LVTFan's Blog

Congressman Maguire's speech on Chinese Exclusion - October 13 & 14, 1893 --- and the remedy

This is a very long speech; it stretched over 2 days.  It was occasioned by discussion of legislation on Chinese exclusion.  James G. Maguire (1853-1920) represented San Francisco in Congress from 1893 to 1899.  Georgists are acquainted with him in part because of his writings in The Standard, Henry George's weekly newspaper, including the 1887 speech to the Anti-Poverty Society in NYC in which Judge Maguire spoke of seeing the cat, which soon became a shorthand for that AHA! moment when one starts to see the full beauty of Henry George's ideas. 

I've seen parts of this speech in various places, but don't always see what I think is the most important and remarkable part of it.    

The situation Congressman Maguire describes in San Francisco is dramatic, and one can see why explaining the situation to his mostly East Coast colleagues in Congress was a challenge. 

In the district which I represent there is a vastly greater number of adult Chinese male population than of adult males of the Caucasian race, citizens and aliens combined. That is the situation there. That was true of the whole city of San Francisco, according to the statistics, until quite recently. I believe it to be the condition in San Francisco now. I believe the census returns of Chinese population in San Francisco to be wholly and grossly inaccurate.

At the end of the first section, we get a hint of where the speech is going.

You see the hardships imposed by our Federal laws upon the Chinese, and your sympathies go out to them because you do not see the other side of the picture. We see the oppression, misery, degradation, and slavery to which our own laborers are reduced as a direct result of Chinese immigration. We see that the imported Chinese coolies are mere agencies in the hands of monopolists—domestic and foreign—by which our own people are gradually reduced to a condition of wretchedness approximating to the social condition of the Chinese slaves, and without the slightest feeling of malice against the unfortunate Chinamen we demand their exclusion and their deportation as necessary measures of defense to our own people.

Squirrel Island

http://www.cooperative-individualism.org/freeland-a_squirrel-island-191x.pdf

SQUIRREL ISLAND

By A. FREELAND.

One hundred squirrels lived on a certain island which contained a thousand nut trees. Each tree yielded sufficient nuts to support one hundred squirrels. But all of the trees were owned by ten of the squirrels. The ninety treeless squirrels rented portions of trees from the ten treelords, paying part of the nuts they gathered. The treelords did no work, but kept fat and sleek, while the treeless squirrels were very poor, both physically and financially.

One of the working squirrels invented a machine for gathering nuts. The ten treelords formed a company and paid the inventor a peck of nuts for his patent, and promised him steady employment at higher wages.

Thirty squirrels, aided by the machines, could gather as many nuts as were formerly gathered by all the working squirrels. Sixty squirrels were thus thrown out of employment. Thirty of these eventually secured employment as menials in the households of the treelords. They became cooks, flunkys, coachmen, footmen, etc., at a very low wage. The remaining thirty unemployed squirrels subsisted on charity or by theft, some actually dying of starvation.

Owing to the diminished demand for nuts, because so many were unable to buy what they needed, there was soon an “overproduction" of nuts, and the treelords were obliged to “shut down" a part of the time, thus throwing many more of the treeless squirrels out of work.

Competition among treeless squirrels for employment became exceedingly fierce and wages steadily fell. Some of the squirrels organized a union and struck for higher wages, but there were plenty of unemployed squirrels who were willing to work for the low rate. These “scab" workers were hired in place of the strikers. The latter did not relinquish their jobs without a struggle. Riots ensued, in which several of the “scabs’’ and strikers were killed.

A charitable society was organized which doled out every day a nutshell full of nut-soup to the unfortunates. The government also established a rock-pile and a public wood-yard, where unemployed squirrels could secure half of an inferior nut in return for breaking a basketful of rocks or gnawing off six double-armfuls of wood. In this way, although the majority of the squirrels were always on the verge of starvation, very few getting enough to eat, it was seldom that one actually starved. Of course their lives were shortened, but that was due, it was said, to inexorable and unavoidable conditions over which squirrels has no control.

The unemployed squirrels and those receiving meager pay began to murmur. Even some of those who operated machines were touched by the sufferings of their fellows and suggested that something must be wrong on an island which yielded sufficient nuts to feed 100,000 squirrels and yet did not support 100.

Some attributed their woes to the single nut standard; others asserted that their condition was due to the importation of pauper cracked nuts from foreign islands; still others that it was because some of the squirrels drank rain-water.

Some suggested that the hours of labor of working squirrels should be shortened, thus making work for more squirrels; others that pauper squirrel immigration should be prohibited, while a pious squirrel declared that times always would be hard so long as some of the wicked squirrels persisted in working on the Sabbath.

Many demanded an income tax of two nuts annually from each of the treelords, the revenue from such source to be given in bounties to nut-tree owners to encourage the production of nuts.

Some contended for the free and unlimited coinage of nut-shells at the ratio of sixteen nut-shells to one nut, while others asserted with considerable unction that green nut-tree leaves were the only safe, sound and flexible currency. They demanded national greenleaf money sufficient in volume to transact the business of the island on a cash basis—not less than fifty greenleaves per capita—declaring that to be the only means of restoring prosperity to the island.

To elevate the standard of citizenship, as a prerequisite to the right of franchise, a poll tax was proposed, the argument being adduced that any squirrel who would not pay for the privilege of wearing a head on his shoulders could not possibly be a good citizen.

There was a popular demand for legislation against the basket and wood trusts, which, it was claimed, were ruining the island by lowering wages and raising prices.

The treelords and the pious squirrels declared that there always were poor squirrels and always would be; that it was an inscrutable decree of Providence that some (the idlers) should be rich and the others (the workers) poor, some masters and others servants.

Many clamored for common ownership of the machines, maintaining that all the ills that were befalling treeless squirrels were the result of machinery displacing labor.

A single-tax squirrel mildly suggested that there were sufficient nut trees on the island to support in comfort 100,000 squirrels; that the treelords did not create the nut trees; that if nut-tree monopoly were abolished there would be plenty of nuts, not only for the squirrels then on the island, but for all the other squirrels on all the other islands; that then any thrifty squirrel or association of squirrels could make machines or hire them made, and the hours of labor would be reduced without legislative enactment.

Immediately there were cries from all quarters: “Anarchist! Socialist! Communist! Thief! Robber! Traitor! Revolutionist! Confiscator! Agitator! Hang him! Throw him to the sharks!" etc. So he wrote this letter.

THE JOSEPH FELS FUND OF AMERICA
Cincinnati, Ohio
Price 10 Cents Per Hundred.

 

We don't know who A. Freeland is, but there is reason to think that Louis Freeland Post could have been the author.  In The Standard, there were a couple of articles signed by "Lewis Freeland."   See "A Mysterious Disappearance," in Issue #013, 1887-04-02 and  "Lavender's Yarn," in Issue #025, 1887-06-25.

 

See also Edward Vance Cooke's poem, "Uncivilized" and J. W. Bengough's "A Poem of Political Economy"

 

 

Terrence Powderly: On Earth Peace, Good Will Toward Men (Cosmopolitan, December, 1891)

 

"ON EARTH PEACE, GOOD WILL TOWARD MEN."

T. V. POWDERLY.

Terence V. Powderly was born January 22, 1849, at Carbondale, Pennsylvania. His parents were natives of Ireland and were honest hard-working people.The boy's school days ended at the age of thirteen.  At fourteen he was examiner for the Delaware and Hudson Canal company: at seventeen he was apprenticed in the Delaware, and Hudson shops to learn the trade of machinist; at twenty he was a machinist in the locomotive shops of the Lackawanna railway at Scranton, and in 1871 joined a labor organization.  Two years later, in spite of the fact that he was a Conservative, he was discharged from the shops because of his activity in the labor union.  He worked at his trade wherever he could find employment notwithstanding the "black list" until 1878, when he was elected Mayor of Scranton, an office he retained for six years. He has been a chief factor in organizing the Knights of Labor, whose General Master Workman he has been since 1879.

IT is easier to point out the wrong than rectify it, less difficult to find something to condemn or find fault with than praise or endorse; and in the field of industry, while the advance toward better conditions has been more rapid during the past decade than for centuries before, the results are not so apparent to the worker in the field as to the looker-on. The great danger which presented itself to the people fifteen years ago was the law. The poor were without friends: they were the recipients of denunciation from statesman, press and pulpit. It was considered rude to even hint that the man who soiled his hands in manual toil had a right to any consideration other than a patronizing kindness at the hands of his employer, and to suggest that others should take an interest in his welfare was to incur the displeasure of society. The law made it a crime to be idle and gave to employers the privilege of turning the workman away without protest. To be out of money and on "tramp" was an offense against the law: it is today, but is not punished so rigorously as it used to be.

A Poem of Political Economy -- likely J. W. Bengough, from 1887

A Poem of Political Economy
from Grip, mid-1887
likely by J. W. Bengough

Capital, Land and Labor
    Were triplets at their birth,
And started out together
    To cultivate the earth;

Quoth they, “We’ll work together,
    And all the wealth we make
Will be divided fairly,
    And each a third will take.

“Capital’s share is Interest,
    Land’s share we’ll know as Rent,
While Labor’s we’ll call Wages.
    And each will be content.”

The business grew and prospered,
    And wealth was made galore,
But, lo! while Land waxed wealthy
    The other two grew poor.

And it was seen, most strangely,
    That with the rise of Rent,
Both Interest and Wages
    Lower and lower went!

“There’s something wrong, dear brother.”
    The others said to Land,
“There’s something crooked somewhere
    We’d like to understand.

“While you are fat and jolly,
    And from all care are free.
We, though we do our portion
    Are pressed by poverty.”

Said Land, “My dearest brothers,
    The facts are as you state—
While capital and wages fall
    Rent grows at inverse rate.

“And why? — the thing is simple,
    And very plain to see: —
For all your raw material
    You’ve got to come to me.

“And I (through ‘private ownership’)
    Am thus empowered to say,
As much as I see fit to ask
    You both have got to pay.

“We’re on a different footing,
    As you may now perceive,
You’ve got to have my help, you know,
    Or, simply, you can’t live.

“And since (through ‘private ownership’)
    I ask more than my share,
It follows that my partners
    Are left a little bare!”

“Most excellently reasoned,”
    Said Labor. “clear as day!”
“The very thing,” said Capital,
    “That I was going to say.”

“Well, now,” said Labor thoughtfully,
    “I think I see the chip
That spoils our dish of porridge—
    It’s ‘private ownership.’

“We’ll just dissolve this little firm
    And form again with two
Called Capital & Labor —
    Both workers — that will do.

“And Land (or raw material)
    Since it by Heaven is sent
We’ll treat as common property
    By wiping out all rent.

“Then while the wealth producing
    Will go on as before,
The workers will enjoy it,
    And neither will be poor.”

 

J. W. Bengough was a prolific illustrator and cartoonist, and he clearly had a way with words.  He published Grip for many years, and late did weekly cartoons for The Public.  See also his Up-To-Date Primer and Whole Hog.    He coined the phrase "Natural Public Revenue."     Look for "Grip" on Google Books; you won't be disappointed!

The Henry George Idea in One Hundred Words

This appeared in a 1943 Henry George School newsletter (which I'm pretty sure was edited by my grandmother, Marjorie Carter (1902-1963) -- something I'd not been aware of!)  It is signed by Louis W. Weston.

 

The Henry George Idea in One Hundred Words

The rental value of land is due to our common human needs.  No single individual -- the people as a whole produce that value.  It grows larger as the population and its activities increase.

This natural law of rent gives the community the moral right to take all of this value which it creates. 

The mistake is made of permitting a few to take this value, thus creating speculation in land, upsetting economic stability, necessitating unemployment and the recurring breakdowns in our civilization.

This fundamental wrong must be righted before wars and all injustice can be abolished.

 

From Case to Shiller: on the Bubble

http://blogs.wsj.com/economics/2014/09/17/a-poetic-tribute-from-case-to-shiller-on-the-real-estate-bubble-of-course/

A poetic tribute from Case to Shiller, on the real-estate bubble, of course

• By JASON ZWEIG

At a conference Friday at Yale University in honor of newly minted Nobel laureate Robert Shiller, economist Karl Case of Wellesley College paid tribute to his long-time research partner with an original poem on the lessons of the real-estate bubble and its aftermath. In the 1980s, after many years of research, Case and Shiller together created what are now known as the S&P/Case-Shiller residential real-estate price indexes—the measures that led Shiller, in 2005 through 2007, to predict that home prices would collapse.

While economics professors are not known for their appreciation of rhyme and meter, Case’s poetic tribute received a warm round of applause from the academic audience. We reprint the full text of the poem here, with Case’s permission, a few tiny tweaks and without further commentary.

Reflection on the Housing Market: Seven Years After the Fall
By Karl E. Case

For the last dozen years we have shed many tears
Living through a recession
The world was broke and it was not a joke
When we talked of another depression
Fifteen million without a job
Foreclosures and banks that fail
401k’s became 201k’s
And everything’s up for sale
How could it be? What didn’t we see
That led to all of this trouble?
There is little doubt that the proximal cause
Was a bursting housing bubble
But other than that who can we blame?
And what do they lament?
Millions of people contributed to
This hundred year event

For me it began in ’76
With a house on Cleveland Road
At 54 thousand, I thought it a lot,
For a small three-bedroom abode
But 10 years later that very same house
Would sell for five times the price
I was glad that I bought … I remember the thought
“This may not be fair but it’s nice”

In Boston alone, that boom created
100 billion in wealth
We spent more, saved less, and I have to confess
It was good for our mental health
We had to know that it couldn’t go on
Someday prices would fall
We knew there were risks – to ourselves and our fiscs
If those prices were ever to stall

It all began in 2001

1884-11-19 Henry George on what St. Paul might think of contemporary society

"Your great city church stands yonder — your grand cathedral. It is named after a tent-maker — after the man who said "If a man will not work, neither shall he eat." Let us suppose the Apostle Paul coming amongst us and seeing how people lived. We will not suppose his going to the West-end and seeing how those got on who never did a stroke of work in their lives, but we will imagine him paying a visit to certain of our societies, and finding them engaged in devising means to help the poor. "Why do they not work?" would be the Apostle's first and natural question. If he were told that there was no work for them to do, what would he say? 'No work? Why do they not go out and catch some fish?' 'Oh the fish are PRESERVED -- and the game is PRESERVED.'  The Apostle might go on to ask, 'Then why do they not cultivate the land?' 'Oh, the land is OWNED,' would have to be the answer. I thought of this, could not help thinking of it, as I traveled over miles and miles of land in coming here. 'The land is owned,' would be the answer given to the Apostle, and what would he say to such a state of society?"

HENRY GEORGE at St. James's Hall, London.

Nov. 19, 1884.

quoted in The Church Reformer, January 15, 1885

Hugh Pentecost, on the connection between crime and poverty

This excerpt from an 1890 article in The Arena seems relevant as we look at gun violence and other contemporary problems created by lack of employment and income -- and hope.

It would be far better for society if instead of speculating on the forms of punishment we turned our attention to the means of preventing the crimes for which we punish the offenders. It has been observed that most of the murders occur among the poor people, and upon the top floors of tenement houses; that is to say, among the poorest of the poor. The connection between poverty and the crime of murder, like the connection between poverty and all other crime, is demonstrably close. If we could cure the social disease of poverty, the seeds of crime would be destroyed. The people rarely think of this. They think it is our business to punish crime; but it is our best business to prevent it. Our present organization of society manufactures criminals faster than we can possibly take care of them. Poverty degrades men; it robs them of leisure, which is absolutely necessary for the development of mind, and the proper control of the passions; it keeps the people hungry and fierce; it imbrutes them; it makes Ishmaels of them — their hand is against society as the hand of society is against them. Plant a generation of paupers, and you will reap a crop of criminals.

If we are wise we will turn our attention to the most important problem of this or any age: how to so enrich the people that the temptations to crime will be minified to the last possible degree. The solution of the problem is as simple as it is important. For every millionaire we shall have a thousand tramps; for every monopolist we shall have a hundred burglars; for every woman who lives in idleness upon the fruit of others’ toil, filched from them under the name of interest or rent, we shall have a score of prostitutes; for every vacant land owner and money limiter — the twin man-starvers — we shall have a murderer. One is the seed from which the other grows. Eliminate your monopolists, the king of whom is the owner of vacant land, and your problem of crime is settled. With open opportunities for men to apply their labor to natural wealth productions, tenfold more wealth would be produced and equitably distributed; and with wealth many times multiplied and equitably distributed, a criminal would be more of a curiosity than the original three-toed horse.

If memory serves, Hugh Pentecost was an Episcopal priest, perhaps in Newark.  The title of the article from which these paragraphs come is "The Crime of Capital Punishment."

I like the word "minified."  Maybe there is a useful slogan there: Minify Taxation!  ("To make smaller or less significant; reduce.") We could collect the revenue we need with lower taxes were we to concentrate our taxes on land value, in all its manifestations.  And in the process, we would reduce poverty, reduce the cost of living, reduce wealth concentration, reverse sprawl, naturally create employment and self-employment opportunities, and stabilize our economy.  It seems to me that any one of these goals is worthy, and if this reform would move us closer to any of these goals, it is worth pursuing.  

And, importantly, with less need to rely on a social safety net, spending could be signficantly reduced.

Henry George's chapter in McNeill's "The Labor Movement: The Problem of Today" (1887)

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)

http://archive.org/stream/labormovementpro00mcneiala/labormovementpro00mcneiala_djvu.txt

THE LABOR MOVEMENT;
THE PROBLEM OF TODAY.

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' Brotherhood, Ohio.

