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!
I should have thought the question about raising rents had been,
to your own knowledge, enough answered by me. I have in several, if
not in many places, declared the entire system of rent-paying to be
an abomination and wickedness of the foulest kind, and have only
ceased insisting on that fact of late years, because I would not be
counted among the promoters of mob violence. The future, not only of
England, but of Christendom, must issue in abolition of rents, but
whether with confusion or slaughter, or by action of noble and
resolute men in the rising generation of England and her colonies,
remains to be decided. I fear the worst, and that soon.
I'm skimming Louis Post's book "Social Service" (1909) and came across a couple of elegant paragraphs about Laissez faire.
Doesn't unrestricted competition mean to let everybody alone? That
depends upon what you mean by letting alone. It does not mean to let
everybody or anybody alone to interfere with production, with
service, with industry. Such interferences, whether by government or
highwaymen, are precisely what ought to be stopped in the interest
unrestricted competition. Unrestricted competition does mean that
everybody should be let alone in production, in trade, in service,
usefulness to his fellows, in making the world better and richer,
in securing a fair distribution of service among those who render
Truly enough, "laissez faire" is the word — "let alone," that is the
watchword of competition. But it isn't all of it. As the old
economists of France put it — those preceptors of Adam Smith — it
"laissez faire, laissez aller." Now, how would you translate that,
Doctor? Don't you think that George's free translation of "a fair
and no favor" will do? Or we might make it "a square deal and no
or best of all, maybe, "equal rights and no privileges."
There is no competition in the policy of "let alone," unless you
abolish privileges. But with equal rights and no privileges, can you
imagine anything fairer or squarer or juster in industry, in trade,
social service, than the policy of "let alone"? This doesn't mean a
"struggle for existence and survival of the fittest" in the sense of
survival of the strong at the expense of the weak, nor even of
of the more productive at the expense of the less productive. It
fair distribution in proportion to production. It means that he who
renders the most and the best service in his specialty shall get the
most and the best service from other specializers, while those who
render the least and the poorest shall nevertheless get the
of what they do render. And it leaves the decision to those who in
equal freedom make the deal for the service.
Competition is the natural regulator of the law of the line of least
resistance. Without such regulation that law might stimulate the
strongest — not the strongest in rendering service, but the
extorting service — to get service without giving an equivalent
of his own. There is your savage "tooth and claw" condition, Doctor.
But under free competition this would be impossible, for free
competition restrains the individual desires of each by the
of the individual desires of others. In other words, competition
to produce an equilibrium of the self-serving impulse at the most
useful level of social service.
It is a word of confusing connotations, this word "competition," as
all living words; and it may not be the best word for conveying my
idea. But I can't manufacture words, Doctor. All I can do is to make
unto myself a definition, and always to use my word in that sense;
all I can ask you to do is to adopt my definitions when you try to
understand my discourse.
Though competition may not be quite synonymous with natural
co-operation, it is closely related to it, and in such a manner as
justify me, I think, in characterizing it as the life principle of
Monopoly, on the other hand, whether its purpose be malevolent or
benevolent, is the death principle of natural co-operation.
So it seems to me that you will grasp the significance of
best by contrasting it with monopoly.
To sum it all up, there are only two ways of regulating co-operative
service, that social service which springs from individual desires
selfservice. One way is by monopoly; the other is by free
Monopoly is pathological, and socially destructive; competition is
natural, and socially creative.
Louis F. Post was editor of Henry George's weekly newspaper, The Standard, for a year or so, and went on to edit The Public for a number of years, and then became an Assistant Secretary of Labor in Woodrow Wilson's administration.
They had so long held the Swamp and felt it to be their very own
in every part and suburb, . . . that they would have resented the
appearance of another rabbit even about the adjoining barnyard.
Their claim, that of long, successful occupancy, was exactly the
same as that by which most nations hold their land, and it would be
hard to find a better right.
—Ernest Thompson Seton, "Wild Animals I Have Known."
"Raggylug," Chapter VIII.
George Monbiot has an excellent article on tax in the Guardian this morning. At its core is an argument for land value taxation, which he explains has long had powerful support. As he puts it:
In 1909 a dangerous subversive explained the issue thus. “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -– and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived … the unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.”
Who was this firebrand? Winston Churchill. As Churchill, Adam Smith and many others have pointed out, those who own the land skim wealth from everyone else, without exertion or enterprise. They “levy a toll upon all other forms of wealth and every form of industry”. A land value tax would recoup this toll.
[W]hat’s wrong with the argument the Terry Leahys and the Bob Diamonds make for their extreme wealth? Look, the line runs, we work bloody hard for it; we’re worth it. And it’s true: unlike previous generations of the ultra-wealthy, many of the modern super-rich work for a living, in running major businesses or in finance (although the Davos guestlist still includes plenty of sheikhs and royals). But that doesn’t mean they truly earn the millions they claim.
Take a look at who’s in the Davos set. Last spring, two American academics, Jon Bakija and Brad Helm, and a US Treasury official, Adam Cole, published the most comprehensive analysis yet of the richest 0.1% earners, based on tax returns. Of these top dogs, nearly two in three were top corporate executives and bankers. And the story in both those professions has not been of brilliant returns to shareholders or vast improvements for society, but of wealth extraction and lobbying politicians, Davos-style. In particular, the tale of modern high-finance is of generating transactions, whether in corporate mergers or sub-prime mortgages and then skimming off some of the cash.
That’s extracting rent in exactly the same way that the property owner does. Economically the logic is the same. This is all unearned income, and we should not be granting it favours which increase the divisions and stresses in society; we should be taxing it.
That means we need land value taxation for sure, but we need progressive income taxation, capital gains tax at the same rate as income tax and enforceable corporation tax too if these rents are to be collected. And then there’s the need for reform of inheritance tax.
I really must get round to writing the Joy of Tax. It is next on my list.
"This is where the debate about workers and shirkers, strivers and skivers should have led. The skivers and shirkers sucking the money out of your pockets are not the recipients of social security demonised by the Daily Mail and the Conservative party, the overwhelming majority of whom are honest claimants. We are being parasitised from above, not below, and the tax system should reflect this."
