land value but on wages or sales -- stupid taxes, to be blunt about it!
We can settle down and study the problem, or we can continue to do what hasn't worked yet. But not for long, and not for free. Our neighbors in the other 94% of the world are going to start holding us accountable at some point. Do we want to wait until it hits us, or do we want to get out in front of it?
And if we could, via a simple reform in the US, set an example that would contribute to prosperity in other countries, wouldn't we be wise to pursue it?
According to CNN, JFK's
airport's busiest runway will close today for four months for reconstruction. "Officials are reducing the number of arrivals and departures at the
airport from about 1,300 a day to 1,050." Given the softness in the economy, this is a fine time to do the necessary work. (I wonder whether this is being paid for in part by stimulus dollars.)
1300 takeoffs and landings a day. 48 million passengers per year. One of two international gateways to -- and from -- NYC metro area.
Finite. There is no suggestion in the article that this project is going to increase capacity. The goal is to widen the runway by 1/3, and add taxiways, to ease air traffic congestion. The results should, I hope, include reducing fuel use by delayed flights, both on the ground and waiting to land; reduce time-wasting backups produced at other airports around the US caused by JFK delays. This will be good for the airlines, for air quality, for efficiency, productivity and stress levels of passengers. Its effects should reverberate through many other airports, here and abroad.
The project will cost $376 million. Quick and dirty, if there are 48 million passengers per year, a $1 surcharge on every ticket for the next 8 years would pay for the work.
So how should this be financed?
We ought to be treating landing rights at JFK (etc.) as our common
treasure, not the property of the airlines. Auction them off, 5 years
at a time. Lease them to the highest bidder at the price bid by the
second highest bidder. Use the revenue to finance airport improvements.
This is one the Bush administration's FAA director got right, but she
was shot down by what I assume were corporate interests or their very
Time to review that one, and get it right.
What the airlines are paying now is far below the amount they'd be willing to pay if we required them to bid for their slots. As I understand it, airlines own their slots, treat them as assets, and can sell them to the highest bidder, with no revenue going to we-the-people or to those who maintain the airports!
Airport landing rights might not have been known at the time of the classical economists, but they would immediately recognize them as "land" and thus rightly part of the commons, to be treated as our common asset rather than anyone's private property. Permitting the privatization of that economic value is a mistake.
2/23: I added a postscript to this one ... scroll down!
David Cay Johnston, first known to many of us as the tax reporter for
the NYT, and more recently the author of Perfectly Legal and Free
Lunch, and as a columnist for tax.com, last week brought to popular
attention a story which the IRS posted to its website without the
normal fanfare which announces a new piece of information there. Even
more interesting is the fact that it represents a return to the IRS
reporting data which was customarily furnished during the Clinton years
and suppressed by the Bush administration, who brought us substantial
tax cuts for the highest-income Americans -- and for the highest-value
(top 1%) decedents. As Andrew Leonard put it in Salon,
This is America, right? We've come to expect shocking statistics on income inequality. They're practically our birth right.
But then came the kicker:
The annual top 400 report was first
made public by the Clinton administration, but the George W. Bush
administration shut down access to the report. Its release was resumed
a year ago when President Obama took office.
Because you know, if you are going to reward the richest Americans with
tax cuts, it's best if you keep the rest of us in the dark as to just
how much money they're making, and how little they are paying Uncle Sam.
The new information relates to the top 400 income taxpayers. The data
published brings forward the series data, previously published for 1992
to 2000 (See http://www.irs.gov/pub/irs-soi/00in400h.pdf, published in 2003) to 2007.
Here are some of the highlights of the 2007 data:
The adjusted gross income threshold for being among the top 400 taxpayers rose from $24.4 million in 1992 to $138.8 million in 2007. In constant dollars, that was approximately a quadrupling in 15 years.
The average AGI among the 400 taxpayers rose from $46.8 million (192% of the cutoff) in 1992 to $344.8 million in 2007 (248% of the cutoff).
In 1992, the total AGI of the 400 represented 0.52% of the total
AGI for all taxpayers. In 2007, the 400 represented 1.59% of the total
AGI. In those years, total taxpayers increased from113.6 million to 143.0 million. The 400 represented .00035% of the households in 1992, and .00028% in 2007.
Over the same period, the average AGI for the remaining taxpayers increased from $31,781 to $59,798.
Salaries and Wages represented 26.22% of the Top 400's AGI in 1992; by 2007, that had decreased to 6.53% -- an average of $29.4 million per taxpayer, for the 306 who reported such income. 306 is the lowest figure since 1992.
All 400 reported Taxable Interest income. On average, they reported
$27.1 million. In total, their taxable interest exceeded their
salaries and wages. In total, their taxable interest was 4.04% of
total US taxpayer interest.
All 400 reported Dividend income, and their average was $24.5 million. Their dividends were 4.14% of total US taxpayer dividends.
The vast majority of their reported taxable income was in "Net
capital Gains less Loss in AGI": an average of $228.6 million each.
Their capital gains equaled 66.29% of their AGI, and 10.07% of total US
taxpayer capital gains.
Virtually all of their capital gains -- $226.4 million on average --were subject to preferential rates; this means they were "long-term" holdings, and were taxed at 15%. [And of course none was subject to FICA, on which the vast majority of those who labor pay 14% (more precisely, (7.65*2)/107.65, or 14.2%).]
49 reported net business income, averaging $3.2 million. More, 84,
reported net business losses, averaging $2.6 million -- they
represented 3.06% of the US aggregate.
202 reported Partnership and S Corporation net income, averaging $83.0 million. 185 reported Partnership and S Corporation net losses, averaging $25.2 million -- 3.52% of the US aggregate.
Their itemized deductions averaged $49.4 million, 1.46% of the US
aggregate; the average itemized deductions limitation was $5.4 million
-- they represented 5.4% of the US aggregate.
On average, they claimed "taxes paid" deductions of $13.9 million, and "interest paid" deductions of $9.9 million. Their "taxes paid" deductions represented 1.17% of aggregate deductions for taxes paid.
Almost all claimed contributions deductions, averaging $28.5 million -- 5.73% of the US aggregate. (Interesting that this is roughly equal to salaries and wages, or to dividend income, or to taxable interest income!)
Their Taxable Income grew from an average of $42.2 million to $296.2 million. In constant dollars, it increased 376%. In 1992, their taxable income represented 0.70% of the aggregate; by 2007, theirs was 1.95% of the total.
Their federal income taxes averaged $57.3 million; in total, the 400 represented
2.05% of the total paid, up from 1.04% in 2007. [Compare the former
percentage to their 1.59% share of AGI, and their 1.95% share of
Taxable Income.] Their average federal tax rate was 16.62% in 2007, down from 26.38% in 1992.
If we add the amount they claimed as a deduction for taxes paid to their federal income tax, their taxes represented 20.57% of their AGI in 2007, down from 32.12% in 1992. Their other taxes paid dropped from 5.74% of AGI in 1992 to 3.95% in 2007.