NEW YORK: THE M. W. HAZEN CO.
1887.

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 they inhabit.

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 ships.

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 political institutions.

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.

The Earth-for-All Calendar: October 27 -- Burns

See yonder poor, o'er-labored wight,
   So abject, mean and vile,  
Who begs a brother of the earth
    To give him leave to toil;
And see his lordly fellow-worm
    The poor petition spurn,  
Unmindful tho' a weeping wife,
    And helpless offspring mourn.

— ROBERT BURNS, Man Was Made to Mourn.

Who Are the Job Creators?

There has been a lot of political rhetoric lately centered around the "Job Creators," and what we can do to encourage them to create jobs (in America).  Most of it seems to be centered around (1) creating some sort of "certainty" for them regarding what sorts of taxes they might be expected to pay if the jobs they deign to create are successful in increasing their profits; and (2) lifting the supposedly onerous regulations we put on them regarding product safety, environmental protection, and perhaps royalties on what they withdraw from the earth's supply of non-renewable natural resources and other services they receive from our common ecosystem.

I contend that those who frame it this way are leading us astray. 

First, the jobs that the so-called Job Creators actually create occur when (a) they want more personal services -- haircuts, manicures, acupuncture, botox, dry cleaning, catering; (b) they want more goods -- dinners out, boats, cars, swimming pools, airplanes, motorcycles, jewelry, wardrobe, fancy foods, alcohol, tobacco, etc.; (c) when they decide to build or rebuild a home, and furnish it.   

The real job creators are those whose demand for products and services create jobs.  A few percent of us have sufficient current income -- or sufficient wealth to draw on -- that it is fair to say that virtually all of their needs and many of their wants are being met.  But the vast majority of us have unmet needs and certainly more wants.  And I think it is fair to say that while it is human nature to want something for nothing, and that all of us want to meet our needs and wants with the least possible effort, it is also true that virtually all of us are willing to work, to serve others with products and services, in return for wages, be they from a single employer or a collection of customers.

So what's the problem?  Why can't this supply of labor get together with this demand for labor, to the general benefit of our entire society?

I can point to several problems.

First, much of the nation's capital is in the portfolios of a very small proportion of our society, and that process of concentration shows no signs of slowing down, much less reversing.  (Not surprising, since we've done nothing to correct the structural causes which produce it!)  Joe Stiglitz has said that the FIRE sector is harvesting something like 40% of the profits of the productive sectors of the economy.  This cannot be permitted to continue if we seek to create prosperity for all.

Second, ownership of America's choicest sites -- mostly in the central business districts of our biggest  cities, but also in some of the scenic coastal areas and the suburbs surrounding those cities -- is in the portfolios of a very small proportion of our society (as well as in portfolios of foreign landlords).  This may not appear to some to be a problem, but I assert that it is -- and a big one.  (The good news is that it is readily fixable.)    An acre of Manhattan land can be worth $250 million or more, while an acre of good farm land might be worth $5,000 -- a difference of 50,000 times!  That is, 50,000 acres of farmland might be worth the same amount as a single acre of Manhattan land!!)   A single 25x100 residential building lot in Manhattan -- 0.058 acre -- can be worth $10 million ... that works out to $172 million per acre.

Third, we tax labor income -- wages -- to fund federal and state spending.  We tax the first $105,000 or so of wages at 15% or so to fund Social Security and Medicare (that includes both the employee's and the employer's contribution, as economists agree is appropriate).  After exempting some amount of income in proportion to family size ($15,200 for a family of 4) and some additional for a standard deduction ($11,900 for married filing jointly) or some combination of itemized deductions (which go mostly to high-end urban/suburban homeowners in northeastern states, with big mortgages and significant property taxes, and California owners, with big mortgages and more modest property taxes), the Federal Income Tax taxes the next dollar of wages at 10%, and the rate rises to 15%, 25% 28%, and, for a tiny but noisy minority of us (adjusted income over $217,450 after exemptions and deductions, for married filing jointly -- which Romney calls the middle class), to 33% and 35% on the marginal dollars (not on all of one's income). But 86% of us pay more in payroll taxes than we do in federal income taxes, when the employer's portion is taken into account. [source:  http://www.cbo.gov/publication/43373, table 8.]  It is worth noting that 15% [social insurance] plus 10%, the federal tax rate on the first dollar after deductions and exemptions, is 25%, but that for those whose household income is well above the $105,000 cut-cutoff, the 35% bracket is not all that much higher than what comes out of the pockets of the low-income worker.

So 25% to 35% of the portion of our wages beyond that allowance for some basic expenses, are being taken to fund federal spending, and in most states, more for state spending.

The federal spending, and much of the state spending, goes to projects whose effect is to increase local land values in specific places -- infrastructure, public goods of various kinds.  Oddly, we fund it via taxes on wages!  Wouldn't we be wiser to fund it via taxes which fall on those land values, which are so concentrated into a relative few pockets -- pockets which are currently not asked to contribute much, but receive so much from those who need to occupy those choice urban sites.   I do not begrudge the owner of a luxury building the right to keep the portions of the rent he receives which can be attributed to (a) the qualities of the building itself and (b) the services he as landlord provides, but much of that rent is attributable to neither of those factors; rather, it is a function of .... (all together, now) Location, Location, Location, and value which is created by the community, not by that landlord!

Fourth, most of us of working age, and particularly our young people, are paying at least 30% of our income for housing, and many, many people are paying a far larger portion of their income. On top of that, many have student loans, car loans, and perhaps credit card debt, and live paycheck to paycheck.  Many young people who bought a home during the 2002 to 2010 period are upside down on their mortgages, owing the lender more than they could sell the property for, and are thus effectively trapped in those homes until prices rise or someone does something to renegotiate their mortgage, or they win big in the Lottery.  Thus they cannot move to meet their families' changing needs, or leave the area to accept a job in another part of the country.   

So what does this have to do with Job Creation?  Well, if those of us who don't live on the really choice bits of urban or coastal land were relieved of some portion of their tax burden, including the 15% that goes for social insurance, we'd have more to spend on satisfying our other needs and wants, and virtually all of that would create jobs.  Here, in the U. S.  

The Earth-for-All Calendar: October 3 -- Marmontel

Let us suppose that a people is excluded from the ownership of the land.  I say that this exclusion, even if followed by no other injustice (which I think impossible), by making a man a stranger to the commonwealth, makes him indifferent to the existence of the State.

— MARMONTEL, Address in Favor of the Peasants of the North (1757), Oeuvres, Vol X., p. 72.

The Earth-for-All Calendar: October 1 -- Emerson

Of course, whilst another man has no land, my title to mine, your title to yours, is at once vitiated.

— R. W. EMERSON, Man, the Reformer, Miscellanies, p. 190.

The Church(es) in Politics

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 there.

“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 are concerned.

“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 Archbishop Corrigan.”

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.

 

The Earth-for-All Calendar: September 12 -- Grant Allen

"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 Earth-for-All Calendar: September 2 -- Gerrit Smith and Thomas Paine

The vacant land belongs to the landless.  The simple fact that the one is vacant and the other landless is of itself the highest proof that they should be allowed to come together.  Alas, what a crime against nature that they should be kept apart.

— GERRIT SMITH, Smith's Speeches in the U. S. Congress, p. 247 (1854). 

The earth in its natural uncultivated state was, and ever would have continued to be, the common property of the human race.

—THOMAS PAINE, Agrarian Justice (1797),  Paine's Writings, Vol. III,, p. 329.

The Earth-for-All Calendar: August 27 -- Lowell

Down to no bower of roses led the path,
But through the streets of towns where chattering Cold
Hewed wood for fires whose glow was owned and fenced,
Where nakedness wove garments of warm wool
Not for itself — or through the fields it led
Where Hunger reaped the unattainable grain,
Where Idleness enforced saw idle lands,
Leagues of unpeopled soil, the common earth,
Walled round with paper against God and Man. 

— JAMES RUSSELL LOWELL, The Parting of the Ways.

Henry George, on money in elections (The Standard, 10/8/1887)

I'm reading through parts of The Standard, Henry George's weekly newspaper from 125 years ago.  In the issue I finished the other day, there was a reference to there being 154 contributors to that issue (and 100,000 readers, a figure one might find a bit difficult to believe -- this was in the first year of publication, though pass-along readership, particularly in the numerous local "land and labor" and "single tax" clubs, and library copies might make that credible).  Though each issue at this time runs 8 printed pages, when I do "print preview" there are generally 90 to 110 pages of text per issue.

The piece below is signed by George, and while it is speaking to the anarchist trial in Chicago, it contains a lot that is extremely relevant in this election year 125 years later.  It comes from page 1 of the October 8, 1887 issue.

I have seen no statement of the ground on which the authorities of Union Hill, New Jersey, prohibited the meeting of sympathy for the Chicago anarchists, which was to have been held there on Sunday afternoon, and was prevented by the police with a free use of their clubs. But whatever may have been the legal excuse, the action was wrong in principle and mistaken in policy. We cannot too carefully guard the right of free speech, and the surest way to prevent the spread of doctrines wrong in themselves is to allow them to be freely ventilated, drawing the line only when overt acts of violence are committed or incited to.

This, is illustrated by the effect which the violent language used by the sympathizers of the Chicago anarchists has been producing, and which is likely to be retarded by such occurrences as that at Union Hill. The withdrawal from the Central labor union on Sunday week of the representatives of the strongest and most influential of its component bodies rather than permit themselves to be trapped into action which would have been used as an expression of the sympathy of the workingmen of New York with the methods and deeds of the Chicago anarchists is indicative of the marked change, of opinion, which has been produced by the ravings of the socialists of the progressive labor party.

Among the great body of workingmen there has never been any sympathy with the bomb throwers of Chicago or any justification of anarchistic methods, but there was a widespread impression that the men condemned at Chicago had, in their excited state of public opinion, failed to get a fair trial: and this feeling led some of the representative men of the New-York trades unions, upon the first receipt of the news that the anarchists had been refused a new trial, to consent to put their names to a circular calling for a protest against the execution of the sentence. But the violent utterances of the “progressive socialists," one of whom, at the meeting of the Central labor union last Sunday week, called on God to bless the hand that threw the bomb at Chicago, and their attempt to put the Chicago anarchists in the light of leaders of the industrial movement who were being persecuted to the death for legitimate and laudable efforts in the cause of labor, have produced a strong reaction, well, indeed, may the personal friends of the men who in Chicago are under sentence of death declare that their blatant “sympathizers” are their worst enemies.

---------

The truth is that there is no ground for asking executive clemency in behalf of the Chicago anarchists as a matter of right. An unlawful and murderous deed was committed in Chicago, the penalty of which by the laws of the state of Illinois is death. Seven men were tried on the charge of being accessory to the crime, and after a long trial were convicted. The case was appealed to the supreme court of the state of Illinois, and that body, composed of seven judges, removed, both in time and place, from the excitement which may have been supposed to have affected public opinion in Chicago during the first trial, have, after an elaborate examination of the evidence and the law, unanimously confirmed the sentence.

That seven judges of the highest court of Illinois, men accustomed to weigh evidence and to pass upon judicial rulings, should, after a full examination of the testimony and the record, and with the responsibility of life and death resting upon them, unanimously sustain the verdict and the sentence, is inconsistent with the idea that the Chicago anarchists were condemned on insufficient evidence. And the elaborate review of the testimony which is given in the decision of the supreme court dissipates the impression that these men were only connected with the bomb throwing by general and vague incitements to and preparations for acts of this kind. Even discarding the testimony (contradicted by other testimony) that Spies handed a bomb to the man who is supposed to have thrown it, there was enough evidence left to connect the seven men with a specific conspiracy to prepare dynamite bombs and to use them against the police on the evening on which the bomb was thrown. It was not indeed proved that any of the seven men threw the bomb, nor even was it proved who did throw the bomb, but it was proved beyond any reasonable doubt that these men were engaged in a conspiracy, as a result of which the bomb was thrown, and were therefore under the laws of Illinois as guilty as though they themselves had done the act. It may be said that these men had worked themselves up to the belief that it is only by acts of violence and bloodshed that social reform can be attained, but that does not affect the justice of their sentence. No matter how honest or how intense may have been their conviction on this point, organized society is none the less justified in protecting itself against such acts.

---------

There may be countries in which the suppression by an absolute despotism of all freedom of speech and action justifies the use of force, if the use of force ever can be justified. But even in such countries complaint cannot be made when the sword is unsheathed against those who draw the sword. In this country, however, where a freedom of speech which extends almost to license is seldom interfered with, and where all political power rests upon the will of the people, those who counsel to force or to the use of force in the name of political or social reform are enemies of society, and especially are they enemies of the working masses. What in this country holds the masses down and permits the social injustice of which they are becoming so bitterly conscious, is not any superimposed tyranny, but their own ignorance. The workingmen of the United States have in their own hands the power to remedy political abuses and to change social conditions by rewriting the laws as they will. For the intelligent use of this power thought must be aroused and reason invoked. But the effect of force, on the contrary, is always to awaken prejudice and to kindle passion.

There is legitimate ground on which executive clemency may be asked for the Chicago anarchists — that, being imbued with ideas which germinate in countries where the legitimate freedom of speech and action is sternly repressed, they were not fully conscious of the moral criminality of their action, and that the main purpose of their punishment — the prevention of such crimes in future — will be as well served, if not even better served, by a commutation of the sentence of death into a sentence of imprisonment.

This last is a very strong ground for the interposition of executive clemency; and it is sincerely to be hoped that the governor of Illinois will see its force.  A tragical death always tends to condone mistakes and crimes, and a certain amount of sympathy will undoubtedly attach to the Chicago anarchists if they are hanged, which would not be aroused if they were merely imprisoned.   

But in whatever expression of opinion associations of workingmen who do not themselves believe in the use of dynamite may see fit to make upon this subject, there should be nothing which tends to put the Chicago anarchists in the light of leaders and martyrs in the cause of American social reform.

---------

There are certain lessons connected with this Chicago tragedy that are well worth the consideration of every thoughtful American. The appearance in this country of a violent phase of anarchism is not to be imputed entirely to the ignorance or viciousness of foreigners unacquainted with our institutions. If they did not find in this country deep and grievous social injustice, they would not retain the idea of violence as a remedy for social evils after coming here; and were it not for this injustice which large bodies of our people keenly feel, the man who should propose violence or plot violence as a means for improving the condition of the people would be laughed into silence. The really dangerous thing in this country is not the presence of foreign born incendiaries, but the existence of industrial conditions, which, in the midst of plenty, deprive the laborer of what he knows to be the fair earnings of his toil, and condemn men able to work and willing to work to enforced idleness. And the most dangerous men are in reality not the socialists or anarchists, but the comfortable classes who declare that things as they are are just what they ought to be, and who not only do not address themselves to finding any reasonable or peaceful solution for social difficulties, but do their utmost to prevent any such peaceful solution from being generally accepted.

Nor is the talking about force confined to anarchists. The rich and influential are too ready to talk about it, and to condone such applications of it as the employment of Pinkerton's detectives and the clubbing of peaceful assemblages by police. And the readiness with which the idea has spread that the Chicago anarchists have been unjustly and illegally condemned is a grave warning of the loss of faith in our judicial system consequent upon the corruption of our politics. We are yet far from the point at which it can be rationally assumed that seven judges of a highest state court would condemn a number of their fellow creatures to death against law and evidence; but when, as in this state, $60,000 is sometimes spent to secure a judicial nomination, and great corporations can make their influence felt in politics to secure friends on the bench, the belief in judicial integrity is surely on the wane.

Henry George.

 

 

A Right-to-Life Platform -- 125 years old

As I listen to the 2012 party platforms, I am reminded of what they ought to be focused on, embodied pretty well in this platform from 1886-87. 

PLATFORM OF THE UNITED PARTY.
Adopted at Syracuse August 19, 1887.

We, the delegates of the united labor party of New York, in state convention assembled, hereby reassert, as the fundamental platform of the party, and the basis on which we ask the co-operation of citizens of other states, the following declaration or principles adopted on September 23, 1886, by the convention of trade and labor associations of the city of New York, that resulted in the formation of the united labor party.   

"Holding that the corruptions of government and the impoverishment of labor result from neglect of the self-evident truths proclaimed by the founders of this republic that all men are created equal and are endowed by their Creator with unalienable rights, we aim at the abolition of a system which compels men to pay their fellow creatures for the use of God’s gifts to all, and permits monopolizers to deprive labor of natural opportunities for employment, thus filling the land with tramps and paupers and bringing about an unnatural competition which tends to reduce wages to starvation rates and to make the wealth producer the industrial slave of those who grow rich by his toil.

'“Holding, moreover, that the advantages arising from social growth and improvement belong to society at large, we aim at the abolition of the system which makes such beneficent inventions as the railroad and telegraph a means for the oppression of the people and the aggrandizement of an aristocracy of wealth and power. We declare the true purpose of government to be the maintenance of that sacred right of property which gives to every one opportunity to employ his labor, and security that he shall enjoy its fruits; to prevent the strong from oppressing the weak, and the unscrupulous from robbing the honest; and to do for the equal benefit of all such things as can be better done by organized society than by individuals; and we aim at the abolition of all laws which give to any class of citizens advantages, either judicial, financial, industrial or political, that are not equally shared by all others."