Although this is a UK-focused story, it has international relevance. As we've noted several times before, Land Value Tax is an essential element of any good tax mix. It's progressive, it doesn't damage productivity, and it curbs the abusive practice of economic rent extraction. The article has a particular opinion:
"It's not really a tax. It's a return to the public of the benefits we have donated to the landlords. When land rises in value, the government and the people deliver a great unearned gift to those who happen to own it."
"The Lord's Prayer says, Give us this day our daily bread. Our
daily bread comes from the land. No man made the land. It is God's
gift to mankind. It belongs to all men. Therefore individual
ownership of land is wrong. Individual control of the fruits of the
land is wrong."
God has made the rich and the poor of the same clay and one
earth bears them both. It is through emperors and kings of the world
that God gives the human law of the human race. Take away the law of
the emperors and who shall dare to say, "This villa is mine?"
The current issue of the Georgist News ends with these two quotes:
“Capital is a result of labor, and is used by labor to assist it in further production. Labor is the active and initial force, and labor is therefore the employer of capital.”
“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
On a sudden the commonalty rose one and all, and encouraging
each other, they left the city, and withdrew to the hill not called
Sacred, near the river Anio, but without committing any
violence, or other act of sedition. Only as they went along, they
loudly complained, that it was now a great while since the rich had
driven them from their habitations; that Italy would anywhere supply
them with air and water and a place of burial; and that Rome, if
they stayed in it, would afford them no other privilege, unless it
were to bleed and die for their wealthy oppressors.
The fate of empires, and the fortunes of their peoples, depend
upon the condition of the proprietorship of land to an extent which
is not at all understood in this country. We are a servile,
aristocracy-loving, lord-ridden people, who regard the land with as
much reverence as we still do the peerage and the baronetage. Not
only have not nineteen-twentieths of us any share in the soil, but
we have not presumed to think that we are worthy to possess a few
acres of mother earth.
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."
Here are the opening paragraphs of a recent article about the complexities of Ground Lease contracts. I commend the entire article to your attention. It helps flesh out why and how the entire FIRE sector -- Finance, Insurance and Real Estate (as well as their attorneys) -- is receiving such a large share of the profits produced by the productive sectors of the economy. The owner of land, and the entities which lend on land, and insure the buildings and the revenue flow, all reap significant shares of what the tenants labor to create. Modern sharecropping. And the recipients of the ground rent get to parade as self-made men, people of awesome foresight and wisdom -- and even philanthropists (think Brooke Astor, the Fishers, and others in your own community) when they donate a small share back to a charity! As you read this, think both of Manhattan land and of land in your community's central business district, and along its major roads. (Location, location, location!)
If one wonders why (true) small business struggles, one might consider the complexity and expense of their ground leases, and contrast that with the Georgist alternative: that one's taxes would be simply the current rental value of the land, while the value of the building remains one's private property, not subject to taxation or going pouf! at the end of a ground lease.
The land lord is "supplying" something he didn't create. We ought to ease him out. Land value taxation is the obvious tool for reducing, and -- slowly or not -- eliminating, his "take" on those who do create. Think what it would mean if working people had that spending power, instead of the lords of the land.
All that land rent could be used to fund our community's needs, instead of lining the pockets of a few very "lucky" -- privileged -- duckies. (The analogies to chattel slavery are not a long stretch, once one starts to think about it. We should all own ourselves, and reap the fruits of our own labors.)
A lease is a lease is a lease – or so you may think. Yes, real property leases grant an estate in land to a tenant for a period of time. And yes, the tenant pays for that right of possession. But the action in a lease isn’t in the conveyance provisions; it’s in the contract provisions. Multiply out the rent and other annual monetary obligations by the length of the lease term (in years), and you’ll see that it might be (and often is) a big dollar contract. Even more important, unlike the vast majority of contracts whose obligations are satisfied in days or weeks, a lease contract goes unfulfilled for 50, 75, “99,” and even 500 years. That takes it beyond the life of the parties involved in its creation, and the future brings surprises. Neither Nostradamus nor Jules Verne got everything right.
Why a Ground Lease?
If a tenant has to build its own building (as is often the case), and has all of the burdens of ownership, why would it lease a property knowing that at the end of the lease term it has nothing left to show for its money and efforts? There are a number of common reasons, principal among them is that the owner won’t sell the land and the tenant has no alternative.
Real property often carries a long term unrealized gain, waiting to be taxed upon its sale.
Not every landowner is interested in making further active real property investments. This makes a like kind exchange unappealing.
Ground leasing the same land keeps ownership in the family. At the owner’s death, because of the current estate tax “stepped up basis” arrangement, the built in gain may never be taxed.
The hospitals (of England) are full of the ancient. . . . The
almshouses are filled with old laborers. Many there are who get
their living with bearing burdens, but more are fain to burden the
land with their whole bodies. Neither come these straits upon men
always through intemperance, ill-husbandry, indiscretion, etc.; but
even the most wise, sober and discreet men go often to the wall when
they have done their best. . . The rent-taker lives on the sweet
morsels, but the rent-payer eats a dry crust often with watery eyes.
—Robert Cushman, Plymouth, 1621, in Young's "Chronicles of the
As soon as I see landed property established, then I see unequal
fortunes, and from these unequal fortunes must there not necessarily
result different and opposed interests, all the vices of riches, all
the vices of poverty, the brutalisation, the corruption of civil
—Jean Jacques Rousseau, "Douies sur L'Otdre Naturel."
I want to live in a just society - a society where we, the people, are recognised as the rightful owners of natural resources; where we all feel a shared ownership of the earth.
Such a simple proposition has profound implications. As co-owners, we would be entitled to a dividend from those natural resources.
That would provide a basic income for every person, allowing us the freedom to choose a fulfilling career, rather than be forced to accept wage-slave jobs to meet our debt-ridden commitments. True freedom implies the right to choose our work, our interests and where we live.
If we, as owners, had a say in the management of our natural resources, most likely we would not consent to the world as it is.
