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 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.
IF it were possible to express in figures the direct pecuniary loss which society suffers from the social mal-adjustments which condemn large classes to poverty and vice, the estimate would be appalling. England maintains over a million paupers on official charity; the city of New York alone spends over seven million dollars a year in a similar way. But what is spent from public funds, what is spent by charitable societies, and what is spent in individual charity, would, if aggregated, be but the first and smallest item in the account. The potential earnings of the labor thus going to waste, the cost of the reckless, improvident and idle habits thus generated, the pecuniary loss (to consider nothing more) suggested by the appalling statistics of mortality, and especially infant mortality, among the poorer classes; the waste indicated by the gin palaces or low groggeries which increase as poverty deepens; the damage done by the vermin of society that are bred of poverty and destitution — the thieves, prostitutes, beggars, and tramps; the cost of guarding society against them, are all items in the sum which the present unjust and unequal distribution of wealth takes from the aggregate which, with present means of production, society might enjoy. — Progress & Poverty — Book IX, Chapter 2: Effects of the Remedy, upon distribution and thence on production
see the corresponding passage in Drake's abridgment of P&P
THREE thousand years of advance, and still the moan goes up, "They have made our lives bitter with hard bondage, in mortar and in brick, and in all manner of service!" Three thousand years of advance! and the piteous voices of little children are in the moan. We progress and we progress; we girdle continents with iron roads and knit cities together with the mesh of telegraph wires; each day brings some new invention; each year marks a fresh advance — the power of production increased, and the avenues of exchange cleared and broadened. Yet the complaint of "hard times" is louder and louder; everywhere are men harassed by care, and haunted by the fear of want. With swift, steady strides and prodigious leaps, the power of human hands to satisfy human wants advances and advances, is multiplied and multiplied. Yet the struggle for mere existence is more and more intense, and human labor is becoming the cheapest of commodities. Beside glutted warehouses human beings grow faint with hunger and shiver with cold; under the shadow of churches festers the vice that is born of wants.
fact — the great fact that poverty and all its concomitants show
themselves in communities just as they develop into the conditions
toward which material progress tends — proves that the social
difficulties existing wherever a certain stage of progress has been
reached, do not arise from local circumstances, but are, in some way or
another, engendered by progress itself.
COULD a man of a century ago* — a Franklin or a Priestley — have seen, in a vision of the future, the steamship taking the place of the sailing vessel, the railroad train of the wagon, the reaping machine of the scythe, the threshing machine of the flail; could he have heard the throb of the engines that in obedience to human will, and for the satisfaction of human desire, exert a power greater than that of all the men and all the beasts of burden of the earth combined; could he have seen the forest tree transformed into finished lumber into doors, sashes, blinds, boxes or barrels, with hardly the touch of a human hand; the great workshops where boots and shoes are turned out by the case with less labor than the old-fashioned cobbler could have put on a sole; the factories where, under the eye of a girl, cotton becomes cloth faster than hundreds of stalwart weavers could have turned it out with their hand-looms; could he have seen steam hammers shaping mammoth shafts and mighty anchors, and delicate machinery making tiny watches; the diamond drill cutting through the heart of the rocks, and coal oil sparing the whale; could he have realized the enormous saving of labor resulting from improved facilities of exchange and communication — sheep killed in Australia eaten fresh in England, and the order given by the London banker in the afternoon executed in San Francisco in the morning of the same day; could he have conceived of the hundred thousand improvements which these only suggest, what would he have inferred as to the social condition of mankind?
It would not have seemed like an inference; further than the vision went, it would have seemed as though he saw, and his heart would have leaped and his nerves would have thrilled, as one who from a height beholds just ahead of the thirst-stricken caravan the living gleam of rustling woods and the glint of laughing waters. Plainly, in the sight of the imagination, he would have beheld these new forces elevating society from its very foundations, lifting the very poorest above the possibility of want, exempting the very lowest from anxiety for the material needs of life; he would have seen these slaves of the lamp of knowledge taking on themselves the traditional curse, these muscles of iron and sinews of steel making the poorest laborer's life a holiday, in which every high quality and noble impulse could have scope to grow. And out of these bounteous material conditions he would have seen arising, as necessary sequences, moral conditions realizing the golden age of which mankind have always dreamed. Youth no longer stunted and starved; age no longer harried by avarice; the child at play with the tiger; the man with the muck-rake drinking in the glory of the stars! Foul things fled, fierce things tame; discord turned to harmony! For how could there be greed where all had enough? How could the vice, the crime, the ignorance, the brutality, that spring from poverty and the fear of poverty, exist where poverty had vanished? Who should crouch where all were freemen, who oppress where all were peers?
Long before I became interested in Henry George's ideas, I had been nudged in their direction by 3 very enthusiastic grandparents. I didn't find the time to read Progress and Poverty, despite receiving lovingly inscribed copies at several milestones in my young years. But somewhere along the way, I acquired a modern reissue of a 1912 book entitled "Gems from George." One of its beauties was that it could be read in short sections; another was that the headings on each page telegraphed the subject area. I can't replicate the latter here, but want to share the gems. I'll post one a day. Today, I'd share Bob Drake's abridgment of P&P; its chapters are shorter, and one can digest them. The Gems, however, come from all George's books, and some of his speeches and articles.
What is this you
call property? It cannot be the earth, for the land is our mother,
nourishing all her children, beasts, birds, fish and all men. The
woods, the streams, everything on it belongs to everybody and is
for the use of all. How can one man say it belongs only to him?
Timon: Why should you want? Behold, the earth hath roots;
Within this mile break forth a hundred springs;
The oaks bear mast, the briers scarlet hips;
The bounteous housewife, Nature, on each bush
Lays her fullness before you. Want! Why want ?
—Shakspere: "Timon of Athens," Act IV., Scene 3.
Timon: Common mother, thou, (digging)
Whose womb unmeasureable, and infinite breast
Teems and feeds all.
They sing of the golden Sigurd, and the face without a foe,
And the lowly man exalted, and the mighty brought alow;
And they say, when the sun of summer shall come aback to the land,
It shall shine on the fields of the tiller that fears no heavy hand;
That the sheaf shall be for the plougher and the loaf for him that
Through every furrowed acre where the son of Sigurd rode.
—William Morris, "Story of Sigurd, the Volsung," Book III, p. 203.
Quite belatedly, I found an interesting article on Taxi Medallions and Rent-Seeking. I particularly like the juxtaposition of the sidebar and the article's primary content; read the sidebar first.
Why did I include in the "categories" for this post "all benefits go to the landholder"? Because a taxi medallion is a privilege, which, in classical economics, is another form of "land." Read the sidebar!
There is an easy solution: auction off those privileges for limited periods of time. Lather, rinse, repeat!
The sidebar quotes Adam Smith "... the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce," which leads me to think about Henry George's axiom that
"The fundamental principle of human action — the law that is to political economy what the law of gravitation is to physics — is that men seek to gratify their desires with the least exertion." [Progress & Poverty Book III, Chapter 6 — The Laws of Distribution: Wages and the Law of Wages]
One quote from the body of the article:
Studies of economic losses due to rent-seeking and the resulting
monopolies have produced figures ranging from 3 to 12 percentage points
of national output for the US.
All of these are possible reasons why the city of Milwaukee might want
to limit the number of cab permits, but they do not imply that the
existing owners must have a permanent right to them.
The city could simply auction 321 licences every year or two and capture
all of the economic rents for itself. Another argument is that a permit
acts as a pension for drivers that would otherwise not have a business
they could sell on retirement. But that is true only for the first,
lucky generation of owners.
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.