We call upon all who seek the emancipation of labor, and who would make the American union and its component states democratic commonwealths of really free and independent citizens, to ignore all minor differences and join with us in organizing a great national party on this broad platform of natural rights and equal justice. We do not aim at securing any forced equality in the distribution of wealth. We do not propose that the state shall attempt to control production, conduct distribution, or in any wise interfere with the freedom of the individual to use his labor or capital in any way that may seem proper to him and that will not interfere with the equal rights of others. Nor do we propose that the state shall take possession of land and either work it or rent it out. What we propose is not the disturbing of any man in his holding or title, but by abolishing all taxes on industry or its products, to leave to the producer the full fruits of his exertion and by the taxation of land values, exclusive or improvements, to devote to the common use and benefit those values, which, arising not from the exertion of the individual, but from the growth of society, belong justly to the community as a whole. This increased taxation of land, not according to its area, but according to its value, must, while relieving the working farmer and small homestead owner of the undue burdens now imposed upon them, make it unprofitable to hold land for speculation, and thus throw open abundant opportunities for the employment of labor and the building up of homes.

While thus simplifying government by doing away with the horde of officials required by the present system of taxation and with its incentives to fraud and corruption, we would further promote the common weal and further secure the equal rights of all, by placing under public control such agencies as are in their nature monopolies: We would have our municipalities supply their inhabitants with water, light and heat; we would have the general government issue all money, without the intervention of banks; we would add a postal telegraph system and postal savings banks to the postal service, and would assume public control and ownership of those iron roads which have become the highways of modern commerce.

While declaring the foregoing to be the fundamental principles and aims of the united labor party, and while conscious that no reform can give effectual and permanent relief to labor that does not involve the legal recognition of equal rights, to natural opportunities, we nevertheless, as measures of relief from some of the evil effects of ignoring those rights, favor such legislation as may tend to reduce the hours of labor, to prevent the employment of children of tender years, to avoid the competition of convict labor with honest industry, to secure the sanitary inspection of tenements, factories and mines, and to put an end to the abuse of conspiracy laws.

We desire also to so simplify the procedure of our courts and diminish the expense of legal proceedings, that the poor may be placed on an equality with the rich and the long delays winch now result in scandalous miscarriages of justice may be prevented.

And since the ballot is the only means by which in our Republic the redress of political and social grievances is to besought, we especially and emphatically declare for the adoption of what is known as the “Australian system of voting,” an order that the effectual secrecy of the ballot and the relief of candidates for public office from the heavy expenses now imposed upon them, may prevent bribery and intimidation, do away with practical discriminations in favor of the rich and unscrupulous, and lessen the pernicious influence of money in politics.

In support or these aims we solicit the co-operation of all patriotic citizens who, sick of the degradation of politics, desire by constitutional methods to establish justice, to preserve liberty, to extend the spirit of fraternity, and to elevate humanity.

The Earth-for-All Calendar: August 13 -- Emerson

Then he says: "If I am born into the earth, where is my part? Have the goodness, gentlemen of this world, to show me my wood lot, where I may fell my wood, my field where to plant my corn, my pleasant ground where to build my cabin."

"Touch any wood or field or house-lot on your peril," cry all the gentlemen of this world; "but you may come and work in ours for us, and we will give you a piece of bread."

— EMERSON, The Conservative.

The Single Tax -- a succinct 1911 description

THE SINGLE TAX.

Mr. Henry George first formulated this idea, which has grown steadily in favor, in 1879. Single-tax men assert as a fundamental principle that all men are equally entitled to the use of the earth; therefore, no one should be allowed to hold valuable land without paying to the community the value of the privilege. They hold that this is the only rightful source of public revenue, and they would therefore abolish all taxation - local, state and national - except a tax upon the rental value of land exclusive of its improvements, the revenue thus raised to be divided among local, state and general governments, as the revenue from certain direct taxes is now divided between local and state governments.

The single tax would not fall on all land, but only on valuable land, and on that in proportion to its value. It would thus be a tax, not on use or improvements, but on ownership of land, taking what would otherwise go to the landlord as owner.

In accordance with the principle that all men are equally entitled to the use of the earth, they would solve the transportation problem by public ownership and control of all highways, including the roadbeds of railroads, leaving their use equally free to all.

The single-tax system would, they claim, dispense with a horde of tax-gatherers, simplify government, and greatly reduce its cost; give us with all the world that absolute free trade which now exists between the States of the Union: abolish all taxes on private issues of money; take the weight of taxation from agricultural districts, where land has little or no value apart from improvements, and put it upon valuable land, such as city lots and mineral deposits. It would call upon men to contribute for public expenses in proportion to the natural opportunities they monopolize, and make it unprofitable for speculators to hold land unused or only partly used, thus opening to labor unlimited fields of employment, solving the labor problem and abolishing involuntary poverty.

source: http://www.gutenberg.org/files/20190/20190.txt

The Handy Cyclopedia of Things Worth Knowing: A Manual of Ready Reference
Joseph Triemens, 1911

The Earth-for-All Calendar: July 20 -- Godwin

It is territorial monopoly that obliges men unwillingly to see vast tracts of land lying waste or negligently and imperfectly cultivated, while they are subjected to the miseries of want.

— WILLIAM GODWIN, Political Justice, Book VIII., Chap. 3.

High Rent as the Best Manure

"High rent is the best manure ever land got."

This quote is attributed to the Irish landlords, in an 1835 piece by Thomas Ainge Devyr entitled "Natural Rights: A Pamphlet for the People."

The statement bears thinking about: when private landlords collect high rents, they force their tenants to work quite hard -- keep in mind that they still have to pay taxes on various things in order to support local spending -- while the landlord has provided them NOTHING that he has made (and nothing he has bought from the fellow who made it, either).

But at the same time, it is worth considering what happens when the community collects reasonably high rents on the land, particularly urban land.  When the community collects high rent, there are no vacant lots.  There are relatively few underused lots.  There is housing for all who want it.  All this economic activity creates jobs -- for those who would design, those who would build, those who would maintain, those who would improve, those who would expand, those who would protect.  All those workers' needs and spending create more jobs.  Wages rise, as jobs chase workers.  

So the phrase is not simply an 18th century rural one, but highly relevant in 21st century U.S. cities, towns and rural areas.  When the community collects the land rent and recycles it to serve local needs -- schools, parks, well-maintained roads, public transportation systems, police, ambulance, fire protection, courts -- communities become good places to live.  When we permit private landlords (be they individual or corporate, universities or trusts) to pocket those funds -- and perhaps "invest" the excess in acquiring more land on which to pocket the rent, those good things, if they happen at all, must be financed by high taxes on productive activity.

One is a virtuous circle; the other a vicious one.  Which one is consistent with our ideals?  If Life, Liberty and the Pursuit of Happiness are for ALL of us, then I think we have to opt for the virtuous circle.

 

Resource Rentals for Revenue -- The 3 R's of fixing our economy

I came across an excellent site at http://www.resourcerentalsrevenue.org, and thought their FAQ page particularly worth sharing.   The links will take you to answers.

We don't HAVE to burden ourselves and our economy with taxes which throw a wet blanket on jobs, on production, on homes.  There is a better way to finance our common spending!

Resource Rentals for Revenue.

The following list comprises the most commonly asked questions about the concept of making land and resource rentals the source of revenue for government. As you continue this study, you will see the value from giving resources the respect they deserve and the benefits resulting from the freeing of labour, production and exchange from taxation. If you have any questions which are not covered here, or observations you would like to put to our panel, please feel free to do so by sending your question as an e-mail query and we will attempt to respond.

The inclusion of land and resources in the economic equation is central to any solution for revenue raising. A taxation solution which does not consider the nature of taxation itself and allows the continuing private monopolisation of community land and resources fails to recognise the essential role land plays in the economic equation and will not work. Land is the only element in the economic equation which is both fixed and finite. It can be monopolised. It is a unique class of asset which must be treated accordingly. If we were to wrest not the land itself, but its unimproved value from private monopolies and return the value to the community — whose very presence creates it — then we would have reduced many problems in one stroke with great benefit to production, to the environment and to the cause of individual freedom and justice.

On the subject of land and resource rents, Henry George said this:

The tax upon land values is the most just and equal of all taxes. It falls upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by nature be attained.

1.Understandings

• What’s with all the terminology?
• Won’t the site rent be passed on to the tenant?
• It sounds too simple
• What is the difference between Land Value and Land Price?
• What is meant by ‘unimproved’ value?
• Why is income from land ‘unearned’ income?
• There is no such thing as a free lunch.
• There is no unimproved land value!
• This tax, like a debits tax, ignores two of the basic principles of raising tax
• It’s incorrect to suggest that income derived from holding land or resources out of use is not a productive activity. It is, since it produces income for the owner.

2.Interest Groups

• Will I be better off with Resource Rentals?
• Are resource rentals fair?
• Wouldn’t the wealthy simply find some way of evading it?
• Wouldn’t the wealthy sell up and flee with their wealth?
• Won’t the poor get caught, while the rich escape as usual?
• Would farmers be able to afford the tax?
• How will it affect multinationals (MNC’s)?
• How will it affect lenders and borrowers?
• Entrepreneurs and Manufacturers?
• Exporters and Importers?
• Environmentalists?
• Won’t it fall harder on the prince in his mansion than on the pauper in his hovel?
• How would old age pensioners on valuable sites be able to pay the site rent as suggested?
• What happens to the self-funded or partly self-funded retiree?
• Unemployed adults - currently untaxed but perhaps owning their own home? Will they have to pay as well?
• The investor in a site has taken a risk, and tied up their capital – who else could possibly be entitled to their capital gain?

3.Implementation

• How would such a system be implemented?
• What would happen to Land Prices?
• If resource rentals are such a good idea, why don’t we have them?
• Why would anyone want to own land under this system?
• How do I buy a property?
• If site values fall, won’t revenue fall too?
• How will it curb unemployment?
• Wouldn’t we run out of space?
• Who wins; who loses?
• Will pensioners and retirees - currently untaxed but living in their own property, be liable for site rents? Will they be reimbursed for past taxes paid?
• New enterprises - yet to realise any profit but paying tax on the property from which they operate? If you tax them, won’t they fail?
• Why don’t we impose reciprocal import duties?
• What about anti-pollution tax rebates?
• What about a Debits Tax?
• Site Rent for Revenue is a crackpot idea.
• Why put the entire burden of taxation on one area of economic activity?

Good questions -- and good answers!

The Earth-for-All Calendar: June 13 -- Paine and Marmontel

Landed monopoly has dispossessed more than half the inhabitants of every nation of their natural inheritance.

— THOMAS PAINE, Agrarian Justice, Paine's Writings, Vol. III., p. 331.

In the country the more rich people there are, the less wealth there is.

— MARMONTEL, Address in Favor of the Peasants of the North (1757), Oeuvres, Vol. X., p. 70.

The Earth-for-All Calendar: April 17 -- Charles Kingsley

Work for all, and all employ
Share with all, and all enjoy
God alike to all has given
Heaven as Earth and Earth as Heaven.

— CHARLES KINGSLEY, Alton Locke, Chap. XXXVI.  p. 390.

The Earth-for-All Calendar: April 13 -- Jefferson

Wherever there is in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on.

— THOMAS JEFFERSON (1785), Ford's Writings of Jefferson, Vol. VII., 36.

Bob Andelson: The Earth is the Lord's!

I've taken some liberties with the formatting, because sometimes bullet points help ... you can find the original in the online library at http://schalkenbach.org/  I was fortunate enoguh to meet Bob

The Earth is the Lord's

by Robert V. Andelson
Professor Emeritus of Philosophy,
Auburn University, Auburn, Alabama

George Bernard Shaw, in a letter written in 1905 to Hamlin Garland, describes how, more than twenty years earlier, he had attended Henry George's first platform appearance in London. He knew at once, he said, that the speaker must be an American, for four reasons:

• "Because he pronounced 'necessarily' . . . with the accent on the third syllable instead of the first;
• because he was deliberately and intentionally oratorical, which is not customary among shy people like the English;
• because he spoke of Liberty, Justice, Truth, Natural Law, and other strange 18th-century superstitions; and
• because he explained with great simplicity and sincerity the views of the Creator, who had gone completely out of fashion in London in the previous decade and had not been heard of there since."

George's magnum opus, Progress and Poverty (the centenary of which occurred in 1979), is characterized by the same moral and religious emphasis remarked by Shaw in its author's London lecture, an emphasis that rises in the final chapter to the noble declaration of a faith revived. It is, I think, therefore entirely appropriate that I focus today on the moral and religious aspects of his basic proposal for economic reform — his proposal to lift the burden of taxation from the fruits of individual labor, while appropriating for public use the socially-engendered value of the land.

For land value taxation is

• not just a fiscal measure (although it is a fiscal measure, and a sound one);
• not just a method of urban redevelopment (although it is a method of urban redevelopment, and an effective one);
• not just a means of stimulating business (although it is a means of stimulating business, and a wholesome one);
• not just an answer to unemployment (although it is an answer to unemployment, and a powerful one),
• not just a way to better housing (although it is a way to better housing, and a proven one);
• not just an approach to rational land use (although it is an approach to rational land use, and a non-bureaucratic one).

It is all of these things, but it is also something infinitely more: it is the affirmation, prosaic though it be, of a fundamental spiritual principle — that "the earth is the Lord's, and the fulness thereof."

It is the affirmation of the same principle to which Moses gave embodiment in the institution of the Jubilee, and in the prohibition against removing ancient landmarks, and in the decree that the land shall not be sold forever. It is the affirmation of the same principle to which the prophets of old gave utterance when they inveighed against those who lay field to field, and who use their neighbor's service without wages. It is the affirmation of the same principle to which Koheleth gave voice when he asserted in the fifth chapter of Ecclesiastes that "the profit of the earth is for all."

The earth is the Lord's! Consider what this means. It means that

• our God is not a pale abstraction.
• Our God is not a remote being who sits enthroned on some ethereal height, absorbed in the contemplation of his own perfection, oblivious to this grubby realm in which we live.
• Our God is concerned with the tangible, with the mundane, with what goes on in the field, in the factory, in the courthouse, in the exchange.
• Our God is the maker of a material world — a world of eating and sleeping and working and begetting, a world he loved so much that he himself became flesh and blood for its salvation. In this sense, then,
• our God is eminently materialistic, and nowhere is this more clearly recognized than in the Bible, which, for that very reason, has always been a stumbling-block and an offense to those Gnostics, past and present, whose delicacy is embarrassed by the fact that they inhabit bodies, and for whom religion is essentially the effort to escape from or deny that fact.
• Our God is not a dainty aesthete who considers politics and economics subjects too crass or sordid for his notice.
• Neither is he a capricious tyrant who has enjoined an order of distribution that condemns retirees after a lifetime of toil to subsist on cat food while parasitic sybarites titillate palates jaded by the most refined achievements of the haute cuisine. It is men who have enjoined this order in denial of his sovereignty, in defiance of his righteous will.

The earth is the Lord's! To the biblical writers, this was no mere platitude. They spelled out what it meant in concrete terms. For them, it meant that the material universe which had been provided as a storehouse of natural opportunity for the children of men was not to be monopolized or despoiled or treated as speculative merchandise, but was rather to be used reverently, and conserved dutifully, and, above all, maintained as a source from which every man, by the application of his labor, might sustain himself in decent comfort. It was seen as an inalienable trust, which no individual or class could legitimately appropriate so as to exclude others, and which no generation could legitimately barter away.

The earth is the Lord's! With the recognition of this principle comes the recognition of the right of every man to the produce which the earth has yielded to his efforts. As the Apostle Paul says in his first letter to the Church at Corinth, if the ox has a right to a share in the grain which it treads out, surely a human being must have a right to the fruits of his labor. For the exercise of this right, he is, of course, accountable to God — but against the world, it holds.

To one who takes seriously, as I do, that insight about human nature which is expressed in the doctrine of original sin, there can be nothing self-evident about the rights of man. In the words of my friend, Edmund A. Opitz, "the idea of natural rights is not the kind of concept which has legs of its own to stand on; as a deduction from religious premises it makes sense, otherwise not." The French Revolution and its culmination in the Reign of Terror demonstrated that humanistic assumptions afford no secure foundation for the concept of human rights. That concept, for the believer, can be neither understood nor justified except in terms of what Lord Acton so eloquently speaks of as "the equal claim of every man to be unhindered in the fulfilment by man of duty to God."

This is what it comes down to: How can a person be "unhindered in the fulfilment of duty to God" if he be denied, on the one hand, fair access to nature, the raw material without which there can be no wealth; and on the other, the full and free ownership of his own labor and its earnings?

You who have studied the history of the Peasants' Revolt in sixteenth century Germany know that in calling for the abolition of serfdom and the restoration of the common lands, the peasants were simply voicing demands which were logically implied by Luther's doctrine of the priesthood of all believers — that the service of God to which all the faithful are elected requires, as I have said, access to the land and its resources, and the free disposal of one's person and of the guerdon [editor's note: reward] of one's toil. Despite the excesses that accompanied this uprising, Luther's part in the suppression of a movement which stemmed logically from his own teaching must always be a source of pain to those of us who revere him for his spiritual genius and integrity.

The earth is the Lord's! The same God who established the just authority of governments has also in his providence ordained for the major source of revenue. Allow me to quote from Henry George:

In the great social fact that as population increases, and improvements are made, and men progress in civilization, the one thing that rises everywhere in value is land, we may see a proof of the beneficence of the Creator . . . In a rude state of society where there is no need for common expenditure, there is no value attaching to land. The only value which attaches there is to things produced by labor. But as civilization goes on, as a division of labor takes place, as men come into centers, so do the common wants increase and so does the necessity for public revenue arise. And so in that value which attaches to land, not by reason of anything the individual does, but by reason of the growth of the community, is a provision, intended — we may safely say intended — to meet that social want. Just as society grows, so do the common needs grow, and so grows the value attaching to land — the provided fund from which they can be supplied (George 1889).