In a democratic society, where the people own the natural resources, in common, we would recognise commons property rights in our accounting. We would not allow loss of biodiversity, pollution of our streams and rivers, high rates of mineral depletion (including fossil fuels), loss of our starscape every night of the year to light pollution – or, at least, we would not allow these things beyond what is acceptable to the people.
When there is even one billionaire, there will be several
half-billionaires and many hundred-millionaires. The fact will
be an indication of a tremendous concentration of wealth, and of the
dwindling proportion of wealth held by the farmers and wage-earners
of this country. The billionaire will bring an army of paupers
in his train. Possibly the actual average wealth of farmers
and mechanics then may be a little greater than it is now.
Optimists of that day may assure them that they are richer, by ten
dollars each, than their ancestors were; and therefore that all is
for the best in this best of all possible worlds. But the
discontent of the masses, under a system which gives to one man a
larger amount of wealth than can ever be attained by a million of
his fellow citizens who are fully his equals in skill and merit and
far his superiors in industry, is certain to be great and ever
increasing. Indeed, universal experience demonstrates that
discontent among the masses is far greater than when the weight of
oppression is somewhat diminished than it was before.
The vast majority of any community must
always have incomes so small that they cannot help spending three
fourths of what they receive. But the small minority of large
property-owners do not need to spend one eighth of their incomes,
and as a rule they do not spend one half. Looking at the
subject with reference to accumulated wealth, the man who is worth
$1,000 usually spends at least $500 a year on the support of his
family, while the man who is worth $1,000,000 rarely spends
$50,000. Indirect taxation, therefore, obviously bears at
least ten times as heavily upon the former as upon the latter.
Under absolutely direct taxation, no poor man would ever pay a
larger share than a rich man, and, indeed, most of the working
classes would pay no taxes at all; because the collection of direct
taxes from them would be too laborious and expensive to be
Direct taxation, on a large scale, is near at hand. The men
who bought and paid for the present Congress can now choose what its
form shall be. They can have a general income tax, or they can
have something less open to fraud, less inquisitorial in its nature,
less oppressive upon honest men, and offering no premium to
perjury. But they know nothing about the science of taxation,
and they do not care to learn; so that the whole matter will be left
over to the new Congress, and a general income tax, objectionable as
it is, seems most likely to be adopted.
The Coming Billionaire
The Forum, January, 1891, page 546-557
In the FORUM for November, 1889, the question was asked, "Who owns
the United States?" and reasons were given for the belief that one
half of all the national wealth is owned by 40,000 families and that
three fourths of it is in the possession of fewer than 250,000
families. These estimates were based in part upon official tax
returns, but in part, also upon private information as to the wealth
of 70 estates, specifically named, each estimated to be worth
more than $20,000,000 and averaging $37,500,000. The
correctness of these statistics, as well as that of the inferences
drawn from them, has been somewhat bitterly denied. Hostile
critics have assumed that the estimates of individual wealth were
based entirely upon newspaper reports; and many newspaper editors,
acting presumably upon their own experience, have unhesitatingly
declared that such statistics are necessarily worthless.
But not one tenth of these names were given upon the authority of
newspaper estimates, while a large majority were given upon very
trustworthy private information. It has been said that no one
can tell what a man's wealth amounts to without access to his books,
which, it has been assumed, is impossible. In several
instances, however, the information came from persons who had access
to the necessary books or had been permitted to inspect the
securities; in some cases it was obtained from tax returns; and in
other cases it was taken from the oral or written statements of the
owners themselves. For example, one gentleman, whose wealth
was set down at $100,000,000 had actually exhibited $75,000,000 in
securities, and had testified in a court of law to the possession of
$10,000,000 more of one kind, all encumbered. During the year
which has now elapsed, not one tenth of these names have been
specified by any one as erroneously entered upon the list or as
seriously overrated, and in only three instances has any probable
error been established. These names might be omitted, and
their places might be supplied by others of the twenty million
grade. Errors of understatement have been discovered which
largely counterbalance all overstatements. The least that can
be said is that there are 70 American estates that average
$35,000,000 each, not including Trinity Church, which perhaps should
not be classed with strictly individual owners. During the
year, by the consolidation of two estates, one individual has become
worth at least $200,000,000. Two brothers, whose property is
held as a unit, together own even a larger amount than this.
Some great estates have been divided up by inheritance, but others
have been divided up by inheritance, but others have been still more
concentrated by that means.
Government's role in income inequality in the U. S.
The federal government has emerged as one of the most potent factors behind the rise in income inequality in the United States - especially in the nation’s capital. Income is increasingly being redistributed up, not just down, through tax cuts and to a growing upper class of contractors, lobbyists and lawyers.
Massachusetts, home to America’s best schools and best-educated workforce, has seen income inequality soar. Why? The poor are losing an academic arms race with the rich. READ MORE
The Undeserving Poor
The American welfare state is bigger than ever, but so are the ranks of the poor. As the U.S. focuses on those deemed most worthy, millions of adults get squeezed. That is clear in Indiana, which has seen a surge in poverty. READ MORE
DEMOCRACY is like a bicycle: if you don’t keep pedaling, you fall. Unfortunately, the bicycle of Greek democracy has long been broken. After the military junta collapsed in 1974, Greece created only a hybrid, diluted form of democracy. You can vote, belong to a party and protest. In essence, however, a small clique exercises all meaningful political power.
For all that has been said about the Greek crisis, much has been left unsaid. The crisis has become a battleground of interests and ideologies. At stake is the role of the public sector and the welfare state. Yes, in Greece we have a dysfunctional public sector; for the past 40 years the ruling parties handed out government jobs to their supporters, regardless of their qualifications.
But the real problem with the public sector is the tiny elite of business people who live off the Greek state while passing themselves off as “entrepreneurs.” They bribe politicians to get fat government contracts, usually at inflated prices. They also own many of the country’s media outlets, and thus manage to ensure that their actions are clothed in silence. Sometimes they’ll even buy a soccer team in order to drum up popular support and shield their crimes behind popular protection, as the drug lord Pablo Escobar did in Colombia, and as the paramilitary leader Arkan did in Serbia.