These 400 taxpayers paid a total of $28.4 billion in taxes,
federal and other, in 2007, on AGI of $137.9 billion and taxable income
of $74.7 billion.
In 2007, they paid $28.4 billion in taxes, federal and other.
Had their tax rate in 2007 equaled their tax rate in 1992, they would
have paid $44.3 billion in taxes, federal and other, or about $110.7
million on average, instead of $70.9 million.
Johnston's Tax.com article also points out:
The top 400 reports understate actual top incomes because of deferral
rules. For example, managers of offshore hedge funds who deferred their
gains may not be counted in the top 400 reports, which are based on the
figure on the last line of the front page of Form 1040.
At least three hedge fund managers made $3 billion in 2007. It is not known how much, if any, of their income they deferred.
Only 7 of the top 400 have shown up in the report every year, the IRS
data showed. Of the 6,400 returns covered by the 16 years of the
report, the IRS said that 2,515, or almost 40 percent, appeared one
The previous report (before the Bush administration suppressed
publication), said that less than 25% of the then 3600 returns appeared
more than once between 1992 and 2000.
A very useful table in DCJ's column shows that the income of the bottom
90% of taxpayers has increased by a mere 13% (in constant dollars) over
the 16 years.
How much of this income do you think they spent on consumer goods?
What do you think they did that helped stimulate our economy?
How many people do you think they employed, and what sort of wages did they pay?
What do you think this year's portion of each fortune will be worth upon the death of the recipient?
What do you think they invested their windfalls in? I'm guessing that a lot of it went into land -- urban land -- and non-renewable natural resources of one kind or another -- that which Will Rogers and others have pointed out is not being made anymore.
What industries do you think these fortunes are coming from? How have these people benefited from the boom-bust cycle which has victimized millions of Americans? What privileges have we-the-people granted them to reap what we-the-people sow? To what degree have they benefited from privatizing the commons -- things which rightly belong to all of us? What sort of contribution do you think these companies have made to pollution, to personal bankruptcies, to concentrating America's wealth in the pockets of a relative few? How many jobs have they moved offshore? Are they being paid in shares or stock options that burden their employer's shareholders? What sort of wages have they paid their employees at various levels on the pyramid? What sort of influence will they have over our next elections -- Senators, Congressmen, Governors, President, etc., -- and over future decisions to go to war in various resource-rich parts of the world? They can certainly afford to spend to influence public opinion in ways which benefit their interests, and to guarantee that they won't be taxed heavily, even if workers, who end up with little, are.
The article lists a number of people who will likely be in the 2008 second tier -- not the top 400, but clearly well into the top half percent, based on their selling Goldman Sachs stock; the article isn't clear about what their basis might have been in the stock -- but one sold shares worth $17.6 million plus $55.7 million (he may not be an American). Another, who ran the merchant banking business, sold $29 million worth. The article suggests that most of these sellers still have considerable amounts of Goldman Sachs stock; Lloyd Blankfein's 3.3 million shares are now worth more than $500 million. Should he sell, he'd be well onto the Top 400; the 2007 threshold was $139 million.
I'm guessing that many on the top 400 list in any particular year are people who have sold a privately held business to a large corporation. They've paid 15% on the capital gains, and will likely rail against paying an estate tax on the other 85%.
The new film, "The End of Poverty? Think Again" had its NYC premier back in November, and is now back for a second round.
I commend it to your attention. It is beautifully filmed, and, while it doesn't provide clear answers, it raises a lot of important questions -- different questions from the ones commonly being discussed -- and considers them in light not only of economic justice, but also the sustainability of our planet.
The title is a direct challenge to Jeffrey Sachs' 2005 book "The End of Poverty." The film looks for the roots of global poverty, and who benefits from the current structure. It provides a lot to think about.
Here are three websites I encourage you to explore
the film company's website, http://theendofpoverty.com This will tell you where you can find the film and provides some additional clips.
The solutions to poverty that most people are talking about -- microcredit, vaccines, drinking water improvements, etc. -- are not going to put a major dent in the problem. None of them, and no combination of them, goes to the ROOT of the problem, the underlying cause.
I'm actually not altogether sure that the filmmaker himself fully understands the root of the problem -- but it seems to me that he is at least on the right track. And I think his film has the potential to get the conversation going, which is a lot better than where we've been.
When I think about the other proposals that are being made to end poverty, I think of a passage from Henry George, the beginning of a chapter called "The Robber That Takes All That is Left:"
Labor may be likened to a man who as he carries home his earnings is waylaid by a series of robbers. One demands this much, and another that
much, but last of all stands one who demands all that is left, save just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers?
I'm not saying that disabling or disposing of some of these other robbers isn't noble work. But we ought not to fool ourselves that it is sufficient. And we're operating in the dark if most people don't even realize the existence of that other robber, who also robs them, day in and day out.
Remember that in America, which has, most of us think, solved most of the problems these people set out to solve, has tremendous concentration of wealth:
10% of us hold 71.5% of the aggregate net worth. The next 10% have 13.5%.
That doesn't leave a whole lot for the bottom 80% of us. And recent developments, including the Supreme Court decision in Citizens United, lead some of us to expect that wealth will concentrate further in America.
I was a rising senior in high school when Woodstock took place. A fellow waitress in the local deli in which I worked -- Max for Snacks, in King of Prussia, PA -- took off for Woodstock, and the rest of us dreamed of doing so.
We thought we could change the world. Many had a vision of a society in which all could prosper, all could succeed. We sang, we danced, we applauded, we protested. Gradually we worked our way up. We educated ourselves, we bought homes, we had children -- not always in that order -- and we became part of the establishment. We bent the establishment, a bit, perhaps, to our advantage.
But we didn't correct the problems, and arguably, we let them grow worse. We watched as the benefits of public investment -- local, muncipal, county, state, federal -- accrued not to all of us but to those who own our land and claim title to our natural resources. We permitted corporations and individuals to lay claim to our common resources, we who grew up hearing about Jed Clampett being somehow entitled to the oil revenue, to the exclusion of the rest of us.
We're so used to the way this aspect of the world was handed to us that few of us think to question it. And yet the privatization of the economic value of urban land and the privilege of collecting the revenue on non-renewable natural resources on which all of us are dependent together produce some of our most serious social, economic, environmental, poverty and justice problems. Most wars are fought over these two things.
And until we come to recognize this, all we can do is put bandaids on those problems -- locally, nationally and globally.
These two things are what someone wisely referred to as "Natural Public Revenue" sources. Yet we largely ignore them, and use taxes which set up perverse incentives -- and wonder why we can't seem to solve any of our biggest problems.
A few lifts from an interesting paper. It speaks only to oil usage related to cars, putting aside heating oil and other uses of oil.