On another occasion he wrote:

The tax on land values is the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common uses (George, P&P, 421).

And yet, my friends, in the topsy-turvy world in which we live, this provided fund goes mainly into the pockets of speculators and monopolists, while the body politic meets its needs by extorting from individual producers the fruits of honest toil. If ever there were any doubt about the perversity of human nature, our present system of taxation is the proof! Everywhere about us, we see the ironic spectacle of the community penalizing the individual for his industry and initiative, and taking away from him a share of that which he produces, yet at the same time lavishing upon the non-producer undeserved windfalls which it — the community — produces. And, as Winston Churchill put it, the unearned increment, the socially-produced value of the land, is reaped by the speculator in exact proportion, not to the service, but to the disservice, done. "The greater the injury to society, the greater the reward."

We hear constantly a vast clamor against the abuse of welfare. I do not for a moment condone such abuse. Yet I ask you, who is the biggest swiller at the public trough?

• Is it the sluggard who refuses to seek work when there is work available?
• Is it the slattern who generates offspring solely for the sake of the allotment they command?
• Or is it the man — perhaps a civic leader and a pillar of his church — who sits back, and, with perfect propriety and respectability, collects thousands and maybe even millions of dollars in unearned increments created by the public, as his reward for withholding land from those who wish to put it to productive use.

Talk about free enterprise! This isn't free enterprise; this is a free ride.

But if that same person were to improve his site — if he were to use it to beautify his neighborhood, or to provide goods for consumers and jobs for workers, or housing for his fellow townsmen — instead of being treated as the public benefactor he had become, he would be fined as if he were a criminal, in the form of heavier taxes. What kind of justice is this, I ask you? How does it comport with the Divine Plan, or with the notion of human rights?

Let me make this clear: Acquisitiveness, or the "profit motive," if you will, is a well-nigh universal fact of human nature, and I have no wish to suggest that the land monopolist or speculator has any corner on it. Even when I speak of him as a parasite, this is not to single him out for personal moral condemnation. He is not necessarily any more greedy than the average run of people. As my late friend, Sidney G. Evans, used to say: "if you have to live under a corrupt system, it's better to be a beneficiary than a victim of it." But the profit motive can be channeled in ways which are socially desirable as well as in ways which are socially destructive. Is it not our duty to do everything we can to build an order without victims one in which the profit motive is put to use in such a way that everybody benefits?

I do not harbor the illusion that the millennium is going to be ushered in by any program of social betterment. My theological orientation does not happen to be one which minimizes the stubbornness of man's depravity. Yet to make the depth of human wickedness an alibi for indifference to the demands of social justice is to ignore the will of him who said:

Take away from me the noise of your songs;
to the melody of your harps I will not listen.
But let justice roll down like waters,
And righteousness like an ever-flowing stream.
(Amos 5:23-24)

To some of you, the promotion of specific programs for social justice is seen as part of the responsibility of the institutional church; to others it is not. But all of us, I am sure, can agree that the individual Christian (or Jew or Moslem, Hindu or Buddhist, as the case may be) has a solemn moral obligation to study the issues carefully, and then involve himself strenuously in whatever social and political efforts his informed conscience tells him best advance the cause of right.

O shame to us who rest content
While lust and greed for gain
In street and shop and tenement
Wring gold from human pain,
And bitter lips in blind despair
Cry, "Christ hath died in vain!"
Give us, O God, the strength to build
The city that hath stood
Too long a dream, whose laws are love,
Whose ways are brotherhood,
And where the sun that shineth is
God's grace for human good.*

The earth is the Lord's!

* From "O Holy City, Seen of John" by Walter Russell Bowie. Copyright, 1910, by A. S. Barnes and Company. Quoted by permission.

The Earth-for-All Calendar: March 8 - Emerson

"I find this vast net-work, which you call property, extending over the whole planet. I cannot occupy the bleakest crag of the White Hills or the Allegheny Range, but some man or corporation steps up to me to show me that it is his."

— EMERSON, The Conservative.

Extended excerpts from The Conservative (an 1841 speech) follow ...

Downton Abbey: The Landed Gentry

I had the pleasure of watching part of a marathon of the second season of Downton Abbey yesterday, knowing that I'd missed a few shows -- and want to watch them all in sequence.

The setting of the show raises some questions one might want to think about.

1. What sort of wages do all the "downstairs" employees receive?

2. What employment alternatives are available to them?

3. How does the owner of Downton Abbey afford to pay for the services of all those workers, in addition to the non-wage costs of maintaining the castle and the surrounding land, which is an overwhelming job -- and passion -- for him?

4. Is there a middle class in that town?  On what are their fortunes dependent?  How are they different from the staff at Downton Abbey?

5. What are the opportunities for the children of the house staff at Downton Abbey to have a different life from their parents?

6. Can others prosper?

7. What sorts of ideas, particularly on public policy, maintain the status quo?

8. Why is having the property pass intact to one person so important?  What would happen if it were divided among several heirs?

9. Do you think there are small holdings in the same area, where individual families can live, work and prosper, or a series of large holdings like DA?

10. Are people unemployed or underemployed? Are their opportunities limited by the system, particularly if they care about staying close to family?

This is off the top of my head.  I'm charmed by the series, and at the same time, am puzzled by how much I enjoy watching it.  (Good writing, of course.)

The Land Questions: #20 Affordable Housing

20. What is the best way to insure that affordable housing -- for people of all ages and stages, all income levels -- is available, both for ownership and for rental, both near the center of activities and, if needed after the desire for housing near the center of activities is satisfied, on the fringes?

A. Lotteries

B. Community Land Trusts

C. Affordable Housing Regulations that require that for every 10 new condos built, 1 must be affordable to people earning less than the local median household income

D. Rent control

E. Shame

F. Fundraisers

G. Habitat for Humanity

H. Relaxed mortgage lending rules and more private mortgage insurance

I. Land value taxation, to encourage the redevelopment of underused sites near the center of things

J. Your suggestions?

Mason Gaffney: An Alternative Reform

In the files I've been digging through, from the late 50s to the early 80s, I found an early draft of a fine paper by Mason Gaffney about California's Proposition 13, for presentation at an August, 1978 conference.  I dug around and found a published copy of that paper, and think it worth sharing here. Original title, "Tax Limitation: Proposition 13 and Its Alternatives"

I see that there continue to be people who see the stupidity of Proposition 13 -- see http://www.dailyrepublic.com/opinion/letters-editor/time-for-a-petition-against-proposition-13/ Perhaps they will find this of use.  Georgists recognize Prop 13 as the antithesis of logical and just taxation.

First, a few of my favorite paragraphs, which I hope will whet your appetite for the whole paper.  I won't attempt to provide the context (you can pick that up when you continue to the paper, below).

• "There is a deferment option for the elderly, bearing only 7% interest (which is about the annual rate of inflation). In California, as also in Oregon and British Columbia, hardly anyone takes advantage of this deferment option. This fact, it seems to me, rather calls the bluff of those who so freely allege that the woods are full of widows with insoluble cash-flow problems, widows who are losing their houses to the sheriff and whose heirs presumptive, will not help keep the property, which they will eventually inherit."

You can read more about the Poor Widow by clicking on the "widow's skirts" link at left, in the tag cloud, and by reading Bill Batt's Property Tax Relief Measures: Answers to the "Poor Widow " Argument (or the pdf version)

• We hear a lot these days about cutting the fat out of the public sector; but there is fat in the private sector too. I interpret "fat" to mean paying someone for doing nothing, or for doing nothing useful. Most economists agree that payments to people. for holding title to land is nonfunctional income, since the land was created by nature, secured by the nation's armed forces, improved by public spending, and enhanced by the progress of society. "Economic rent" is the economist's term, but in Jarvis-talk we may call it the fat of the land or "land-fat." It has also been called unearned increment, unjust enrichment, and other unflattering names. Howard Jarvis has said that the policeman or fireman who risks his life protecting the property of others has his "nose in the public trough." But it has seemed to generations of economists that the owner whose land rises in value because public spending builds an 8-lane freeway from, let us say, Anaheim to Riverside, and carries water from the Feather River to San Diego, is the first to have his nose in the trough. Nineteenth-century English economists who worked this out were more decorous. They said things like "landlords grow rich in their sleep" (John Stuart Mill), or the value of land is a "public value" (Alfred Marshall) because the public, not the owner, gives it value.
  
  Some 43% of the value of taxable real estate in California is land value. When we lower the property tax we are untaxing not only buildings, but also land-fat.

• The ownership of property is highly concentrated, much more so than the receipt of income. Economists in recent years are increasingly saying that the property tax is, after all, progressive because the base is so concentrated, and because so little of it can be shifted. But this message has not yet reached many traditional political action groups who continue to repeat the old refrains. Two remedies are in order.

• One is to collect and publish data on the concentration of ownership of real estate. The facts are simply overwhelming and need only to be disseminated.
• The second remedy is to note how strikingly little of the Proposition 13 dividend is being passed on to renters. This corroborates the belief of economists that the property tax rests mainly on the property owner where it originally falls, and not on the renter.

• A high percentage of real property is owned from out of state and even out of the country. The percentage is much higher than we may think. It is not just Japanese banks and the Arabs in Beverly Hills. It is corporate-held property which comprises almost half the real estate tax base. If we assume that California's share of the stockholders equals California's share of the national population, then 90% of this property is absentee-owned; the percentage may be higher because many of these, after all, are multinational corporations with multinational ownership.

• No one seems to have seized on the fact that half the taxable property in California is owned by people not voting in the state. Senator Russell Long has suggested the following principle of taxation: "Don't tax you, don't tax me, tax that man behind the tree."  Property tax advocates have done well in the past and should do well again in the future when they make their slogan: "Don't tax you, don't tax me, tax that unregistered absentee. Don't tax your voters, they'll retaliate; tax those stiffs from out of state." Chauvinism and localism can be ugly and counterproductive, as we know; but here is one instance where they may be harnessed to help create a more healthy society.  The purpose of democracy is to represent the electorate, not the absentee who stands between the resident and the resources of his homeland.
  
  California's legislative analyst, William Hamm, estimates that over 50% of the value of taxable property in California is absentee-owned. This is such a bold, bare, and enormous fact it is hard to believe that Californians will long resist the urge to levy taxes on all this foreign wealth. They may be put off by the argument that they need to attract outside capital, but that carries no weight when considering the large percentage of this property which is land value.

• Property income is generally more beneficial to the receiver than is the same income from wages or salaries, because the property owner does not have to work for it.

• Property, particularly land, has been bought and sold for years on the understanding that it was encumbered with peculiar social obligations. These are, in effect, part of our social contract. They compensate those who have been left out. Black activists have laid great stress in recent years on the importance of getting a few people into medical and other professional schools. Does it not make more sense that the landless black people should have, through the property tax, the benefit of some equity in the nation's land from which their ancestors were excluded while others were cornering the supply?
  
  A popular theme these last few years is that property owners should pay only for services to property, narrowly construed. Who, then, is to pay for welfare — the cripples? Who is to pay for schooling — the children? Who should sacrifice for the blacks — Allan Bakke? Who should finance our national defense — unpaid conscripts? The concept that one privileged group of takers can exempt itself from the giving obligations of life denies that we are a society at all.

Here is, perhaps, my favorite:

• We can ask that a single standard be applied to owners troubled by higher taxes and to tenants troubled by higher rents. When widow A is in tax trouble, it is time to turn to hearts and flowers, forebode darkly, curse oppressive government, and demand tax relief. When widow B has trouble with escalating rents, that touches a different button. You have to be realistic about welfare bums who play on your sympathy so they can tie up valuable property. You have to pay the bank, after all. A man will grit his teeth and do what he must: garnishee her welfare check. If that is too little, give notice. Finally, you can call the sheriff and go to the beach until it's over. That's what we pay taxes for. Welfare is their problem.
  
  Anyway, widow B is not being forced out of her own house, like widow A and so many like her. Jarvis said that taxes are forcing three million Californians from their homes this year. But in truth, while evictions of tenants are frequent, sheriff's sales of homes are rare. Those who do sell ("because of taxes," they say, as well as all their other circumstances) usually cash out handsomely, which is, after all, why their taxes had gone up.

• Then there is the fruit tree anomaly. Under Proposition 13, a tree can only be assessed at its value when planted, with a 2% annual increment. The value of a seed thrown in the ground or even a sapling planted from nursery stock is so small compared with the mature tree that this is virtual exemption. This anomaly rather graphically illustrates how Proposition 13 automatically favors any appreciating property over depreciating property. The greatest gain here goes, of course, to appreciating land.

• Finally, build no surpluses. Surpluses attract raiders and raiders are often organized landowners. "Property never sleeps," said the jurist Sir William Blackstone. "One eye is always open." Even though the surplus was built up by taxing income, Howard Jarvis made it seem the most righteous thing in the world that it should be distributed to property owners. He was geared up for this because his landlord patrons kept him constantly in the field.

• Economists of many generations even before Adam Smith and continuing to the present — have preached on the advantages of land as a tax base. Let me enumerate a few of those.

•  
  • A tax on land value is the only tax known to man which is both progressive and favorable to incentives. One can wax lyrical only about a tax that combines these two properties, because the conflict between progressivity and incentives has baffled tax practitioners for centuries, and still baffles them today.

•  
  • A land tax is progressive because the ownership of the base is highly concentrated, much more so than income and even more so than the ownership of machines and improvements.

•  
  • Also, the tax on land values cannot be shifted to the consumer. The tax stimulates effort and investment because it is a fixed charge based merely on the passage of time.

•  
  • It does not rise when people work harder or invest money in improvements. Think about this. It is remarkable. With the land tax, there is no conflict but only harmony between progressivity in taxation and incentives to work and invest. In one stroke it solves one of the central divisive conflicts of all time.

The land tax does that because it cuts only the fat, not the muscle. It takes from the taxpayer only "economic rent," only the income he gets for doing nothing. If people could grasp this one overriding idea, then the whole sterile, counterproductive, endless impasse between conservatives who favor incentives and liberals who favor welfare would be resolved in a trice, and we could get on to higher things.

The final paragraphs speak directly to us in 2012.  34 years have passed since this was written.

• Summing up, Walter Rybeck, an administrative assistant for Congressman Henry Reuss of Wisconsin, and head of the League for Urban Land Conservation, has sagely suggested that we distinguish two functions of business: wealth-creating and resource-holding.   A good tax system will not make people pay for creating wealth but simply for holding resources.  Most taxes wait on a "taxable event" — they shoot anything that moves, while sparing those who just sit still on their resources.
  
  If we really want to revive the work ethic and put the United States back on its feet, we had better take steps to change the effect of taxes on incentives. Legislatures have got in the habit of acting as though persons with energy and talent, and with character for self-denial, should be punished, as if guilty of some crime against humanity. We cannot study the tax laws without inferring that Congress regards giving and receiving employment to be some kind of social evil, like liquor and tobacco, to be taxed and discouraged by all means not inconsistent with the rights of property. Little wonder the natives are getting restless. If we tax people for holding resources rather than creating wealth and serving each others' needs, we will be taking a giant step toward a good and healthy society.

 If your appetite is whetted by these excerpts, you can read the entire article below:

A Statement of Beliefs, and Purposes of the Movement

Another goody from my grandparents' files.  I searched for a version of this online, and, finding none, have transcribed it because I thought it good.

I BELIEVE:

• that the problems of poverty, hunger, illness and illiteracy have reached such proportions that they can no longer be neglected, and that they demand immediate, vigorous and adequate solutions;

• that the rising levels of joblessness and homelessness can only be reduced through systematic adjustments that foster reversal of the widening economic gap between rich and poor;

• that an adequate level of economic and social well-being must become more widespread if the political freedoms essential for a peaceful world are to be achieved and maintained;

• that this requires that access to the wealth of the land, the oceans and other natural resources be made available to all on a basis of fairness and equity;

• that the essential pre-requisite to solving these problems with justice for all is to relieve labor, industry and consumers of the onerous taxes they now bear;

• and that this can best be done by raising revenue for public purposes from those values that are created by the public itself, namely, the economic values of land and other natural resources, which now flow as unearned income to those corporations and individuals who happen to hold title to them.

 

PURPOSES OF THE MOVEMENT

1. To fund public services from publicly-created land-value revenues, instead of from privately-created wealth, such as homes and other man-made structures;
2. To stimulate the general economy by lessening the need for income, sales and other kinds of taxes;
3. To encourage private construction of low-cost housing, industrial plants and other needed facilities by reducing taxes usually levied against buildings of all kinds;
4. To encourage proper maintenance of all structures by reducing the tax "penalty" usually incurred whenever major repairs or improvements are made;
5. To discourage land speculation, which drives up both land prices and rents, resulting in increased levels of tenancy and homelessness;
6. To reduce urban sprawl and the mounting pressures to convert nearby agricultural land to residential, commercial and industrial uses;
7. To strengthen political freedom by enabling more people to share in the economic and social benefits of owning one's own home and/or workplace; and
8. To reduce the risk of global war by promoting a widely-recognized remedy for a primary cause of conflict within and between nations.

Vie Peterson on Henry George's one tax

I'm reading through some of my grandparents' files of correspondence; they were great correspondents, and kept carbons of their outgoing letters and originals of what they received.  This is an excerpt from a 1957 letter from the executive secretary of a foundation which sponsored my grandfather's work, Vie Peterson (also a wonderful correspondent!) and was written in response to a draft of a document he was assembling as an introduction to Henry George. (A much later version of that paper is available here.)