In 2011, Evangelos Venizelos, who was then the finance minister and is now the leader of the socialist party, Pasok, instituted a new property-tax law. But for properties larger than 2,000 square meters — about 21,000 square feet — the tax was reduced by 60 percent. Mr. Venizelos thus carved out a big exemption for the only people who could afford to pay the tax: the rich. (Mr. Venizelos is also the man responsible for a law granting broad immunity to government ministers.)
It seems to me that I also heard that the property tax law only applied to land with buildings on it -- it was collected via electric utility bills! Thus, vacant land, even in choice locations, seemed to be excluded.
How to kill an economy!
Such shenanigans have gone on for decades. The public is deprived of real information, as television stations, newspapers and online news sites are controlled by the economic and political elite.
The article goes on to detail other corrupt things, and then concludes:
This is all unfolding at a time when Greece is walking a tightrope above the abyss of bankruptcy, while the coalition government is instituting new taxes on the lower classes. Half of young Greeks are unemployed. The economy is shrinking at an annual rate of 6.9 percent. People are scrounging for food. And a neo-Nazi party, Golden Dawn, is on the rise, exploiting the resentment and rage toward the ruling class.
The Greek people must remount their bicycle of democracy by demanding an end to deception and corruption. Journalists need to resist manipulation and rediscover their journalistic duties. And the government should revive Greece’s ancient democratic heritage — instead of killing the messenger.
It began more than 90 years ago as a small tax break intended to help family farmers who wanted to swap horses and land. Farmers who sold property, livestock or equipment were allowed to avoid paying capital gains taxes, as long as they used the proceeds to replace or upgrade their assets.
Over the years, however, as the rules were loosened, the practice of exchanging one asset for another without incurring taxes spread to everyone from commercial real estate developers and art collectors to major corporations. It provides subsidies for rental truck fleets and investment property, vacation homes, oil wells and thoroughbred racehorses, and diverts billions of dollars in potential tax revenue from the Treasury each year.
The tax break also exposes one of the greatest vulnerabilities of the United States tax system: it depends on voluntary compliance. The I.R.S. staff is so outnumbered by tax lawyers and accounting departments at major corporations that there is often little to prevent taxpayers from taking a freewheeling approach to interpreting and administering the rules.
What’s more, the tax break is one of so many that it tends to escape attention. The independent Simpson-Bowles deficit commission appointed by Mr. Obama in 2010 raised the possibility of eliminating it and other tax expenditures, however, and some budget experts argue that the program should be severely limited or repealed.
Some financial planners and economists say that the tax break even favors real estate investors unfairly by allowing them to defer capital gains taxes that those who invest in securities and other ventures have to pay. And although it was originally intended to help farmers, some economists and lawmakers in agricultural areas say it has perversely contributed to suburban sprawl and the spiraling cost of farmland. Because it allows farmers to avoid capital gains taxes on land swaps, the tax break provides an incentive to sell farmland coveted by developers and buy property in less desirable and more remote areas.
Even as the debate over the tax break continues, there is a deep conviction in the real estate business that it is justified. Advocates for the real estate industry say that a large majority of transactions are conducted in strict compliance with I.R.S. regulations. Because the asset exchanges spur investment and help create jobs, industry officials say they would strenuously oppose any effort to end them.
“Historically, these exchanges are a very important consideration for a very important segment of the economy,” said Jeffrey D. DeBoer, chief executive of the Real Estate Roundtable. “I have no reason to believe that Congress won’t ultimately recognize that.”
A very important segment of the economy, or a very important segment of the financing of political campaigns? Land speculation doesn't create jobs for ordinary working people. Tax accountants, perhaps. Banks, perhaps. But land speculation is inert -- if what we want are jobs and widespread prosperity.
Recall that capital doesn't appreciate. Buildings and equipment, even with the best of maintenance, decline in value. What appreciates is land and natural resources -- and they rise in value for reasons which have nothing to do with the fellow, or corporation, who owns them. He is passive, inert -- and rent-seeking. We ought not to reward or even permit it. We can correct it through a better designed tax system.
The only point where I do not find myself in complete accord (and
that is perhaps more due to your comparative silence than anything
else) is that I attach relatively more importance to the initial
injustice done by the permitted monopoly of raw material in a few
hands. It seems to me that individualism, in order to be just, must
strive hard for an equalisation of original conditions by the
removal of all artificial advantages. The great reservoir of natural
wealth that we sum up as land (including mines, etc.) ought, it
seems to me, to be nationalised before we can say that the
individual is allowed fair play. While he is thwarted in obtaining
his fair share of the raw material, he is being put at a
disadvantage by artificial laws.
—Grant Allen, Letter to Herbert Spencer, 1886, in "Grant Allen, A
Memoir," by Edward Clodd.
An extract from an address delivered by the late
Thomas G. Shearman at Portland, Ore., June 17, 1889. This address, just
as it was taken down by the stenographer at the time, was reproduced In
the September (1900) number of "Why?", an excellent little periodical
published by Frank Vierth at Cedar Rapids, Ia. As the editor of "Why?"
says: "The lapse of nearly 12 years gives the speech added interest and
Some cause has been at work during the last 25
or 30 years, which has resulted in a tremendous widening of the social
chasm between the rich and poor. Some
cause has, within the recollection probably of the majority of those
who are present, entirely transformed the face of American society.
Our old equality is gone. So far from being the most equal people on
the face of the earth, as we once boasted that we were, ours is the
most unequal of civilized nations. You talk about wealth of the
British aristocracy, and about the poverty of the British poor. There
is not in the whole of Great Britain and Ireland so striking a
contrast, so wide a chasm between the rich and the poor, as there is in
these United. States of America. There is no man in the whole of Great
Britain and Ireland who is as wealthy as one of some half a dozen
gentlemen who could be named in this country; and there are few there
who are poorer than some who could be found in this country. It is
true, I think, even yet, that there is a larger number of the
extremely poor in Great Britain and Ireland than there is in this
country. Haw long that will remain true it is difficult to say; but it
is unquestionably not true that there is any greater mass of riches
concentrated in a few hands in any country than in this.
