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!
What more generous boost to the pay-day loan industry could Congress offer than a government shutdown, when so many Americans live paycheck to paycheck?
First it will affect the government employees, particularly those in the early years of their careers, who might not have a whole lot in the way of liquid savings, and those who have high fixed costs like mortgages, student debt, or children in college.
And then it will affect all those who depend on their patronage, including a lot of small businesses and their employees.
What a brilliant plan for forcing so many Americans into the hands of the pay-day loan industry!
And most of us are aware how difficult it will be for the latter group to dig themselves out. The government employees may eventually get paid -- they'll still owe the pay-day lenders exhorbitant interest, for the month or two. But it will be the second group that falls into the clutches of the legal loan sharks.
Brilliant. Simply brilliant. I wonder what the campaign contribution picture looks like.
How far is the saying true that "Every one lives either by working, or
by begging, or by stealing."' Observe: This is primarily a question
merely of fact, and not of right or wrong. There may be (1) Right
Work and Wrong Work; (2) Begging that is justifiable, and Begging that
is unjustifiable; (3) Stealing which is pardonable, and stealing which
is unpardonable. In simply placing, therefore, any class of persons
under one or another of these three heads, I am not necessarily either
praising or blaming the individual members of that class. Again, of two
paid workers one may be greatly underpaid, and the other as greatly
overpaid. But neither is this consideration embraced in the question
before us. We have not to do, tonight, with the merits of any
individual, nor with the value or valuelessness of any kind of work, nor
yet with the equitable assignment in any particular case of the reward
of work. Let us, in the first place, classify the members of English
society by dividing them simply into — I. Workers, and II. NonWorkers.
I. Workers, e.g.: — Manual labourers, skilled and unskilled; domestic
servants; soldiers; sailors; farmers; clerks and overseers; professional
men; retail and wholesale dealers; merchants and manufacturers; bankers
(sleeping partners are excepted); teachers and preachers; artists,
authors, and editors; high officers and Ministers of State; the
Sovereign; housewives. All these are doing work, and are receiving pay
in coin or kind in return for their work. Some of them may be doing
unpaid (honorary) work as well as paid work; and others may be getting
interest (on a capital for which they never worked) in addition to those
wages of superintendence which are strictly the reward of a merchant's
or manufacturer's work. Again, some of them may be working in appointed
places for definite salaries, while others may be working, so to speak,
"on their own hook," or, in more elegant language, "paddling their own
canoe." By what mark, then, shall we distinguish the type of man who
lives by his work? What is his definition? He is the man who lives upon
pay, in coin or kind, which is given him in return for his personal
services. And only in proportion as his means of living are derived from
such pay, or from his personal labour on the soil, can he properly be
said to "live by working.'' We have next to consider who are the (II.)
Non-Workers of Society, and whether they may all, without exception, be
properly included in the two classes, "Beggars," and "Stealers" —
whether, in fact, this two-fold division of them is an exhaustive one.
Now, Beggars and Thieves are alike in these respects, that they, both of
them, consume without producing, enjoy without labouring, are served
but render no service to others, receive but give not in return, are
clever in subtraction, but failures in addition. Wherein, then, do they
differ from each other? They differ, for the purposes of the present
argument, only in the different dispositions of their respective victims
towards them. The victim of the Beggar is a willing victim; he is influenced by custom, or by compassion for weakness, pain, or privation. On the other hand, the victim of the Thief is an unwilling victim.
It may be that he is unconscious of the spoliation that is perpetrated
National Debt. — "A national debt, like any other, may be honestly
incurred in case of need, and honestly paid in due time. But if a man
should be ashamed to borrow, much more should a people; and if a father
holds it his honour to provide for his children, and would be ashamed to
borrow from them, and leave, with his blessing, his note of hand, for
his grandchildren to pay, much more should a nation be ashamed to
borrow, in any case, or in any manner; and if it borrow at all, it is at
least in honour bound to borrow from living men, and not indebt itself
to its own unborn brats. If it can't provide for them, at least let it
not send their cradles to the pawnbroker, and pick the pockets of their
first breeches. A national debt, then, is a foul disgrace at the best.
But it is, as now constituted, also a foul crime. National debts paying
interest are simply the purchase, by the rich, of power to tax the
poor." — John Ruskin, quoted in The Christian Socialist (London), December, 1883.
One might be led to ask, how many is enough, and how we might go about encouraging our best and brightest into careers that serve others instead of rent-seeking. Two generations ago, many became doctors, engineers and teachers.
What changes in public policy will reduce the returns now funneled so generously to the rent-seekers, leaving more for the folks who labor in the productive sectors of the economy?
Why do we pay so little attention to rent-seeking?
Why is rent-seeking taught to our MBAs, but the impacts of rent-seeking not taught to our liberal arts, social sciences, political science, public policy students?
D'ya think that the rent-seekers might really really like it this way??
Shiller: Too Many Graduating Seniors Go Into Finance
Too many of the our brightest people may be choosing careers in finance,
undertaking economically and socially useless — and even harmful —
activities, Robert Shiller, a Yale University economics professor,
writes in an article for Project Syndicate.
survey of elite U.S. universities showed that 25 percent of Harvard
graduating seniors, 24 percent of Yale graduating seniors and 46 percent
of Princeton graduating seniors were going into financial services in
2006, notes Shiller, co-creator of the Case-Shiller home price index.
While those proportions have fallen more recently, he explains that might only be a temporary effect of the financial crisis.
more are going into speculative fields like investment banking rather
than traditional finance such as lending, he says, citing a study by
Thomas Philippon of the Stern School of Business, New York University
and Ariell Reshef of the University of Virginia.
need some traders and speculators, Shiller concedes, as they provide
some useful service — sorting through information about businesses and
trying to judge their real worth.
"But these people's activities
also impose costs on the rest of us," he explains. Much of their
speculation and deal making is "pure rent-seeking."
other words, it is wasteful activity that achieves nothing more than
enabling the collection of rents on items that might otherwise be free."
working in speculative finance fields are like a feudal lord installing
a chain across a river to charge fees on passing boats, he argues.
Making no improvements to the river, the lord does nothing productive
and helps no one but himself. Few people will use the river if enough
lords put chains across it to collect fees.
working in speculative fields, he says, "skim the best business deals,
creating a 'negative externality' on those who are not party to them."
For example, they can reject bad assets, such as subprime mortgage securities, offloading them to less knowledgeable investors.
repeal of the Glass-Steagall Act, which blocked commercial banks from
investment banking, allowed bankers to act more and more like those
feudal lords collecting fees.
"In fact, the main advantages of
the original Glass-Steagall Act," he says, "may have been more
sociological than technical, changing the business culture and
environment in subtle ways. By keeping the deal-making business
separate, banks may have focused more on their traditional core
A paper by economists at Columbia University and Princeton published on the Social Science Research Network website
showed that over-the-counter (OTC) traders allowed informed dealers to
extract excessive rents and to undermine organized exchanges by
"cream-skimming" the best deals.
informational rents in OTC markets in turn attract too much talent to
the financial industry, which would be more efficiently deployed as
real-sector entrepreneurs," the paper asserts.
Plus, OTC dealers'
rents tend to increase "as there are more informed dealers, because the
greater cream-skimming by dealers worsens the terms entrepreneurs can
get for their assets on the organized exchange, and therefore their
bargaining power on OTC markets."
This appears in the current issue of the University of Chicago Magazine:
Recently at a coffee shop near my home, a scruffy young barista
looked at the University of Chicago T-shirt I was wearing. His face
soured and he disdainfully said, “I don’t know about the University,
just their economics department.” It’s a reaction the shirt has been
getting more frequently the last few years. He was more or less
implicating me by association with creating the economic crisis many
of us are still slowly clawing our way out of. I felt stung. I’m a
social worker, and not only do my politics not agree with that of
the Chicago school’s libertarian bent, but in the wake of the
crisis, with the state and federal budgets that pay for my work
being slashed, I certainly haven’t reaped any financial rewards from
my association with the University or its economics department.