Vie wrote,

"Should we elaborate why George insisted on one tax? He felt that the economic rent of land was the true national income.  He felt any tax on production was a form of penalty on man's industry and thrift.  He felt that every step forward that man makes in raising himself and in improving civilization as a whole would be reflected in land values and provide an increasing source of revenue which he believed would be sufficient for the national needs.  As a family lives on a set income, George believed that a nation should do likewise.  It would be necessary, it seems to me, to indicate that at the present time with the national debt so high and with other complications a tax on land values alone might not be sufficient, but the purpose of this statement is to show what George had in mind in his day which was not burdened with debt as is our own?

 In another, slightly earlier, letter, Vie writes,

"... George believed that easy access to land would overcome unemployent, would eliminate reliance on government aid, and therefore simplify government structure, etc. "

 

Social Problems

Social Problems.

A civilization which tends to concentrate wealth and power in the hands of a fortunate few, and to make of others mere human machines, must inevitably evolve anarchy and bring destruction. But a civilization is possible in which the poorest could have all the comforts and conveniences now enjoyed by the rich; in which prisons and almshouses would be needless, and charitable societies unthought of. Such a civilization waits only for the social intelligence that will adapt means to ends. Powers that might give plenty to all are already in our hands. Though there is poverty and want, there is, yet, seeming embarrassment from the very excess of wealth-producing forces. "Give us but a market," say manufacturers, "and we will supply goods without end!" "Give us but work!" cry idle men.

The evils that begin to appear spring from the fact that the application of intelligence to social affairs has not kept pace with the application of intelligence to individual needs and material ends. Natural science strides forward, but political science lags. With all our progress in the arts which produce wealth, we have made no progress in securing its equitable distribution. Knowledge has vastly increased; industry and commerce have been revolutionized; but whether free trade or protection is best for a nation we are not yet agreed. We have brought machinery to a pitch of perfection that, 50 years ago, could not have been imagined; but, in the presence of political corruption, we seem as helpless as idiots. The East River bridge is a crowning triumph of mechanical skill; but to get it built a leading citizen of Brooklyn had to carry to New York $60,000 in a carpet bag to bribe New York aldermen. The human soul that thought out the great bridge is prisoned in a crazed and broken body that lies bedfast, and could watch it grow only by peering through a telescope. Nevertheless, the weight of the immense mass is estimated and adjusted for every inch. But the skill of the engineer could not prevent condemned wire being smuggled into the cable.

The progress of civilization requires that more and more intelligence be devoted to social affairs, and this not the intelligence of the few, but that of the many. We cannot safely leave politics to politicians, or political economy to college professors. The people themselves must think, because the people alone can act.

Wow!  How many quotes can you take from those 3 paragraphs?  The source is the first essay in Henry George's book, "Social Problems," published in 1883, entitled "The Increasing Importance of Social Questions."

• "A civilization which tends to concentrate wealth and power in the hands of a fortunate few, and to make of others mere human machines, must inevitably evolve anarchy and bring destruction."

• "a civilization is possible in which the poorest could have all the comforts and conveniences now enjoyed by the rich; in which prisons and almshouses would be needless, and charitable societies unthought of. Such a civilization waits only for the social intelligence that will adapt means to ends. Powers that might give plenty to all are already in our hands."

Think about that one not just with regard to America, but with regard to the entire world.

• "Though there is poverty and want, there is, yet, seeming embarrassment from the very excess of wealth-producing forces. 'Give us but a market,' say manufacturers, 'and we will supply goods without end!' 'Give us but work!' cry idle men."

• "The evils that begin to appear spring from the fact that the application of intelligence to social affairs has not kept pace with the application of intelligence to individual needs and material ends. Natural science strides forward, but political science lags."

• "With all our progress in the arts which produce wealth, we have made no progress in securing its equitable distribution."

• "The progress of civilization requires that more and more intelligence be devoted to social affairs, and this not the intelligence of the few, but that of the many."

• "We cannot safely leave politics to politicians, or political economy to college professors. The people themselves must think, because the people alone can act."

"Social intelligence."  Nearly 130 years have passed since Henry George wrote these words.  Nearly every college has a Social Sciences division.  Most have a political science department and an economics department.  Almost all have history departments.  Many have American Studies programs.  I'd venture to say that not one in 1000 has a professor who knows these ideas well.  Many know the name of Henry George, as they know some other names from his era, but few have had the quality of education that would include exposure in depth to George's ideas.

Some would say that these social questions have no solutions, and move on to discuss some other topic they think more important, or solvable.  Some might murmur that any attempt to solve these questions would by definition be somehow socialistic, and therefore is not worth a further thought. (Much depends on what you mean by "socialistic;"  the word seems to be a conversation closer in many circles, which is a shame -- though I do not regard George's ideas as remotely socialistic as the term is commonly used.) 

Those who have sat with Henry George's ideas know differently. These problems can be solved.  Might you join that group?  What would it feel like to know these problems do have solutions?

And as we enter a presidential election season, this one bears repeating:

"We cannot safely leave politics to politicians, or political economy to college professors. The people themselves must think, because the people alone can act."

Charity or Justice: How We Treat the Poor

THE SOLID TRUTH OF IT.

And what is this lowest man who holds the fate of the world in his hands; whom we must lift or perish? He is landless, workless, poverty stricken, degraded, drunken, dishonest. In a word overflowing with plenty, he lacks everything. In a world of brightness, he and his cower in a cellar, or burrow in a sun-abandoned court. With abundance of pure air, they breathe only the foul.

Let us go to this man, whom we have thus painted in somberest hues; loveless, imbruted, dirty, lazy. What shall we do with him?

Let me rehearse some of the favorite processes of the philanthropic tread-mill so amiably worked by the well-meaning, though willfully blind, in their efforts to "raise the fallen":

• Preaching Jesus to his soul.
• Giving soap and water to his filth.
• Compelling him, willy-nilly, to work.
• Exhorting him to abstinence.
• Giving his children a taste of heaven on earth, with a treat of fresh air (sending them back again to hell of foul air).
• Building airy tenements for his occupation.
• Providing for his immediate wants in food, fuel, clothing and physic.

Although these do not exhaust the enumeration, they are typical and must suffice. But they are all wrong wrong, wrong.

What! Wrong to preach Jesus to the fallen? Yes, wrong to preach Jesus to them, until we practice Jesus ourselves.

What a mockery to preach Jesus to the fallen man, with the proceeds of his stolen rights in our pockets, in the suit of clothes we wear, and in the meal we enjoyed before we went forth to meet him. The first lesson in religion we can give him is an object lesson in the restoration of his lost inheritance in the earth. The first sermon he hears us preach should be one exhorting ourselves to repentance, confession, and restitution. Having obeyed and thus done the first duty in the premises, it remains for us to aid our fallen and defrauded brother in recovering the ground from which we have thrust him.

And this fallen man is not hurt harmlessly. He is the fly in the ointment of our wealth. He is the barrier to the realization of our social dreams. To secure ourselves we must secure him. The oneness of industry in its best conception is impossible until we have made this our brother one with ourselves. In some sad respects we trace evidences of our relationship. Is he sinful? So are we. Has he fallen? So have we. He was robbed and fell. We robbed and fell. Clearly our first duty is to "restore the pledge, given again that we have robbed." We can restore; he cannot recover; he is helpless; only we can help.

Until the lowest man and his rights are practically dealt with, and his opportunities to rise assured, we shall suffer; depressions, crashes, anxiety, overcompetition, aggravated covetousness, will mar all our industry.

We produce as individuals; we suffer as an organism. No man liveth to himself. The need of one is the calamity of all.

We have taken our brother's inheritance — the right to the use of the earth — and we make merchandise out of it. Let us agree to pay into the public treasury the whole annual value of the land we use in city or county, only retaining the proceeds of our own industry. Having agreed to and carried out this act of simple justice, no one will hold, can hold, land for profit. He must use or abandon it. The abandoned estates will then be available for our brother now landless, hopeless, degraded. Then, and only then, can we preach Jesus to him.

We are many members in one body. Which of us can be hurt and not bring hurt on the rest? In this sense, in the sense of sharing in suffering, the oneness of industry is perfect.

—James T. Barnard, in Hamilton Templar.

reprinted in The San Jose Letter, June 27, 1896

Delaware Single Tax Platform, 1896

How does this strike you?  If this is the first thing you've read here, it may seem very odd to you. I invite you to explore the ideas involved, through the tags (below this post) and in the cloud, at left.  Comments welcome, of course!

Single Tax Platform

The single taxers of Delaware are conducting a red hot campaign. The single tax will be the issue in that state this fall, and Justice, the state single tax organ, published the following as their Single Tax Platform:

We assert as our fundamental principle, that all men are equally entitled to the use of the earth;

Therefore, No one should be permitted to hold land without paying to the community the value of the privilege thus accorded; and from the fund so raised all expenses of government should be paid. We would therefore abolish all taxation, except a tax upon the value of land exclusive of improvements. This tax should be collected by the local government and a certain proportion be paid to the state government.

This system of taxation would dispense with a horde of tax-gatherers, simplify government and greatly reduce its cost.

It would do away with the corruption and gross inequality inseparable from our present methods.

It would relieve the farmer, the workman and the manufacturer of those taxes by which they are unjustly burdened, and take for public uses those values due to the presence of population.

It would make it impossible for speculators to hold land idle, and would open unlimited opportunities for the employment of labor and capital, which is essential to the solution of the labor problem.

reprinted in The San Jose Letter, June 13, 1896

Young Men and Their Opportunities - 1896 and today

This appeared in a California weekly 115 years ago.  Much of it could have been written in 2011.  Does this mean that these problems are eternal, necessary and simply can't be avoided?

Or does it mean that when we continue to maintain the structures that create these problems, we ought not to be surprised that the problem continues to show up?

These problems can be solved -- and prevented -- by a simple, logical, just, efficient reform of our tax structure.  But almost none of our elected representatives are the least bit familiar with it.  You might send yours a copy of Walt Rybeck's book, "Re-Solving the Economic Puzzle," if you think yours might have an open mind.

 

Young Men and Their Opportunities
The San Jose Letter, February 1, 1896

But what are young men to do for a living? Did it ever occur to you that thousands of young Americans between the ages of 16 and 21 are pondering over that very question? What are they to do, indeed? Shall they study for a profession? Scores of young professional men in San Jose are not earning enough to pay their office rent, young lawyers, doctors, dentists, waiting for the practice that does not come.

The professions are overcrowded, some one says, let them learn a trade. What trade, pray? Would you have any of them learn the carpenter's trade, for instance? The valley is over-run with idle carpenters. Would you have them become house painters? Every other tramp one meets appears to be a painter. Would you have them learn the printer's trade? A dozen idle printers are clammoring for every place.

I was talking with a gentleman who is in the hardware business the other day. This question of idle young men came up. The merchant got down a list containing probably a score of names. Applicants, he told me, for a chance to learn the plumber's trade. "I have not a place," he said, "for one in twenty of them. They offer to work for nothing, if permitted to learn the trade. But idle journeymen apply for work every day."

It is so with every trade that may be named. Plenty of young men are fitting themselves for a $20 job, by spending months in learning shorthand and type writing. There was a time when a book-keeper could earn a living-assuring salary. He cannot now. Book-keepers, good enough for any average retail business, are hunting $40 jobs.

What are the young Americans of this generation to do, then? Such as have parents to furnish them with a home can work for $20 a month. Those with no home cannot compete with home-cheapened labor. The result is, San Quentin is filling up with young fellows under 25 years of age. Most of our tramps appear to be under 30.

Since the land is filled with idle doctors one can safely conclude that none want for medical assistance and advice. Since idle carpenters are begging for work, the people of America must have all the houses they want. There can be no more plumbing to do, for plumbers are idle; no houses that need painting for painters are tramping the country seeking work, no one without bread for there is no sale for breadstuffs, and bakers are without employment.

But, strange to say, hundreds of men are suffering for the services of the idle doctors. Families are shelterless, while carpenters are begging to build them houses. Men and women and children are suffering for bread while bread-stuffs rot, and bakers starve to death because they can find no one who can command their services.

Doctor A wants to build a house, and carpenter B is anxious to build it for him; but the house is not built. In the meantime Carpenter B's children die for the lack of medical assistance. Blacksmith C is unable to furnish his family with wood, for he "has no work." However, Wood-dealer D sees his horses go lame because he cannot afford to have them shod.

A very interesting state of affairs, is it not? Work that should be done, and plenty of it; while the young men of the nation are drifting to State prisons and the road because they can find no work.

This condition of affairs is new in America. Hungry men startle the well-fed, until they, too, hunger for the luxuries that once seemed necessities, then they are more than startled.

Along with this an evil is growing up in America that cannot be too earnestly condemned; it is that of the steadily growing custom of giving charity. The recipient of charity is demoralized. The American laborer wants work, not charity. When you give him charity you sink him to a condition lower than that of the negro slave. I know philantropists who employ Chinese, while white labor goes begging for a purchaser, who pompously "pay the white man's butcher bill." The white man wants to pay his own butcher bill, and demands work that will enable him to do it.

The evil results of this charity are doubled when school children are taught to "give to the poor." San Francisco has been turned into a pauper-making, pauper-sustaining educational institution. The papers reek with "charity," and the children are given lessons in pauperizing their elders. A year ago last winter the children were encouraged to feed the men employed at $1 a day in the Golden Gate Park. What did this mean? It meant that the children were made accustomed to see laboring Americans want for food, while the laborers, although working ten hours a day, were obliged to stoop to accept charity, and charity at the hands of children. It is very pathetic, this picture of Susie or Johnnie giving a ham sandwich or a piece of sponge cake to a hungry laboring American — a pretty picture, if you like; but the children are not benefited by it and the laborer can know no greater degradation. But, what are the young men who are leaving schools, colleges and universities each year to do for a living? Must the majority of them become objects of charity, to be given work, charity work, at wages which will not sustain life, only to be helped out of the difficulty by a lot of idle society women, who have nothing better to do than to take up the fad, charity; and by a parcel of school children who are encouraged in doing their little towards the ultimate pauperization of the American laborer?

This was most likely written by Franklin Hichorn, editor of The San Jose Letter.

Taxing work does not create ...

Inspired by the energy, rhythm and tune of Kristin Andreassen’s Crayola Doesn’t Make the Color of your Eyes or another version from Prairie Home Companion, my friend Joe Johnston wrote this song.  Watch one of the videos first!  The tune is infectious, and Joe's words communicate the message clearly.

Taxing work does not create....

I went to see the wise one
our town was such a mess
the longest lines to get in
were at the DSS

He said, I cannot cure your town
But here’s something you can do
write a list and flesh it out
Of why your town is in a stew

Well, we build roads; we run the bus,
We try to control crooks.
We build the parks and sidewalks
We give our streets good looks

To do these things, we need some wealth
And so we tax the things we see
We tax the buildings and what you earn
We tax merchants and sellers with a fee.

(refrain)
I guess I realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.

We tax the land, that helps ensure
that land is not a wager
It lowers the cost to those who use it
to create more jobs per acre

Collecting land rents means
That the things we as community do
are benefiting everyone and
go to all, not to the few.

And if a person wants to work
she reaps the results of her labor
The benefits of what she does,
Not the out-of-town land speculator

(refrain)
I guess I  realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.

So maybe we’ll shift the taxes off
The labor you and I do, you see
And put it on the land so none
can squeeze the blood from you and me.

That way they’ll be  more jobs for those
who put their backs and brains to work
We wouldn’t have to work so long,
To put a roof and walls on God’s good dirt.

We wouldn’t need two jobs to feed
The mouths that we beget,
To house and clothe them and ourselves
And where we need to go, we’d get.

(refrain)
I guess I  realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.

A compact town means we could walk around
to get, to shops, to meet, to work for gain
And even walk to parks nearby
where quiet, joy, and beauty reign.

We wouldn’t need a big back yard,
or front ones with their lawns to mow.
We’d have a share in common land,
Where our souls, spirits, and bodies grow.

I think we’ve solved the problem of unemployment lines
of barely earning what we need.
We may not have the harvest yet,
But we have sown the seed.

(refrain)
I guess I  realized,
shoulda come as no surprise
that Taxes on work don’t create
a good environment.
What we tax, that we reduce
let’s not kill our jobs,
Taxes on work do not create
a good environment.

THE RIOTS

THE RIOTS.

Bryan Kavanagh, in Australia, writes,

The rioting in England is indefensible, but how to understand it?

I’ve mentioned several times throughout these blogs that the rent of land represents community.  However, although land and natural resource rent is community-generated, less and less of it has been captured back for public revenue over the last forty years.  Thereby, a sense of a community has been lost.

That’s because it has become fashionable to privatise the rent of land and natural resources in the misbegotten belief that ‘user pays’ and increased taxation is preferable to the public capture of publicly created resource rents. It is largely privatisers of our natural resource rents who’ve been able to put about this self-serving idea successfully. And they’ve sold it well to governments.

The cumulative effect of the process over forty years has been to widen the gap between rich and poor. This now vast divide is well documented, but the role of rent has been kept invisible.

Right wing shock jocks consider the private leeching of natural resource rents by private interests is respectable employment and, unable to think through the natural consequences, they’re flabbergasted by London’s street riots.

The rising of the hun in the city is obviously a function of poverty and dispossession. Feeling disenfranchised and disconnected, these predominantly lower class youth exhibit their hate for a system that keeps them down and often unemployed whilst bank CEOs receive their multi-millions.  Unlike many of us, the rioters see the game is rigged and their frustration has spilled over into aggression and excess.