Whereas, 40 years ago a man worth $100,000 was,
even in our great city of New York, an object of remark and envy, such
a man is now utterly obscure and unnoticed, and is considered to have
laid merely the beginnings of a very moderate part of the capital which
would be necessary for him to make a living.
Whereas, 40 years ago, there was but one man in
the United States who was supposed to be worth more than $5,000,000,
there are several Astors now, each of whom is generally reputed to be
worth at least $50,000,000. There are probably ten times as many men
today who are worth $20,000,000 as there were 40 years ago who were
worth $1,000,000; and there are now several men, who are worth over
This state of things is developing more and more
rapidly. In every corner are men and women buried in obscurity, until
we learn by some accident that they are worth their $10,000,000 or
$20,000,000. A single member of a banking firm in, the city of
Philadelphia lately died, leaving more than $21,000,000. There are at
least four surviving partners in that firm having equal shares with
the deceased. Two Philadelphians, of no public fame, recently died,
having $22,000,000 each. One lady in my own city of Brooklyn is worth
certainly not less than $30,000,000. We see evidences of this enormous
accumulation on every side. And, it can be demonstrated with great ease by statistics which are
undisputed, that at the present day less than 100,000 persons,
constituting as a matter of fact only about one two-hundredth part of
our working force, are possessed of incomes which enable them to save
about three-fifths of all the wealth that is annually saved in this
country. And as wealth is substantially all reproduced within less
than 30 years, this means that within 30 years 100,000 persons are
destined to own three fifths of the entire wealth of the United States;
land, houses, improvements, goods, chattels, personal property of every
Everybody knows that
this state of things is undesirable. This enormous amount of wealth
concentrated in a few hands brings to them no particular pleasure, no
additional comforts, certainly does not bring to them anything like
Published weekly, by Henry George,
at the office of The Standard, 25 Ann Street, New York
October 22, 1887
printed in The Standard,
October 8, 15 and 22, 1887
Mr. Edward Atkinson is a gentleman of whom I have no disposition to
speak in any other terms than those of respect and esteem. He
has done a vast amount of useful work; he is sincerely desirous of
promoting the welfare of mankind; he has done much for the
dissemination of sound ideas on economic questions, and he is always
sincere and earnest. His weakness is mostly in a too strong
conviction of his own infallibility, in the full persuasion that he
knows just what needs to be done, how it is to be done and when it
must be done, and a consequent peremptory method of disposing of
everybody as something very like a fool who does not agree with him
upon all these details. Thus, he has been for many years in
favor of free trade, and in former years he strenuously insisted
upon the vital importance of reform in that direction. He has
not recanted his opinions; but he has become more interested in
other questions, and now he has very little patience with, and
indeed, something very like contempt for, men who hold his opinions
as to free trade and think that issue more important than the new
questions which have recently attracted Mr. Atkinson's mind.
In May last Mr. Atkinson addressed the Boston labor lyceum,
ostensibly on the subject of the proposed eight hour law, but really
on the question, "How are the profits divided?" His address,
as revised, has but just come into my hands, and it raises some
issues which need further consideration and a broader view. In
reviewing its conclusions, it may be as well to accept its statement
of facts and statistics without dispute, for it is so evident that
Mr. Atkinson has overlooked important elements of the problem, upon
his own showing, that it is not worth while to enter into
controversy as to the facts or figures.
Mr. Atkinson claims that in $1,100,000 worth of cotton sheeting
there is not more than $145,000 profit to capitalists, while $15,000
go in taxes and $940,000 to labor. He makes no allowance
whatever for rent, except perhaps for the rent of the ground upon
which the mill stands. He assumes that 1,400 bales of cotton
can be grown upon land which pays no rent and costs nothing to the
cotton grower. Of course he makes no allowance for rent in the
cost of supplies, machinery, repairs, freight, etc. In one
place he says that rent does enter into the cost; in another he says
that if the landlord is taxed upon his rent he will add the tax to
the rent, and so it will enter into the cost; and finally he says
that rent amounts to a trifle less than 1% of sales, anyway.
Now the truth is that before this $1,100,000 worth of cotton
sheeting can get into the hands of the people there must be paid out
of the proceeds rent, or the interest on the cost of the land, which
is the same thing, on the land where the cotton is grown, on which
the supplies are manufactured, on which the railroad is laid, on
which the repairs are done, on which the sheeting mill is situated,
on which the great stores where the sheetings are sold stand, and,
finally, on which the residences of the 3,400 persons said to be
engaged in producing these goods also stand. All this is
plainly stated in Mr. Atkinson's "Distribution of Products."
We will leave Mr. Atkinson to reckon the amount of these items,
simply remarking that upon his own estimates the single item of the
rent of the stores in which the goods are sold would add $100,000 to
their cost, and that, making the most moderate allowance for the
rent of the other land used in this work of production, it is
obvious that rent alone would far exceed the whole sum Mr. Atkinson
has allowed to go to compensation for capital.
In the next place, Mr. Atkinson has fallen, for the moment, into the
old idea, long ago exploded by Adam Smith, but still current among
unthinking people, that what is spent by the rich in their personal
luxuries is as truly employed for the general good as that which is
spent in productive enterprise. He seeks to reduce the
$145,000 appropriated by capital by showing that much of this is
spent in employing labor. He might just as well include the
whole of it, because even the money which he charges to waste, as
spent on champagne, etc., is all paid out for labor of some kind.
The true rule is that nothing should be charged to labor except that
which is expended usefully and so as to promote reproduction.
A lord who employs a hundred servants to wait upon his idle and
useless person, not only wastes the money which he pays to them, but
also wastes their time and skill in occupations which neither help
him nor them to serve mankind any better than they would have done
before. Every dollar thus spent is devoted to waste, not to
THE DISTRIBUTION OF WEALTH BY THOMAS G. SHEARMAN. II.
