Land Value Taxation will solve many of the 21st century's most serious social, economic and environmental problems, and promote justice, fairness and sustainability. We CAN have a world in which all can prosper.
Progress and Poverty, by Henry George Here are links to online editions of George's landmark book, Progress & Poverty, including audio and a number of abridgments -- the shortest is 30 words! I commend this book to your attention, if you are concerned about economic justice, poverty, sprawl, energy use, pollution, wages, housing affordability. Its observations will change how you approach all these problems. A mind-opening experience!
Henry George: Progress and Poverty: An inquiry into the cause of industrial depressions and of increase of want with increase of wealth ... The Remedy This is perhaps the most important book ever written on the subjects of poverty, political economy, how we might live together in a society dedicated to the ideals Americans claim to believe are self-evident. It will provide you new lenses through which to view many of our most serious problems and how we might go about solving them: poverty, sprawl, long commutes, despoilation of the environment, housing affordability, wealth concentration, income concentration, concentration of power, low wages, etc. Read it online, or in hardcopy.
Bob Drake's abridgement of Henry George's original: Progress and Poverty: Why There Are Recessions and Poverty Amid Plenty -- And What To Do About It! This is a very readable thought-by-thought updating of Henry George's longer book, written in the language of a newsweekly. A fine way to get to know Henry George's ideas. Available online at progressandpoverty.org and http://www.henrygeorge.org/pcontents.htm
Where Else Might You Look?
Wealth and Want The URL comes from the subtitle to Progress & Poverty -- and the goal is widely shared prosperity in the 21st century. How do we get there from here? A roadmap and a reference source.
Reforming the Property Tax for the Common Good I'm a tax reform activist who seeks to promote fairness and reduce poverty. Let's start with the enabling legislation and state requirements for the property tax. There are opportunities for great good!
What is there in our economic life more significant than the fact that a majority must pay the relatively few for the privilege of living and of working on those parts of the surface of the Earth which geological forces and community development have made desirable?
Interesting comments on a number of things, including doctors, slaves, soldiers, income inequality, sobriety, thrift, poverty,
Bad as we are, I believe that if we all understood how we are living,
and what we are doing daily, we should make a revolution before the end
of the week. But as we do not know; and as many of us, forseeing
unpleasant revelations, do not want to know; I can only assure you that I
am in perfect concord with standard economists when I state that
competition is the force that makes our industrial system self-acting.
It produces the effects which I have described without the conscious
contrivance or interference of either master on the one hand, or slave
on the other. It may be described as a seesaw, or lever of the first
order, having the fulcrum between the power and the weight.
The so-called right of private property is a convention that every man
should enjoy the product of his own labour, either to consume it or
exchange it for the equivalent product of his fellow labourer. But the
landlord and capitalist enjoy the product of the labour of others, which
they consume to the value of many millions sterling every year without
even a pretence of producing an equivalent. They daily violate the right to which they appeal when the socialist
attacks them. Nor is their inconsistency so obvious as might be
expected. If you violate a workman's right daily for centuries, and
daily respect the landlord's right, the workman's right will at last be
forgotten, whilst the landlord's right will appear more sacred as
successive years add to its antiquity. In this way the most illogical
distinctions come to be accepted as natural and inevitable. One man
enters a farmhouse secretly, helps himself to a share of the farm
produce, and leaves without giving the farmer an equivalent. We call him
a burglar, and send him to penal servitude. Another man does precisely
the same thing openly, has the impudence even to send a note to say when
he is coming, and repeats his foray twice a year, breaking forcibly
into the premises if his demand is not complied with. We call him a
landlord, respect him, and, if his freebooting extends over a large
district, make him deputy-lieutenant of the country or send him to
Parliament, to make laws to license his predatory habits.
How far is the saying true that "Every one lives either by working, or
by begging, or by stealing."' Observe: This is primarily a question
merely of fact, and not of right or wrong. There may be (1) Right
Work and Wrong Work; (2) Begging that is justifiable, and Begging that
is unjustifiable; (3) Stealing which is pardonable, and stealing which
is unpardonable. In simply placing, therefore, any class of persons
under one or another of these three heads, I am not necessarily either
praising or blaming the individual members of that class. Again, of two
paid workers one may be greatly underpaid, and the other as greatly
overpaid. But neither is this consideration embraced in the question
before us. We have not to do, tonight, with the merits of any
individual, nor with the value or valuelessness of any kind of work, nor
yet with the equitable assignment in any particular case of the reward
of work. Let us, in the first place, classify the members of English
society by dividing them simply into — I. Workers, and II. NonWorkers.
I. Workers, e.g.: — Manual labourers, skilled and unskilled; domestic
servants; soldiers; sailors; farmers; clerks and overseers; professional
men; retail and wholesale dealers; merchants and manufacturers; bankers
(sleeping partners are excepted); teachers and preachers; artists,
authors, and editors; high officers and Ministers of State; the
Sovereign; housewives. All these are doing work, and are receiving pay
in coin or kind in return for their work. Some of them may be doing
unpaid (honorary) work as well as paid work; and others may be getting
interest (on a capital for which they never worked) in addition to those
wages of superintendence which are strictly the reward of a merchant's
or manufacturer's work. Again, some of them may be working in appointed
places for definite salaries, while others may be working, so to speak,
"on their own hook," or, in more elegant language, "paddling their own
canoe." By what mark, then, shall we distinguish the type of man who
lives by his work? What is his definition? He is the man who lives upon
pay, in coin or kind, which is given him in return for his personal
services. And only in proportion as his means of living are derived from
such pay, or from his personal labour on the soil, can he properly be
said to "live by working.'' We have next to consider who are the (II.)
Non-Workers of Society, and whether they may all, without exception, be
properly included in the two classes, "Beggars," and "Stealers" —
whether, in fact, this two-fold division of them is an exhaustive one.
Now, Beggars and Thieves are alike in these respects, that they, both of
them, consume without producing, enjoy without labouring, are served
but render no service to others, receive but give not in return, are
clever in subtraction, but failures in addition. Wherein, then, do they
differ from each other? They differ, for the purposes of the present
argument, only in the different dispositions of their respective victims
towards them. The victim of the Beggar is a willing victim; he is influenced by custom, or by compassion for weakness, pain, or privation. On the other hand, the victim of the Thief is an unwilling victim.
It may be that he is unconscious of the spoliation that is perpetrated
One might be led to ask, how many is enough, and how we might go about encouraging our best and brightest into careers that serve others instead of rent-seeking. Two generations ago, many became doctors, engineers and teachers.
What changes in public policy will reduce the returns now funneled so generously to the rent-seekers, leaving more for the folks who labor in the productive sectors of the economy?
Why do we pay so little attention to rent-seeking?
Why is rent-seeking taught to our MBAs, but the impacts of rent-seeking not taught to our liberal arts, social sciences, political science, public policy students?
D'ya think that the rent-seekers might really really like it this way??
Shiller: Too Many Graduating Seniors Go Into Finance
Too many of the our brightest people may be choosing careers in finance,
undertaking economically and socially useless — and even harmful —
activities, Robert Shiller, a Yale University economics professor,
writes in an article for Project Syndicate.
survey of elite U.S. universities showed that 25 percent of Harvard
graduating seniors, 24 percent of Yale graduating seniors and 46 percent
of Princeton graduating seniors were going into financial services in
2006, notes Shiller, co-creator of the Case-Shiller home price index.
While those proportions have fallen more recently, he explains that might only be a temporary effect of the financial crisis.
more are going into speculative fields like investment banking rather
than traditional finance such as lending, he says, citing a study by
Thomas Philippon of the Stern School of Business, New York University
and Ariell Reshef of the University of Virginia.
need some traders and speculators, Shiller concedes, as they provide
some useful service — sorting through information about businesses and
trying to judge their real worth.