This excellent article shows the rent-seeking process is alive and well in India.

Justice, Order -- what do we value?

As we watch the people of various countries in the world seeking a new order in their societies, this 110 year old article caught my eye.

"ORDER" MORE PRECIOUS THAN JUSTICE.

Drastic legislation against anarchists will be a feature of the present session. All the big men who are anxious to pose as friends of "order" are rushing to the front with revolutionary suggestions for the suppression of one of the symptoms of social disease. No statesman is heard of who offers a constitutional remedy. Even the president, it is said, will preach the gospel of suppression. It is assumed by all these great men that "order" is more precious and more easily secured than justice. Yet our fathers did not think so. They did not hesitate to plunge the country into disorder for the sake of a principle. They defied the constituted authorities, they assaulted the king's representatives, they threw a cargo of tea into Boston harbor, they unfurled the flag of revolt and they waged a war for seven long years in assertion of their right to disregard order where it involved injustice. This is the point which our anarchistic friends of order ignore. They will not admit that they deny that there is any social injustice which breeds social disease and such manifestations of it as we have lately witnessed. It will be easy to pass laws for the suppression of anarchy. But these laws will not suppress it. They will only serve to intensify the frightful conditions which are breeding it. They will serve only to push the country farther along toward a despotism of pelf. And the inspiration of this legislation is not a love of liberty and a hatred of wrong; it comes from those who are profiting by wrong and who are in deadly fear of the plain people who are their victims. The drag-nets to be thrown out are not to catch the red anarchist alone. He is not the occasion of fear. The people to be caught are those who dissent from things as they are and who protest in orderly ways against robbery and injustice.—Johnstown (Pa.) Democrat of December 3.

from The Public, DECEMBER 28, 1901.

I had to look up "pelf:" Money, esp. when gained in a dishonest or dishonorable way.

I appreciated some of the phrases: 

• suppression of the symptoms of social disease;
• social injustice which breeds social disease
• despotism of pelf
• the inspiration of this legislation is not a love of liberty and a hatred of wrong; it comes from those who are profiting by wrong and who are in deadly fear of the plain people who are their victims
• The people to be caught are those who dissent from things as they are and who protest in orderly ways against robbery and injustice

And then the word "order" caught my imagination, in the way it is used in "Pen's Parade" -- see an entry a bit further down this page.  Orderly, indeed.

Pen's Parade: do you realize we're mostly dwarves?

.... and how we might correct the distribution.

I came across a spectacularly good graphic the other day.  I don't know that it will reproduce here, so I'll just provide you the link:

http://assets.theatlantic.com/static/coma/images/issues/200609/Height.jpg

Open it in another window, let it fill the screen, scrolling if necessary to see it in full -- and then continue reading here.

It comes from a 2006 article in The Atlantic Monthly entitled "The Height of Inequality," which lays out very well the extent of the income inequality we have in America, though it starts with an explanation done in 1971 by Dutch economist Jan Pen, describing the distribution of income in the British economy at that time. (I've put part of it into bullet format.) It begins,

In 1971, Jan Pen, a Dutch economist, published a celebrated treatise with a less-than-gripping title: Income Distribution. The book summoned a memorable image. This is how to think of the pattern of incomes in an economy, Pen said (he was writing about Britain, but bear with me). Suppose that every person in the economy walks by, as if in a parade. Imagine that the parade takes exactly an hour to pass, and that the marchers are arranged in order of income, with the lowest incomes at the front and the highest at the back. Also imagine that the heights of the people in the parade are proportional to what they make: those earning the average income will be of average height, those earning twice the average income will be twice the average height, and so on. We spectators, let us imagine, are also of average height.

Pen then described what the observers would see. Not a series of people of steadily increasing height—that’s far too bland a picture. The observers would see something much stranger. They would see, mostly, a parade of dwarves, and then some unbelievable giants at the very end.

• As the parade begins, Pen explained, the marchers cannot be seen at all. They are walking upside down, with their heads underground—owners of loss-making businesses, most likely.
• Very soon, upright marchers begin to pass by, but they are tiny. For five minutes or so, the observers are peering down at people just inches high—old people and youngsters, mainly; people without regular work, who make a little from odd jobs.
• Ten minutes in, the full-time labor force has arrived: to begin with, mainly unskilled manual and clerical workers, burger flippers, shop assistants, and the like, standing about waist-high to the observers. And at this point things start to get dull, because there are so very many of these very small people. The minutes pass, and pass, and they keep on coming.
• By about halfway through the parade, Pen wrote, the observers might expect to be looking people in the eye—people of average height ought to be in the middle. But no, the marchers are still quite small, these experienced tradespeople, skilled industrial workers, trained office staff, and so on—not yet five feet tall, many of them. On and on they come.
• It takes about forty-five minutes—the parade is drawing to a close—before the marchers are as tall as the observers. Heights are visibly rising by this point, but even now not very fast.
• In the final six minutes, however, when people with earnings in the top 10 percent begin to arrive, things get weird again. Heights begin to surge upward at a madly accelerating rate. Doctors, lawyers, and senior civil servants twenty feet tall speed by. Moments later, successful corporate executives, bankers, stock­brokers—peering down from fifty feet, 100 feet, 500 feet.
• In the last few seconds you glimpse pop stars, movie stars, the most successful entrepreneurs. You can see only up to their knees (this is Britain: it’s cloudy). And if you blink, you’ll miss them altogether.
• At the very end of the parade (it’s 1971, recall) is John Paul Getty, heir to the Getty Oil fortune. The sole of his shoe is hundreds of feet thick.

As Garrison Keillor ironically informs his listeners, not every child can be above average. But when it comes to incomes, the great majority can very easily be below average. A comparative handful of exceptionally well-paid people pulls the average up. As a matter of arithmetic, the median income—the income of the worker halfway up the income distribution—is bound to be less than average.

This is true in every economy, but in some more than others. Back when Pen wrote his book, incomes were already more skewed in America than in Britain. Over the past thirty-five years, and especially over the past ten, that top-end skewness has greatly increased. The weirdness of the last half minute of today’s American parade—even more so the weirdness of the last few seconds, and above all the weirdness of the last fraction of a second—is vastly greater than that of the vision, bizarre as it was, described by Pen.

The article goes on to point out that (1) at the time, the US giants were even taller than the British ones; (2) that in the intervening years, a highly disproportionate share of US income has gone to make the giants taller yet in proportion to the rest of us.   It quotes a study suggesting that a large share of the top income earners were sports and media celebrities and top corporate executives.   13,000 people in the 99.99th percentile, with total earnings of $83 billion in 2001.  (an average of $6.4 million, so some are much higher, many a lot lower.)   In 2001, there were probably relatively few Hedge Fund managers pocketing billions each (and their incomes are likely not shown as wages, but rather as "capital" gains, taxed at less than all but our lowest wage earners must pay in federal income taxes, and not subject to Social Security or Medicare taxes.

Most of us, as the article points out, have a big problem with sports or media celebrities receiving large incomes, considering it a "perfecting of the labor market."  But how is it that corporate executives get to harvest so much?  We know about hand-picked board compensation committees which reward their pickers with high incomes, whether or not performance has been strong.  But do we think about just how it is that there is so much for them to work with?  Do we know why so little goes to the rest of the parade in wages?    We're so used to the situation that we no longer examine it.  Even your family's college economics major probably has never been exposed to a serious examination of the question.  Air to the bird, water to the fish -- just the environment we live in, not even interesting enough to study, until it no longer supports life.

Here's an account of a talk Joe Stiglitz gave last summer during his lecture tour in Australia, which might shed some light on how so much is available for those corporate executives and their compensation committees, as well as for the shareholders:

Professor Stiglitz told a packed UQ Centre that Australia's economic stimulus package was the best designed in the world.

AND he said natural resources - coal, iron ore - should be properly valued at market just like the electromagnetic spectrum.

The government auctions the spectrum to the highest bidders who want to operate mobile phone networks, cable companies, television and radio stations. 

Basically, a country - like Australia - will end up poor if doesn't get the best price for its assets - and natural assets are not renewable, once they are gone they are gone. If the proceeds from the sale of these assets are not invested in infrastructure to support and grow other sectors the economy (manufacturing and value-adding, goods creation) then a country and it's people will not prosper - HELLO! HELLO! Drowning not waving.

"It should be subtracted from Gross Domestic Product (GDP)," he said. "You are selling off assets at a very low price if you don't have adequate taxes on mining - you are being cheated," he said to audience applause.

He thinks resources should be auctioned off to the highest bidder - the free market at work. Of course, the mining industry will make all kinds of threats.

To everyone's amusement he joked about how mining companies bamboozled, threatened and bribed governments of developing, fragile nations. 

"I assume that's not the case in Australia," he mused.

To prosper, a country needs to set up a stabilization fund (from a mining tax, if not a resources auction) for nation building.

This is what he calls an investment fund for building infrastructure and to grow value-adding industries, maintain education, job creation.

Not only that but the sell-off of natural resources should appear on a country's accounts as a kind of depreciation of assets - otherwise the accounts are not accurate. ...

He made these comments at the end of the oration after he explained the difference between the financial sector and the economy - the economy is not the financial sector.

The financial sector (the banks and regulators) are the culprits behind the global financial crisis which has crippled the global economy. Apparently, moneylenders have been skimming 40 percent of the profits from companies that actually make and produce things. His big point was that this is not really the role of the financial sector. The financial sector's job is to support economic growth, not cripple it. 

"Finance is a means to an end," he said. "The lack of balance between the financial sector and the economic sector was actually the real problem in this economic crisis (NOT the real estate bubble)."

Why aren't the workers getting more?  In large part because there isn't competition for their labor.  Why is this the case?  In part because our natural resources are being given out -- at bargain prices -- to corporations which have monopolized them.    And, while about half of us have some stock, stock ownership of publicly held companies is quite concentrated (top 5% hold 66.5%), and ownership of privately held companies (a larger figure at the household level) even more so (top 5% hold 88.1%).

So how do we create more competition for the services of workers?  How do we create more opportunity for all to employ themselves if they don't like their chances with other employers?  To find out, explore this blog, explore the ideas associated with the name of 19th century economist and philosopher Henry George.

Political economy is the science which deals with the natural laws governing the production and distribution of valuable goods and services.  I'll also reference Adam Smith's definition:

Political economy considered as a branch of the science of a statesman or legislator proposes two distinct objects, first, to supply a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves; and secondly, to supply the state or commonwealth with a revenue sufficient for the public service. It proposes to enrich both the people and the sovereign.

Which people?  All people?

Thinking about taxes and jobs

AN IMPORTANT DIFFERENCE

Man cannot profit from owning capital without using it, which means to employ labor. Man can profit from owning land without using it, which means unemployed labor. A low tax on land will not add one foot to the State; a high tax will not drive one acre away. A low tax or no tax on capital will bring to the State the means of developing its resources and employing its labor; a high tax will drive capital away and leave unemployment.

Which is your town/city/county/state/nation going to do? Will she listen to the land speculators, and lower the taxes on vacant land? Or will she give heed to the business men and farmers, and lighten the taxes on industry? Much depends upon her decision.

 

adapted from Tax Facts, January, 1928.

Think about the unused and underused land within the borders of your town or city.  It is not neutral.  It is a drag on your economy and contributes nothing, whil the owner sits and waits for someone to meet his price.  It is held out of use to create an unearned windfall for its owner. 

We ought to examine our tax policies for the incentives which make it possible for some owners to put the land in their portfolio to little or no use.   I'm not concerned with land of genuinely little value, but with land served by infrastructure that we-the-people have taxed ourselves to provide and maintain.  We accord landholders a privilege in taxing them but lightly, month in and month out, on the value of their holdings.  (At the same time, we make a big mistake by taxing the improvements and "personal" property, including vehicles and business equipment, of those who have improved their land to make it useful and productive.  I am reminded of Enoch Ensley's important statement:

NEVER TAX ANY THING
THAT WOULD BE OF VALUE TO YOUR STATE,
THAT COULD AND WOULD RUN AWAY, OR
THAT COULD AND WOULD COME TO YOU.

Our elected representatives ought to be reminded of that, and then asked to ponder how to implement it.  I commend to their attention Fred Foldvary's article "The Ultimate Tax Reform."

1915 Commission's report and 2011's scenario

The issue of whether and how we ought to tax large fortunes upon the death of the second-to-die of a wealth-holding couple seems to have gone away recently, but this report to the federal government in 1915 ("Final Report of the Commission on Industrial Relations") from a Commission created by a 1912 Act of Congress, provides some interesting and timely reading nearly 100 years later -- and not just for questions related to the estate tax, but for economic justice and stability in general.   Those who have seen the film "Inside Job" will also find some interesting items below.    (While initially I wanted to share the David Lloyd-George quote, the length of this post grew some: it was difficult to pick starting and ending points.  This starts on page 23.)

This sense of tension and impending danger has been expressed by numerous witnesses before the Commission, but by none more forcibly than by Mr. Daniel Guggenheim, a capitalist whose interests in mines and industrial plants extend to every part of the country.

Chairman Walsh. What do you think has been accomplished by the philanthropic activities of the country in reducing suffering and want among the people?

Mr. Guggenheim. There has a great deal been done. If it were not for what has been done and what is being done we would have revolution in this country.

The sources from which this unrest springs are, when stated in full detail, almost numberless. But upon careful analysis of their real character they will be found to group themselves almost without exception under four main sources which include all the others. These four are:

1. Unjust distribution of wealth and income.
2. Unemployment and denial of an opportunity to earn a living.
3. Denial of justice in the creation, in the adjudication, and in the administration of law.
4. Denial of the right and opportunity to form effective organizations.

1. Unjust Distribution of Wealth and Income.

The conviction that the wealth of the country and the income which is produced through the toil of the workers is distributed without regard to any standard of justice, is as widespread as it is deep-seated. It is found among all classes of workers and takes every form from the dumb resentment of the day laborer, who, at the end of a week's back-breaking toil, finds that he has less than enough to feed his family while others who have done nothing live in ease, to the elaborate philosophy of the "soap-box orator," who can quote statistics unendingly to demonstrate his contentions. At bottom, though, there is the one fundamental, controlling idea that income should be received for service and for service only, whereas, in fact, it bears no such relation, and he who serves least, or not at all, may receive most.

This idea has never been expressed more clearly than in the testimony of Mr. John H. Walker, President of the Illinois State Federation of Labor:

A working man is not supposed to ask anything more than a fair day's wage for a fair day's work; he is supposed to work until he is pretty fairly tuckered out, say eight hours, and when he does a fair day's work he is not supposed to ask for any more wages than enough to support his family, while with the business man the amount of labor furnishes no criterion for the amount they receive. People accept it as all right if they do not do any work at all, and accept it as all right that they get as much money as they can; in fact, they are given credit for getting the greatest amount of money with the least amount of work; and those things that are being accepted by the other side as the things that govern in everyday life, and as being right, have brought about this condition, this being in my judgment absolutely unfair; that is, on the merits of the proposition in dealing with the workers.

The workers feel this, some unconsciously and some consciously, but all of them feel it, and it makes for unrest, in my judgment, and there can be no peace while that condition obtains.

In the highest paid occupations among wage earners, such as railroad engineers and conductors, glass-blowers, certain steel-mill employees, and a few of the building trades, the incomes will range from $1,500 to $2,000 at best, ignoring a few exceptional men who are paid for personal qualities. Such an income means, under present-day conditions, a fair living for a family of moderate size, education of the children through high school, a small insurance policy, a bit put by for a rainy day — and nothing more. With unusual responsibilities or misfortunes, it is too little, and the pinch of necessity is keenly felt. To attain such wages, moreover, means that the worker must be far above the average, either in skill, physical strength, or reliability. He must also have served an apprenticeship equal in length to a professional course. Finally, and most important, he or his predecessors in the trade must have waged a long, aggressive fight for better wages, for there are other occupations whose demand for skill, strength and reliability are almost as great as those mentioned, where the wages are very much less.

These occupations, however, include but a handful compared to the mass of the workers. "What do the millions get for their toil, for their skill, for the risk of life and limb? That is the question to be faced in an industrial nation, for these millions are the backbone and sinew of the State, in peace or in war.

First, with regard to the adult workmen, the fathers and potential fathers, from whose earnings, according to the "American standard," the support of the family is supposed to be derived.

Between one-fourth and one-third of the male workers 18 years of age and over, in factories and mines, earn less than $10 per week; from two-thirds to three-fourths earn less than $15, and only about one-tenth earn more than $20 a week. This does not take into consideration lost working time for any cause.

Next are the women, the most portentously growing factor in the labor force, whose wages are important, not only for their own support or as the supplement of the meager earnings of their fathers and husbands, but because, through the force of competition in a rapidly extending field, they threaten the whole basis of the wage scale. From two-thirds to three-fourths of the women workers in factories, stores and laundries, and in industrial occupations generally, work at wages of less than $8 a week. Approximately one-fifth earn less than $4 and nearly one-half earn less than $6 a week.

Six dollars a week — what does it mean to many? Three theater tickets, gasoline for the week, or the price of a dinner for two; a pair of shoes, three pairs of gloves, or the cost of an evening at bridge. To the girl it means that every penny mnst be counted, every normal desire stifled, and each basic necessity of life barely satisfied by the sacrifice of some other necessity. If more food must be had than is given with 15 cent dinners, it must be bought with what should go for clothes; if there is need for a new waist to replace the old one at which the forewoman has glanced reproachfully or at which the girls have giggled, there can be no lunches for a week and dinners must cost five cents less each day. Always too the room must be paid for, and back of it lies the certainty that with slack seasons will come lay-offs and discharges. If the breaking point has come and she must have some amusement, where can it come from? Surely not out of $6 a week.