What it misses is the fact that our incentives are aligned to create sprawl, and that until we realign them, we aren't going to get smart growth. Readers of this blog know that the first realignment -- necessary, if not sufficient -- is a reform of the conventional property tax, shifting taxation off buildings and onto land value, followed by a shifting of more of the tax burden off sales and wages and onto land value. When we tax land value heavily, only good things happen --
from the point of view of the environment,
from the point of view of efficiency,
from the point of view of the economy,
from the point of view of encouraging smart growth,
from the point of view of job creation and affordable housing,
from the point of view of dense cities and walkable cities and effective public transit which people want to use and are willing and able to rely on, day in and day out.
The NRDC is not going to achieve its goals without the tool of land value taxation. "Targets" and "funding" are all well and good, but they don't counteract the current disincentives that our system of taxation creates. I'd be happy to provide the NRDC folks with material which will help them understand the needed change.
Good public transit systems can be fully funded by the increased land value they create.
From their paper:
America’s dependence on oil is problematic in several ways, including the following:
The United States has less than 2 percent of the world’s oil supplies but is responsible for about one-quarter of the world’s oil consumption.2 We import almost two-thirds of our crude oil supply from foreign countries, and more and more of the world’s future supply will come from regions that are either politically unstable or unfriendly to U.S. interests.3
Our unstable supply of oil threatens our national economy, particularly since about 96 percent of our transportation system relies on oil.4
Oil consumption is a leading contributor to the greenhouse gas (GHG) emissions that cause global warming. In the United States, the oil-based transportation system is responsible for roughly one-third of our global warming pollution
Smart growth and public transit. States can reduce oil dependence by integrating land use and transportation policies and designing them to reduce vehicle-miles traveled and promote alternatives to driving. Nineteen states, including Hawaii, Georgia, Tennessee, and Maine, have adopted smart growth measures intended to curb sprawl and reduce the associated traffic and vehicle-miles traveled. Fourteen states have created an agency or other mechanism to develop and coordinate land use policies. Six states have set targets for reducing vehicle-miles traveled. In addition, some states — led this year by New York, New Jersey, and Washington — have prioritized the funding of public transit through the allocation of state funds and/or by transferring portions of their federal highway dollars.
Nineteen states have growth management acts. Among the most comprehensive ways of promoting smart growth is growth management legislation, such as Washington’s Growth Management Act (GMA). This GMA affects 29 counties (95 percent of Washington’s population) and requires, among other things, policies covering sprawl reduction, affordable housing, open space and recreation, environmental protection, natural resource industries, permit processing, concentrated urban growth, regional transportation, historic lands and buildings, and public facilities and services.13 Despite Florida Governor Crist’s weakening of his state’s growth management laws this year, growth management legislation was still one of the areas of greatest improvement from last year, when only 12 states had such laws.
Only six states have set targets for reducing vehicle-miles traveled. For instance, the state of Washington amended its GMA to make it even more effective at lowering oil consumption, calling for reductions in per capita vehicle-miles traveled (VMT) of 18 percent by 2020, 30 percent by 2025, and 50 percent by 2050.14
Fourteen states have an agency or other mechanism to coordinate development. Many states have recognized that several different state entities influence development, sometimes in potentially contradictory ways, and have created mechanisms to coordinate public investment that supports development. In 2003, Massachusetts established a powerful Executive Office of Commonwealth Development.15 Such coordination is a vital first step toward smart development, enabling a state to take into account the wide range of relevant influences. We encourage states to use coordinating mechanisms to promote smart growth.
Some states have prioritized the funding of public transit. Public transit systems, such as bus, commuter rail, subway, and light rail programs, are important components in state efforts to promote smart growth and reduce oil dependence. By creating or expanding reliable and accessible public transit programs, states can reduce the number of single-passenger cars on the road, consequently lowering average VMT. And strong public transit provides a critical transportation alternative as gas prices rise. A case in point: Americans drove 1.4 billion fewer highway miles in April 2008 than in April 2007 because of soaring fuel prices; many took trains or buses instead, leading to a surge in transit ridership.16 In 2008, public transportation saw its highest level of ridership in 52 years.17
States have the ability to “flex” certain federal funds that ordinarily would be spent on highway projects and use them to pay for public transit programs. States that choose not to transfer federal funds to transit programs are not necessarily neglecting transit funding, however, as they may be spending more state dollars on transit. The best way to understand state transit prioritization is to compare the amount of total state spending (including flexed federal funds) on mass transit with the total spent on highway programs, as shown in the far right column of Table 3. By this measure, the top five states prioritizing public transit spending are New York, New Jersey, Washington, Massachusetts, and Utah.
The schedule for the annual gathering of Georgists (that is, people who are persuaded that the economist and social philosopher Henry George (b. 1839, Philadelphia; d.1897, NYC), author of "Progress & Poverty" and a book of essays entitled "Social Problems," among others, pretty much had it right) is now online. It is in downtown Cleveland in early August.
Looking over the schedule, I see a lot of familiar names -- people I've come to know since I attended my first CGO meeting in 2001 -- and some people I've not yet met face to face but know online. I'm happy that we have few sessions running side by side, because virtually all of the programs are of interest to me.
My last visit to Cleveland was with 600 delightful women, and included a great and noisy party at the Rock 'n' Roll Hall of Fame. (I just had the pleasure of being on the host committee for the same group's 2009 Annual Meeting!) At that time, I didn't know the significance of the larger-than-life statue nearby of Cleveland mayor Tom L. Johnson. The book he holds in his hand is P&P.
If you would like to see an end to poverty, come join us.
If sprawl and its concomitants concern you, come join us; we know how to slow it and reverse it and channel it into reusing the land already well served by taxpayer-provided infrastructure.
If long commutes -- and the fuel, pollution, spending and time loss involved -- worry you, come join us.
If you would like to see a more stable economy, without the booms and busts which cause such widespread pain and ruin, we have answers.
If you would like to see healthier cities and a more vibrant economy, come listen to what some of these people have to offer.
If unaffordable housing troubles you, come talk to us.
If the extreme concentrations of income and wealth -- particularly of natural resource wealth -- trouble you, we know how to correct it gently and justly.
If you hate the income tax and recognize that sales and consumption taxes damage the economy, but still believe that there are some things government can do better than the private sector, we know how to finance that spending justly.
We come from all over the political spectrum, and share little except a major commitment to creating a better and more sustainable world and society and economy for all. (That's a lot actually!) It is a joy to spend a few days with people so passionate about social and economic justice and with a clear vision of how to get there.
If you're curious about Henry George, you might start where I started, with four of his speeches. I found these as pamphlets in the files of my late grandparents when I took possession of their library and file cabinets and some sentimental treasures. My first pass was for genealogical information. Shortly after that, I started reading a speech entitled "Thou Shalt Not Steal," and it clicked. My paternal grandparents (three of them, actually: my own grandparents, and my step-grandmother, whose first husband was a dear family friend, too, in the 1940s and 50s) were all Georgists. For every landmark occasion in my young life, their gifts included a lovingly inscribed copy of Progress & Poverty (just in case I'd misplaced the previous ones!) But I'd not done more than thumb through it. When I first did get around to reading it, I was in my late 40s; my grandparents were quicker studies, and devoted the second half of their lives to promoting these ideas. My first read of P&P was a slow slog; a friend shocked me when she said she found it a page-turner, a mystery whose solution she was anxious to get to. Now I admit I read it for, and with, pleasure.