"But these people's activities
also impose costs on the rest of us," he explains. Much of their
speculation and deal making is "pure rent-seeking."
other words, it is wasteful activity that achieves nothing more than
enabling the collection of rents on items that might otherwise be free."
working in speculative finance fields are like a feudal lord installing
a chain across a river to charge fees on passing boats, he argues.
Making no improvements to the river, the lord does nothing productive
and helps no one but himself. Few people will use the river if enough
lords put chains across it to collect fees.
working in speculative fields, he says, "skim the best business deals,
creating a 'negative externality' on those who are not party to them."
For example, they can reject bad assets, such as subprime mortgage securities, offloading them to less knowledgeable investors.
repeal of the Glass-Steagall Act, which blocked commercial banks from
investment banking, allowed bankers to act more and more like those
feudal lords collecting fees.
"In fact, the main advantages of
the original Glass-Steagall Act," he says, "may have been more
sociological than technical, changing the business culture and
environment in subtle ways. By keeping the deal-making business
separate, banks may have focused more on their traditional core
A paper by economists at Columbia University and Princeton published on the Social Science Research Network website
showed that over-the-counter (OTC) traders allowed informed dealers to
extract excessive rents and to undermine organized exchanges by
"cream-skimming" the best deals.
informational rents in OTC markets in turn attract too much talent to
the financial industry, which would be more efficiently deployed as
real-sector entrepreneurs," the paper asserts.
Plus, OTC dealers'
rents tend to increase "as there are more informed dealers, because the
greater cream-skimming by dealers worsens the terms entrepreneurs can
get for their assets on the organized exchange, and therefore their
bargaining power on OTC markets."
What we have is a crisis of imagination. Albert Einstein said that you cannot solve a problem with the same mind-set that created it. Foundation dollars should be the best “risk capital” out there.
There are people working hard at showing examples of other ways to live in a functioning society that truly creates greater prosperity for all (and I don’t mean more people getting to have more stuff).
Money should be spent trying out concepts that shatter current structures and systems that have turned much of the world into one vast market. Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine.
It’s an old story; we really need a new one.
But perhaps Buffett's most important observation is this one:
"Inside any important philanthropy meeting, you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left."
To which I can only insert ... "and are benefiting from."
He also points out,
As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic it sounds to “give back.” It’s what I would call “conscience laundering” — feeling better about accumulating more than any one person could possibly need to live on by sprinkling a little around as an act of charity.
But this just keeps the existing structure of inequality in place. The rich sleep better at night, while others get just enough to keep the pot from boiling over. Nearly every time someone feels better by doing good, on the other side of the world (or street), someone else is further locked into a system that will not allow the true flourishing of his or her nature or the opportunity to live a joyful and fulfilled life.
I hope Mr. Buffett will take the time to read Henry George's "Progress and Poverty." He might be better able to identify the particular structures that create and maintain poverty and the concentrations of wealth, income and power. And, based on that last sentence, I think Buffett would appreciate the final section of P&P. (Bob Drake's 2006 abridgment is a fine starting place, but the unabridged is a pleasure of its own.)
One of the reasons for our poor economic performance is the large distortion in our economy caused by the tax system. The one thing economists agree on is that incentives matter — if you lower taxes on speculation, say, you will get more speculation. We’ve drawn our most talented young people into financial shenanigans, rather than into creating real businesses, making real discoveries, providing real services to others. More efforts go into “rent-seeking” — getting a larger slice of the country’s economic pie — than into enlarging the size of the pie.
It doesn’t have to be this way. We could have a much simpler tax system without all the distortions — a society where those who clip coupons for a living pay the same taxes as someone with the same income who works in a factory; where someone who earns his income from saving companies pays the same tax as a doctor who makes the income by saving lives; where someone who earns his income from financial innovations pays the same taxes as a someone who does research to create real innovations that transform our economy and society. We could have a tax system that encourages good things like hard work and thrift and discourages bad things, like rent-seeking, gambling, financial speculation and pollution. Such a tax system could raise far more money than the current one — we wouldn’t have to go through all the wrangling we’ve been going through with sequestration, fiscal cliffs and threats to end Medicare and Social Security as we know it. We would be in sound fiscal position, for at least the next quarter-century.
to which I posted a response. The last time I looked, it was the only one, out of about 430, which discussed the issue of rent seeking. Here's what I wrote:
How do we unstack it? Collect the rent. Treat it as our COMMON treasure, not something subject to privatization by individuals, corporations, foundations, universities, etc.
Will it fund everything? We don't know. We can't know. We don't even collect the data that would permit us to calculate its magnitude. (Funny thing about that. Wonder who benefits from that. Could it be the rent-seekers?) Start collecting it, and using it to fund public goods.
At the same time, start reducing, even eliminating the dumb taxes which burden the economy: taxes on sales, buildings, wages, starting with the lowest wages earned. Watch the 99% recover. Watch the economy recover. The 1% will do all right under such a set up, but the rest of us will begin to thrive. Most likely, we'd be able to reduce the amount we need to spend on the social safety net, so that collected rent might cover a large share of our internal revenue needs.
What else might we collect revenue from? How about the privileges we've given out -- the privilege of using the airwaves (think how much a strong radio signal sells for in a large city) and the entire electromagnetic spectrum; franchises of various kinds, landing rights at LaGuardia, particularly at rush hour;
Then there are our nonrenewable and scarce natural resources: water, oil, natural gas, various metals. Royalties on many of these things are trivial, or they are going into private pockets, instead of being treated as our common treasure.
THE power of a special interest, though inimical to
the general interest, so to influence common thought as to
make fallacies pass as truths, is a great fact, without
which neither the political history of our own time and
people, nor that of other times and peoples, can be
understood. A comparatively small number of individuals
brought into virtual though not necessarily formal agreement
of thought and action by something that makes them
individually wealthy without adding to the general wealth,
may exert an influence out of all proportion to their
numbers. A special interest of this kind is, to the general
interests of society, as a standing army is to an
unorganized mob. It gains intensity and energy in its
specialization, and in the wealth it takes from the general
stock finds power to mold opinion. Leisure and culture and
the circumstances and conditions that command respect
accompany wealth, and intellectual ability is attracted by
it. On the other hand, those who suffer from the injustice
that takes from the many to enrich the few, are in that very
thing deprived of the leisure to think, and the
opportunities, education, and graces necessary to give their
thought acceptable expression. They are necessarily the
"unlettered," the "ignorant," the "vulgar," prone in their
consciousness of weakness to look up for leadership and
guidance to those who have the advantages that the
possession of wealth can give. — The Science
of Political Economy — Book
II, Chapter 2, The Nature of Wealth: Causes of Confusion as
to the Meaning of Wealth
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
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
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'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.
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 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."
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.
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.
are nearing the season of the year when the society columns of the
newspapers will report that "everybody is out of town." "Everybody!"
What a world of impertinence and aristocratic insolence there is in that
word! Yet no phrase is more commonly used on the piazzas and lawns and
beaches and golf links of our fashionable summer resorts.
a matter of fact, the whole great city goes straight along thru the
year, taking no heed of heat and cold, rains or droughts. All its myriad
enterprises move along as if there were no differences of weather or
street is as busy in the summer as it was in the winter. Not a single
trolley car has been taken from the rails. Every egg-box tenement is
packed as full as ever. Every shop and mill and factory and store is as
busy with its ordinary activities as if the thermometer registered fifty
instead of ninety degrees.
thru the sweltering days of June, July, and August, when even at the
cool beaches the idle pleasure-seekers are gasping for breath and
wishing themselves in Labrador, when the city has become a great oven of
brick and stone, there are still apparently as many workers as ever
jostling one another on the street cars and in the over-heated
truth is that those who leave the city for the summer are in most cases
not missed. The fashionable set is only a handful of dudes and dolls,
who can come and go whenever they please without having any effect upon
the serious work of the world.
speaking, they are the nobodies of our cities. They do no useful work
and their relation to the real worker is about the same as that of the
potato-bug to the potato. They are nobodies, yet such is this queer
social system of ours that if it were not for them the useful workers
would not have to work so hard and so long during the hot summer months.