Last of all are the children, for whose petty addition to the stream of production the Nation is paying a heavy toll in ignorance, deformity of body or mind, and permature old age. After all, does it matter much what they are paid? for all experience has shown that in the end the father 's wages are reduced by about the amount that the children earn. This is the so-called "family wage," and examination of the wages in different industries corroborates the theory that in those industries, such as textiles, where women and children can be largely utilized, the wages of men are extremely low.

The competitive effect of the employment of women and children upon the wages of men, can scarcely be overestimated. Surely it is hard enough to be forced to put children to work, without having to see the wages of men held down by their employment.

This is the condition at one end of the social scale. What is at the other?

Massed in millions, at the other end of the social scale, are fortunes of a size never before dreamed of, whose very owners do not know the extent nor, without the aid of an intelligent clerk, even the sources, of their incomes. Incapable of being spent in any legitimate manner, these fortunes are burdens, which can only be squandered, hoarded, put into so-called "benefactions" which for the most part constitute a menace to the State, or put back into the industrial machine to pile up everincreasing mountains of gold. *

In many cases, no doubt, these huge fortunes have come in whole or in part as the rich reward of exceptional service. None would deny or envy him who has performed such service the richest of rewards, although one may question the ideals of a nation which rewards exceptional service only by burdensome fortunes. But such reward can be claimed as a right only by those who have performed service, not by those who through relationship or mere parasitism chance to be designated as heirs. Legal right, of course, they have by virtue of the law of inheritance, which, however, runs counter to the whole theory of American society and which was adopted, with important variations, from the English law, without any conception of its ultimate results and apparently with the idea that it would prevent exactly the condition which has arisen. In effect the American law of inheritance is as efficient for the establishment and maintenance of families as is the English law, which has bulwarked the British aristocracy through the centuries. Every year, indeed, sees this tendency increase, as the creation of "estates in trust" secures the ends which might be more simply reached if there were no prohibition of "entail." According to the income tax returns for ten months of 1914, there are in the United States 1598 fortunes yielding an income of $100,000 or more per year. Practically all of these fortunes are so invested and hedged about with restrictions upon expenditure that they are, to all intents and purposes, perpetuities.

An analysis of 50 of the largest American fortunes shows that nearly one-half have already passed to the control of heirs or to trustees (their vice regents) and that the remainder will pass to the control of heirs within twenty years, upon the deaths of the "founders." Already, indeed, these founders have almost without exception retired from active service, leaving the management ostensibly to their heirs but actually to executive officials upon salary.

We have, according to the income tax returns, forty-four families with incomes of $1,000,000 or more,1 whose members perform little or no useful service, but whose aggregate incomes, totalling at the very least fifty millions per year, are equivalent to the earnings of 100,000 wage earners at the average rate of $500.

1 — The income tax statistics, as a matter of fact, cover only a period of ten months in 1914.

The ownership of wealth in the United States has become concentrated to a degree which is difficult to grasp. The recently published researches of a statistician of conservative views 2 have shown that as nearly as can be estimated the distribution of wealth in the United States is as follows:

2 — Prof. Willard I. King, The Wealth and Income of the People of the United States.

• The "Rich," 2 percent of the people, own 60 percent of the wealth.
• The "Middle Class," 33 percent of the people, own 35 percent of the wealth.
• The "Poor," 65 percent of the people, own 5 percent of the wealth.

This means in brief that a little less than two million people, who would make up a city smaller than Chicago, own 20 percent more of the Nation 's wealth than all the other ninety millions.

The figures also show that with a reasonably equitable division of wealth, the entire population should occupy the position of comfort and security which we characterize as Middle Class.

The actual concentration has, however, been carried very much further than these figures indicate. The largest private fortune in the United States, estimated at one billion dollars, is equivalent to the aggregate wealth of 2,500,000 of those who are classed as "poor," who are shown in the studies cited to own on the average about $400 each.

Between the two extremes of superfluity and poverty is the large middle class — farmers, manufacturers, merchants, professional men, skilled artisans, and salaried officials — whose incomes are more or less adequate for their legitimate needs and desires, and who are rewarded more or less exactly in proportion to service. They have problems to meet in adjusting expenses to income, but the pinch of want and hunger is not felt, nor is there the deadening, devitalizing effect of superfluous, unearned wealth.

From top to bottom of society, however, in all grades of incomes, are an innumerable number of parasites of every conceivable type. They perform no useful service, but drain off from the income of the producers a sum whose total can not be estimated.

This whole situation has never been more accurately described than by Hon. David Lloyd-George in an address on "Social Waste":

I have recently had to pay some attention to the affairs of the Sudan, in connection with some projects that have been mooted for irrigation and development in that wonderful country. I will tell you what the problem is, — you may know it already. Here you have a great, broad, rich river upon which both the Sudan and Egypt depend for their fertility. There is enough water in it to fertilize every part of both countries; but if, for some reason or other, the water is wasted in the upper regions, the whole land suffers sterility and famine. There is a large region in the Upper Sudan, where the water has been absorbed by one tract of country, which, by this process, has been converted into a morass, breeding nothing but pestilence. Properly and fairly husbanded, distributed, and used, there is enough to fertilize the most barren valley and make the whole wilderness blossom like the rose.

That represents the problem of civilization, not merely in this country but in all lands. Some men get their fair share of wealth in a land and no more — sometimes even the streams of wealth overflow to waste over some favored regions, often producing a morass, which poisons the social atmosphere. Many have to depend on a little trickling runlet, which quickly evaporates with every commercial or industrial drought; sometimes you have masses of men and women whom the flood at its height barely reaches, and then you witness parched specimens of humanity, withered, hardened in misery, living in a desert where even the well of tears has long ago run dry.

Besides the economic significance of these great inequalities of wealth and income, there is a social aspect which equally merits the attention of Congress. It has been shown that the great fortunes of those who have profited by the enormous expansion of American industry have already passed, or will pass in a few years, by right of inheritance to the control of heirs or to trustees who act as their "vice regents." They are frequently styled by our newspapers "monarchs of industry," and indeed occupy within our Republic a position almost exactly analogous to that of feudal lords.

These heirs, owners only by virtue of the accident of birth, control the livelihood and have the power to dictate the happiness of more human beings than populated England in the Middle Ages. Their principalities, it is true, are scattered and, through the medium of stock-ownership, shared in part with others; but they are none the less real. In fact, such scattered, invisible industrial principalities are a greater menace to the welfare of the Nation than would be equal power consolidated into numerous petty kingdoms in different parts of the country. They might then be visualized and guarded against; now their influence invisibly permeates and controls every phase of life and industry.

"The king can do no wrong" not only because he is above the law, but because every function is performed or responsibility assumed by his ministers and agents. Similarly our Rockefellers, Morgans, Fricks, Vanderbilts and Astors can do no industrial wrong, because all effective action and direct responsibility is shifted from them to the executive officials who manage American industry. As a basis for this conclusion we have the testimony of many, among which, however, the following statements stand out most clearly:

Mr. John D. Rockefeller, Jr.: 1

1 — Before Congressional Investigating Committee.

..." those of us who are in charge there elect the ablest and most upright and competent men whom we can find, in so far as our interests give us the opportunity to select, to have the responsibility for the conduct of the business in which we are interested as investors. We can not pretend to follow the business ourselves.

Mr. J. Pierpont Morgan.

Chairman Walsh. In your opinion, to what extent are the directors of corporations responsible for the labor conditions existing in the industries in which they are the directing power?

Mr. Morgan. Not at all I should say.

The similitude, indeed, runs even to mental attitude and phrase. Compare these two statements:

Mr. John D. Rockefeller, Jr.
My appreciation of the conditions surrounding wage-earners and my sympathy with every endeavor to better these conditions are as strong as those of any man.

Louis XVI.
There is none but you and me that has the people 's interest at heart. ("II n'y a que vous et moi qui aimions le peuple.")

The families of these industrial princes are already well established and are knit together not only by commercial alliances but by a network of intermarriages which assures harmonious action whenever their common interest is threatened.

Effective action by Congress is required, therefore, not only to readjust on a basis of compensation approximating the service actually performed, the existing inequalities in the distribution of wealth and income, but to check the growth of an hereditary aristocracy, which is foreign to every conception of American Government and menacing to the welfare of the people and the existence of the Nation as a democracy.

The objects to be attained in making this readjustment are: To reduce the swollen, unearned fortunes of those who have a superfluity; to raise the underpaid masses to a level of decent and comfortable living; and at the same time to accomplish this on a basis which will, in some measure, approximate the just standard of income proportional to service.

The discussion of how this can best be accomplished forms the greater part of the remainder of this report, but at this point it seems proper to indicate one of the most immediate steps which need to be taken.

It is suggested that the Commission recommend to Congress the enactment of an inheritance tax, so graded that, while making generous provision for the support of dependents and the education of minor children, it shall leave no large accumulation of wealth to pass into hands which had no share in its production. 1 The revenue from this tax, which we are informed would be very great, should be reserved by the Federal Government for three principal purposes:

1— It is suggested that the rates be so graded that not more than one million dollars shall pass to the heirs. This can be equitably accomplished by several different gradations of taxation.

1. The extension of education.

2. The development of other important social services which should properly be performed by the Nation, which are discussed in detail elsewhere.

3. The development, in cooperation with States and municipalities, of great constructive works, such as road building, irrigation and reforestation, which would materially increase the efficiency and welfare of the entire Nation.

We are informed by counsel not only that such a tax is clearly within the power of Congress, but that upon two occasions, namely, during the Civil War and in 1898, such graded inheritance taxes were enacted with scarcely any opposition and were sustained by the Supreme Court, which held that the inheritance tax was not a direct tax within the meaning of the Constitution. We are aware that similar taxes are levied in the various States, but the conflict with such State taxes seems to have presented little difficulty during the period in which the tax of 1898 was in effect. Under any circumstances this need cause no great complication, as the matter could be readily adjusted by having the Federal Government collect the entire tax and refund a part to the States on an equitable basis.

There is no legislation which could be passed by Congress the immediate and ultimate efforts of which would be more salutary or would more greatly assist in tempering the existing spirit of unrest.

2. Unemployment and Denial of Opportunity to Earn a Living.

As a prime cause of a burning resentment and a rising feeling of unrest among the workers, unemployment and the denial of an opportunity to earn a living is on a parity with the unjust distribution of wealth. They may on final analysis prove to be simply the two sides of the same shield, but that is a matter which need not be discussed at this point. They differ in this, however, that while unjust distribution of wealth is a matter of degree, unemployment is an absolute actuality, from which there is no relief but soul-killing crime and soul-killing charity.

To be forced to accept employment on conditions which are insufficient to maintain a decent livelihood is indeed a hardship, but to be unable to get work on any terms whatever is a position of black despair.

A careful analysis of all available statistics shows that in our great basic industries the workers are unemployed for an average of at least one-fifth of the year, and that at all times during any normal year there is an army of men, who can be numbered only by hundreds of thousands, who are unable to find work or who have so far degenerated that they can not or will not work. Can any nation boast of industrial efficiency when the workers, the source of her productive wealth, are employed to so small a fraction of their total capacity?

Fundamentally this unemployment seems to rise from two great causes, although many others are contributory. First, the inequality of the distribution of income, which leaves the great masses of the population (the true ultimate consumers) unable to purchase the products of industry which they create, while a few have such a superfluity that it can not be normally consumed but must be invested in new machinery for production or in the further monopolization of land and natural resources. The result is that in mining and other basic industries we have an equipment in plant and developed property far in excess of the demands of any normal year, the excess being, in all probability, at least 25 percent. Each of these mines and industrial plants keeps around it a labor force which, on the average, can get work for only four-fifths of the year, while at the same time the people have never had enough of the products of those very industries — have never been adequately fed, clothed, housed, nor warmed — for the very simple reason that they have never been paid enough to permit their purchase.

The second principal cause lies in the denial of access to land and natural resources even when they are unused and unproductive, except at a price and under conditions which are practically prohibitive. This situation, while bound up with the land and taxation policies of our States and Nation, also rests fundamentally upon the unjust distribution of wealth. Land or mineral resources in the hands of persons of average income must and will be used either by their original owners or by some more enterprising person. By the overwhelming forces of economic pressure, taxation, and competition they can not be permitted to lie idle if they will produce anything which the people need. Only in the hands of large owners — free from economic pressure, able to evade or minimize the effects of taxation and to await the ripening of the fruits of unearned increment — can land be held out of use if its products are needed.

There can be no more complete evidence of the truth of this statement than the condition of the farms of 1000 acres and over, which, valued at two and one-third billion dollars, comprise 19 percent of all the farm land of the country and are held by less than one percent of the farm owners. The United States Census returns show that in these 1000-acre farms only 18.7 percent of the land is cultivated as compared with 60 to 70 percent in farms of from 50 to 499 acres. Furthermore, it is well known that the greater part of these smaller farms which are left uncultivated are held by real estate men, bankers and others who have independent sources of income. More than four-fifths of the area of the large holdings is being held out of active use by their 50,000 owners, while 2,250,000 farmers are struggling for a bare existence on farms of less than 50 acres, and an untold number who would willingly work these lands are swelling the armies of the unemployed in the cities and towns.

A basic theory of our Government, which found expression in the Homestead Acts, was that every man should have opportunity to secure land enough to support a family. If this theory had been carried out and homesteads had either gone to those who would use them productively or remained in the hands of the Government, we should not yet have a problem of such a character. But these acts were evaded; land was stolen outright by wholesale, and fraudulent entries were consolidated into enormous tracts which are now held by wealthy individuals and corporations.

The Public Lands Commission, after an exhaustive inquiry, reported in 1905:

Detailed study of the practical operation of the present land laws shows that their tendency far too often is to bring about land monopoly rather than to multiply small holdings by actual settlers.

. . .  Not infrequently their effect is to put a premium on perjury and dishonest methods in the acquisition of land. It is apparent, in consequence, that in very many localities, and perhaps in general, a larger proportion of the public land is passing into the hands of speculators than into those of actual settlers making homes. . . . Nearly everywhere the large landowner has succeeded in monopolizing the best tracts, whether of timber or agricultural land. 1

1 — Senate Doc. 154, 58th Cong., 3d Sess., p. 14.

To one who has not read the preceding statements carefully, there may seem to be a contradiction in proposing to prevent great capitalists from creating an excess of productive machinery and overdeveloping mineral resources, while pointing out the necessity of forcing land and other natural resources into full and effective use by the people. The two propositions are, as a matter of fact, as fundamentally distinct as monopoly and freedom. The capitalist increases his holdings in productive machinery and resources only because through monopolization and maintenance of prices he hopes to reap rewards for himself or increase his power, while the aim in desiring the full development of land and other resources by the people is that they, producing for themselves, may enjoy a sufficiency of good things and exchange them for the products of others, and thus reduce to a minimum the condition of unemployment.

There are, of course, many other causes of unemployment than the inequality of wealth and the monopolization of land which there is no desire to minimize. Chief among these are immigration, the inadequate organization of the labor market, the seasonal character of many industries, and the personal deficiencies of a very large number of the unemployed. It can not be denied that a considerable proportion of the men who fill the city lodging houses in winter are virtually unemployables, as a result of weakness of character, lack of training, the debasing effects of lodging house living and city dissipation, and, last but not least, the conditions under which they are forced to work in the harvest fields and lumber, railroad and construction camps. The seasonal fluctuations of our industries are enormous, employing hundreds of thousands during the busy season and throwing them out on the community during the dull season, and almost nothing has been done to remedy this condition. It would be difficult to imagine anything more chaotic and demoralizing than the existing methods of bringing workmen and jobs together. Certain measures for dealing with these conditions, which are discussed elsewhere in the report, need to be pushed forward with all possible vigor. But it may be confidently predicted that the unemployment situation will not be appreciably relieved until great advances have been made in the removal of the two prime causes — unjust distribution of wealth and monopolization of land and natural resources.

The most direct methods of dealing with the inequality of wealth have already been briefly discussed and will be considered elsewhere in the report. "With respect to the land question, however, the following basic suggestions are submitted:

1. Vigorous and unrelenting prosecution to regain all land, water power and mineral rights secured from the Government by fraud.

2. A general revision of our land laws, so as to apply to all future land grants the doctrine of "superior use," as in the case of water rights in California, and provision for forfeiture in case of actual nonuse. In its simplest form the doctrine of "superior use" implies merely that at the time of making the lease the purpose for which the land will be used must be taken into consideration, and the use which is of greatest social value shall be given preference.

3. The forcing of all unused land into use by making the tax on nonproductive land the same as on productive land of the same kind, and exempting all improvements.

Other measures for dealing with unemployment are discussed under that head on p. 181.

The unemployed have aptly been called "the shifting sands beneath the State." Surely there is no condition which more immediately demands the attention of Congress than that of unemployment, which is annually driving hundreds of thousands of otherwise productive citizens into poverty and bitter despair, sapping the very basis of our national efficiency and germinating the seeds of revolution.

 

So what would a similar Commission say today?

The Case Plainly Stated

I stumbled across this document in a little book which runs to 24 pages, from 1887.  Those with an interest in Alabama history, particularly as it relates to taxation, might find that it helps explain how the 1903 constitution came about -- whose interests it sought to protect.   Consider it, too, in light of our current economic situation -- too few jobs, lots of income and wealth concentration; not enough credit available to afford housing or commercial sites.     These problems can be solved, but not in the ways we've already tried.