Another piece you might read is my grandfather's "An Introduction to Henry George" or my grandmother's more humorous article, "My Introduction to Henry George;" she went on to write delightful short stories for Ladies Home Journal, Colliers, the Saturday Evening Post and many other magazines in the 40s. Things have come full circle -- I'm on the board of two Georgist foundations, including the one my grandfather worked for and with for over 30 years, the Robert Schalkenbach Foundation. And following in the example of my late stepgrandmother, who tried to write an activist letter every day, I try to post comments on either my blog or other blogs or articles online every day. I mostly succeed, though in the past month or two, I've fallen short. And I've created a website to make Henry George's ideas accessible to people coming from a wide range of interests and points of view: http://www.wealthandwant.com/
The online article is titled "Democrats for Rich Heirs?":
But why the populist fury over those AIG bonuses of a few million
dollars while no one seems to care much about billions being
transferred through inherited wealth? The obvious answer -- that
there's a difference between what people do with our hard-earned money
and what they do with their own hard-earned money -- isn't actually as
persuasive as it seems.
Perusing the Forbes 400 list of America's richest people, it's striking how few of them made the list by building the proverbial better mousetrap. The most common route to gargantuan wealth, like the route to smaller piles, remains inheritance. The ability to pass money along to your kids may motivate many a successful executive or investor to work harder, but it can't possibly motivate those kids to inherit harder in order to pass it along once again.
Dozens of Forbes 400 fortunes derive from the rising value of land or other natural resources. These businesses are fundamentally different from mousetrap building. Land does not need to become "better" to increase in value, and that value increase doesn't produce more land. Yet other fortunes depend directly on the government. The large fortunes based on health care and pharmaceuticals would not exist if not for Medicare and Medicaid. The government hands out large fortunes even more directly in forms as varied as
drilling, mining and mineral rights;
minority small-business loans; and
other special treatment.
LVTfan here: The privilege of calling OUR natural resources MINE is a major one, and we're so used to it that we don't even notice it.
The oil revenue (and other like revenue -- see Mason Gaffney's article, The Hidden Taxable Capacity of Land for a listing of some of the things which the classical economists would recognize as land), that currently flows to individuals -- be they Jed Clampetts, or large property owners rural or just choice-land owners urban -- or corporations (ditto!) should be treated as OURS. Then we wouldn't need to tax wages so much -- and maybe not at all.
And we'd all have an equal opportunity under such a scenario.
If you spend some time reading this blog, you might come away thinking that I believe that land value taxation is a cure-all, a panacea. (See the "topic cloud" in the left sidebar.) But that isn't the case.
However, I have come around to the point of view that many of our most serious social, environmental, economic and justice problems are not going to be solved -- cannot be solved! -- without the enactment of land value taxation.
That sounds extreme, particularly to those who have never heard of LVT or who have read little about it.
So many of our most serious problems ultimately find their root in the privatization of the natural creation -- that which the classical economists called land, including things that the classical economists would have known nothing about, but would immediately recognize: electromagnetic spectrum, geosynchronous orbits, landing rights at LaGuardia (particularly at rush hour), etc..
Let me be more specific. It isn't the privatization of land, or oil resources, or minerals, or geosynchronous orbits, or water rights themselves that is the problem. Secure title is necessary and important. Rather, the problem is that the economic value of these common resources is currently treated as private treasure rather than as our common asset. But we need revenue for public purposes, so we then tax sales and wages and interest. But those who need land pay others for it (unless they inherited the rights to it) either in the form of rent or in the form of a lump sum, and then are burdened with the sorts of taxes which depress the economy and steal from them that which they produced (in addition to the significant costs of servicing the debt related to that lump sum payment).
Land, in all its forms, is not of human creation. We can't create more of it in response to an increase in demand. In particular, we can't create more land downtown, where it is served by awesomely important infrastructure that took decades and millions or billions to build. We can't create more water, or more frequencies on FM or AM radio. Yet we permit the privatization of the economic value of these and other like vital and fabulously valuable common assets.
Were we to shift our taxes off productive effort, off sales, off buildings, and onto all these things called "land value," we would be on our way to solving many of our environmental problems, our social problems, our economic problems, urban sprawl and its concommitants, and many of our justice problems. We'd have a more efficient economy, a more vibrant one, without the excess burden (deadweight loss) our current system creates. We'd have opportunity, jobs, a growing pie, and lose the boom-bust cycle which plagues us.
When I seek a parking spot near my local grocery store, I am brought face to face with a form of sprawl. While I am not one to drive around for long looking for a parking spot (it seems a waste of time and energy), I find myself dealing with a simple form of sprawl: parking spots occupied or blocked by shopping carts. The parking spots can't serve their intended purpose because someone has left behind an underuse.
A friend's comment that for most people, a lot of 15,000 to 20,000 square feet is about all we could put to use (for a home), got me thinking. That's 0.33 to 0.46 acre. Certainly some of us need more, particularly if we are market farming or are growing all our own food. Many of us live on far less land, particularly in or near cities. In Manhattan, a lot 25' wide and 100' deep, or 0.057 acres, is standard, and might bring $7 million or more; it might house a single family, quite generously, in 3 or more stories.
At 2.5 persons per household, 0.33 acre average lot size works out to 2.5*3*640 = 4800 people per square mile. To accommodate all 300 million of us would require a circle with a radius of 141 miles. (Calculation: 300,000,000, divided by 4,800, divided by pi; take the square root.) That's a circle whose opposite edges are in
Los Angeles and Las Vegas
Pittsburgh and Cincinnati
Albany and Buffalo
Chicago and Cincinnati
Philadelphia and Pittsburgh
St. Louis and Nashville
New Orleans and Montgomery
Boston and Philadelphia
Atlanta and Charleston, SC
A 0.50 acre lot size works out to 2.5*2*640 = 3200 people per square mile. To accommodate all 300 million of us at that density would require a circle with a radius of 173 miles. That's a circle whose opposite edges are in
New Orleans and Birmingham
Kansas City and Oklahoma City
New Orleans and Houston
Chicago and Columbus
Baltimore and Cleveland
New York and Pittsburgh
Albany and Washington, D.C.
Los Angeles and Phoenix
Atlanta and Memphis
Minneapolis and Chicago
If we were all content with a single-family home on that Manhattan 25x100 lot, the calculation would be 2.5x17x640 = 27,200 people per square more. To accommodate all 300 million of us would of require a circle with a radius of 105 miles ... diameter of 210 miles. No we haven't even talked about any multi-family housing! This is all single-family.