There would be shorter hours and vacations for all. — Boyce's Weekly -- reprinted in "The American Cooperator."
I have a friend who has held six life-insurance policies of from $1,000
to $3,000 each and has let them all lapse. He is industrious and capable
and has a good trade, yet each one of these policies has been wrested
from him by the hard fate of poverty. He also belonged to a fraternal
society, but forfeited his membership in that, too, by the non-payment
of dues. I should add that this man uses neither tobacco nor
intoxicants, and is extravagant only when a collection basket or
subscription paper for some good cause is passed around. * * He has now been sick for twelve weeks. His wife and four children are
without relatives that can support them and are dependent upon
precarious sources of help for food, clothes, house-rent, and doctor's
bills. Their plight is a desperate one. Both the sick man and his wile
belong to a well-to-do church, however, and I heard yesterday that the
Ladies' Sewing Society had arranged to sew for these children this very
week. This is good, but I wonder how long the good ladies will do this
before they will really despise the dear little children they are
clothing. "There they go, playing in the dirt in the very dresses I made
for them out of my Fedora's last winter's gowns." "You should have
heard that biggest one muling fault with the waist we made her because
it wasn't big enough across the shoidders! The impudence of it!"
"Lookin' a gift horse in the mouth!" "How saucy those children are! They
treat my children just like their equals." "It is so discouraging doing
things for her. She has no management and don't take care of things
after you give them to her." * * So deep, and so sweet is charity! * * If this sewing-society plot is actually carried into effect, the poor
woman's fate is something terrible to contemplate. Socially she will
enter upon a living death. She will get plenty of patronizing bows from
all the best carriages as they drive by while she hangs out clothes, and
every one of them will send a cold steel into her heart and set the
death mark upon her face the harder. Of course the children will be
saucy, and it will be strange if they are not worse than saucy with
every circumstance calculated to destroy their self-respect. Let them
become the wards of the church in every economic sense and they will be
marked for social ostracism.
One of the members of this church is a deacon. He was made a deacon for
the simple reason that he had money and contributed a miserable little
sum each year to the minister's salary. Some of this deacon's money is
invested in the Blank Life of New York. The deacon's stock in this
insurance company has paid him 8% and even 10% dividends. It was in this
company that my friend who is now sick and uninsured held a $3,000
policy. He paid this company altogether $173. The company paid him
nothing. This poor man's money went to pay salaries and dividends.
Different amounts of his money have gone also, without bringing him any
return, into five other companies. The deacon puts his dividends into
his pockets, smiles benignly and thinks it is all right. The man had
protection while he was paying his money—that is, he had chances. He
took the chances and lost them, quoth the good deacon, pinching a seam
in the roll of bills and then clasping both hands warmly about them. The
deacon is a warm opponent of gambling, and talks very strenuously in
prayer meeting about the evil of card-playing and all games ot chance. * * The American people are just now in a gambling frame of mind. Insurance
is only one of a number of legal forms of gambling. The illegal forms
may be worse incidentally but not essentially. For every family which
receives a thousand dollars after paying less than a hundred, as was the
"good luck" of one of my neighbors, there are many poor fellows who
have drawn blanks and have nothing but a few worthless papers to show
for their precious investments. When I heard last Sunday morning that
those four children had stopped going to Sunday school because they
lacked shoes, I could not help thinking hard thoughts and feeling strong
feelings about this legal form of gambling.
* * The relationship existing between my friend the dividends-deacon and my
friend the sick man, members of the same church, is not that of
brotherhood. It is not the relationship that Jesus Christ tried to
establish between men. It is not ecdesia, holy and blessed. There are
secret societies that realize a much larger measure of real brotherhood
than does the average church. I have heard the claim made that the
secret societies did more for both body and soul, but I doubt that. This
much too is true,that when a member is in need of any kind, sick or in
prison, the societies will help him the quicker, and when they do help
him or his family it does not make him feel like a dog nor humiliate or
disgrace the family. The church does not yet know that a man has a right
to eat, to work, and to live. The charity of a sweet and humble soul is
beautiful and good in the giver and a curse to the recipient, but the
charity of a self-righteous, condescending, pious pharisee is an
abomination and a curse from every point of view. The cry of the poor is
not a cry for more charity but a cry for justice. If life had not been
such a lottery with my sick friend there would be some provision for him
and his today. As it is he has put something near $500 into the hands
of those who do not need it in a frantic and vain effort to make
provision against this very hour of utmost need on the part of his
All this means that I am up against the question as to what I am going
to do about it. I can send them coal and potatoes and stand in for the
doctor's bill, but what will that mean? They will feel under obligation
to me, I fear, in a harmful way. The obligations of mutualism are
beautiful and helpful to soul prosperity, but the crude obligations of
misfortune, hunger, of an under class to an upper class, are destructive
and damning. I must manage in some way for them to earn, or in some way
feel that they have a right to every dollar they get. And I myself am
poor and in debt. I wish I could say that no privilege shall be enjoyed
by myself or my children which is not equally extended to this sick man
and to all others. I could say it, but I cannot carry it out. I would do
good but evil is present with us. Frankly, I blame this state of things
to the competitive organization of society.
It is uncomfortable to have to live like a pagan and feel like a hypocrite.
I stumbled across an excerpt from this in The American Cooperator, and when I couldn't find the material in any of George's other books, I went looking for the source, an 1887 book with chapters by 16 authors.
Enjoy! (It prints out as about 9 pages, if you're so inclined)
THE HISTORY, PURPOSE AND
POSSIBILITIES OF LABOR ORGANIZATIONS
IN EUROPE AND AMERICA; GUILDS, TRADES-
UNIONS, AND KNIGHTS OF LABOR; WAGES AND PROFITS;
HOURS OF LABOR; FUNCTIONS OF CAPITAL; CHINESE LABOR:
COMPETITION; ARBITRATION; PROFIT-SHARING AND
CO-OPERATION; PRINCIPLES OF THE KNIGHTS OF
LABOR; MORAL AND EDUCATIONAL AS-
PECTS OF THE LABOR QUESTION.
EDITED BY GEORGE E. McNEILL,
First Deputy of Mass. Bureau of Statistics of Labor; Sec.-Treas. of D. A. 30, Knights of Labor.
ASSOCIATE AUTHORS: TERENCE V. POWDERLY, G. M. W., K. of L.; DR. EDMUND J. JAMES, University of Pennsylvania; HON. JOHN J. O'NEILL, of Missouri;
HON. J. M. FARQUHAR, of New York; HON. ROBERT HOWARD, of Massachusetts; HENRY GEORGE, of New York;
ADOLPH STRASSER, Pres. Cigar Makers' Union; JOHN JARRETT, of
Pennsylvania; REV. R. HEBER NEWTON, of New York; F K. FOSTER, of
Massachusetts; P. M. ARTHUR, Chief Engineer Locomotive Brotherhood; W.
W. STONE and W. W. MORROW, of California; FRANKLIN H. GIDDINGS,
"Springfield Union"; JOHN McBRIDE, Secretary Coal Miners' Union;
D.J.O'DONOGHUE, of Toronto, Canada; P. J. McGUIRE, Secretary Carpenters'
NEW YORK: THE M. W. HAZEN CO.
Copyright 1886, by
A M. BRIDGMAN & CO.
CHAPTER XXIII. THE LAND QUESTION.