Now, sure, maybe Surly Barista Guy is a die-hard radical leftist and
feels the Original Sin of Chicago’s having propagated free market
neoliberalism across the globe is so great that all the good done by
other alums in the many fields of study and practice the University
produces is rendered irrelevant. Maybe, like a lot of millennials,
he just feels salty because he’s been stuck doing barista jobs since
the recession hit and can barely cover his student debt, let alone
save for retirement or buy a home. Maybe he’s upset that the Chicago
school he’s read about advanced theories and policies that would
ultimately make a very small number of people extraordinarily rich
through financial business practices of at least questionable ethics
if not legality while everyone else was left struggling to keep
their homes. Perhaps he’s also aware that former Treasury secretary
Hank Paulson was hired by—the University of Chicago. Paulson’s
migration to Chicago remains a direct link in many minds between the
free market economic policies that emanate from the University and
the global financial meltdown that nearly resulted from them.
When I applied to Chicago, the school’s reputation was for its Great
Books curriculum and producing top-notch teachers, not global
finance Masters of the Universe. Over the 16 years since I
graduated, I’ve been able to watch how reactions have shifted when I
tell people where I went to school. Whereas the U of C used to be
considered closer in character to schools like Reed or Saint John’s
Colleges, it’s now more associated with places like the University
of Pennsylvania’s Wharton School. People are surprised to find that
I work directly with poor communities and have used my Chicago
education to serve the public good.
The University has never addressed its role in forming and advancing
the economic policies that destroyed trillions of dollars in wealth
during the financial crisis and created epic human misery across
multiple continents. It has heavily publicized and promoted its many
Nobel Prize for Economics winners, driving the public’s perception
of Chicago as a one-dimensional institution. I doubt I’m the only
alum who would appreciate the University making a statement
addressing the economics department’s role in creating the crisis
and articulating a plan for how its policies can benefit the greater
good by expanding opportunity and prosperity for all. I also doubt
that I’m the only alum who would support the University shifting its
focus back to producing graduates who want to live the “life of the
mind” rather than to conquer the global marketplace. We would
appreciate it, frankly, because we’re getting tired of the guilt by
Jeff Deeney, AB’97
In the same issue, in the classifieds, appeared this:
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Sussex County recently passed their 2014 budget which began July 1st, 2013. Part of the budget includes keeping the property taxes in Sussex County some of the lowest in the country. While other regional governments are trying to look for every dollar, Sussex County will be keeping the tax rate the same as it was in 1990.
Officials pointed to the strength of the local housing market as a contributing factor to an uptick in revenue. 2014 will be the 24th year where the county has kept the tax rate to 44.5 cents on $100 dollars of assessed value. The average tax bill for Sussex County residents in a single family home will remain approximately $100 annually.
Beyond the good news for home owners, the 117.7 million dollar budget also includes rate reductions for some 57,000 public waste-water customers. County Administrator, Todd Lawson explains:
“This budget continues Sussex County’s long tradition of prudent, measured spending while ensuring essential public services remain the best value around. “Sussex County is tremendously proud of the fact that, unlike many others, we can continue to run efficiently and effectively with a tax rate set a generation ago. It’s a tremendous feat.”
For the full Sussex County 2014 Budget press release, Click Here.
To which I reply:
Low tax rates and efficient government are very good thing, but it is time to update the assessments, which, as this article points out, are more than 24 years old. Relative land values have changed, particularly with the huge investment in widening the Coastal Highway, and our valuations are way out of date.
Assessing land value well is not difficult or expensive to do. In some states, revaluations are mandated every 4 years.
Sussex County needs to bring its valuations into the 21st century.
MUTUAL TOWN-BUILDING IN ENGLAND "GARDEN CITIES" OF INDIVIDUAL, DETACHED HOMES BUILT WITHOUT THE AID OF PHILANTHROPY — A BETTER PLAN THAN REBUILDING THE SLUMS
BY WILHELM MILLER
(who visited these cities to make a first hand study of them)
LETCHWORTH, "the perfect city," less than five years old but with 6,000
inhabitants, is thirty-four miles north of London and is reached by the
best trains in fifty minutes. It has 3,818 acres and its population is
limited to 35,000 inhabitants, so that there will never be any crowding.
The factory quarter can never be enlarged; it is situated as far as
possible from the residence quarter and the prevailing wind carries the
smoke away from the homes. Nearly one-sixth of the town site, or two
hundred acres, is perpetually reserved for open spaces, including parks,
jjlaygrounds, and a golf course.
And even if the surrounding country should build up as solidly as
London, the people of Letchworth are always sure of enjoying a beautiful
rural scene because a large belt is perpetually reserved for
agriculture. This belt comprises 2,500 acres, or 65 percent of the
whole estate. It will undoubtedly be occupied by market gardeners and
dairymen, for gardens yield about eleven times as much profit per acre
A man can buy a house at Letchworth or he can rent one, but he cannot
buy the land. He cannot even lease it for 999 years, because that would
enable him to sell or lease his property in such a way as to make a
profit from the unearned increment. He can lease the land for
ninety-nine years without revaluation and the improvements will not
revert to the landowner. In any case, he has every advantage enjoyed by
the man who owns the land outright — save one. He cannot get rich from what Henry George called the "unearned increment" but which in Letchworth is called the "collectively earned increment."
Even if he rents his house and land from week to week he cannot be
dispossessed by some one who offers more money. In the agricultural
belt, the tenant is allowed to continue in occupation as long as he is
willing to pay as much as anyone else, less 10 percent, in favor of the
Letchworth has been built upon a plan whereby people in any part of the
world can make a city that is practically perfect without asking any
rich man to give money, and without facilities for borrowing any large
amount. The essence of the scheme is to preserve to the people the
"collectively earned increment." The Letchworth people take some pride
in the use of this phrase, and justly. For, merely by moving to
Letchworth and living there they created in four and a half years a net
increase of half a million dollars. They do not get that half million
now, but some day they will get 95 percent of it in the form of
abolition of taxes. And that day, in my opinion will come in about
twenty years, for by that time the city should be able to pay back all
that its public works have cost.
THE TWO OTHER "GARDEN CITIES "
There are two other successful "garden cities," Bourneville, a suburb of
Liverpool built by the Cadbury Cocoa Works, and Port Sunlight near
Birmingham created by the Lever Brothers, soap manufacturers, solely for
Port Sunlight is the most beautiful because the Messrs. Lever have gone
to the unnecessary extreme of making no two houses alike. Also, they
have spent more upon ornamentation of
houses than is necessary and they plant and care for all the front yard gardens.
The tenants at Port Sunlight get more for their money than elsewhere for
two reasons. First, the rents are too low, because they are calculated
only to pay expenses. Second, the social institutions, though more
elaborate than elsewhere, cost the people nothing originally and they
can and do manage them so as to keep expenses down to the mininum.
THE "taint" of philanthropy
The one great drawback to the Port Sunlight idea is that it involves too
great an expenditure on the part of one man or one firm, and it is hard
to prove to a factory owner that the investment is worth while. In this
case, the factory owners disclaim all idea of philanthropy and are
positive that it pays, because their employees are healthier, happier,
more prosperous and therefore more efficient.
The Lever Brothers rejected all direct profit-sharing schemes because
they thought this the only plan that would benefit the wives and
children of the men. There is the keenest competition for a chance to
work in that factory and live in one of those houses. But all the
profits to the firm are indirect. Rarely, if ever, can they be expressed
in dollars and cents and indirect profits can never be expected to
weigh in the mind of the average employer against the appalling fact
that Lever Brothers have put about $1,700,000 into their paradise at
Port Sunlight and have never directly gotten back one cent.
In other words, if this is not philanthropy, it is too much like it to
be generally copied. Humanity cannot look to great employers for the
solution of the housing problem. And employees do not want philanthropy.
And at Bourneville there is less of the philanthropic spirit. The
employees of the Cadbury Cocoa Works get a normal social life, which the
people of Port Sunlight do not have. The cocoa workers are not obliged
to live in Bourneville and only 42 percent of the tenants at Bourneville
are employed at the Cadbury factory. Thus Bourneville is a mixed
community and the ideal community must be mixed — not merely industrial,
or suburban, or composed exclusively of any one class. It is sad to see
the magnificent clubs, lecture halls, baths, and other social features
at Port Sunlight languish for attendance, but it is only human nature.
