One Solution for Many Problems?

That was the title I chose for a short talk I gave at the "Building a New World Conference" at Radford, VA, a few weeks ago.  Here it is ... 

One Solution for many Problems: Connecting the Dots

That sounds too good to be true ... until you become conscious of the magnitude of the error that the solution corrects.

My goal here today is to connect some dots.  If you're like me, you won't see all the connections immediately; some of what I say will make perfect sense to you, and some of it will seem way off the mark.  It is my opinion that the possibility of solving any ONE of these problems is reason enough to advocate the reform I am proposing ~ and that even the possibility of solving more than one should be enough to persuade a large number of people that this is in our individual and joint best interest.  I will ask you to suspend judgment for a little while, and see whether any of these connections resonates with you? 

Some of what I'm saying will overlap with things Art and Carl have said, and most likely I'll say the same things a little differently.

Let me put out here first some of the bigger dots I mean to connect. 

• Sprawl
• Blighted cities
• Long Commutes
• Housing Affordability
• Barriers to entry for budding entrepreneurs
• Low wages
• Boom-bust cycles
• Low hopes for the future

I'll telegraph my conclusion here, and then share with you some of how I get there.  Perhaps this might be summed up by saying that the children, grandchildren and greatgrandchildren of the fellow who "got here first" should not be empowered to collect -- and pocket -- rent from the rest of us for our ancestors' failure to beat him to it.  We are all created equal, and by collecting the rent -- by which I mean the annual value of the land on which we all rely -- from those who today are permitted to privatize it, we can create an environment in which all of us are equal, all of us hold as private only as much as we can use effectively, and none of us is permitted to enslave our fellow people.   The effects of collecting that rent are awe-inspiring.  They range across some of our most serious and unyielding social, economic and justice problems, and correcting that privatization of the commons will put us on the road to solving many other problems.

One is sprawl. Nearly 50 years ago, there was an issue of a builders' trade journal devoted to land and sprawl.  I'd heard about it for a long time, and finally got my hands on it a few weeks ago. It had some amazing aerial photos of the sprawl development that was occurring in the late 1950s.  Not long after that, I had occasion to drive through the Delmarva peninsula, and see exactly the same thing.  Checkerboard development ... leapfrogging over agricultural land to establish new subdivisions, new towns, with park-and-ride lots to access Wildmington.  Those new towns are causing good agricultural land to be torn up, paved over and built up with new towns and subdivisions, requiring new schools, sewer systems, police, fire, Home Depots ... you get the idea.  The reason the good land closer to Wilmington's jobs is not being developed first is that speculators are holding out for a higher price.  It costs us in fuel, pollution, commuting time, and all their concommitants.

Another is blighted cities
If you don't live in or near a city which suffers from blight, picture the city scenes in Lackawanna Blues.  Plenty of parking lots (paved and unpaved), vacant or falling down buildings, empty storefronts.   Every city started in its current location because there was something naturally favorable about that location: rivers, waterfalls, lakes, harbors.  To these natural advantages, the community added its own investments in infrastructure -- city water, sanitary and storm sewers, transportation systems -- and in public services -- schools, public health, building inspections, police, firefighting.  Starting after WWII, the federal government built interstate highways, connecting the cities with each other.   And commuter expressways made it possible for people to commute to the city from further and further out.  Cities like Philadelphia, St. Louis and Kansas City, Missouri impose wage taxes.   They tax buildings, so they get fewer buildings and less well-maintained ones, since to keep them looking good and performing well brings down the tax collector.  They get vacant lots, because the owners of vacant lots are not asked to pay much in property taxes.

Another "dot" is long commutes.
Commuting consumes huge amounts of time for many of us -- young parents with children in daycare; slightly older parents with children in after-school activities, the large group of people who simply cannot afford to live near the job that pays their wages.   Long commutes lengthen a long and stressful workday.  They consume energy -- whether the commute be via public transportation, individual cars, bicycle or foot.  They likely result in pollution.  They use natural resources that could be put to better use.  They encourage farmers to produce for energy instead of for food. 

Another "dot" is housing affordability.   Many of us have in our heads an image of a single family home with a white picket fence around it as our ideal.  And to afford such a home, particularly if they also require that it be in a school district which they can be confident will provide their children a good education, young buyers discover that they need to drive long distances to qualify for the mortgage.  The house itself doesn't offer a great deal more space than an urban condominium might offer; it costs a lot to heat and cool, and even for an older home, they must pay a large share of their income, and must keep two parents employed.  Elizabeth Warren and Amelia Tyagi described this -- without understanding the underlying dynamics -- in The Two Income Trap.   (Single-parent families are pretty much out of luck in this scenario; they tend to find themselves in inferior school districts and insecure living situations.)

Another "dot" is the barriers to entry for budding entrepreneurs
(Do you know that while small businesses are responsible for a significant portion of our job creation, they are also responsible for a lot of jobs that disappear?  How many "lost our lease" "under new management"  and "space available" signs have you seen in the past month?)    There are two kinds of small businesses:

• the kind whose operators are their own landlords -- or landlords to others -- and
   
• those which are tenants. 
   