MAGNITUDE OF THE QUESTION — FIRST PRINCIPLES — THE
LAND-OWNER THE ABSOLUTE MASTER OF MEN WHO MUST LIVE ON HIS LAND — THE
ORDER OF NATURE INVERTED — EQUAL RIGHTS TO THE USE OF THE EARTH —
SELFISHNESS, THE EVIL GENIUS OF MAN — THE IRISH PEOPLE FORCED TO BEG
PERMISSION TO TILL THE SOIL — APPROPRIATION OF THE CHURCH-LANDS — LAND
IN ITSELF HAS NO VALUE — THE GREAT CAUSE OF THE UNEQUAL DISTRIBUTION OF
WEALTH — NO HOPE FOR THE LABORER, SO LONG AS PRIVATE PROPERTY IN LAND
EXISTS — NOTHING MYSTERIOUS ABOUT THE LABOR QUESTION — THE DIFFICULTY IN
FINDING EMPLOYMENT — NATURE OFFERS FREELY TO LABOR — NATURAL MEANS OF
EMPLOYMENT MONOPOLIZED — SPECULATION IN THE BOUNTIES OF NATURE.
BENEATH all the great social questions of our time lies one of primary
and universal importance, the question of the rights of men to the use
of the earth.
The magnitude of the pecuniary interests involved, the fact that the
influential classes in all communities where private property in land
exists are interested in its maintenance, lead to a disposition to
ignore or belittle the land question: but it is impossible to give any
satisfactory explanation of the most important social phenomena without
reference to it; and the growing unrest of the masses of all civilized
countries, under conditions which they feel to be galling and unjust,
must at length lead them, as the only way of securing the rights of
labor, to turn to the land question.
To see that the land question does involve the problem of the equitable
distribution of wealth; that it lies at the root of all the vexed social
questions of our time, and is, indeed, but another name for the great
labor question in all its phases, it is only needful to revert to first
principles, and to consider the relations between men and the planet
We find ourselves on the surface of a sphere, circling through
immeasurable space. Beneath our feet, the diameter of the planet extends
for eight thousand miles; above our heads night reveals countless
points of light, which science tells us are suns, that blaze billions of
miles away. In this inconceivably vast universe, we are confined to the
surface of our sphere, as the mariner in mid-ocean is confined to the
deck of his ship. We are limited to that line where the exterior of the
planet meets the atmospheric envelope that surrounds it. We may look
beyond, but cannot pass. We are not denizens of one element, like the
fish; but while our bodies must be upheld by one element, they must be
laved in another. We live on the earth, and in the air. In the search
for minerals men are able to descend for a few thousand feet into the
earth's crust, provided communication with the surface be kept open, and
air thus supplied; and in balloons men have ascended to like distances
above the surface; but on a globe of thirty-five feet diameter, this
range would be represented by the thickness of a sheet of paper. And
though it is thus possible for man to ascend for a few thousand feet
above the surface, or to descend for a few thousand feet below it, it is
only on the surface of the earth that he can habitually live and supply
his wants; nor can he do this on all parts of the surface of the globe,
but only on that smaller part, which we call land, as distinguished
from the water, while considerable parts even of the land are
uninhabitable by him.
By constructing vessels of materials obtained from land, and
provisioning them with the produce of land, it is true that man is able
to traverse the fluid-surface of the globe; yet he is none the less
dependent upon land. If the land of the globe were again to be
submerged, human life could not long be maintained on the best-appointed
Man, in short, is a land-animal. Physically considered, he is as much a
product of land as is the tree. His body, composed of materials drawn
from land, can only be maintained by nutriment furnished by land; and
all the processes by which he secures food, clothing and shelter consist
but in the working up of land or the products of land. Labor is
possible only on condition of access to land, and all human production
is but the union of land and labor, the transportation or transformation
of previously existing matter into places or forms suited to the
satisfaction of man's needs.
Land, being thus indispensable to man, the most important of social
adjustments is that which fixes the relations between men with regard to
that element. Where all are accorded equal rights to the use of the
earth, no one needs ask another to give him employment, and no one can
stand in fear of being deprived of the opportunity to make, a living. In
such a community, there could be no "labor question." There could be
neither degrading poverty nor demoralizing wealth. And the personal
independence arising from such a condition of equality, in respect to
the ability to get a living, must give character to all social and
On the other hand, inequality of privilege in the use of the earth must
beget inequality of wealth and power, must divide men into those who can
command and those who are forced to serve. The rewards which nature
yields to labor no longer go to the laborers in proportion to industry
and skill; but a privileged class are enabled to live without labor by
compelling a disinherited class to give up some part of their earnings
for permission to live and work. Thus the order of nature is inverted,
those who do no work become rich, and "workingman" becomes synonymous,
with "poor man." Material progress tends to monstrous wealth on one
side, and abject poverty on the other; and society is differentiated
into masters and servants, rulers and ruled.
If one man were permitted to claim the land of the world as his
individual property, he would be the absolute master of all humanity.
All the rest of mankind could live only by his permission, and under
such conditions as he chose to prescribe. So, if one man be permitted to
treat as his own the land of any country, he becomes the absolute
sovereign of its people. Or, if the land of a country be made the
property of a class, a ruling aristocracy is created, who soon begin to
regard themselves, and to be regarded, as of nobler blood and superior
rights. That "God will think twice before he damns people of quality,"
is the natural feeling of those who are taught to believe that the land
on which all must live is legitimately their private property.
seems a hard thing for many to understand how the single tax, as
applied at Fairhope or elsewhere, can benefit both those who have little
and those who have much. They think that if the tax burden upon the
wealthy man's fine improvement is decreased, it must be at the expense
of his poorer neighbor; or on the other hand, if the poor man's burden
is lightened, it must be because it is shifted to the well-to-do. The
fact is that the wealthy man whose wealth is genuine wealth, houses,
stores, stocks (of goods) and other things which are the product of
labor — not the possessor of monopoly privileges — will be benefited by
the freeing from taxation of these forms of wealth, and the poor man
will be benefited by the exemption of his smaller improvement if he be a
home-owner, and if he be not, by the destruction of land speculation,
making it easy for him to secure land for a home or for cultivation, and
by an increased demand for his labor from others and the increased
ability of others to buy his products if he be a producer.
somebody must be hurt by your policy. You can't benefit everybody, the
beneficiaries of the present system as well as its victims," will say
the skeptic. To which we say: There is plenty of room for the argument
as to whether the enthronement of Justice ever did or can hurt anybody;
but so far as the colony is concerned, there are no beneficiaries of
injustice. No one has ever been given the privilege of collecting
tribute in the form of unearned land values, and the wealthy and the
poor are alike benefited by the taking for public use of that which
belongs and has been held from the beginning to belong to the public,
but elsewhere is made the privilege of a favored few.
the colony the application of the single tax to present conditions
would take somebody's privileges and profits, and it will be those who
are "reaping where they have not sown" in the collection of land values
rightly belonging to the public for the two highest reasons: first,
because their collection for the common benefit is necessary to insure
to each his inherent right to live upon the earth; and second, because
such values are the result of their joint presence and activity, and not
traceable to individual exertions.
-- Fairhope Courier, quoted in The American Cooperator (1903)
"God gave the earth to all the people, and not to some of them. The privileges should be for all of them, and not bartered off to
some of them. That, gentlemen, constitutes my political economy, my
politics, and (I say it reverently) my religion. And it is, I believe,
the religion that Christ taught the people many years ago."
-- Tom Johnson, mayor of Cleveland and U. S. congressman
No generation of men can or could, with never such solemnity and
effort, sell land on any other principle; it is not the property of
any generation, we say, but that of all the past generations that
have worked on it, and of all the future ones that shall work on it.
— THOMAS CARLYLE, Past and
Present, Book III., Chap. 8.