On getting home after a day's work, a man wants to forget thoughts of
his work. And if he lives in a city where every house and every person
he sees on the street suggests the workroom, he is bound to escape to
the next town where he can get a drink or otherwise forget his daily
routine. The only serious complaint which the tenants at Port Sunlight
have any right to make is that they live in the atmosphere of a single
Mr. Cadbury gave Bourneville to the people. How then does it escape the "taint" of philanthropy?"
A GREAT FUND FOR PROPAGANDA
It is true that Mr. Cadbury gave the property to a trust which
administers it for the benefit of the people, but eventually this trust
will be able to finance hundreds of other garden cities that will be
purely cooperative. For instance, people wishing to live in a "garden
city," where all the "collectively earned increment" benefits all alike
instead of going to the building up of individual fortunes, can form a
stock company with shares as low as $25. If the Bourneville trust
approves of their plan, it will lend them enough money to start a town.
But the company must pay it back, so that the Bourneville trust can use
it again and again.
How does the Bourneville trust hope to get this fund? Its income, which
is almost wholly rent, doubles every five years. At this rate, in fifty
years it will have an annual income of five million dollars. Long before
that, Bourneville will have reached its limit of population. And since
the trust never has to pay back the cost of the houses, roads, or other
public works, it will be able to roll up a vast sum for the propagation
of the "garden city" idea.
The all-important point is that the Bourneville trust will never give
anyone something for nothing. It will merely lend money to people who
are building "garden cities."
THE HEALTH AND BEAUTY OF THESE CITIES
These are far healthier and more beautiful than cities that have grown
up normally; healthier because crowding is prevented by a limit to the
population and because more and better provision is made for outdoor
sports — to say nothing of architecture in which health is the first
thought. The average town death-rate in England is 15 per 1,000.
Letchworth has cut this down to 2.75. The birthrate at Port Sunlight is
twice the average for the rest of England.
The greater beauty of these garden cities lies chiefly in the
architecture and gardening. The houses and stores all conform to one
general style of architecture, but are never monotonous. Every building
must be approved by the city's architect. The houses are all of brick
and built to last. There are no long rows of houses just alike. The
first idea was to have no two houses alike but that is a needless waste
of money. For poor people it is impossible to get good houses cheap
enough without building three or four in a row and this row can be
duplicated in another part of town without harming the total effect.
Moreover, Bourneville has shown how much can be saved on ornamentation.
The plainest houses are transformed in three years by the use of
climbers. Bourneville's head gardener sees that every house has a
different set of vines. Not merely is the plainness soon hidden thereby,
but also the individuality of each home is notably increased.
Gardening is compulsory at Bourneville and Letchworth. If a tenant
neglects his garden at Bourneville and will not hire some one to weed
it, the estate notifies him that he will forfeit his lease unless he
makes his place look decent. But there have been only two cases of
The estate plants a hawthorn hedge all round each man's place, digs and
manures his vegetable garden, lays down the lawn, sets out dwarf fruit
trees, plants the climbers on his house, and digs his flower-beds. These
expenses are considered part of the cost of building and the rent is
based thereon. The tenant must keep it in good condition but he can buy
plants from the estate cheaper than from a nurseryman and he gets
instruction for nothing. There is no chance for a beginner to get
A FIVE-ROOM HOUSE FOR $7.80 A MONTH
I am almost afraid to tell how much a tenant gets for his money at one
of these garden cities. The cheapest houses at Bourneville rent for only
$7.80 a month, which includes taxes and water rates. Such a house
contains five rooms and a wonderful "folding bath" which stands up like a
cabinet when not in use. Clerks and artisans, however, generally pay
about $12.30 a month for seven rooms and an eighth of an acre.
The ideal amount of land at Bourneville is one-eighth of an acre, and
the average value of the fruits and vegetables produced on such a plot
is about $32.24 a year, or sixty-two cents a week the year round. The
smallest lots at Letchworth are a twelfth of an acre, which is the same
as 25 x 145 feet, and is 45 percent larger than the typical New York
lot, on which many families are allowed to live. In addition to these
direct benefits the tenant gets a chance to play cricket, tennis, bowls,
quoits, and hockey near by at no expense or at less cost than in an
All rents at Bourneville are figured at 8 percent of the cost. Taxes,
insurance and repairs cost 3 percent, leaving a profit to the
Bourneville estate of 5 percent. With this 5 percent, it employs a
permanent staff of about one hundred builders and has about fifty houses
under construction all the time.
OBSTACLES OVERCOME AT LETCHWORTH
The Letchworth company had its hands full with public works, for it had
to construct eight miles of road, eleven miles of sewers, and seventeen
miles of water main. Also it had to build a reservoir for water, a gas
making plant, and an electric power station to supply the factories, of
which it now has twenty-four. Another difficulty overcome was
transportation. The company has cooperated with the railroad so well
that its "commuters" can make their thirty-four miles to and from London
daily in less than an hour, though most trains require an hour and a
The income of the land company is partly from the sale of water, gas,
and electricity, but chiefly from ground rent. It never sells any land
or houses. Ground rent may seem a very small source of revenue, but
every man, woman and child in England contributes for ground rent an
average of $10.50 a year. The Letchworth company can, and doubtless
will, raise the ground rent as its limit of population approaches, but
even if it should raise it as high as the average for England, the
tenant will pay less than elsewhere, for taxes will eventually be
What we have is a crisis of imagination. Albert Einstein said that you cannot solve a problem with the same mind-set that created it. Foundation dollars should be the best “risk capital” out there.
There are people working hard at showing examples of other ways to live in a functioning society that truly creates greater prosperity for all (and I don’t mean more people getting to have more stuff).
Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.
It’s an old story; we really need a new one.
But perhaps Buffett's most important observation is this one:
"Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left."
To which I can only insert ... "and are benefiting from."
He also points out,
As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.
But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over. Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life.
I hope Mr. Buffett will take the time to read Henry George's "Progress and Poverty." He might be better able to identify the particular structures that create and maintain poverty and the concentrations of wealth, income and power. And, based on that last sentence, I think Buffett would appreciate the final section of P&P. (Bob Drake's 2006 abridgment is a fine starting place, but the unabridged is a pleasure of its own.)
"If you wish to test the merits in point of certainty of land value taxation as compared with other taxes, go to a real estate agent in your community and, showing him a building lot upon the map, ask him its value. If he inquires about the improvements, instruct him to ignore them. He will be able at once to tell you what the lot is worth. And if you go to twenty other agents their estimates will not materially vary from his. Yet none of the agents will have left his office. Each will have inferred the value from the size and location of the lot.
But suppose when you show the map to the first agent you ask him the value of the land and its improvements. He will tell you that he cannot give an estimate until he examines the improvements. And if it is the highly improved property of a rich man he will engage building experts to assist him. Should you ask him to include the value of the contents of the buildings he would need a corps of selected experts, including artists and liverymen, dealers in furniture and bric-a-brac, librarians and jewelers.
Should you propose that he also include the value of the occupant's income, the agent would throw up his hands in despair. If without the aid of an army of experts the agent should make an estimate of these miscellaneous values, and twenty others should do the same, their several estimates would be as wide apart as ignorant guesses usually are. And the richer the owner of the property the lower as a proportion would the guesses probably be.
Now turn the real estate agent into an assessor, and is it not plain that he could appraise land values with much greater certainty and cheapness than he could appraise the values of all kinds of property? With a plot map before him he might fairly make almost all the appraisements without leaving his desk at the town hall.
And there would be no material difference if the property in question were a farm instead of a building lot. A competent farmer or business man in a farming community can, without leaving his own dooryard, appraise the value of the land of any farm there; whereas it would be impossible for him to value the improvements, stock, produce, etc., without at least inspecting them."
-- "The Taxation of Land Values," (pp. 107, 108) Bobbs-Merrill, Indianapolis.
Rent is not earned by individuals ... but is unearned. This is obvious for two simple reasons:
First, rent cannot be earned by individuals because land is not man-made but nature-made. It is not a product of capital and labor, but is a free gift of the Creator.