An Irish landlord, writing to the London Times, called particular attention to the fact
that, in case all the landlords should be expelled, the whole of
Ireland, outside of the large towns, would be left without a single
person whose annual income would exceed $1,500. To the wealthy
landlord who owns the Times,
this appalling fact seems to afford such conclusive proof of the
desolation and misery which would follow home rule that he deems it
superfluous to add a word of comment. He considers it quite enough
to say that no such state of things exists in any civilised country.
That it should be eventually brought about in Ireland, he evidently
believes, must be considered by every sane man as one of the most
frightful disasters which could befall the human race.
I am writing in Germany, the country from which have proceeded the
most important additions to the intellectual wealth of the world
during the last fifty years. The man who knows nothing of the
contributions made to history, to theology, to science, whether
abstract or applied, by German students, knows practically nothing
at all. What have been the income of the men who have thus enriched
the world! Rarely so much as $1,500; generally not half that amount.
Some of the world-famous German scholars accomplished their great
achievements on an income of less than $600 a year.
New England developed a marvelous degree of intellectual activity in
the colonial period of our history, though confined within a narrow
circle. But that was a period of small incomes and very little
accumulated wealth; nor did the few wealthy men contribute anything
of importance to the intellectual or moral development of the
people. What have the wealthy Irish landlords done for the
development of the Irish people in religion, morality or intellect?
What contribution has any wealthy Irish landlord ever made to
literature, science, art or high thought of any kind? What benefit
have these men of wealth conferred upon any part of the world in any
direction? They have just held a solemn meeting to answer these
questions, and their own testimony affords the best evidence against
them. They claim to have advised their tenants to improve their
stock, to introduce better methods of cultivation and to qualify
themselves generally to pay higher rents, while they themselves have
set excellent examples to their inferiors by taking good care of
Many years ago a practical joker inserted an advertisement in a
daily paper to the following effect: "Wanted, by a young gentleman
of good birth and breeding, board in a respectable family, where his
Christian example would be considered sufficient compensation for
his board." The Irish landlords do not advertise, but they get
precisely that for which the young man advertised in vain. Their
Christian example, however, has been chiefly directed toward
hunting, horse racing and hard drinking. Certainly, down to a period
less than fifty years ago, all accounts of Ireland agreed in this;
and except that the drinking is conducted with more moderation,
there seems no reason to believe that there has been any change.
This, the third and final instalment, appeared in The Standard, October 22, 1887:
DISTRIBUTION OF WEALTH.
BY THOMAS G. SHEARMAN.
Having reached the conclusion that indirect, or as the writer first
called it five years ago, "crooked" taxation is certain to produce
enormous inequality of wealth, that it is palpably and indisputably
unjust, and that it inevitably leads to that worst form of
inequality which involves the perpetual ownership of more than half
of the wealth of a country by less than the one-hundredth part of
its inhabitants, we are prepared to take up the next and final
question in our series.
What can be done to effect a more equal distribution of wealth,
without diminishing its production?
Again let us waive the discussion of rent. Having purposely avoided
all consideration of that tender subject, we will not take it up
just now. Assuming that rent can rightfully be private property, and
that the community is not to claim it, simply as rent — conceding
all that the champions of private property in land claim — let us
inquire what, nevertheless, remains to be done and ought to be done,
in order to prevent the unjust use of government to the injury of
the poor, and to check the artificial tendency toward the monopoly
of wealth by a hundredth part of the population.
A few snippets from the season premier of Downton Abbey and a preliminary program about the estate where it is filmed.
Like many others, I'm a fan of the Downton Abbey series. I think a lot about the economics of maintaining an estate that size -- how many people are involved -- how many breadwinners employed, and for whose benefit -- what the products are, what the opportunities are for local residents to live without being either employees or tenants, and what percentage of their annual income goes to support the owners of the land. Large spreads of land certainly reduce the pool of employers.
5,000 acres is 7.8 square miles. 5 times Central Park, I think they said. That's a circle of 1.57 miles radius. A long way from one's nearest non-tenant neighbor, even if they live right at one's perimeter! Small by Texas standards, perhaps, but its location within a reasonable radius of London makes it far more valuable.
It was 20% bigger when the current owner's grandfather owned it. Taxes "chipped away" at it. (Cui bono?)
The program focuses on the people involved in keeping the castle itself and its immediate grounds going; it doesn't mention the tenant farmers.
Watching the program about the Highclere property, I am reminded of a presentation I heard in Newport, Rhode Island, this fall, about the gardeners and property managers of the great estates there. They seemed to have more employers to choose from, since the typical estate in Newport might be a few acres.
Ah, there's a Rothschild in the picture! The wife of the 1890's occupant ... with a dowry.
Against all odds, Highclere survived ... in other words, they didn't need to sell off land to other people?
1500 acres of grazing ... an important source of income for generations ... and oats for the queen's (and others') racehorses. (Do the royals watch Downton Abbey?)
A straight-on view of one side of the castle suggested that one side was about 17 windows wide. I grew up in a subdivision "colonial-style" home, built about 1963, which was 5 windows wide on its front side. I thought it was huge!
The 3rd season premier:
@14 minutes: "The estate must be a major employer and support the house!"
A paragraph from "To Destroy the Rum Power," by Henry George, in the February, 1890, issue of The Arena. (The full article follows this single eloquent paragraph.) --
"Almost universal sobriety," wrote Adam
Smith in Kirkaldy, somewhere in the early seventies of the eighteenth
century. Writing as the wonderful nineteenth century nears its final
decade and in the great metropolis of a mighty nation then unborn, I
can say no more, if as much. The temperance question does not stand
alone. It is related — nay, it is but a phase, of the great social
question. By abolishing liquor
taxes and licenses we may drive the "rum power" out of politics, and
somewhat, I think, lessen intemperance. Thus we may get rid of an
obstacle to the improvement of social conditions and increase the
effective force that demands improvement. But without the improvement
of social conditions we cannot hope to abolish intemperance.