"Of course the fact that a chief or land-owner has bought and paid
for a particular privilege or species of taboo, or has inherited
from his fathers, doesn't give him in any moral claim to it. The
question is, Is the claim in itself right and reasonable? for a
wrong is only all the more a wrong for having been long and
— GRANT ALLEN, The British
Barbarians. (Words spoken by Bertram.)
The most impudent hypocrite of all is the great proprietor who,
being a principal cause of the misery which he affects to deprecate,
would be disgusted and furious if he were to be shown in his true
colors, and so trusts in ignorance and sophistry when he laments the
condition of the poor, but secretly and steadily adds to their
— PROFESSOR THOROLD ROGERS, Work
and Wages, Chap. XVI., p. 457.
But if Egyptian civilization had its victims, it had also its
favorites. . . . There stood . . . that upper class . .
. owners of a large portion of the soil, and so possessed of
hereditary wealth, one which seemed born to enjoy existence and
"consume the fruits" of other men's toil and industry.
— GEORGE RAWLINSON, History of
Ancient Egypt, Vol. I., Chap. II., p. 533.
But yet in other scenes more fair to view,
When Plenty smiles — alas! she smiles for few —
And those who taste not, yet behold her store,
Are as the slaves that dig the golden ore —
The wealth around them makes them doubly poor.
Pigou, a key bridge figure in the history of his field, was one of the earliest classical economists to notice that markets do not always produce the best possible social outcomes. The pollution generated by a factory imposes costs on those who live downstream or in the path of its airborne emissions. The risks assumed by banks leading up to the recent financial crisis imposed costs on just about everybody. Market transactions often generate what economists call “externalities” — side effects, sometimes positive but often negative, that affect people who do not participate in the transaction.
Pigou, having recognized the problem, was the first to propose a solution. Society should tax the negative externalities and subsidize the positive ones. This simple notion — if you want less of something, tax it — is why his ideas periodically bubble up in the service of combating a recognizable cost to society, like pollution. We think that his approach offers an answer to another great problem of our time: inequality.
Does the extreme degree of inequality in America today really create, as Pigou would put it, negative externalities? Does the fact that hedge-fund manager Mr. Jones rakes in 100 or 1,000 times what office manager Mrs. Smith earns impose costs on everybody else? Plenty of Americans think not. Defenders of our skewed income distribution point out that a free-enterprise system requires some inequality. Unequal rewards give people an incentive to work hard and acquire new skills. They encourage inventors to invent, entrepreneurs to start companies, investors to take risks. It’s fine in this view that some people get astronomically rich. As Mitt Romney likes to say, “I’m not going to apologize for being successful.”
On the other side, many of us have a gut feeling that inequality has gone too far. Our times are reminiscent of the Gilded Age’s worst excesses. Hence the popularity of the Occupy Wall Street movement’s slogan, “We are the 99 percent.”
LVTfan here: Wouldn't it be better to prevent the inequality by such measures as treating the natural creation as our common treasure, instead of permitting its privatization and then taxing back what is taken? Treating the natural creation, and that which the community creates by its presence and its investment in public goods -- schools, roads, libraries, etc. -- as our COMMON treasure would create equal opportunity for all, a much better idea than permitting some to capture it and then taxing some of their booty back after the fact. When we let some reap what others sow, and then take back a share after the fact, we're still permitting them to reap which deprives the sowers of that right. Whether it be nature doing the sowing, or the community as a whole, no good can come of permitting the privatization of that. Henry George, in "Progress and Poverty" and "Social Problems" showed the logical, efficient, just way to do better.
The game’s true origins, however, go unmentioned in the official literature. Three decades before Darrow’s patent, in 1903, a Maryland actress named Lizzie Magie created a proto-Monopoly as a tool for teaching the philosophy of Henry George, a nineteenth-century writer who had popularized the notion that no single person could claim to “own” land. In his book Progress and Poverty (1879), George called private land ownership an “erroneous and destructive principle” and argued that land should be held in common, with members of society acting collectively as “the general landlord.”
Magie called her invention The Landlord’s Game, and when it was released in 1906 it looked remarkably similar to what we know today as Monopoly. It featured a continuous track along each side of a square board; the track was divided into blocks, each marked with the name of a property, its purchase price, and its rental value. The game was played with dice and scrip cash, and players moved pawns around the track. It had railroads and public utilities — the Soakum Lighting System, the Slambang Trolley — and a “luxury tax” of $75. It also had Chance cards with quotes attributed to Thomas Jefferson (“The earth belongs in usufruct to the living”), John Ruskin (“It begins to be asked on many sides how the possessors of the land became possessed of it”), and Andrew Carnegie (“The greatest astonishment of my life was the discovery that the man who does the work is not the man who gets rich”). The game’s most expensive properties to buy, and those most remunerative to own, were New York City’s Broadway, Fifth Avenue, and Wall Street. In place of Monopoly’s “Go!” was a box marked “Labor Upon Mother Earth Produces Wages.” The Landlord Game’s chief entertainment was the same as in Monopoly: competitors were to be saddled with debt and ultimately reduced to financial ruin, and only one person, the supermonopolist, would stand tall in the end. The players could, however, vote to do something not officially allowed in Monopoly: cooperate. Under this alternative rule set, they would pay land rent not to a property’s title holder but into a common pot—the rent effectively socialized so that, as Magie later wrote, “Prosperity is achieved.”
Readers of this blog know that Lizzie Magie had created her game and started to promote it by the Fall of 1902.
“Monopoly players around the kitchen table”—which is to say, most people—“think the game is all about accumulation,” he said. “You know, making a lot of money. But the real object is to bankrupt your opponents as quickly as possible. To have just enough so that everybody else has nothing.” In this view, Monopoly is not about unleashing creativity and innovation among many competing parties, nor is it about opening markets and expanding trade or creating wealth through hard work and enlightened self-interest, the virtues Adam Smith thought of as the invisible hands that would produce a dynamic and prosperous society. It’s about shutting down the marketplace. All the players have to do is sit on their land and wait for the suckers to roll the dice.
Smith described such monopolist rent-seekers, who in his day were typified by the landed gentry of England, as the great parasites in the capitalist order. They avoided productive labor, innovated nothing, created nothing—the land was already there—and made a great deal of money while bleeding those who had to pay rent. The initial phase of competition in Monopoly, the free-trade phase that happens to be the most exciting part of the game to watch, is really about ending free trade and nixing competition in order to replace it with rent-seeking.
This is a good article, and I commend it in its entirety to your attention. It also provides links to Tom Forsythe's new site, http://landlordsgame.info/, whose graphics show many early versions of the Landlord's Game, which I look forward to exploring. I learned for the first time that the game layout that I had thought was an early one, with a lake in the center, was actually a 1939 version, based on Lizzie Magie's design but published by Parker Brothers. (I ought to have figured that out sooner, since the board includes her married name!)
It is interesting that one of the earlier versions -- 1909 -- was based on Altoona's streets. In the past year, Altoona has shifted to taxing land and not taxing buildings to fund its municipal spending. (This was a gradual shift, accomplished over a number of years; they must have liked the effect!)
A snippet of a thought: When some of us contribute by paying taxes -- be it into the Social Security system or the federal income tax, or state income tax, or state sales tax -- and others by contributing to our favorite charities, are these equally beneficial to the common good? (We don't give federal income tax deductions for one's contributions to Social Security, which constitute the majority of taxes for most of us. Well, maybe we do, sort of: the standard deduction could be construed as a sort of deduction for SS taxes. I've not played with the numbers.)
When some of us contribute by spending 2 years evangelizing overseas for our chosen religion, and others contribute by spending some years of our lives in military service, at risk to their lives and future well-being, are these equally beneficial to the common good?