Not everyone wants as much as 0.33 acres. If we return to the 0.33 acre assumption per family, but assume that half of the single-person households would prefer 0.05 acres, and that 25% of the remainder of households would prefer 0.10 acres.
1-person households represent about 52 million people. If half of those households would choose to live on 0.05 acres, and the other half would still want to be on .33 acre, the "central core" of 26 million people would live on 26 million*.05 acres/640 = 2,031 square miles; that's a radius of 25.4 miles. If the rest of us, 248 million, chose to live at .33 acre per household, with an average household size of 3.0 (pulled from thin air!) that would be 248 million, divided by 3 per household equals 83 million hh at .33 acre is 42,800 square miles; add that to the 2,031 sq miles occupied by the .05 acre group. That's 44,831 square miles. Divide by 3.14, and take the square root: the circle would need to have a radius of 119 miles. A 240-mile circle would be the area between
Dallas and Houston -- 239 miles
Chicago and Detroit -- 275 miles
St. Louis and Indianapolis -- 244 miles
St. Louis and Kansas City -- 244 miles.
Of course none of these calculations allows any room for places to work, so let's say that we need to devote, say, 30% of our land to places that would employ us (and simultaneously provide for our shopping needs). Let's further say that beyond that we need to allow 20% more for streets, railroads, parks, rivers, airports, schools. That 44,831 square miles grows to just about 70,000 square miles.
So how big an area is that? Divide it by pi (3.14) ... 22,300 and take the square root: 149 miles. That's a 300 mile circle, to contain all 300 million of us!
And if, instead of a single urban area 300 miles across, we instead looked at 50 cities, they would need to be 1,400 square miles each, with a radius of 21 miles (and a population of 6 million people each).
Some of us don't care about being within a commuting distance of what a city has to offer, and prefer to live in the wide open spaces. That's fine, as long as they cover the costs themselves. And they shouldn't be asked to pay for the infrastructure of the cities, except to the extent that they make use of them.
A few weeks ago there was a brief piece in the NYT Magazine entitled "Gallons Per Mile." It got me thinking; my noodlings follow the article itself:
As gas prices rose earlier this year, consumers started paying a lot
more attention to their cars’ miles per gallon. Good luck with that.
The apparently simple unit of measurement is a highly misleading one,
as two Duke management professors demonstrated in a June issue of
Science. They favor an alternative measure of fuel economy: gallons
consumed per 10,000 miles.
The problem with m.p.g., argues Richard Larrick, who wrote the article
with his business-school colleague (and carpooling partner) Jack Soll,
is that it leads consumers to significantly underestimate the gains in
fuel efficiency that can be achieved by trading in very low m.p.g.
vehicles — even for one that gets only a few more miles per gallon.
Less detrimentally, m.p.g. also misleads people about the fuel savings
achieved by moving from an ordinary family sedan into a Prius.
This isn't the first time Michael Kinsley has shared his appreciation of Henry George and his landmark book, Progress & Poverty, but I thought it worth sharing nonetheless. In the newest issue of The Week, Kinsley shares 7 favorite books. The rest are novels, and here is what he has to say about P&P:
Progress and Poverty by Henry
George (Cosimo, $15). Once a famous book by a famous author, now almost
forgotten. George was a self-trained economist of the late 19th
century. In Progress and Poverty, he explains to his own
satisfaction — and pretty much to mine — how all the world’s evils are
attributable to real estate. He overstates his case, but he does so
with wit and excess that make the book fun to read. And it leaves you
Well, it isn't quite accurate to say "attributable to real estate." I'd rephrase that to say something like "attributable to our failure to treat part of real estate -- the economic value of the land part -- as our common treasure."
I'm glad Kinsley sees Henry George's wit and vision. I can't say I found P&P fun on the first reading -- I struggled through it the first time, though I now read it for pleasure. May I offer you a number of options for dipping a toe into the water?
1. The first is the shortest version. It comes from J. W. Bengough, a Canadian journalist, cartoonist and commentator.
Remedied by Single
(a little short for my tastes, but admirable nonetheless.)
2. A synopsis by Al Katzenberger 3. A 1928 abridgment by Harry Gunnison Brown, of the University of Missouri, Columbia ... including John Dewey's appreciation of Henry George. Yes -- that John Dewey. The book runs about 75 pages. 4. A. W. Madsen's abridgment (240 pages) 5. Bob Drake's 2006 thought-by-thought updating of P&P. Bob first updated P&P into contemporary language -- roughly the language of Time or Newsweek -- and then abridged it, shortening some of HG's awesomely long and poetic sentences ... some of the excess to which Kinsley refers ... and providing a very readable version. Those who know the original will find it ringing in their ears. Those who do not will find a very readable book on the cause of some of our most serious -- and otherwise intractable -- problems, and the remedy we need if we are ever to solve them. You can read it online here (with a course!) and here, listen to it as MP3s here, and buy it from Amazon or Schalkenbach.
6 The unabridged, available online and in hardcopy (look also at Amazon and, often, on ebay. (It was, after all, the #2 bestseller of the 1880s, and within 20 or so years, 6 million copies had been sold, so it is not surprising to find many of those copies still available. 6 million would be a blockbuster today. Think of it over 100 years ago! According to Wikipedia, The Cat in the Hat, published in 1957, has sold 10 million copies.)
(I've left out some others; e.g., there was an abridgment called More Progress, Less Poverty.)
This phrase comes from an Anglican prayer book, but it came to my mind when I was writing to a foundation which claims to be in favor of a just society. Examining their website, I could see no sign of any familiarity with Henry George's ideas, and this phrase, whose origins I could not bring to mind, popped into my head.
Hear ..., read, mark, learn, and inwardly digest ... The reference is to scripture, but I think it might apply nearly as well to Henry George's ideas, if you regard any of these as important:
sharing nature's bounty more evenly among us
protecting the environment from despoilment
reducing, even reversing, sprawl
making housing affordable
making cities more vibrant
making effective public transportation systems realistic
(I'd be happy to see any one of those ... and thrilled to see all of them. Dayenu!)
Well, Henry George has been called "The Prophet of San Francisco" -- that's where he wrote Progress & Poverty -- and many people consider him to have answers to problems that most people think are completely intractable.
Hear, read, mark, learn and inwardly digest ... and then get to work creating a more just society, for yourself, your neighbors, and all our children and future generations.
John Fisher wrote an excellent Letter to the Editor, published in the Chatham Daily News, which I think worth sharing:
Sir: Re: Boom and Bust Cycles.
No matter how many billion-dollar crutches (bailouts, stimulus) are
thrown at the current economic downturn, up-and-down cycles will
continue until the "experts" get back to Economics 101.
Adam Smith, David Ricardo, Henry George and other classical economists
correctly defined land (free gift of nature), labour and capital as the
three factors of production. Land or nature, not being created by
labour, is not capital. Unlike privately created wealth, nature only
gets value from the presence and activity of the community as a whole.