Second, rent cannot be earned by individuals because land values can only arise through the growth of population and the progress of society as a whole. No one man can make land values any more than he can make the land itself. Land values spring from the demand for land and to cause this demand a community of people is necessary. If the community is small or unprogressive, land values will be very low; if it is large or progressive, land values will be very high.
-- Emil Jorgensen: False Education in our Colleges and Universities (1925), available at HathiTrust.org
And American economists — but, be it noted, economists without the gates of institutionalism — proposed thoroughgoing remedies. Chief
among these was Henry George, whose idealism was as high as his
testimony was eloquent. It was sought to cry him down as a fanatic with a
cure-all, but history will not permit his critics to reach to his
That article begins,
"The business depression points
an accusing finger at professional economists. This paper is not an
apology for the economists—quite the contrary. At the same time it is
proper to point out that when an epidemic disease attacks the community,
(a fair analogy in the physiological world) we do not upbraid the
doctors. We welcome them into our houses, place our individual sick in
their hands, and listen anxiously to their guesses at the source of
infection. We recognize that physicians are paid by individuals, and are
not conservers of the public health in the strict sense, and so we do
not hold them, even collectively, responsible for the spread of typhoid
or influenza. They are to lock the individual stable door after the
steed is stolen, and so long as they do this with reasonable quickness
and accuracy, we do not complain.
economists have been somewhat less occupied with the ills of the
individual than have doctors as a class, and yet the share of their
attention demanded by the enterpriser, the lender, the borrower, the
speculator as such, absolves them in part from the indictment of
neglecting the public interest. Until recently the forces in American
economic life have been centrifugal, and students have been invited to
become specialists. This direction of their effort was not always the
case. The profession of "Political Economy" clearly implies a concern
for public, collective problems, and it is only within the last two
generations that American economists have departed from the historical
tradition. The term "economics" in the narrow sense, and, more
explicitly, the term "business economics," indicates the drift toward
preoccupation with private economy.
Elsewhere* I found this:
Broadus Mitchell, in his book, The
World's Wealth — Its Use and Abuse, pays a high compliment to
Henry George, the Economist who first proposed the taxation of
rental value, saying that "If America were invited to contribute one
name to an international economic hall of fame, the rest of the
world would scarcely understand it if we did not nominate Henry
*Arthur Otis: Added Revenue Without Burden; I could not find the Mitchell book online.
A third tribute to Henry George from Broadus Mitchell is online at the School of Cooperative Individualism. It describes Mitchell as Associate Professor of Political Economy, Johns Hopkins University.
There are at least four Little Neck homes up for sale: 4 Little Neck Road, $649,999; 30 Plum Sound Road, $489,000; 29 Middle Road, $565,0000 and 18 Baycrest Road, $650,000.
The average price per lot the town received in the August sale was approximately $186,747.
The cottages themselves are quite modest. Most are at least 80 years old, many less than 1000 square feet, many not winterized. Anywhere else, no one would say they were worth more than $75,000.
When the Feoffees -- trustees of this fine piece of land, whose charge was to steward this 1650 gift to the schools of the town of Ipswich, Massachusetts to produce maximum income -- sold the land at a small fraction of its real value, to its tenants, they did something that reasonable people would call criminal.
The students of Ipswich -- this generation, the next generation, and dozens of generations after them -- should have had the windfall. Instead, the tenants got it. Let's say those 3 cottages sell for a mere $500,000 on average. $187,000 paid for the land and $75,000 worth of cottage add up to $262,000. The other $238,000 each was a very generous gift from the students' trustees to 166 cottage owners. Calculate it. That's $39,508,000 -- over and above the $31 million -- that should have gone to the students' benefit, and instead was gifted to the tenants. And their well-compensated attorneys and consultants and public relations folks.
Look for an article next week detailing all the wonderful things that this year's installment of the interest on the $31 million -- well, not that much, net net net.
“Buy land,” the adage goes, “they’re not making any more of it.” True enough: Land is an economic factor like no other, what economists call an “inelastic commodity.”
Demand for land goes up, yet there can be no increase in supply. According to the law of supply and demand, rising demand produces rising prices, which is offset by manufacturing more supply, which lowers prices.
In the case of land, the iron law of supply and demand is tossed out the window.
One can of course develop more land, but this does not produce more of the basic resource upon which development depends.
Control of the resource, then, is where opportunity lies, an opportunity which involves nothing more than the willingness to gamble that the value of land will continually rise. In Moab all landowners – which is to say all homeowners along with owners of undeveloped plots – know this. In places where population is increasing, where the demand for land is rising, the trick to getting rich is to buy a plot of soil, sit on it, and watch the value grow as demand for the commodity grows.
Ketcham ends with,
And therein lies the problem.
Like the speculator with his bare lot, when I sell my property I get to keep for myself, barring a few taxes, the entire increase in value, an increase that resulted in part, yes, from my own labor and upkeep, but also, to a far larger degree, from communal labor and social investment (along with the simple fact of inelastic supply in the face of rising demand).
The homeowner who manages to make a killing upon selling his house minces in the mirror and says, “I earned it, I and I alone!”
Such self-delusion, needless to say, is one of the keystones of the real estate market on which so much of our economy is predicated.
I encourage you to go read the original to see the middle section. Ketcham, if memory serves, was the author of a very good article in Harper's about Monopoly.
In 1871, a Tennessee businessman, Enoch Ensley, wrote to his governor in much the same vein:
In showing or proving what I have above promised to show, I will
THE GOLDEN RULE OF
First, I will present you with a rule or motto
which I think it would be well for the state to adopt and have cut into
the stone at the capitol (in large letters and have them gilded), in
the senate chamber, the hall of the house of representatives and in the
governor's office, for I think it entirely harmonizes with the correct
principles of taxation in every particular, to wit:
That Would Be of Value to Your State,
That Could and Would Run Away, or
That Could and Would Come to You.
In 1978, Milton Friedman stated, "the least bad tax is the
property tax on the unimproved value of land, the Henry George argument
of many, many years ago" ("An Interview with Milton Friedman,” Human
Events 38 , November 18, 1978, p. 14.)
In 2004, interviewed by Joe Matthews about California's Proposition 13,
When the subject turned to Prop 13, which he
had strongly supported in 1978, Friedman said he thought the measure
had proven to be "a mixed bag." He did not regret his vote for Prop 13
because it had sent a tax-cutting message that was important for that
* * *
But as a matter of current policy, he said, Prop 13 was problematic.
"It's a bad tax measure because the property tax is the least bad tax
there is," he said. "Think of the original and indestructible
properties of the soil. The least dangerous and harmful tax is a tax on
something of which there is an inelastic supply." He argued that
protecting Prop 13 was far less important than cutting other taxes,
particularly on the income and sales we need more of.
Friedman in an interview published in the San Jose Mercury a few weeks before his death in 2006:
"Yes, there are taxes I like. For example, the gasoline tax, which pays for highways. You have a user tax. The property tax is one of the least bad taxes, because it's levied on something that cannot be produced — that part that is levied on the land. So some taxes are worse than others, but all taxes are bad." — interview, San Jose Mercury News, Nov 5, 2006
So Friedman could see at least two very good reasons for relying on taxes on land value. One wonders why he never devoted himself to promoting LVT.
One of the reasons for our poor economic performance is the large distortion in our economy caused by the tax system. The one thing economists agree on is that incentives matter — if you lower taxes on speculation, say, you will get more speculation. We’ve drawn our most talented young people into financial shenanigans, rather than into creating real businesses, making real discoveries, providing real services to others. More efforts go into “rent-seeking” — getting a larger slice of the country’s economic pie — than into enlarging the size of the pie.
It doesn’t have to be this way. We could have a much simpler tax system without all the distortions — a society where those who clip coupons for a living pay the same taxes as someone with the same income who works in a factory; where someone who earns his income from saving companies pays the same tax as a doctor who makes the income by saving lives; where someone who earns his income from financial innovations pays the same taxes as a someone who does research to create real innovations that transform our economy and society. We could have a tax system that encourages good things like hard work and thrift and discourages bad things, like rent-seeking, gambling, financial speculation and pollution. Such a tax system could raise far more money than the current one — we wouldn’t have to go through all the wrangling we’ve been going through with sequestration, fiscal cliffs and threats to end Medicare and Social Security as we know it. We would be in sound fiscal position, for at least the next quarter-century.
to which I posted a response. The last time I looked, it was the only one, out of about 430, which discussed the issue of rent seeking. Here's what I wrote:
How do we unstack it? Collect the rent. Treat it as our COMMON treasure, not something subject to privatization by individuals, corporations, foundations, universities, etc.