And a semi-related thought: it seems likely that the richer candidate's contributions to his chosen charities were in the form of (awesomely) appreciated securities for which his basis was quite low. I've not heard much mention of that. He might have paid income taxes on $1 of "value" when he received it, and gotten a tax deduction on $10 or $100 -- or more -- when he donated it a few years later.
I don't mean this as a partisan thing; I'm not enthralled with either of our current major parties or their candidates, and regard one only as the lesser of two evils. (I think I would find one candidate's Supreme Court appointees more palatable than those of the other, and regard that as the key issue in the federal election.) I'll be voting for various 3rd party candidates for many of the positions on my ballot.
We'd be better off if we tapped into natural public revenue sources -- the rental value of land, the rental value of "location, location, location!", taxes on finite natural resources, such things as the supposedly "public" airwaves, geosynchronous orbits, airport landing rights, water rights -- the value of which today flows into the private pockets of various privileged folks, enriching them without requiring a return of service to the rest of society for that value.
As I listen to the rhetoric of the presidential and vice-presidential candidates about equal opportunity for women -- seeking equal opportunities for their daughters and granddaughters as for their sons and grandsons -- it occurs to me that they haven't asked that their sons and daughters have opportunities equal to the sons and grandchildren of Mitt Romney, who apparently share a trust fund currently worth over $100 million.* Even divided among 5 sons and 18 grandchildren, that's about $4 million per descendant, enough to throw off $90,000 per person per year without diminishing (and without them working -- or even having finished grade school). And that's before we start to talk about the $100 million IRA they are likely to inherit, which continues to appreciate free of taxes.
The Earth-for-All Calendar contains a number of items which speak to equality of opportunity for all in our current generation, and for all in future generations. When some of us start life with all the advantages, and others, because of the design of our society's systems, have few or no advantages, how do we continue to maintain the fiction that we believe we are all created equal, that our nation is founded on this proposition and its laws and customs said to conform to and support this proposition?
The advantages of our wealthiest didn't come out of thin air. They aren't "no-cost" to the rest of us, and they don't benefit the rest of us by any form of "trickle down." The trickle flows the other direction. To the extent that our society pretends that this comes out of thin air, we are permitting ourselves to be fooled -- treated as fools, taught by rich people's useful idiots.
And when some of us have the money to devote to promoting points of view that benefit ourselves, at the expense of the common good, to influence elections, where does democracy get us?
The accompanying map says, "Around Grand Central Terminal, towers could be up to twice the size now permitted. Development could also take place along the Park Avenue corridor, where towers could be more than 40% larger. Elsewhere in the district, towers could be 20% larger."
New York’s premier district, the 70-block area around Grand Central
Terminal, has lagged, Bloomberg officials say, hampered by zoning rules,
decades old, that have limited the height of buildings.
Mayor Michael R. Bloomberg wants
to overhaul these rules so that buildings in Midtown Manhattan can soar
as high as those elsewhere. New towers could eventually cast shadows
over landmarks across the area, including St. Patrick’s Cathedral and
the Waldorf-Astoria Hotel. They could rise above the 59-story MetLife
Building and even the 77-story Chrysler Building.
Mr. Bloomberg’s proposal reflects
his effort to put his stamp on the city well after his tenure ends in
December 2013. Moving swiftly, he wants the City Council to adopt the
new zoning, for what is being called Midtown East, by October 2013, with
the first permits for new buildings granted four years later.
administration says that without the changes, the neighborhood around
Grand Central will not retain its reputation as “the best business
address in the world” because 300 of its roughly 400 buildings are more
than 50 years old. These structures also lack the large column-free
spaces, tall ceilings and environmental features now sought by corporate
rezoning — from 39th Street to 57th Street on the East Side — would
make it easier to demolish aging buildings in order to make way for
state of-the-art towers.
it, “the top Class A tenants who have been attracted to the area in the
past would begin to look elsewhere for space,” the administration says
in its proposal.
plan has stirred criticism from some urban planners, community boards
and City Council members, who have contended that the mayor has acted
hastily. They said they were concerned about the impact of taller towers
in an already dense district where buildings, public spaces, streets,
sidewalks and subways have long remained unchanged.
Mr. Bloomberg has encouraged high-rise development in industrial neighborhoods, including the Far West Side of Manhattan,
the waterfront in Williamsburg, Brooklyn, and in Long Island City,
Queens. But with the proposal for Midtown, which is working its way
through environmental and public reviews, he is tackling the city’s
the development potential in this area will generate historic
opportunities for investment in New York City,” Deputy Mayor Robert K.
The initiative would, in some cases, allow developers to build towers twice the size now permitted in the Grand Central area. The
owner of the 19-story Roosevelt Hotel at Madison and 45th Street could
replace it with a 58-story tower under the proposed rules. Current
regulations permit no more than 30 floors.
When zoning changes increase the value of land, who should reap the benefit? The current landholder, or the community? What did the landholder do to earn that windfall? Do you think it comes out of thin air? Do you think it is paid him by other rich people?
Or do you recognize that it is part of the structure which enriches a few and impoverishes the many?
It is easy to fix this one. One just has to recognize the structure, and value the land correctly, and start collecting the lion's share of the land rent for the community. If it is more than NYC can put to use -- and it will be -- then apply the excess to reducing our federal taxes on productive effort. Use it to fund Social Security, or Medicare, or universal health insurance, or something else that will benefit the vast majority of us instead of an undeserving tiny privileged minority. Don't throw it in the ocean, and don't leave it in private pockets, be they American or not.
Collect the land rent. Repeat next year, and the next, and the next. Natural Public Revenue.
Equity, therefore, does not permit property in land. For if
one portion of the earth's surface may justly become the
possession of an individual and may be held by him for his sole use
and benefit as a thing to which he has an exclusive right, then
other portions of the earth's surface may be so held; and eventually
the whole of the earth's surface may be so held; and our planet may
thus lapse into private hands.
— HERBERT SPENCER, in 1850, Social
Statics, Chap. IX.
"The wages problem resolves itself into a very simple question, viz.: Which is the better for a community — to have 10,000,000 men earning $2.50 a day, with hours that enable them to read and rest and pass a fair proportion of their time with their families, and at the same time have no millionaires, or to have those 10,000,000 men working fifteen hours a day at $1.50, and have a few score millionaires?"
The Standardwas devoted to issues like this, and makes excellent reading in this decade and century.
It might be worth noting that in those days when one spoke of a millionaire, the reference was to someone whose assets totalled over $1 million. Today, it is commonly used to refer to someone whose annual income is over $1 million. But you'll notice what workmen's wages were in 1887 -- $1.50 a day is $468 per year*, and likely didn't leave much, if anything, for savings. [6 days a week.]
So which IS better for the community? The families making $1.50 or $2.50 a day are spending nearly every penny of that, just in order to get by. The millionaires can only spend so much on the necessities of daily life, plus some generous amount on luxuries. The rest they will invest, one way or another, and the wise ones, in our current structure, will "invest" in land -- particularly choice urban sites -- and natural resources, since we as a society are so generous about letting the owners of these assets keep most of what those assets earn, despite them having nothing to do with having created those assets, and being in no position to create more in response to demand, which will naturally increase with population!!
THAT is the problem with our current "generosity."
The spending of the 10 million on the necessities of daily life creates jobs for a lot of other people. (The portion that goes to their landlords in payment for the right to occupy bits of urban -- or other -- land, DOESN'T create any jobs; it simply enriches the landlord. I don't begrudge the landlord the portion that relates to the building, or to services he provides, such as, say, a doorman in the city.)
That any human being should dare to apply to another the epithet
"pauper" is, to me, the greatest, the vilest, the most unpardonable
crime that could be committed. Each human being by mere birth
has a birthright in this earth and all its productions; and if they
do not receive it, then it is they who are injured, and it is not
the "pauper," oh, inexpressibly wicked word! — it is the well-to-do
who are the criminal classes.