Intemperance today springs mainly from that unjust distribution of
wealth which gives to some less and to others more than they have
fairly earned. Among the masses it is fed by hard and monotonous toil,
or the still more straining and demoralizing search for leave to toil;
by overtasked muscles and overstrained nerves, and under-nurtured
bodies; by the poverty which makes men afraid to marry and sets little
children at work, and crowds families into the rooms of tenement
houses; which stints the nobler and brings out the baser qualities; and
in full tide of the highest civilization the world has yet seen, robs
life of poetry and glory of beauty and joy. Among the classes it finds
its victims in those from whom the obligation to exertion has been
artificially lifted; who are born to enjoy the results of labor without
doing any labor, and in whom the lack of stimulus to healthy exertion
causes moral obesity, and consumption without the need of productive
work breeds satiety. Intemperance is abnormal. It is the vice of those
who are starved and those who are gorged. Free trade in liquor would
tend to reduce it, but could not abolish it. But free trade in
everything would. I do not mean a sneaking, half-hearted, and
half-witted "tariff reform," but that absolute, thorough free trade,
which would not only abolish the custom house and the excise, but would
do away with every tax on the products of labor and every restriction
on the exertion of labor, and would leave everyone free to do whatever
did not infringe the ten commandments.
It is worth noting that Frances Willard, a major figure in the temperance movement, published, in 1896, An Up-to-Date Catechism. She saw the connection between poverty and intemperance, and recognized that the Single Tax could make all the difference in making life better.
Here's George's full article follows (check out the corset analogy!):
In our society, established upon a very rigorous idea of
property, the position of the poor man is horrible; he has literally
no place under the sun. There are no flowers, no shade, no grass but
for him who possesses the earth. In the East these are the gifts of
God, which belong to no man. The proprietor has but a slender
privilege; nature is the patrimony of all.
This excerpt from an 1890 article in The Arena seems relevant as we look at gun violence and other contemporary problems created by lack of employment and income -- and hope.
It would be far better for society if instead of speculating on the
forms of punishment we turned our attention to the means of preventing
the crimes for which we punish the offenders. It has been observed that
most of the murders occur among the poor people, and upon the top floors
of tenement houses; that is to say, among the poorest of the poor. The
connection between poverty and the crime of murder, like the connection
between poverty and all other crime, is demonstrably close. If we could
cure the social disease of poverty, the seeds of crime would be
destroyed. The people rarely think of this. They think it is our
business to punish crime; but it is our best business to prevent it. Our
present organization of society manufactures criminals faster than we
can possibly take care of them. Poverty degrades men; it robs them of
leisure, which is absolutely necessary for the development of mind, and
the proper control of the passions; it keeps the people hungry and
fierce; it imbrutes them; it makes Ishmaels of them — their hand is
against society as the hand of society is against them. Plant a
generation of paupers, and you will reap a crop of criminals.
If we are wise we will turn our attention to the most important problem
of this or any age: how to so enrich the people that the temptations to
crime will be minified to the last possible degree. The solution of the
problem is as simple as it is important. For every millionaire we shall
have a thousand tramps; for every monopolist we shall have a hundred
burglars; for every woman who lives in idleness upon the fruit of
others’ toil, filched from them under the name of interest or rent, we shall have a score of prostitutes; for
every vacant land owner and money limiter — the twin man-starvers — we
shall have a murderer. One is the seed from which the other grows.
Eliminate your monopolists, the king of whom is the owner of vacant
land, and your problem of crime is settled. With open opportunities for
men to apply their labor to natural wealth productions, tenfold more
wealth would be produced and equitably distributed; and with wealth many
times multiplied and equitably distributed, a criminal would be more of
a curiosity than the original three-toed horse.
If memory serves, Hugh Pentecost was an Episcopal priest, perhaps in Newark. The title of the article from which these paragraphs come is "The Crime of Capital Punishment."
I like the word "minified." Maybe there is a useful slogan there: Minify Taxation! ("To make smaller or less significant; reduce.") We could collect the revenue we need with lower taxes were we to concentrate our taxes on land value, in all its manifestations. And in the process, we would reduce poverty, reduce the cost of living, reduce wealth concentration, reverse sprawl, naturally create employment and self-employment opportunities, and stabilize our economy. It seems to me that any one of these goals is worthy, and if this reform would move us closer to any of these goals, it is worth pursuing.
And, importantly, with less need to rely on a social safety net, spending could be signficantly reduced.
Third Fisherman: Master, I marvel how the fishes live in the sea.
First Fisherman: Why, as men do a land. The great ones eat up the
little ones. I can compare our rich misers to nothing so fitly as to
a whale , 'a plays and tumbles, driving the poor fry before him, and
at last devours them all at a mouthful; such whales have I heard on
o' the land, who never leave gaping till they have swallowed the
whole parish, church, steeple, bells and all. . . .
Third Fisherman: If the good King Simonides were of my mind, he
would purge the land of these drones that rob the bee of her honey.
—Shakspere, "Pericles, Prince of Tyre," Act II, Scene 1.
Most taxes discourage economic vitality — taxing sales reduces consumption; taxing wages discourages work; taxing interest reduces savings — and so on. There is one exception to the impact of taxation: taxing a base with an inelastic supply. Such taxes engender growth and economic vitality.1 Here the greater the tax the more the economic vitality. Recently Professor Joe Stiglitz has written that
One of the general principles of taxation is that one should tax factors that are inelastic in supply, since there are no adverse supply side effects. Land does not disappear when it is taxed. Henry George, a great progressive of the late nineteenth century, argued, partly on this basis, for a land tax. It is ironic that rather than following this dictum, the United States has been doing just the opposite through its preferential treatment of capital gains.
But it is not just land that faces a low elasticity of supply. It is the case for other depletable natural resources. Subsidies might encourage the early discovery of some resource, but it does not increase the supply of the resource; that is largely a matter of nature. That is why it also makes sense, from an efficiency point of view, to tax natural resource rents at as close to 100% as possible.
Those are the opening paragraphs of Bill's December, 2012, testimony in Albany, New York. The rest can be found here. It is 6 pages, and worth your time.