Will it fund everything? We don't know. We can't know. We don't even collect the data that would permit us to calculate its magnitude. (Funny thing about that. Wonder who benefits from that. Could it be the rent-seekers?) Start collecting it, and using it to fund public goods.
At the same time, start reducing, even eliminating the dumb taxes which burden the economy: taxes on sales, buildings, wages, starting with the lowest wages earned. Watch the 99% recover. Watch the economy recover. The 1% will do all right under such a set up, but the rest of us will begin to thrive. Most likely, we'd be able to reduce the amount we need to spend on the social safety net, so that collected rent might cover a large share of our internal revenue needs.
What else might we collect revenue from? How about the privileges we've given out -- the privilege of using the airwaves (think how much a strong radio signal sells for in a large city) and the entire electromagnetic spectrum; franchises of various kinds, landing rights at LaGuardia, particularly at rush hour;
Then there are our nonrenewable and scarce natural resources: water, oil, natural gas, various metals. Royalties on many of these things are trivial, or they are going into private pockets, instead of being treated as our common treasure.
This appeared in the Freeport News, and I thought it worth sharing:
Why is it so hard to understand the justice and benefits of capturing the community created value of land for the community?
Classical economists such as Adam Smith and Henry George, defined land as all free gifts of nature (urban land, harbors, etc.).
These get value because people, both local and foreign, want them for personal or commercial use.
So, no matter who 'owns' the gift of nature (land) there is a location value called economic rent which is exclusive of any production on or from that location.
When economic rent goes into private hands (i.e., beaches are given away to corporations, land values are uncollected) legitimate government revenue is lost and taxes like the proposed VAT are applied to the production process.
Not only is land speculation rewarded but building houses, trading goods and services, etc. are punished by taxes.
Naturally people try to avoid these taxes by smuggling and other forms of corruption.
When economic rent goes to honest government it encourages better use of locations as there is no tax penalty to build or work.
It reduces pollution and pays for infrastructure that helped create the economic rent in the first place.
Why is this so difficult to understand? Why is there so much ignorance of it and opposition to it?
Hoi oligoi. A new phrase for me, and one which made immediate sense. My Georgist grandparents sometimes referred to themselves as part of the hoi polloi, but at other times also used it to distinguish themselves, in a joking way, from the mass of people who didn't know George's ideas.
When they become due I don't like them at all. Taxes look large be they ever so small Taxes are debts which I venture to say,
No man or no woman is happy to pay.
I grumble about them, as most of us do.
For it seems that with taxes I never am through.
But when I reflect on the city I love,
With its sewers below and its pavements above,
And its schools and its parks where children may play,
I can see what I get for the money I pay,
And I say to myself: "Little joy would we know
If we kept all our money and spent it alone".
I couldn't build streets and I couldn't fight fire.
Policemen to guard us I never could hire. A water department I couldn't maintain.
Instead of a city we'd still have a plain.
Then I look at the bill for the taxes they charge,
And I say to myself: "Well, that isn't so large".
I walk through a hospital thronged with the ill
And I find that it shrivels the size of my bill.
As in beauty and splendor my home city grows,
It is easy to see where my tax money goes.
And I say to myself: "If we lived hit and miss
And gave up our taxes, we couldn't do this".
I AM writing these pages on the shore of Long
Island, where the Bay of New York contracts to what is
called the Narrows, nearly opposite the point where our
legalized robbers, the Custom-House officers, board incoming
steamers to ask strangers to take their first American
swear, and where, if false oaths really colored the
atmosphere the air would be bluer than is the sky on this
gracious day. I turn from my writing-machine to the window,
and drink in, with a pleasure that never seems to pall, the
"What do you see?" If in ordinary talk I were asked
this, I should of course say, "I see land and water and sky,
ships and houses, and light clouds, and the sun drawing to
its setting over the low green hills of Staten Island and
But if the question refer to the terms of political economy,
I should say, "I see land and wealth." Land, which is the
natural factor of production; and wealth, which is the
natural factor so changed by the exertion of the human
factor, labor, as to fit it for the satisfaction of human
desires. For water and clouds, sky and sun, and the stars
that will appear when the sun is sunk, are, in the
terminology of political economy, as much land as is the dry
surface of the earth to which we narrow the meaning of the
word in ordinary talk. And the window through which I look;
the flowers in the garden; the planted trees of the orchard;
the cow that is browsing beneath them; the Shore Road under
the window; the vessels that lie at anchor near the bank,
and the little pier that juts out from it; the
trans-Atlantic liner steaming through the channel; the
crowded pleasure-steamers passing by; the puffing tug with
its line of mud-scows; the fort and dwellings on the
opposite side of the Narrows; the lighthouse that will soon
begin to cast its far-gleaming eye from Sandy Hook; the big
wooden elephant of Coney Island; and the graceful sweep of
the Brooklyn Bridge, that may be discovered from a little
higher up; all alike fall into the economic term wealth —
land modified by labor so as to afford satisfaction to human
desires. All in this panorama that was before man came here,
and would remain were he to go, belongs to the economic
category land; while all that has been produced by labor
belongs to the economic category wealth, so long as it
retains its quality of ministering to human desire.
But on the hither shore, in view from the window, is a
little rectangular piece of dry surface, evidently reclaimed
from the line of water by filling in with rocks and earth.
What is that? In ordinary speech it is land, as
distinguished from water, and I should intelligibly indicate
its origin by speaking of it as "made land." But in the
categories of political economy there is no place for such a
term as "made land." For the term land refers only and
exclusively to productive powers derived wholly from nature
and not at all from industry, and whatever is, and in so far
as it is, derived from land by the exertion
of labor, is wealth. This bit of dry surface
raised above the level of the water by filling in stones and
soil, is, in the economic category, not land but wealth. It
has land below it and around it, and the material of which
it is composed has been drawn from land; but in itself it
is, in the proper speech of political economy, wealth; just
as truly as the ships I behold are not land but wealth,
though they too have land below them and around them and are
composed of material drawn from land.
THAT land is only a passive factor in
production must be carefully kept in mind. . . . Land cannot
act, it can only be acted upon. . . . Nor is this principle
changed or avoided when we use the word land as expressive
of the people who own land. . . .
That the persons whom we call landowners may contribute
their labor or their capital to production is of course
true, but that they should contribute to production as
landowners, and by virtue of that ownership, is as
ridiculously impossible as that the belief of a lunatic in
his ownership of the moon should be the cause of her
THE term Land in political economy means the natural or
passive element in production, and includes the whole
external world accessible to man, with all its powers,
qualities, and products, except perhaps those portions of it
which are for the time included in man's body or in his
products, and which therefore temporarily belong to the
categories, man and wealth, passing again in their
reabsorption by nature into the category, land.
THE power to reason correctly on general
subjects is not to be learned in schools, nor does it come
with special knowledge. It results from care in separating,
from caution in combining, from the habit of asking
ourselves the meaning of the words we use and making sure of
one step before building another on it — and above all, from
loyalty to truth.
I AM convinced that we make a great mistake in
depriving one sex of voice in public matters, and that we
could in no way so increase the attention, the intelligence
and the devotion which may be brought to the solution of
social problems as by enfranchising our women. Even if in a
ruder state of society the intelligence of one sex suffices
for the management of common interests, the vastly more
intricate, more delicate and more important questions which
the progress of civilization makes of public moment, require
the intelligence of women as of men, and that we never can
obtain until we interest them in public affairs. And I have
come to believe that very much of the inattention, the
flippancy, the want of conscience, which we see manifested
in regard to public matters of the greatest moment, arises
from the fact that we debar our women from taking their
proper part in these matters. Nothing will fully interest
men unless it also interests women. There are those who say
that women are less intelligent than men; but who will say
that they are less influential?