— RICHARD JEFFERIES, The Story of
My Heart, Chap. X., p. 122.
Any settlement of the land of a country that would exclude the
humblest man in that country from his share of the common
inheritance would be not only an injustice and a wrong to that man,
but moreover would be an impious resistance to the benevolent
intentions of the Creator.
I'm reading through the first issues of Henry George's newspaper, "The Standard," a weekly which was published in NYC beginning in January, 1887. It was started shortly after the mayoral race of 1886 (chronicled in Post & Leubuscher's December, 1886 book), and in the 4th issue there is a very explicit article about the role that Rome was attempting to play in NYC politics by removing from the priesthood an activist priest, the much-loved Dr. Edward McGlynn, of St. Stephen's Church, on 28th Street in Manhattan, the largest parish in the city. (This was before the creation of New York City by combining the five boroughs.)
For over 20 years, McGlynn had been living among New York's poor, hearing the confessions of the poor, and knew how hard their lives were. He knew the situation in Ireland which had brought many of them to the U. S., and when he read Henry George's 1879 book, "Progress and Poverty," he found the cause of their suffering, and saw how to correct the underlying cause of poverty.
The article to which I refer is entitled, "From a Brooklyn Priest"
The Body of the
Catholic Clergy Sympathize With Dr. McGlynn
The Brooklyn Times prints an interesting
interview with “a well known parish priest” of that city. His
name is not given "for obvious reasons,” but those acquainted
with the Catholic clerics of Brooklyn have little difficulty in
attributing it to the most popular and influential of the
Catholic clergy of that city. We make the following extracts:
“The sympathy of the body of the Catholic clergy in New
York and Brooklyn is undoubtedly with Dr. McGlynn. I have talked
with a great many of my brother priests of both cities on the
matter, and almost without exception, they have taken Dr.
McGlynn's side in the controversy, though they would be loth to
do so publicly for manifest reasons. The sentiment of the body
of the Catholic clergy of the two cities is that whatever has
been done in Dr. McGlynn's case has been done by inspiration from this side. Of course the question at issue does
not at all touch matters of faith. It is purely a question of
discipline. The authorities at Rome know little or nothing of
the real state of affairs at this side of the Atlantic except as
they are inspired by the archbishop of the different provinces.
Archbishop Corrigan is in daily communication with Rome by
cable, and the views of the controversy between Dr. McGlynn and
his superior that are entertained at Rome pending the personal
appearance of Dr. McGlynn in the Eternal City, are the views of
the archbishop of New York that are telegraphed and written
“I do not mean to imply that Archbishop Corrigan would
willfully misrepresent the situation here, but I do say that Dr.
McGlynn, with all his experience as a priest in the American
metropolis, with all his practical knowledge of the condition of
the poor and of the working classes in that city, is a better
judge of the political needs of the masses in New York than
Archbishop Corrigan is, who has spent the greater part of his
career as an ecclesiastic in the state of New Jersey; and I hold
that Dr. McGlynn and every other Catholic priest has the right
to take an active part in the politics of the country. To say
that a man of the acknowledged piety and the blameless life of
Dr. McGlynn sympathizes with anything that smacks of communism
or anarchy is the veriest nonsense to anyone who knows him — and
who does not know everything about him today? Dr. McGlynn, as a
priest, knows the awful burdens which the laboring classes of
New York city have to bear through political misrule and the
corrupt combination of capital to oppress them. He knows how
anomalous that condition of things is which allows one man to
accumulate a hundred millions of dollars within 25 years and compels another to work for a dollar a day, nay, while
thousands, anxious for work, are starving for the lack of it.
Hence his support of the candidate of the labor party for mayor.
Dr. McGlynn did not believe that anarchy or communism would
follow in the wake of the election of Henry George to the
mayoralty of New York any more than he believed that Mr. George,
as the chief executive of the municipal government across the
East river could put his land theories into practical operation
in the metropolis. Any possible change in the government of New
York city must be a change for the better, so far as the poor
“If the bishops of the dioceses in the United States
were taken by Rome from among the clergy of these dioceses who
thoroughly understand the social and political conditions of
their people, there would be none of these disciplinary
troubles. What sense is there in sending an Italian priest to
Canada or an Irish priest to Guatemala as bishop? Or why should
a bishop be transferred from a city in the state of New Jersey
to preside over the archdiocese of New York when there are many
able and holy priests in the metropolis worthy of election to
the prelacy who have spent their lives among the masses of the
people? In countries where the canonical law of the church is in
practical application the parish priests of a diocese in which
the bishopric becomes vacant send three names to Rome by majority
vote. One is set down as dignus, or worthy, another as dignior,
or more worthy, and a third as dignissimus, or most worthy. Any
one of the three may be selected, and it sometimes happens that
it is the lowest on the list who is chosen. The pope has the
absolute power to go outside the list sent to him from the
diocese in which a vacancy occurs, but it is a power rarely
exercised and only for the most exigent reasons. If the canon
law applied in America, which is only yet a missionary country
and subject to the propaganda at Rome, Dr. McGlynn could not
have been turned out of St. Stephen's church as he has been and
his salary would have run on despite his suspension until his
case was finally decided at Rome.
“It is most unfortunate that the canon law does not
apply in the United States, and that the political, social and
educational situation in this country is not better understood
at Rome. Wealthy Catholic politicians have too much to say on
church policy in this country; and unfortunately that is today
the trouble in New York city. The masses of the Catholic clergy
say, 'Hands off.' As long as bishops, with whom wealthy
politicians are most powerful, practically say who shall be
elected to the prelacy in the United States there will be a
chance for trouble among the laity.
“I am satisfied that if a majority of the Catholic
clergy of the dioceses of New York and Long Island could do it
Dr. McGlynn would have been elected archbishop and Archbishop
Corrigan would have been allowed to remain in New Jersey. I
unhesitatingly say that if the votes of the Catholic clergy in
these two dioceses could do it Dr. McGlynn would be restored to
St. Stephen's parish tomorrow. No old priest of New York city
wanted to succeed Dr. McGlynn in that parish, for they all knew
how his congregation idolized him. I am also free to say that if
Archbishop Corrigan had not been brought from the state of New
Jersey to New York city this trouble would never have occurred.
“Mgr. Preston is the bitterest foe that Dr. McGlynn has
in the diocese of New York. I do not mean to imply that the
monsignor entertains personal animosity toward the ex-rector of
St. Stephen's church, but he is utterly opposed to what Dr.
McGlynn stands for as an American citizen. Mgr. Preston is an
aristocrat and the associate of aristocrats. Even converts to
the Catholic church who know Father Preston well have admitted
that the monsignor dearly loves the privileges which attach to
church dignitaries in Catholic countries, and is inclined to ape
the civil ceremonial of such communities in his intercourse with
his flock. Dr. McGlynn is poor, is of the poor and loves to
associate with the poor. He is in this respect the antithesis
of Mgr. Preston, and the latter is a confidential adviser of
This article, more than anything else I've read, brings home to me the extent to which the rich manage even the Church for the benefit of the rich, to the detriment of the poor. When a priest who seeks to correct the unjust structures is deprived of his priesthood because he might upset the privileges of the rich, the country and the church are both in trouble.
When churches benefit from contributions from wealthy contributors, they will tend to act to enforce the structures which enrich those wealthy contributors, rather than rocking the boat in any way. When economic structures funnel the community's wealth into a relative few pockets, the Church will tend to embrace those pockets, not challenge the structures. Money in elections is not the only corrupting force.
That which is yet wanting on your part to be done is this, to see
that the oppressor's power be cast out with his person; and to see
that the free possession of the land and liberties be put into the
hands of the oppressed commoners of England.
— JERRARD WINSTANLEY,
Epistle Dedicatory to Oliver Cromwell, in
The Law of Freedom in a
Platform, or True Magistracy Restored.