The economy is often compared to a house or a ship, but usually without
reference to the lot or water upon which they absolutely depend. All
the good things the experts now suggest to improve the house or ship
will ultimately determine the value of the underlying natural base,
depending of course on human pollution, over and restricted use, etc.
Giving nature a value like we do now for land and then capturing it for
the social good would reduce urban sprawl and waste of resources, while
rewarding quality and quantity in the production process.
Many classical economists, including Henry George, would shift taxes
from private wealth (the house) to public wealth (the land). In other
words, pay for what you take from nature and not what you make
privately. With little cost to government, this simple tax shift would
remove unearned income from resource speculation and enable tax
reductions on wages and business.
Until economic justice and reason prevail with a major tax shift from
production (jobs, houses, trade) to resource values (raw land, water,
oil) the world will continue to suffer from monopolies of nature and
If you'd like to know more about these subjects, from a Georgist point of view, you might explore these pages:
As we, perhaps, become somewhat more appealing to the other 94% of the globe's residents as a result of the choice the voters made on Tuesday, we still need to consider the question of the rightness and the sustainability of a country which has 6% of the world's people consuming about 25% of the world's resources.
An ambitious new book explains how and why the U.S. is so different from other countries around the world.
“America is indeed exceptional by any plausible definition
of the term and actually has grown increasingly exceptional [over]
time.” This is the conclusion of the editors of a new volume, Understanding America: The Anatomy of an Exceptional Nation (PublicAffairs, $35). At an American
Enterprise Institute conference on April 22, Peter H. Schuck and James
Q. Wilson introduced the collection of essays, which is designed to
probe Alexis de Tocqueville’s observation that America is
“exceptional,” or qualitatively different from other countries. The
book, which examines 19 different areas, marshals the best and most
current social science evidence to examine America’s unique
institutions, culture, and public policies.
During his introductory remarks, AEI president Christopher DeMuth said that no effort to understand the meaning of Americanexceptionalism had been “more ambitious and far-reaching” than this book. Not only does it describe the ways — both good and bad — in which Americans differ from people in other nations, DeMuth said, it also considers whether Americanexceptionalism is likely to continue, and how it matters to the world. DeMuth noted that Americans
are more individualistic, self-reliant, anti-state, and pro-immigration
than people in many other countries. They work harder, are more
philanthropic, and participate more in civic activities. On the
negative side, America also has a higher murder rate than some other
Wilson noted that one of the best ways to understand Americanexceptionalism is to look at polls. Three-quarters of Americans say they are proud to be Americans;
only one-third of the people in France, Italy, Germany, and Japan give
that response about their own countries. Two-thirds of Americans believe that success in life depends on one’s own efforts; only one-third of Europeans say that. Half of Americans, compared to one-third of Europeans, say belief in God is essential to living a moral life.
Three-quarters of Americans say they are proud to be Americans; only one-third of the people in France, Italy, Germany, and Japan say that about their own countries.
Negative views of America in polls today have been shaped by the
Iraq war and by the response to President Bush, Wilson noted, but
criticism of America has a long history, particularly among elites. He
quoted Sigmund Freud as saying, “America is a great mistake.” “Anti-Americanism was an elite view,” Wilson continued, “but it has spread deeper to publics here and abroad.”
Schuck said that Understanding America casts a new light on Americanexceptionalism by examining it at a micro level. He identified seven overarching themes that connect the essays.
(1). American culture is
different. Its patriotism, individualism, religiosity, and spirit of
enterprise make it different. The United States, Schuck said, “is more
different from other democracies than they are from one another.”
(2). American constitutionalism is unique in its emphasis on individual rights, decentralization, and suspicion of government authority.
(3). Our uniquely competitive, flexible, and decentralized economy
has produced a high standard of living for a long time, even though it
now generates greater inequality.
(4). America has been diverse throughout its history. Schuck cited
research by historian Jill Lepore, who found that the percentage of
non-native English speakers in the United States was actually greater
in 1790 than it was in 1990. The thirst for immigration, he said, has
transcended economic booms and busts.
(5). The strengths of civil society here make America qualitatively
different. No other country, he said, allocates as much responsibility
for social policy to the nonprofit sector.
(6). The characterizations of the United States as a welfare-state laggard compared to Europe miss an element of American distinctiveness: its reliance on private entities to provide certain benefits.
(7). We are exceptional demographically with our relatively high fertility rate.
... The editors of Understanding America, Schuck and Wilson,
believe that the “stakes in understanding America could hardly be
higher. For better or worse, America is the 800-pound gorilla in every
room in the world.”
Americans are consuming roughly 25% of the world's natural resources, despite representing only 6% of the world's people. As others see themselves as our equals -- equally entitled to the world's resources, including the carrying capacity of the environment to handle the pollution we spew out, how are we going to reconcile the notion that all men are created equal with their very reasonable expectation that they are equally entitled -- and further, that future generations are entitled to inherit a world that works and a planet with resources available to meet their needs, too -- not to mention, within the US, the younger generation's very reasonable right to not be paying for our generation's wars and mistakes?
And then remember that within the US, the top 1% of wage-earners are getting 12% of wages; the top 10% are getting nearly 36% of wages. When we look at all income excluding capital gains, the top 1% of income recipients are receiving nearly 20% of income and the top 10% are receiving 47% of income. When we look at income including capital gains -- the most inclusive measure -- the top 1% are receiving nearly 23% and the top 10% nearly 50% of income. [Source: Piketty & Saez, 2006 data]
And when we look at the accumulated net worth of Americans, in 2004 the top 1% of wealthholders had over 33% of the net worth; the top 10% of wealthholders held nearly 70% of America's household wealth. [Source: FRB Survey of Consumer Finances, 2004.]
How much of that wealth is created out of thin air, without the use of natural resources? We've learned a bit about assets created from thin air, and we may have reason to worry greatly in coming months about the moods and portfolios of those who invested heavily in hedge funds. But I'm willing to bet that were we to get a new snapshot of the same statistics for, say, October 31, 2008, the wealth concentration would be little a bit higher than 2004's. (The 2007 data will likely be available in January, if previous publication patterns hold.)
Natural resources and resources which are rightly common property -- the economic value of land, of broadcast spectrum, of water rights, of landing rights, of many other like things, which the neoclassical economists would recognize as "land," as opposed to "capital" -- have been privatized -- quite legally -- to produce the wealth and income concentration which America lives with. They've played by the rules -- but the rules aren't just or right. It is time to revise the rules and the structures.
By doing so, we can do something about our excessive use of the world's scarce resources; reduce urban sprawl; shorten commutes; increase urban density; encourage job creation, raise wages, reduce wealth concentration, improve the economy's efficiency, remove much of the deadweight loss, motivate the private sector to provide, at a profit, affordable housing for all. And reduce our overuse of the world's natural resources significantly, making us an example to the rest of the world of what to do and how to do it, rather than the opposite.
Too much to ask of one reform? Too much to ask for? NO!