SOCIAL reform is not to be secured by noise
and shouting; by complaints and denunciation; by the
formation of parties, or the making of revolutions; but by
the awakening of thought and the progress of ideas. Until
there be correct thought, there cannot be right action; and
when there is correct thought, right action will follow.
Power is always in the hands of the masses of men. What
oppresses the masses is their own ignorance, their own
WE may be wise to distrust our knowledge; and, unless we have tested them, to distrust what we may call our reasonings; but never to distrust reason itself. . . . That the powers with which the human reason must work are limited and are subject to faults and failures, our reason itself teaches us as soon as it begins to examine what we find around us and to endeavor to look in upon our own consciousness. But human reason is the only reason that men can have, and to assume that in so far as it can see clearly it does not see truly, is in the man who does it not only to assume the possession of a superior to human reason, but it is to deny the validity of all thought and to reduce the mental world to chaos.
We are laying the foundations in this state for a greater
distinction of classes than exists in any state of the Union at the
present day — as great as that which exists in England, where one man
rolls in wealth and another can scarcely keep body and soul
together. We are not much over twenty years old, and have in this
great empire of our own hardly half a million people. Yet, there is
already one man among us who is worth nearly ten million dollars,
and quite a number who are worth from one to seven, while the best
part of our land is divided off into estates, which in a little
while, when population becomes denser, will make their owners as
rich as the Duke of Argyll, or the Marquis of Bute.
There is a constantly increasing tendency to the concentration of
wealth. The greater the fortune, the more rapidly it grows; and
though the people who hold these great aggregations of money may be
constantly changing, as they are changing in England, there will
constantly remain the distinction between the very rich and the very
poor. These two classes are the correlatives of each other; one man
cannot become enormously rich without other men becoming
proportionately poor. If not for our own sakes, at least for the
sake of our children, is it not time for us to stop and ask what is
the cause of this tendency of property to accumulate in a few hands? There is
certainly nothing in the laws of Nature which requires the giving to
one man of as much as can be had by ten thousand of his fellows.
-- Henry George, March 17, 1873, in the (San Francisco) Daily Evening Post, quoted by Kenneth Wenzer in Henry George: Collected Journalistic Writings, Volume 1, pp. 69-70
The physical parish church offers not only a place for public worship but also a place for study groups, social and fund-raising events, soup kitchens and the like. Nobody, surely, wants to be like the early Christians, wandering through deserts and hillsides, without a physical place of worship, without roots. We need the Church Physical, just as we need the Church Ethical and the Church Social. Even the modest Quakers, with their great commitment to prayer and social justice, need meeting houses, organization and a network.
But no one launching an attack upon the papal elections, Vatican finances, sexism and the rest should think that they are attacking Catholicism per se. From my perspective, our Catholic Church is vibrant, helpful, intellectual, and working in so many ways to fulfill the message to love God and to love, and reach out to, one’s unknown neighbor. Everything else is, well, footnotes.
The op-ed, by a professor at Yale, does not speak to whether the local parish or the worldwide church sees a need, or does anything about, challenging the structures which funnel the world's wealth, power and income into relatively few pockets, and insure that there will always be poor people -- and a growing number of them -- to whom they can render charity.
Wouldn't it be better to work for justice, even if that meant challenging the structures which many of our universities seem designed to uphold and to prepare their students to benefit from, to the detriment of the rest of the world?
THE power of a special interest, though inimical to
the general interest, so to influence common thought as to
make fallacies pass as truths, is a great fact, without
which neither the political history of our own time and
people, nor that of other times and peoples, can be
understood. A comparatively small number of individuals
brought into virtual though not necessarily formal agreement
of thought and action by something that makes them
individually wealthy without adding to the general wealth,
may exert an influence out of all proportion to their
numbers. A special interest of this kind is, to the general
interests of society, as a standing army is to an
unorganized mob. It gains intensity and energy in its
specialization, and in the wealth it takes from the general
stock finds power to mold opinion. Leisure and culture and
the circumstances and conditions that command respect
accompany wealth, and intellectual ability is attracted by
it. On the other hand, those who suffer from the injustice
that takes from the many to enrich the few, are in that very
thing deprived of the leisure to think, and the
opportunities, education, and graces necessary to give their
thought acceptable expression. They are necessarily the
"unlettered," the "ignorant," the "vulgar," prone in their
consciousness of weakness to look up for leadership and
guidance to those who have the advantages that the
possession of wealth can give. — The Science
of Political Economy — Book
II, Chapter 2, The Nature of Wealth: Causes of Confusion as
to the Meaning of Wealth
IT is as bad for a man to think that he can know nothing as
to think he knows all. There are things which it is given to
all possessing reason to know, if they will but use that
reason. And some things it may be there are, that — as was
said by one whom the learning of the time sneered at, and
the high priests persecuted, and polite society, speaking
through the voice of those who knew not what they did,
crucified — are hidden from the wise and prudent and
revealed unto babes. — A Perplexed Philosopher (Conclusion)
THAT thought on social questions is so confused and
perplexed, that the aspirations of great bodies of men,
deeply though vaguely conscious of injustice, are in all
civilized countries being diverted to futile and dangerous
remedies, is largely due to the fact that those who assume
and are credited with superior knowledge of social and
economic laws have devoted their powers, not to showing
where the injustice lies but to hiding it; not to clearing
common thought but to confusing it. — A Perplexed Philosopher (Conclusion)
POLITICAL economy is the simplest of the sciences. It is but
the intellectual recognition, as related to social life, of
laws which in their moral aspect men instinctively
recognize, and which are embodied in the simple teachings of
him whom the common people heard gladly. But, like
Christianity, political economy has been warped by
institutions which, denying the equality and brotherhood of
man, have enlisted authority, silenced objection, and
ingrained themselves in custom and habit of thought. — Protection
or Free Trade, Chapter 1
SOCIAL progress makes the well-being of all
more and more the business of each; it binds all closer and
closer together in bonds from which none can escape. He who
observes the law and the proprieties, and cares for his
family, yet takes no interest in the general weal, and gives
no thought to those who are trodden underfoot, save now and
then to bestow alms, is not a true Christian. Nor is he a
good citizen. — Social Problems — Chapter 1, the
Increasing Importance of Social Questions
WHOSE fault is it that social conditions are
such that men have to make that terrible choice between what
conscience tells them is right, and the necessity of earning
a living? I hold that it is the fault of society; that it is
the fault of us all. Pestilence is a curse. The man who
would bring cholera to this country, or the man who, having
the power to prevent its coming here, would make no effort
to do so, would be guilty of a crime. Poverty is worse than
cholera; poverty kills more people than pestilence, even in
the best of times. Look at the death statistics of our
cities; see where the deaths come quickest; see where it is
that the little children die like flies — it is in the
poorer quarters. And the man who looks with careless eyes
upon the ravages of this pestilence; the man who does not
set himself to stay and eradicate it, he, I say, is guilty
of a crime. — The Crime of Poverty
I BELIEVE that in a really Christian community, in a society
that honored, not with the lips but with the act, the
doctrines of Jesus, no one would have occasion to worry
about physical needs any more than do the lilies of the
field. There is enough and to spare. The trouble is that, in
this mad struggle, we trample in the mire what has been
provided in sufficiency for us all; trample it in the mire
while we tear and rend each other. — The Crime of Poverty
The university, which offers world-class instruction in art, architecture and engineering, but no expensive athletic programs, no tricked-out student centers, no plush lawns to sprawl on between classes, is currently losing $12 million a year, about a fifth of its overall budget. So 153 years after the inventor and industrialist Peter Cooper founded a school long rhapsodized as “free as air and water,” it is considering whether to end its most famous tradition, and start making undergraduates pay to attend.
Many students and alumni, shocked at the possible loss of their school’s defining trait, have criticized the decision to erect the $177 million building, which was designed by Thom Mayne of the firm Morphosis. But Cooper Union’s president, Jamshed Bharucha, who arrived after construction was completed, said that the discussion about the building was a red herring, and that the real problems date to at least the 1970s.