The landlord businesses tend to thrive; the tenant businesses come and go.  Neighborhoods appreciate in value, and the landlord reaps the benefit, the tenant must either meet his demand for higher rent, relocate to an inferior location (with an ongoing cost to his productivity, and an interruption to his business), or go out of business.    Why should the landlord share in the benefits created by the community?  What has he added? 

What does an entrepreneur need?  Unless his business plan can be executed entirely from his computer, or from a desk in the corner of the bedroom, he likely needs a location. For that, he must pay someone who already owns a location, either by renting a portion of his building, or buying the site.  Much of what he pays that "someone" for is not the building itself -- the manmade part of the property -- but the location. And that "someone" didn't make that location valuable.  We all did, by our common spending through our taxes, and our presence as consumers, workers, volunteers, tourists, community members, business travelers, etc.

Another "dot" is low wages. Today, we are in a situation in which people are chasing jobs. There appears to be the prospect on the horizon that as the Baby Boom generation reaches retirement age, this situation may shift around a bit.  (Then again, the data I've examined suggests that much of the baby boom generation will not be able to fully retire, given their level of assets and income.  They will still be in the job market, though perhaps not working full time.  They will be competing with a different segment of the job spectrum.  But think of the sort of competion we could have for workers if entrepreneurs had access to the sites they needed, and had to compete with each other for workers.  Think of the incentives that every single young person would have to improve himself, so that he could be the "decider," choosing among potential employers, instead of being lucky to find a job at all. 

Yet another dot is the boom-bust cycles with which we are afflicted.  Things may seem pretty good for some of us on the way up -- maybe -- but there is no denying the widespread economic and psychic pain produced by the other side of that curve.   

Low hopes for the future Perhaps this is the worst of all the "dots."  Call it poverty.  Call it discouragement.  Call it desperation. Call it living on the edge.  Call it "working poor."  Call it "paycheck to paycheck."  Call it trapped in high fixed costs and payday loans. Call it living in neighborhoods whose schools don't seem to be able to educate our children.  Call it teaching in a school whose students live in families where there isn't sufficient income to meet their most simply defined needs.    And many of the most hopeless are being realistic, given what they see around them.   And then we turn around and blame them for their victimization.

A large percentage of Americans, people who live in one of the best-off countries in the world, simply lack the income to provide for their families' most simply defined needs. Our wealth is concentrated in the hands of a relative few of us.   And most of us, believing devoutly in "property rights" accept that as if it was natural or even God's will.    Our official poverty rate is in the low teens.  But even the Census Bureau, which calculates that poverty rate, will be the first to tell you that the thresholds they use have no particular relationship with the cost of living or any other reality; they are simply a statistical benchmark.  And yet our politicians, perhaps with the best of intentions, seem to accept this measure as if it were meaningful and speak of cutting poverty by half within a specific period of time.  Moving people from somewhere below that statistical threshold income level to an income level somewhat above that threshold is not ending poverty.   We don't need more programs to help the impoverished.  We need to correct the structures that create our poverty, our sprawl,  our housing affordability problem, suppress wages and enrich those who have been savvy enough or lucky enough to be permitted to treat as private treasure certain kinds of economic value which rightly belong to all of us, in common.  If you've been listening, you know that we're not talking about disturbing title to land or natural resources.  We are talking about a reform of what we tax, and what we don't tax.  This is a reform which can be enacted locally, once the enabling legislation is in place, and which each of us can work for at the local level.

• Henry George's remedy, a tax on land values replacing most or all of our other taxes, can solve our sprawl problem, redirecting sprawl back into our urban areas which have the infrastructure in place.    
   
• Henry George's remedy can produce the kind of density that will make possible effective public transportation systems.   
   
• Land Value Taxation can provide the incentives which will lead the private sector to produce comfortable, technologically modern housing suitable for people of all ages, stages and income levels, close to the infrastructure and amenities that our cities and towns already have in place.
   
• LVT can make it possible for those of us with a business plan in our heads to see that plan to fruition  (I'm not promising the business will be a success -- just that the entrepreneur will have a far better opportunity, and will start from a position of equality with his fellow human beings.) 
   
• LVT can create the economic environment in which entrepreneurs will be chasing workers, driving wages up.
   
• Under LVT, a rise in wages will benefit the worker and his family, instead of the current beneficiaries -- the urban landlord or suburban home- or land-seller and the mortgage lender.
• LVT can reduce the highs and lows of the boom-bust cycles that have afflicted us
• LVT can eliminate poverty, opening opportunities for all of us to create more satisfying lives -- life, liberty and the pursuit of happiness -- for all of us!

All these things can be corrected through the enactment of land value taxation.  And likely, they can't be corrected without the enactment of land value taxation. 

I'll conclude with two quotes, both from Albert Einstein:

• Insanity: doing the same thing over and over again and expecting different results.  
• A clever person solves a problem; a wise person avoids it.

So what does a wise society do? It prevents problems, by structuring itself wisely and justly.   Land value taxation is the necessary, if not sufficient, reform to achieve that.

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[Nicholas D. Rosen]

Sing it, sister!