As I listen to and read about attempts to reduce pollution, reduce reliance on foreign oil, reduce energy usage, I find myself frustrated by the lack of radicalism in the answers people propose. Their answers aren't wrong, but they don't go to the source of the problem, and so merely nibble around the edges. Nibbling is fine and admirable, and definitely has its place. And nibbling will make a bigger difference if they are nibbling at a circumference of 2X instead of X, though a larger percentage difference if we can get to a circumference of X.
The current Vice President asserted a few years ago that the American way of life was non-negotiable.
Well, if that means that what is is good -- the ultimate conservatism -- keep things just as they are because we live in the best of all possible worlds -- or -- it works just fine for my and my kind thank you very much -- a case one might reasonably make if one were in the top 1% of the wealth and income spectra, which, as I frequently mention here, receive a very disproportionate share of the productivity in this country:
The top 1% of income recipients -- and I'm using income excluding capital gains for the moment -- have received 36% of the aggregate income gains from 2000 to 2006.
The next 4% of income recipients have received 17% of the income gains between 2000 and 2006.
The next 5% of income recipients have received 14% of the income gains between 2000 and 2006
The bottom 90% of income recipients have received 33.1% of the income gains between 2000 and 2006.
For comparison: in 2000, the top 1% had 16.5% of the income excluding capital gains; the next 9% had 26.6%, and the bottom 90% had 57.8% of the income; by 2006, the corresponding figures are 18.2%, 27.0% and 54.7%. [Source, my calculations from Tables A1 and A0 of Piketty and Saez's spreadsheet through 2006.]
Is this the non-negotiable American way of life to which the Vice-President was referring? I suspect that, at bottom, it is.
So why should we change anything, if the machine is working so well for those at the top?
So what if this machine uses excessive amounts of the world's natural resources?
So what if it produces more than our legitimate use of the world's carrying capacity for dealing with pollution of air and water?
So what if, in order for us to be rich, others must be poor -- very poor?
So what if, in order to us to continue to drive our cars everywhere we need or want to go, we need to import oil drilled in other parts of the world?
So what if, in order for our powerful to maintain their privileges, we impinge on the rights of our own people, the rights of our contemporaries in other countries, and on the rights of future generations both here and abroad?
Ah - I've not answered the initial question. I'll come back to that in a future post, I guess -- because I think there are some very obvious answers to that question -- obvious to Georgists, anyway -- whose widespread understanding could make a big difference.
I suspect that many people relate these two words, without quite knowing why. A google alert on the two words brings me 4 to 6 items a day which mention the two words fairly close together. In many the context is "We're making progress against poverty." In others, the context is more like "we're making progress in many areas, but little progress against poverty."
Putting those two words into the search field at Amazon yields these books:
All of these books together can not have come close to the sales of Henry George's 1879 book, Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth; the remedy. By the turn of the century, over 6 million copies had been sold, it had been translated into 30 or so languages, serialized in newspapers in a number of countries. [6 million copies would be a large number today ... think of it in 1885!] Today, there are at least two foundations, created by industrialists of another era (using identical language), whose missions are to share Henry George's ideas, as expressed in Progress & Poverty -- the Robert Schalkenbach Foundation (based in NYC) and the Lincoln Foundation (with offices in Cambridge, MA), founded, respectively, by a printer and an electric utility magnate. Joseph Fels, of the Fels Naptha soap company (and brother of the endower of the Fels Planetarium at Philadelphia's Franklin Institute) also devoted much of his mature years to promoting these ideas.
George's Progress & Poverty was the #2 best seller of its decade, second only to the Bible, and the "progress" in its title helped inspire the Progressive movement. Anyone in English-speaking countries who read at all was likely to be familiar with its ideas, and George was an effective speaker who traveled widely. In NYC, he ran twice for mayor; the first time, he lost to Abram Hewitt (the Tammany Hall candidate) in 1886, but beat out the 29-year-old Theodore Roosevelt (whose Bull Moose Party platform about 25 years later looked remarkably Georgist; it is said TR learned his George at San Juan Hill, from a hero who died there); the second time, he died a few days before election day in 1897. His funeral was among the largest ever in NYC. (Search the NYT's free archives for articles.)
So what sets Henry George's Progress & Poverty apart from the other books which mention those two words in their titles? Why did he choose that title? What is the relationship between these two aspects of our society? Is it a necessary relationship, ordained by immutable natural forces or laws of economics, or is it something created by human structures, and therefore something we can alter?
George saw clearly something that others had seen through a glass darkly. He laid it out clearly in Progress & Poverty. Extend your education by reading this book. It will probably change your mind and your vision forever, and if enough of us understand the workings of the poverty machine, we will be able to retool it, and leave our children a better world, and a country which genuinely lives up to its ideals.
Progress and Poverty. You might also want to go read the first essay in George's second book, Social Problems. It is very timely.
The fundamental starting point for democratic government began with taxation, said David Cay Johnston, a Pulitzer Prize-winning author and former New York Times investigative journalist, during a speech to McCombs accounting students Sept. 24.
Johnston, who came to UT as part of the Lyceum Speaker Series, told students that the ideas about taxation and society that have prevailed since Ronald Reagan’s time favor a system in which money is systematically funneled from the poor to benefit the rich.
“People who think that taxes are a cost will do virtually anything to eliminate that cost,” Johnson said. “Taxes are not a cost. Taxes are a moral obligation.”
The ancient Athenians, he said, developed democracy by instilling a guiding moral principle in tax laws: that the greater the wealth one has built up, the greater their moral obligation to helping society continue.
As readers of this blog know, I am a great admirer of David Cay Johnston. I generally think he is on the right track, and/but (shifting metaphors and transportation systems) think he has some blinders on.
In the quote in the preceding paragraph, I think he is bringing up a vitally important matter, but he hasn't followed it to its logical root, and is thereby missing perhaps the most vital aspect of the subject.
A few days ago I received a mailing from a friend, incorporating (with permission) something I wrote a while ago, and had mostly forgotten about. I think it is worth sharing here; I'll expand on bits and pieces of it, as the spirit moves me.
It has been said that a budget is a moral document. Usually that is construed to refer to the spending side of the budget. But it is equally and importantly true of the revenue side. When we tax the wrong things, we get undesirable effects. When we fail to tax that which we should tax, we get undesirable effects as well. [I might add that an individual's revenue which comes from stealing from others is also a very poor idea -- even when the theft is legal! Chattel slavery certainly fit in this category, as did the industrial slavery Douglas Blackmon described in his recent book.]