That is because, he said, its costs started rising faster than revenues — most notably those from the school’s biggest asset, the land under the Chrysler Building, which now generates $27 million a year.
The article goes on to say
And because the school spends so much to subsidize everyone’s classroom instruction, regardless of income level, it has almost nothing left over to subsidize the high cost of living in New York, which hits needy students hardest.
The school’s financial crisis is expected to be most acute over the next five years; in 2018, the revenues on the land under the Chrysler Building go up by $25 million a year, enough to cover the deficit, although only for a while.
So the rent for the land will soon be $52 million per year. Capitalized at 5% (also known as "20 years' purchase"), that $52 million represents a purchase value of $1.04 billion.
(It appears that a 75% interest in the building was sold in 2008 for $800 million, by Prudential to the Abu Dhabi Investment Council; Tishman Speyer Properties owns the remaining 25%.)
Urban land is valuable. Who deserves the rent money? The community? Its colleges? Or whatever private entity happens to have title to it? The "conventional" "traditional" answer is not necessarily the best answer, when one stops to think about it.
TWENTY men working together will, where
nature is niggardly, produce more than twenty times the
wealth that one man can produce where nature is most
bountiful. The denser the population the more minute becomes
the subdivision of labor, the greater the economies of
production and distribution, and, hence, the very reverse of
the Malthusian doctrine is true; and, within the limits in
which we have any reason to suppose increase would still go
on, in any given state of civilization a greater number of
people can produce a larger proportionate amount of wealth
and more fully supply their wants, than can a smaller
number. —Progress & Poverty — Book II,
Chapter 4: Population and Subsistence: Disproof of the
IF bears instead of men had been shipped from
Europe to the North American continent, there would now be
no more bears than in the time of Columbus, and possibly
fewer, for bear food would not have been increased nor the
conditions of bear life extended, by the bear immigration,
but probably the reverse. But within the limits of the
United States alone, there are now forty-five millions of
men where then there were only a few hundred thousand, and
yet there is now within that territory much more food per
capita for the forty-five millions than there was then for
the few hundred thousand. It is not the increase of food
that has caused this increase of men; but the increase of
men that has brought about the increase of food. There is
more food, simply because there are more Men. — Progress & Poverty — Book II,
Chapter 3: Population and Subsistence: Inferences from
read the corresponding passage in Drake's abridgement ...
DOES not the fact that all of the things which
furnish man's subsistence have the power to multiply many
fold — some of them many thousand fold, and some of them
many million or even billion fold — while he is only
doubling his numbers, show that, let human beings increase
to the full extent of their reproductive power, the increase
of population can never exceed subsistence? This is clear
when it is remembered that though in the vegetable and
animal kingdoms each species, by virtue of its reproductive
power, naturally and necessarily presses against the
conditions which limit its further increase, yet these
conditions are nowhere fixed and final. No species reaches
the ultimate limit of soil, water, air, and sunshine; but
the actual limit of each is in the existence of other
species, its rivals, its enemies, or its food. Thus the
conditions which limit the existence of such of these
species as afford him subsistence man can extend (in some
cases his mere appearance will extend them), and thus the
reproductive forces of the species which supply his wants,
instead of wasting themselves against their former limit,
start forward in his service at a pace which his powers of
increase cannot rival. If he but shoot hawks, food-birds
will increase: if he but trap foxes the wild rabbits will
multiply; the bumble bee moves with the pioneer, and on the
organic matter with which man's presence fills the rivers,
fishes feed. — Progress & Poverty — Book II,
Chapter 3: Population and Subsistence: Inferences from
read the corresponding passage in Bob Drake's abridgement:
LIFE does not use up the forces that maintain
life. We come into the material universe bringing nothing;
we take nothing away when we depart. The human being,
physically considered, is but a transient form of matter, a
changing mode of motion. The matter remains and the force
persists. Nothing is lessened, nothing is weakened. And from
this it follows that the limit to the population of the
globe can only be the limit of space. — Progress & Poverty — Book II,
Chapter 3: Population and Subsistence: Inferences from
read the corresponding passage in Bob Drake's abridgement ...
It is getting awfully expensive to be a millionaire in California.
With the new year, big earners are confronting a 51.9 percent federal-state income tax hit on earnings over $1 million, the result of a confluence of new tax-the-rich levies imposed by California and Congress in the closing days of 2012. That is officially the highest in the nation. And at 13.3 percent, the top-tier California income tax is, in addition to being higher than any other state, the steepest it has been since World War II.
That Would Be of Value to Your State,
That Could and Would Run Away, or
That Could and Would Come to You.
Ensley, writing in 1871, had it right. But he failed to note the #1 rule of real estate -- Location, location, location -- and that a great location is worth every penny one spends for it.
What the public hasn't noticed is that, while those locations are worth every penny, the lion's share of all those pennies are going to individuals and corporations, not to the community -- we-the-people, whose investment in public goods (as well as our simple presence), MAKES those choice locations choice!! And of course we've not noted that by right, that value belongs to all of us, and is the rational source for funding our investment in public goods, year in and year out.
A shortage of New York City apartments for sale is forcing real estate agents to take extreme, if not desperate, measures in order to conjure up listings.
One tactic is sending letters to all the two-bedrooms, say, in choice buildings to try to persuade their owners to sell. Another is buttering up the doorman for information on who might be inclined to move — a couple with a baby on the way, perhaps, or newly empty nesters.
Some brokers are trolling through expired listings in the hopes of reviving a dead deal. Others are digging through rental agreements to see when leases in coveted buildings might be coming due. And at least one broker has found that her years of volunteering at nursing homes have helped her find leads (more on that later).
Working the phone, the Rolodex and even the memory, brokers say, is all part of the game now that listings have hit a record low. Just 5,160 apartments and town houses were on the market in Manhattan at the end of last year, according to the appraisal firm Miller Samuel. That’s the lowest number since comprehensive tracking began about 12 years ago.
There are no reliable statistics on the number of pieds-à-terre in New York City, but real estate experts say that global economic jitters have drawn more and more astonishingly wealthy people into the market in recent years. They come from all over, whether Monaco, Moscow or Texas, looking for a safe place to put their money, as well as a trophy, and perhaps a second — or third or fourth or fifth — home while they’re at it.
“It is a safe haven,” said Jonathan Miller, president of the appraisal firm Miller Samuel. “It’s not coming from just one country; it’s a global phenomenon.”
Scott Avram, an assistant vice president at Toll Brothers City Living, a company that builds luxury condos, said 40 percent of the buyers at the Touraine, a project at 65th Street and Lexington Avenue, were from foreign countries.
And the ultraluxury condo building One57 on West 57th Street, where two apartments are in contract for at least $90 million, has had billionaire buyers from Britain, Canada, China and Nigeria, as well as from America.
Then there is the $88 million crash pad at 15 Central Park West, bought last year by a trust linked to Ekaterina Rybolovleva, then 22 years old. Ms. Rybolovleva is the daughter of a Russian billionaire in the fertilizer industry, Dmitry Rybolovlev, who is in the middle of a rather expensive divorce. In a lawsuit filed last year, Mr. Rybolovlev’s wife, Elena Rybolovleva, alleged that the apartment was bought not as a place for their daughter to live, but as a way to put that money out of the older Ms. Rybolovleva’s reach. According to court documents, the younger Ms. Rybolovleva is a resident of Monaco.
The building at 15 Central Park West has its share of pieds-à-terre, real estate professionals say. But the concentration there is not as high as in other brutally expensive buildings, especially those in Midtown that share space and services with hotels, like the Plaza or the Time Warner Center, which shares a building with the Mandarin Oriental.
“I was living on the 16th floor, and I was pretty much the only one there,” said Charlie Attias, a senior vice president at the Corcoran Group who rented an apartment at the Plaza for three years and has handled many transactions in the building. “We had the occasional visitor — I mean, the occasional owner — once in a while.”