"But how is it that you allow these chiefs — landlords, don't you call them? — to taboo the
soil, and prevent you all from even walking on it? Don't you see
that if you choose to combine in a body, and insist upon the
recognition of your natural rights — if you determined to make the landlords give up
their taboo, and cease from injustice, they'd have to yield to you?
And then you could exercise your natural right of going where you
pleased, and cultivate the land in common for the public benefit,
instead of leaving it as now, to be cultivated anyhow, or turned
into waste, for the benefit of the tabooers?"
— GRANT ALLEN, The British
Barbarians (Words spoken by Bertram).
The nobility and gentry and even those holy men, the abbots, not
content with the old rents that their farms yielded, nor thinking it
enough that they, living at their ease, do no good to the public,
resolve to do it hurt instead of good. . . . As if
forest and parks had swallowed up too little of the land, those
worthy countrymen turn the best inhabited places into solitude.
A great landholder may legally convert his whole property into a
forest or hunting ground, and expel every human being who has lived
upon it. In a thickly populated country like England, where
almost every acre has its owner and occupier, this is a power of
legally destroying his fellow-creatures; and that such a power
should exist, and be exercised by individuals, in however small a
degree, indicates that as regards true social science, we are still
in a state of barbarism.
— ALFRED RUSSEL WALLACE,The Malay
Archipelago, Chap. 40. Final Note to the book. (1869)
The post below this one, "Mitt Romney's 'Fair Share' " refers to his fair share of the costs of providing public goods.
But perhaps an equally important question is the nature of one's fair share of the output of our economy and the output of the earth. Some of the former output is the result of individual efforts, and one ought to be able to keep that portion. But at the same time we must recognize how much comes from the division of labor, from drawing down on the non-infinite supply of non-renewable natural resources on which all of us today must depend and on which future generations of human beings must rely. Those who draw down more than their legitimate share owe something to the rest of the community. Our wealthiest tend, we suspect, to use many, many times their legitimate share, and the median American likely draws far more than their share, when one considers the planet as a whole.
Perhaps "legitimate" is not the right word here. It refers to what is permissible under current law. (The word gets misused a lot -- see the discussion on "legitimate rape," which seemed to be about the circumstances under which a woman has a right to make a specific very personal, decision, and when it is considered by some to not be left to her and is the province of government, legislators or others.)
What is one's "fair share" of natural resources? America is using a hugely disproportionate share of the world's resources. Are we entitled to it because we're somehow "exceptional"? Because "our" God is somehow better than other nation's Gods? Or do we genuinely believe that all people are created equal, and intend to live our lives accordingly?
Our output of greenhouse gases exceeds our share of the world's population. This is not without consequences for the world, and for peace on earth.
We ought to be re-examining our incentives so that they move us in the direction we ought to be going, which is, to my mind, using less. We can build transportation infrastructure which will permit many more of us to move around with less impact on the environment. We can fund that through collecting the increases in land value that infrastructure creates. We can correct the incentives which cause us to use today's inferior technologies to extract natural resources from the earth in ways which damage the environment, as if ours was the final generation, or the only one worth serious consideration.
Better incentives could reduce, eliminate, even reverse urban sprawl. I refer specifically to land value taxation as a replacement for the existing property tax, particularly in places where assessments are for one reason or another not consistent with current property values -- e.g., California and Florida, parts of Delaware and Pennsylvania which currently use assessments from the 1970s, and many other places where assessments are simply out of whack with current reality!) We should be replacing sales taxes, wage taxes, building taxes with taxes on land value and on natural resources. Most of that value is flowing generously into private or corporate pockets, to our detriment. It concentrates wealth, income, and, of course, political power.
Collecting the rent, instead of leaving the lion's share of it to be pocketed by the rent-seekers, would go a long way to making our society and our economy healthier. Eliminating the privilege of privatizing that which in a wisely designed society would be our common treasure would make our society a better place in which to live, a place in which all could thrive and prosper without victimizing their fellow human beings.
A major theme of the underlying political debate in the United States is the role of the state and the need for collective action. The private sector, while central in a modern economy, cannot ensure its success alone. For example, the financial crisis that began in 2008 demonstrated the need for adequate regulation.
Moreover, beyond effective regulation (including ensuring a level playing field for competition), modern economies are founded on technological innovation, which in turn presupposes basic research funded by government. This is an example of a public good – things from which we all benefit, but that would be undersupplied (or not supplied at all) were we to rely on the private sector.
Conservative politicians in the US underestimate the importance of publicly provided education, technology, and infrastructure. Economies in which government provides these public goods perform far better than those in which it does not.
But public goods must be paid for, and it is imperative that everyone pays their fair share. While there may be disagreement about what that entails, those at the top of the income distribution who pay 15% of their reported income (money accruing in tax shelters in the Cayman Islands and other tax havens may not be reported to US authorities) clearly are not paying their fair share. ...
I have to disagree with the second sentence of this next paragraph. And I think Stiglitz knows better, if he stops to think about it:
Democracies rely on a spirit of trust and cooperation in paying taxes. If every individual devoted as much energy and resources as the rich do to avoiding their fair share of taxes, the tax system either would collapse, or would have to be replaced by a far more intrusive and coercive scheme. Both alternatives are unacceptable.
We don't need intrusive or coercive; we just need to start collecting the lion's share of the rent! Well, I suppose some rent-seekers would find this extremely intrusive -- it intrudes on their habit of self-enrichment by privatizing of what is rightly and logically our PUBLIC treasure, the logical way of financing PUBLIC goods. And Professor Stiglitz is quite aware of the value of natural resources; he may not be quite as conscious of the value of urban and other well-situated land.
Our national recordkeeping doesn't even collect the valuations of land and natural resources on any consistent basis! (One could reasonably argue that this failure-to-measure is a form of corruption!) What we don't measure we can't do anything about. And the powers that be are quite content with how we do things; the benefits accrue to them! And several generations of college-educated people know nothing about the issue, which was well known and widely discussed 100 years ago. (Look into the extensive Single Tax literature and the ideas of Henry George.)
Some more excerpts:
The billionaire investor Warren Buffett argues that he should pay only the taxes that he must, but that there is something fundamentally wrong with a system that taxes his income at a lower rate than his secretary is required to pay. He is right. Romney might be forgiven were he to take a similar position. Indeed, it might be a Nixon-in-China moment: a wealthy politician at the pinnacle of power advocating higher taxes for the rich could change the course of history.
But Romney has not chosen to do so. He evidently does not recognize that a system that taxes speculation at a lower rate than hard work distorts the economy. Indeed, much of the money that accrues to those at the top is what economists call rents, which arise not from increasing the size of the economic pie, but from grabbing a larger slice of the existing pie.
Those at the top include a disproportionate number of monopolists who increase their income by restricting production and engaging in anti-competitive practices; CEOs who exploit deficiencies in corporate-governance laws to grab a larger share of corporate revenues for themselves (leaving less for workers); and bankers who have engaged in predatory lending and abusive credit-card practices (often targeting poor and middle-class households). It is perhaps no accident that rent-seeking and inequality have increased as top tax rates have fallen, regulations have been eviscerated, and enforcement of existing rules has been weakened: the opportunity and returns from rent-seeking have increased.
Today, a deficiency of aggregate demand afflicts almost all advanced countries, leading to high unemployment, lower wages, greater inequality, and – coming full, vicious circle – constrained consumption. There is now a growing recognition of the link between inequality and economic instability and weakness.
There is another vicious circle: Economic inequality translates into political inequality, which in turn reinforces the former, including through a tax system that allows people like Romney – who insists that he has been subject to an income-tax rate of “at least 13%” for the last ten years – not to pay their fair share. The resulting economic inequality – a result of politics as much as market forces – contributes to today’s overall economic weakness.