With other Georgists, I seek a shift in how we tax ourselves which will produce a better world for all of us. Land value taxation will have important effects in many areas which concern most Americans:
slowing, stopping and reversing urban sprawl
improve wages, without raising the cost of living
spur job creation -- here
reduce long commutes
excessive energy usage
reducing greenhouse gases
The term LAND includes not just the value of urban land, which is huge (and currently underreported and thus ignored, despite being the underlying source of huge fortunes), but also the rest of the natural creation ...
broadcast spectrum -- those airwaves which we all say (complete the sentence) ... belong to the American people, but which have been sold to corporations
water rights (ditto)
natural resources, particularly the non-renewables
congestion in the skies and at location3 airports
and many others -- see Mason Gaffney's paper, The Hidden Taxable Capacity of Land: Enough and to Spare,here
Land Value Taxation (LVT) can solve a lot of problems and set the stage for solving many others. Most of us believe that without this taxation reform, none of these problems are solvable; all we can do is place small bandages on them and spend a lot of money on programs which help relatively few victims.
If we are going to claim to value every life, and encourage every pregnant woman to bring every fetus to term, we need to acknowledge that every child born is the equal of every person already born. Interestingly, Alaska has been doing something important in this regard, for more than 20 years.
Every man, woman and child who lives in Alaska receives an annual income from the Alaska Permanent Fund, which represents dividends from the invested proceeds of Alaska oil revenue, and which, if properly managed, will continue to provide an annual income for every Alaska long after the oil has all been tapped. And Alaska's governor has had the fortitude to increase the share of the public in Alaska's oil revenue due to the high price of oil. (See another post on the subject from a few days ago.)
(And much of Alaska's state government spending comes from oil revenues, too.)
Our oil is not the only resource that needs to be treated this way. Urban land values can be hundreds of thousands of times the value of an acre of agricultural land. There is an acre in Manhattan said to be worth $400,000,000 to $1,100,000,000 -- as a teardown. If we were to tax that land value at, say, 5% per year, at $400,000,000 it would produce $20 million in income for we-the-people, relieving the need for $20 million in sales taxes, or $20 million in payroll taxes, or $20 million in income taxes. Talk about fiscal stimulus! Talk about a permanent tax holiday! Talk about getting the incentives right!
The Port Authority of New York and New Jersey
announced plans on Monday to block the Bush administration’s proposal
to auction landing slots at La Guardia, Newark and Kennedy Airports by
banning any airliner that used an auctioned slot. ...
But the Port Authority says the auctions would do nothing to reduce
congestion and would amount to an unauthorized new tax. “They’re going
to be selling something that doesn’t belong to them, in an attempt to
raise revenue,” Mr. DeCota said.
The airlines are also adamantly against an auction.
Transportation Department’s top lawyer, D. J. Gribbin, said that such a
ban by the Port Authority “vastly outstrips any authority they have.”
clearly have the authority, as we’ve done with orders that currently
exist, to determine which carriers can access the airports at what
times,” he said. And the slots belong to the public, according to the
Transportation Department. ...
A friend sent me a link to a page where one can make policy suggestions to Barack Obama's campaign. Turns out to be a thinly veiled way to harvest emails. But maybe somewhere in the campaign, someone might actually read the suggestions.
One of the fields was a dropdown menu so one could categorize one's proposal. I chose "economy" but made the first line of my policy proposal a list of a number of categories into which mine falls:
Issues: Economy, Energy, Environment, Ethics, Family, Infrastructure, Justice, Labor, Poverty ... and maybe even health --
Luke Russert said that whenever he did well on a school assignment, his father would yell, "Yahoo! You smoked 'em, buddy!"
He asked the crowd to imagine a special edition of "Meet the Press"
this Sunday in heaven, perhaps with a debate between Alexander Hamilton
and Aaron Burr, or John F. Kennedy and Barry Goldwater. He even
suggested a talk on the need for a new political party involving Teddy
Roosevelt, the former president who later ran unsuccessfully for
president as a member of the Bull Moose party.
What was the platform of that party? You might be surprised, both by its timeliness and by its similarity to the ideas of Henry George, who came in #2 in the 1886 NYC mayoral election in which TR was #3. (Tammany Hall won, and the circumstances would not surprise most people troubled by some of our recent national elections.)
And neither of them gets it right. They are proposing different arrangements of the deck chairs, and while one may provide a slightly better view of the orchestra, and the other better accoustics for enjoying the music, neither of them understand either what needs to be done or why.
Land, water, oil, air ... none of it is of our creation, and all of us depend on access to them. If dollars are involved, to whom should they flow, and why? If royalties are due, who is entitled to them? If rent happens, as it does in any place where there is a scarcity, who is entitled to it?
Is it the fellow whose land is in high demand? Is it the fellow whose land has valuable minerals in it? Is it the fellow whose property is on a great aquifer? Is it the great-great-grandchild of the Duke of Westminster, or of the first Caucasian settlers on a particular piece of land, or of someone to whom they sold title? LVTfan says not.
Alaska treats as its common treasure a significant share of the economic value of its oil. Oil revenues finance a significant part of Alaska spending (supplemented by generous amounts of federal pork brought home by powerful senators who argue that because Alaska is such a new state and relatively low in population, the rest of us should be financing their infrastructure needs). And a portion of the oil revenue goes into the Alaska Permanent Fund, which is invested in a diversified portfolio and provides annual payments to every man, woman and child in Alaska. One of the results is that Alaska has among the lowest range of incomes,because even a low-income person in Alaska receives an annual dividend from that invested oil money. Pretty smart, huh?
My local newspaper has set up a facility to permit comments on articles and opinion pieces, and I frequently respond to what I read. Yesterday, I posted a comment to an article entitled Office owners strive to retain tenants whose thumbnail description says "In tough times, office building owners often look for other sources of tenants besides relocations to their properties." Today I went back and someone had posted the comment, "
Your sole issue is land value tax. Am I right?"
If Europe’s example is any guide, here are the two secrets of coping
with expensive oil: own fuel-efficient cars, and don’t drive them too
Notice that I said that cars should be fuel-efficient — not
that people should do without cars altogether. In Germany, as in the
United States, the vast majority of families own cars (although German
households are less likely than their U.S. counterparts to be
But the average German car uses about a
quarter less gas per mile than the average American car. By and large,
the Germans don’t drive itsy-bitsy toy cars, but they do drive
modest-sized passenger vehicles rather than S.U.V.’s and pickup trucks. ...
Can we also drive less? Yes — but getting there will be a lot harder.
have been many news stories in recent weeks about Americans who are
changing their behavior in response to expensive gasoline — they’re
trying to shop locally, they’re canceling vacations that involve a lot
of driving, and they’re switching to public transit.
of it amounts to much. For example, some major public transit systems
are excited about ridership gains of 5 or 10 percent. But fewer than 5
percent of Americans take public transit to work, so this surge of
riders takes only a relative handful of drivers off the road.
Any serious reduction in American driving will require more than this — it will mean changing how and where many of us live.
I came across a piece entitled "Why Democrats should love the FairTax," written by Laurence J. Kotlikoff, a professor of economics at Boston University, an economic adviser to Mike Gravel and a consultant to FairTax.org.
I continue to be amazed how even economists, who should know better -- far better -- than to even think about a sales tax as a solution to anything, can be in favor of such an alternative.