THAT man cannot exhaust or lessen the powers of nature
follows from the indestructibility of matter and the
persistence of force. Production and consumption are only
relative terms. Speaking absolutely, man neither produces
nor consumes. The whole human race, were they to labor to
infinity, could not make this rolling sphere one atom
heavier or one atom lighter, could not add to or diminish by
one iota the sum of the forces whose everlasting circling
produces all motion and sustains all life. As the water that
we take from the ocean must again return to the ocean, so
the food we take from the reservoirs of nature is, from the
moment we take it, on its way back to those reservoirs. What
we draw from a limited extent of land may temporarily reduce
the productiveness of that land, because the return may be
to other land, or may be divided between that land and other
land, or perhaps, all land; but this possibility lessens
with increasing area, and ceases when the whole globe is
considered. —Progress & Poverty — Book II,
Chapter 3: Population and Subsistence: Inferences from
read the corresponding section in Bob Drake's abridgement ...
WE are so accustomed to poverty that even in
the most advanced countries we regard it as the natural lot
of the great masses of the people; that we take it as a
matter of course that even in our highest civilization large
classes should want the necessaries of healthful life, and
the vast majority should only get a poor and pinched living
by the hardest toil. There are professors of political
economy who teach that this condition of things is the
result of social laws of which it is idle to complain!
There are ministers of religion who preach that this is the
condition which an all-wise, all-powerful Creator intended
for His children! If an architect were to build a theater so
that not more than one-tenth of the audience could see and
hear, we should call him a bungler and a botcher. If a man
were to give a feast and provide so little food that
nine-tenths of his guests must go away hungry, we should
call him a fool, or worse. Yet so accustomed are we to
poverty, that even the preachers of what passes for
Christianity tell us that the great Architect of the
Universe, to whose infinite skill all nature testifies, has
made such a botch job of this world that the vast majority
of the human creatures whom He has called into it are
condemned by the conditions he has imposed to want,
suffering, and brutalizing toil that gives no opportunity
for the development of mental powers — must pass their lives
in a hard struggle to merely live! — Social Problems — Chapter 8:
That We All Might Be Rich
OR let him go to Edinburgh, the "modern Athens," of which
Scotsmen speak with pride, and in buildings from whose
roofs a bowman might strike the spires of twenty churches he
will find human beings living as he would not keep his
meanest dog. Let him toil up the stairs of one of those
monstrous buildings, let him enter one of those "dark
houses," let him close the door, and in the blackness think
what life must be in such a place. Then let him try the
reduction to iniquity. And if he go to that good charity
(but, alas! how futile is Charity without Justice!) where
little children are kept while their mothers are at work,
and children are fed who would otherwise go hungry, he may
see infants whose limbs are shrunken from want of
nourishment. Perhaps they may tell him, as they told me, of
that little girl, barefooted, ragged, and hungry, who, when
they gave her bread, raised her eyes and clasped her hands,
and thanked our Father in Heaven for His bounty to her. They
who told me that never dreamed, I think, of its terrible
meaning. But I ask the Duke of Argyll, did that little
child, thankful for that poor dole, get what our Father
provided for her? Is He so niggard? If not, what is it, who
is it, that stands, between such children and our Father's
bounty? If it be an institution, is it not our duty to God
and to our neighbor to rest not till we destroy it? If it be
a man, were it not better for him that a millstone were
hanged about his neck and he were cast into the depths of
the sea? — The
Reduction to Iniquity (a reply to the Duke of Argyll) -- at page 25 -- originally in The
Nineteenth Century, July, 1884.
Inequalities we are born with, — we cannot help. Differences in
physique, disposition, temperament, ability, talent, ambition,
perseverance, character and many other personal qualities, will always
exist. But these inequalities are made more unequal by inequalities that
ought not to exist. It is the economic inequalities that especially
command our attention. Inequalities before the law make outlaws of those
who are outlawed. Inequalities in the enjoyment of special privileges,
natural opportunities and resources, make millionaires at one end of the
social line and tramps at the other. Inequalities in wealth and
taxation, however they arise, are trouble breeders in every community.
While ability and enterprise and push are always recognized as factors
in success, still they wholly fail to explain the great disparity of
rewards existing between the frugal and industrious on the one side and
the profligate idle, drunk with opulence and power, on the other. Too
many now have tasted the bitter cup of despair and have looked beneath
the economic surface of things to be longer quieted by admonitions of
sobriety, Industry and perseverance.
In success, they now see more the hand of fraud and cunning than the
qualities of exertion and merit. Their disillusionment is known and
appreciated in high places and is well-voiced in the following words of
John A. Hobson, Lecturer in Economics, Oxford University:
"Though there are still many comfortably-situated men and
women who believe that, on the whole, industrial conditions are such as
to apportion the 'good things in life' in accordance with the deserts of
the recipients, this belief is rarely held either by those whose
circumstances give them a close and wide acquaintance with the 'hard
facts of life,' or by those who have brought intellectual analysis to
bear upon the processes by which distribution of wealth is affected. The
political economy, not only of 'the masses,' as voiced by Karl Marx,
Henry George and their followers, but also of the classes, through the
mouths of academic teachers, is full of frank avowals of the deep
injustices which underlie the existing apportionment of wealth. The
following words of J. G. Hill may be taken as a representative
expression of this feeling: 'The very idea of distributive justice or
any proportionality between success and merit, or between success and
exertion, is, in the present state of society, so manifestly chimerical
as to be relegated to the region of romance.'"
When you pick up a special privilege and examine it, — whether it be a
franchise, a rebate, a tax or a tariff, — you have in your hands
someone's special preserve. He is hurt if you criticise, and you are
hurt if you don't. The social organism is filled with these special
preserves. They are a prolific source of economic inequality. They leave
no place for a buffer in the successive distributions of labor brought
about by the successive discoveries in the arts and of mechanics and
tools. When the natural resources are someone's preserve and are closed
to retreat, those crowded out of employment by machines and tools cannot
fall back, — they must stagnate and starve, or else go forward. And
"forward" here means to turn backward upon the preserves.
-- in The Painter and Decorator, a union journal, 1907
THE aggregate produce of the labor of a savage tribe is
small, but each member is capable of an independent life. He
can build his own habitation, hew out or stitch together his
own canoe, make his own clothing, manufacture his own
weapons, snares, tools and ornaments. He has all the
knowledge of nature possessed by his tribe — knows what
vegetable productions are fit for food, and where they maybe
found; knows the habits and resorts of beasts, birds, fishes
and insects; can pilot himself by the sun or the stars, by
the turning of blossoms or the mosses on the trees; is, in
short, capable of supplying all his wants. He may be cut off
from his fellows and still live; and thus possesses an
independent power which makes him a free contracting party
in his relations to the community of which he is a member.
I wonder if Morgan the Pirate,
When plunder had glutted his heart,
Gave part of the junk from his ships he had sunk
To help some Museum of Art;
If he gave up the role of "collector of toll" And became a Collector of Art?
I wonder if Genghis the Butcher, When he'd trampled down nations like grass.
Retired with his share when he'd lost all his hair, And started a Sunday school class;
If he turned his past under and used half his plunder In running a Sunday school class?
I wonder if Roger the Rover,
When millions in looting he made,
Built libraries grand on the jolly mainland
To honor Success and "free trade;"
If he founded a college of natural knowledge Where Pirates could study their trade?
I wonder, I wonder, I wonder,
If Pirates were ever the same,
Ever trying to lend a respectable trend
To the jaunty old buccaneer game;
Or is it because of our Piracy Laws That philanthropists enter the game?
—Wallace Irwin, in Life. -- reprinted in The Painter and Decorator, a union journal, 1907
FIVE centuries ago the wealth-producing power of England, man for man, was small indeed compared with what it is now. Not merely were all the great inventions and discoveries which since the Introduction of steam have revolutionized mechanical industry then undreamed of, but even agriculture was far ruder and less productive. Artificial grasses had not been discovered. The potato, the carrot, the turnip, the beet, and many other plants and vegetables which the farmer now finds most prolific, had not been introduced. The advantages which ensue from rotation of crops were unknown. Agricultural implements consisted of the spade, the sickle, the flail, the rude plow and the harrow. Cattle had not been bred to more than one-half the size they average now, and sheep did not yield half the fleece. Roads, where there were roads, were extremely bad, wheel vehicles scarce and rude, and places a hundred miles from each other were, in difficulties of transportation, practically as far apart as London and Hong Kong, or San Francisco and New York, are now.