An ebay alert for the Crosby "Earth-for-All Calendar" -- which I've had for many years -- finally showed a copy of it (almost 2 years after I got a scan of a copy). But I'll post it here in case a reader is interested.
Oh, you queens, you queens! Among the hills and happy greenwood
of this land of yours, shall the foxes have holes, and the birds of
the air have nests; and in the cities shall the stones cry out
against you, that they are the only pillows where the Son of Man can
lay his head?
—Ruskin, "Sesame and Lilies," "Queens' Gardens," Sec. 95.
But for this, I say,
And but for selfish getting of the land,
And beggarly entailing it, we two,
Today well fed, well grown, well dressed, well read,
We might have been two horny-handed boors,—
Lean, clumsy, ignorant, and ragged boors,—
Planning for moonlight nights a poaching scheme,
Or soiling our dull souls and consciences
With plans for pilfering a cottage roost.
How long shall we covet and oppress, enlarge our possessions and
account that too little which was formerly enough for a nation? . .
. A bull contents himself with one meadow, and one forest is enough
for a thousand elephants; but the little body of man devours more
than all other living creatures.
—Seneca, "Morals." Translation of Walter Clode, Chapter II.
Duke of Suffolk (reading petition): What's here? "Against the
Duke of Suffolk for enclosing the commons of Hebford." How now, sir
Petitioner: Alas, sir, I am but a poor petitioner of our whole
—Shakspere, Henry VI., Second Part, Act 1, Scene 3.
The soil was given to rich and poor in common. Wherefore, O ye
rich, do you unjustly claim it for yourselves alone?
—Hildebrand, Pope Gregory the Great.
(See also March 11)
Hmmm. Googling this, it appears to be from St. Ambrose. (See December 21 for another):
Upton Sinclair, ed. (1878–1968). The Cry for Justice: An Anthology of the Literature of Social Protest. 1915.
The Voice of the Early Church. V.
By St. Ambrose
HOW far, O rich, do you extend your senseless avarice? Do you intend to be the sole inhabitants of the earth? Why do you drive out the fellow sharers of nature, and claim it all for yourselves? The earth was made for all, rich and poor, in common. Why do you rich claim it as your exclusive right? The soil was given to the rich and poor in common—wherefore, oh, ye rich, do you unjustly claim it for yourselves alone? Nature gave all things in common for the use of all; usurpation created private rights. Property hath no rights. The earth is the Lord’s, and we are his offspring. The pagans hold earth as property. They do blaspheme God.
Well, we've completed a year of the "Earth-for-All Calendar." (See the original explanatory post here.) There have been about 430 quotes, all pointing in the direction of the wisdom and justice of the earth being for ALL.
Ernest Crosby, after publishing the book, turned up an additional month's worth of quotes, which I will publish as Undecimber (with honors to my Latin teachers, Mrs. Yost, Miss Deitz, Mr. Ferry and Miss Basehore! My source for the thirteenth month is the July 15, 1902, edition of The Single Tax Review.
The soil of all countries belongs evermore in a very considerable
degree to the Almighty Maker.
— THOMAS CARLYLE, Past and
Present, Book III., Chap. 8
As He who first founded the earth was then the true proprietor of
it, so He still remains, and though He hath given it to the children
of men, so that multitudes of people have had their sustenance from
it while they continued here, yet He hath never alienated it, but
His right is as good as at first; nor can any apply the increase of
their possessions contrary to universal love, nor dispose of lands
in a way which they know tends to exalt some by oppressing others
without being justly chargeable with usurpation.
—JOHN WOOLMAN, A Word of
Remembrance and Caution to the Rich, (1771), Sec. X.
We worked through spring and winter,
through summer and through fall.
But the mortgage worked the hardest
and steadiest of them all;
It worked on nights and Sundays, it
worked each holiday;
It settled down among us and it never
Whatever we kept from it seemed almost as bad as theft;
It watched us every minute and it
ruled us right and left.
The rust and blight were with us
sometimes, and sometimes not;
scowling mortgage was forever on the spot.
The weevil and the cutworm they went
as well as came;
The mortgage stayed forever, eating
heartily all the same.
It nailed up every window, stood
guard at every door,
And happiness and sunshine, made
their home with us no more;
Till with falling crops and sickness
we got stalled upon the grade.
And there came a dark
day on us when the interest wasn't paid.
And there came a sharp foreclosure,
and I kind o' lost my hold.
And grew weary and discouraged and
the farm was cheaply sold.
The children left and scattered, when
they hardly yet were grown;
My wife she pined and perished, and I found myself alone.
What she died of was a mystery, and
the doctors never knew;
But I knew she died of mortgage — Just
as well as I wanted to.
If to trace a hidden sorrow were
within the doctors art.
They'd ha' found a mortgage lying on
that woman's broken heart.
Worm or beetle, drought
or tempest, on a farmer's land may fall.
But for a first-class
ruination, trust a mortgage 'gainst them all.
How much of a farmer's mortgage is for the value of the land itself, and how much for the present value of the improvements which previous owners have made, such as clearing, draining, fencing, irrigating, building structures, plus, perhaps, equipment purchased with the land and buildings?
For that matter, how much of a homeowner's mortgage is for the value of the land itself --including its access to community-provided services such as city water and sewer, fire hydrants, and the like -- and how much for the purchase price of the landscaping and structures on the property, built by any of the previous owners?
To what degree is the modern buyer including in his formal calculations or his underlying assumptions the notion that the land will increase in value during his tenure? (See Case & Schiller, 2003.)
If, then, successive generations of men cannot have their fractional
share of the actual soil (including mines, etc.) how can the
division of the advantages of the natural earth be effected? By the
division of its annual value or rent; that is, by making the rent of
the soil the common property of the nation. That is (as the taxation
is the common property of the State), by taking the whole of the
taxes out of the rents of the soil, and thereby abolishing all other
kinds of taxation whatever. And thus all industry would be
absolutely emancipated from every burden.
— PATRICK EDWARD DOVE, Theory of
Human Progression (1850), Chap. III., Sec. 3.