John Fisher wrote an excellent Letter to the Editor, published in the Chatham Daily News, which I think worth sharing:
Re: Boom and Bust Cycles.
No matter how many billion-dollar crutches (bailouts, stimulus) are thrown at the current economic downturn, up-and-down cycles will continue until the "experts" get back to Economics 101.
Adam Smith, David Ricardo, Henry George and other classical economists correctly defined land (free gift of nature), labour and capital as the three factors of production. Land or nature, not being created by labour, is not capital. Unlike privately created wealth, nature only gets value from the presence and activity of the community as a whole.
The economy is often compared to a house or a ship, but usually without reference to the lot or water upon which they absolutely depend. All the good things the experts now suggest to improve the house or ship will ultimately determine the value of the underlying natural base, depending of course on human pollution, over and restricted use, etc.
Giving nature a value like we do now for land and then capturing it for the social good would reduce urban sprawl and waste of resources, while rewarding quality and quantity in the production process.
Many classical economists, including Henry George, would shift taxes from private wealth (the house) to public wealth (the land). In other words, pay for what you take from nature and not what you make privately. With little cost to government, this simple tax shift would remove unearned income from resource speculation and enable tax reductions on wages and business.
Until economic justice and reason prevail with a major tax shift from production (jobs, houses, trade) to resource values (raw land, water, oil) the world will continue to suffer from monopolies of nature and economic turmoil.
If you'd like to know more about these subjects, from a Georgist point of view, you might explore these pages:
boom-bust cycles | Adam Smith | David Ricardo | Henry George | classical economists | land | labor | capital | factors of production | well-provisioned ship | all benefits go to the landholder | growing rich in one's sleep | technological progress | population growth | he who produces | pollution | pay for what you take | unearned increment | land speculation | privatization | commons | enclosure | sprawl
John packed a lot into a single letter, and I'm glad the editor had the sense to print it. Now, if only more of us understood what John does.
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