 

The Case Plainly Stated
By H. F. RING

PREFATORY NOTE -- This address originally was delivered to the United Labor Organization of Houston, Texas, in 1887. It appeared in full the next morning in the Houston Daily Post, and afterwards in The Standard, published at that time in New York by Henry George. Mr. George then issued it in tract form, giving it the name of "The Case Plainly Stated." Many editions of it have since been published from time to time in this country and in Europe and Australia, and it is generally regarded as one of the clearest brief statements extant of the philosophy of land value taxation as taught by Henry George in his famous "Progress and Poverty."

MR. CHAIRMAN:— The land question is simply a question as to how the use of the bounties of nature shall be best regulated and controlled. By bounties of nature I mean the coal beds, the mineral deposits, the land — all those natural elements which were not created by human industry, but which Nature has freely and abundantly provided for the use and enjoyment of all the children of men; and I propose to show how the right of capital and. labor to use these natural elements should be regulated by the government*, so as most to conduce to the happiness and well-being of mankind.

* The word "government" as used in this presentation of the Single Tax refers to the tax levying power as vested, not alone in the federal, but also and even primarily in the state, county, and municipal governments.
It is probable that a complete application of the Single Tax will be reached through its gradual adoption at first in cities, counties and states, before it is substituted for tariff and internal revenue taxation.

I am a Single Taxer, and a discussion of the land question by me can be nothing more than a mere attempt to expound the teachings of that great master of the subject, Henry George.

George, at the outset, calls attention to the marvelous improvements in the arts and sciences, the discoveries, inventions, and labor-saving machines which, within the past 100 years, have so immensely increased the productive powers of the human race. Is it not a moderate estimate to assume that on an average the labor of one man today, with all these labor-saving inventions, will produce as much of the comforts and luxuries of life as the labors of four men would a hundred years ago? And does it not follow that the average workman of today creates, by each day's labor, four times as much wealth as the average workman did a hundred years ago? George teaches that if the workman of today, on an average, creates four times as much wealth as the workman of a hundred years ago, then the services of this workman of today are four times as valuable to society; then why should not his wages of right be four times as great? Why should he not be four times as independent? Why should it not be four times as easy for him to make a living and support his family in comfort and decency?

Will any one presume to assert that this is in fact the case? On the contrary, is it not just about as hard for the poor man to make a living today as it ever was? Does he not dread the loss of a position today just as much as he ever did? George asserts that labor-saving machinery really ought to lessen the burdens of labor, to make it easier for the laborer to live, and in fact, to lighten his toil. But alas, from some apparently mysterious cause, — a cause which many comfortably well-to-do people insist is one of the unfathomable mysteries of Divine Providence, — what George claims should rightly result from inventions does not result from them. And still we are all the time making new discoveries, and year by year increasing, by means of new inventions, the productive powers of working men; yet, with the increase of population, the lot of those who produce all this wealth seems to be becoming more precarious, less independent and more and more wretched.

Who denies that under the present social system, wages tend to fall irresistibly to the point at which the wage-workers can barely subsist? This is called the iron law of wages, and all the strikes conceivable can only temporarily, and but fitfully, arrest this steady tendency. For so long as unemployed men compete for employment against the employed, wages cannot permanently advance. The worker may create quadruple the wealth, but he is not permitted to retain any more of it as his share.

WHO GETS THE WEALTH?

Now, where does this wealth go — this wealth which we now produce so much more easily and in such vastly greater quantities than ever before? What becomes of it? Who gets it? Why is it that in this age of wealth-producing and labor-saving machinery, poverty as abject and hideous as ever before seen in the history of the world abounds and increases in our midst? What is the cause of the so-called iron law of wages? Henry George has discovered it. He has pointed it out, and he has shown us the remedy. He has demonstrated beyond a doubt or question that it does not result as a fatal necessity from the nature of things, but that it is a result of violation of natural law, of a refusal on the part of society to recognize the inalienable right of every citizen of access to the bounties of nature within the territory of his country on equal terms with every other citizen of that country.

Let me now give you a short lesson in the elements of this new political economy.

Three factors enter into the creation of every conceivable kind of wealth. By wealth we mean any material thing produced by human industry which gratifies human desires. These factors are land, labor and capital. Wealth in a civilized community is produced only by means of a union or partnership between land, labor and capital. Labor does the work, capital loans the tools, and land furnishes the natural elements on which, and out of which all material things resulting from human industry are created. In speaking of land in the new political economy we never include improvements or anything which is the result of human toil. We simply mean the opportunities which land and the elements within it afford for the employment of capital and labor — we mean the raw elements as they lie on or in the bosom of the eartli, untouched by the hand of man.

Now, as before remarked, the product of land, labor and capital is wealth, and after it is produced, it is divided among these factors entering into its composition. A certain portion of it, called rent, goes to land, either directly in the form of rent or in the form of interest on the selling price of the land or of the coal bed, or whatever it is; another portion of it, called profit or interest, goes to capital for the use of tools which capital has furnished, and the balance left, after land has been paid rent and capital has been paid interest or profits, goes to labor as wages for the work which labor has done, including the labor of superintendence.

MEANING OF RENT.

Now what does rent signify as used here? Rent is the price paid for the privilege of access to the raw material — for the mere privilege of getting hold of something not created by man, on which and out of which labor and capital can produce wealth. This rent may be paid periodically, or may be paid in a lump in the form of purchase money. In either case the result will be the same. Is it not clear that in the division of wealth after it has been produced by this partnership between land, labor and capital, the more land gets for rent the less there will be left for capital and labor? Is it not quite as plain as A B C that the more it costs capital and labor to get hold of these natural elements, the coal beds, the mines, the water fronts, the land — the gifts of nature which a kind providence has provided for the equal use and enjoyment of all — the less there will be for labor and capital to divide between them?

In the new political economy we must never confuse land with capital. One is never the synonym of the other. Land, as before stated, is simply the natural opportunity, exclusive of improvements or anything done to it by man. Capital is something that has been made by man, like a machine for instance, which is useful in the production of wealth. It is wealth used to produce more wealth.

LABOR AND CAPITAL PARTNERS.

But someone asks: Suppose the capitalist who is using the coal bed or using this natural opportunity, whatever it may be, is also owner of it. Where then does your partnership between land, labor and capital come in? We answer just the same as before. A sum equal to the interest on the market value of the coal bed (independent of the machinery, excavation work, etc.) is in such cases a factor of rent. The owner, in addition to profit or interest on his capital, as before defined, must also take from the wealth produced a sum equal, approximately, to interest on the market value of the coal land, otherwise he would sell out and quit. It is evident that the more money the owner is obliged to invest in purchasing the coal bed, for instance, the greater must be the sum which he takes out of the wealth produced to cover interest on that investment, and hence such interest money is simply rent paid for the use of a natural element, for the privilege of access to one of the bounties of nature. Therefore, is it not equally plain in this case that the more paid for this privilege of use, the less will remain out of which labor can get wages?

A few years ago we read in the newspapers of a great boom in the vicinity of Birmingham, Alabama. We were exultingly told that the lands containing coal beds and mineral deposits in northern Alabama had gone up in value from $75,000 to $50,000,000 in the space of six years. What does this signify? It means that when capital and labor shall attempt to utilize these coal beds and mineral deposits, when capital and labor shall unite together, the one to furnish the tools, the other the labor, with which to produce wealth out of this raw material, then will a set of landlords step forward and block the enterprise with a demand for $50,000,000 for the mere right of access to these free gifts of nature, or in lieu of it the payment of $3,000,000 a year as tribute money, that being the interest of $50,000,000 at six per cent.

There lie the coal beds and mineral deposits untouched by man, fresh from the hands of the Creator, intended by Him, if He is the just, benevolent Being whom we have been taught to worship, for the equal use and enjoyment of all His children, and yet our laws say that capital and labor must pay a few forestallers $3,000,000 a year for the privilege of applying the hand of industry to these elements.

And after this blackmail has been paid, how much will there be left for the wages of labor? The answer is, just as little as labor can ordinarily subsist upon. Why? Because this monopolization of the gifts of nature going on, not only in northern Alabama, but everywhere else, enables capital to drive a hard bargain with labor. For this reason, and this alone, they can't deal with each other on equal vantage grounds. Suppose labor objects and says to capital: "I'll not accept the pittance you offer." Capital replies: "All right, go elsewhere." And so labor starts out to get work for himself, and what does he find? Here he is, living in a country capable of raising food for ten times its present population, and he finds four-fifths of the land untilled or but partially cultivated. He finds four-fifths of the coal beds and mineral deposits unused. He finds vacant land and unused lots on every side. He goes to New York City even and he finds there within its corporate limits almost one-third the area of that city vacant, unoccupied, and unused, although there are miles and miles of tenement houses, in which men and women and innocent children are packed and crowded like maggots, as though there wasn't ample room in the city for the comfortable housing of every human being in it. He finds unused natural elements all around him wherever he goes, sufficient to give employment and support in abundance to tens of millions of happy families.

But now suppose labor attempts to make use of any of these unused natural opportunities? Suppose he concludes to go to work for himself upon a piece of vacant land in the suburbs of a city, for instance, where labor could be applied to the greatest advantage. What happens? An individual comes along and waves a title deed, and orders him off the premises. He finds that all these unused natural opportunities are owned by individuals and claimed as private property. He finds himself frustrated at every point. He finds that he can't go to work anywhere without paying blackmail to the owner of some natural element for the mere privilege of working and so he strikes back to northern Alabama and takes off his hat to Capital and bows very low and says: 'Please, sir, give me a bare living and I will be your slave."

And that is about all that he does get, and that is all he ever will get under the present system of land ownership, though you may strike and boycott and potter about graduated land taxes, graduated income taxes, and graduated nonsense until doomsday.

THE GREAT PARASITE.

With advancing population the greater becomes the demand for natural opportunities and the higher the prices which can be extorted for the privilege of using them. As population increases, the town lots, the coal beds, the mineral deposits, the water fronts, the land, go up in value, and so goes up also the amount of tribute money which labor must pay for access to them, for the privilege of employment. The more of the products of industry which go for the payment of this constantly increasing tribute, the less and less will grow the share allowed the laborer and the more dependent and the more wretched will his lot become.

Here in Houston today, suppose Enterprise has $50,000 to invest in the paper mill business, a sum barely sufficient to put up the building, buy the machinery and carry stock. He finds a beautiful site for his mill on the banks of the bayou. It is a vacant lot. The hand of man has never been applied to it, and it stands there now just as it stood when the Indian roamed over the site of this city. The owner of that block, however, thinks he can make Enterprise pay him $20,000 for the privilege of giving employment to labor on this natural opportunity — this piece of ground. That is the price, and if he can't get it today he will get it when the city grows a little larger. But Enterprise says to him: "I have only $50,000 capital, all of which I shall need in my business." The land owner answers it is not his lookout, and so Enterprise turns away checkened and baffled, and the mill is not built.

CAUSE OF DULL TIMES.

And so it is everywhere. Wherever we find a portion of the vacant surface of the earth which could be utilized by capital and labor, and which affords an opportunity for human toil and enterprise, there we find a human vampire with a paper title in his hand warning off labor; and that vampire must always be placated by the payment of blackmail before the wheels of industry can begin to turn.

Need we wonder that these wheels turn slowly, and that they are always getting out of gear; that we are always talking about dull times; that men are always out of employment and always hunting for work, regarding it as a favor even to be allowed to work; that we are all the time growing too much cotton, when millions of human beings have only one shirt to their names; that we are producing too much food, when half the population of the world is insufficiently fed; that carpenters are out of work, when half the people are not comfortably housed; shoemakers wanting work and millions needing shoes? How could it be otherwise, when labor is compelled to beg for work in the midst of limitless unused opportunities for work, on which opportunities, however, sit these human vampires, these dogs in the manger, waving labor back with their paper title deeds?

AN ILLUSTRATION.

Now let us go back for a moment to that partnership between land, labor and capital. For illustration, suppose the wealth produced by the partnership to be created by the application of capital and labor to those coal beds and mineral deposits in northern Alabama, valued, as we have seen, at $50,000,000. In the division of wealth produced we have shown how, say six percent of this $50,000,000, or $3,000,000, must go to land as rent. Or, in other words, $3,000,000 a year must be paid to land owners directly as rent or interest on purchase money for the bare privilege of utilizing these gifts of nature. Now, in the division of wealth produced, why is labor entitled to any portion of it? Clearly because labor's industry has contributed to its creation. Why is capital entitled to any part of it? Because capital has furnished labor with tools with which to develop the mineral deposits. The capitalist who owns the tools can trace his title back to the creator of them, to some individual or set of individuals whose industry produced them and from whom he purchased or inherited them. The title, then, of both labor and capital to a portion of the wealth produced from these mineral deposits originates in human industry, and it is a sacred title. Now then, why should the land owner get any portion of this wealth, to produce which capital has supplied the tools and labor has done the work? This owner claims the right of making capital and labor pay him interest on $50,000,000, or $3,000,000 a year, for the mere privilege of access to this raw coal and raw ore. Ought we not to scrutinize most carefully his right to extort this immense tribute? And if he can show no natural and moral right to claim it, does not society countenance the robbery of labor in permitting him to do so? Where does his title originate?

We find that six or seven years ago he paid someone who claimed to own the land in which these mineral deposits are found $750,000 for the raw natural element for which he now demands $50,000,000. Was this additional value of $49,250,000 in six years produced by his industry? Was it produced by the industry of any previous owner of these natural elements? Did it cost $49,250,000 to discover these mineral deposits? We trace back his title a little further, and we find that perhaps a hundred years ago it originated in a grant to John Jones from the government — that is to say, the people who inhabited this country a hundred years ago and who constituted the government said: "We will divide the land and we will give John Jones this particular tract for his private property."

But did these people create that land and the coal and iron in it? Can it be shown that they had any better right to it from the Almighty Creator than the people of this generation have? Was the earth intended by the Heavenly Father for one generation to dispose of forever, or as an abiding place for all generations? Was Thomas Jefferson right or wrong when he wrote: "The earth belongs in usufruct to the living; the dead have no right or power over it?" By what authority could the people living here a hundred years ago, long since dead and gone, confer upon John Jones, also dead and gone, a right which would enable John Smith today, by tracing a paper chain of titles from him, to extort from capital and labor a tribute of $3,000,000 a year for the bare privilege of getting to that coal and iron and making it useful to mankind?

Who dares to blaspheme the name of the Almighty Ruler of the universe by saying that the coal and iron were not intended by Him for the equal use and the enjoyment of all His children — the humblest babe born today in a garret equally with a child of the proudest duke who ever lived?

MAN IS A LAND ANIMAL.

Is not man a land animal? Can he live without land? Can he any more rightfully be deprived of access to land than he can rightfully be deprived of life itself? Can he any more rightfully be compelled to yield up to a forestaller, a mere owner of land, a portion of the fruit of his industry for the privilege of getting hold of the raw material elements than he can rightfully be compelled as a slave to yield up to a master a portion of the fruits of his industry? To compel him to do so is as much a robbery of labor in one case as in the other. Why then is not the humblest babe that God sends into this world naturally and by inalienable right entitled to access to land on equal terms with all his fellow human beings?

ORIGIN OF PROPERTY RIGHT.

Mind, when we say access to land we do not include access to improvements on land, or access to anything produced by human industry, a title to which can be shown originating in human toil; we simply mean access upon equal terms to the free bounties of nature as they lie upon the kind bosom of mother earth, untouched and undisturbed by the hand of man. What I produce by my industry is mine. What I obtain by exchanging the products of my industry for the products of another's industry is mine. What my father or my grandfather produced by his industry was his, and if he has given it to me it is mine.

In all these cases human industry is the origin of property right, and property rights originating in human industry must be held sacred, else there would be no incentive to human effort. Do not the values produced by the individual belong to the individual producing them? Do not the values produced by the community belong to the community producing them? Is there anything wrong, immoral or communistic in this ideal? And yet this is the sum and substance of the Henry George philosophy.

Take the case of the vacant block on the bank of the bayou which Enterprise wanted for a paper mill and could not get. Fifty years ago it was worthless. Now labor must pay a tribute of over $20,000 to the so-called owner for the privilege of using it. Whose industry has put $20,000 of value on that piece of vacant ground? Not the industry of the present owner, nor the industry of any former owner, because no man has ever done a stroke of work upon it. That value of $20,000 has been placed upon the land by the common energy and enterprise of the entire community. Since the community has produced that land value why does it not belong to the community? Why has not the community the same rights to the value it creates as the individual has to the values which he individually creates?

THE REMEDY.

How shall this derangement of the wheels of industry, this blackmail upon enterprise, this robbery of labor, this eager and fatal competition among laborers for employment, this slavish fear of the loss of a situation in the midst of abundant unused opportunities for employment — how shall this curse which our present land system has fastened upon the productive industry of the country, be removed? Simply by doing justice; by being honest; by recognizing in our laws one of the inalienable rights of man; by recognizing in every human being, in every generation, the present as well as the past, an inalienable right of access to the bounties of nature on equal terms with every other human being.

How shall this right of access on equal terms be secured? Simply by making every individual who claims a right to the exclusive possession of a tract of land pay in the form of a tax approximately what the use of that tract of land is worth, exclusive of all improvements on it or anything done to it by the hand of man, and by abolishing every other form of taxation. Take the rent of land for public use instead of taxes.

WILL SIMPLIFY GOVERNMENT.

Some one asks: "Will not this proposed change vastly increase the functions of government and immensely add to the number of government employees?" I reply no. On the contrary, at least two-thirds of the present army of revenue collectors and tax gatherers will be dispensed with, and the remaining one-third will collect this single tax on land values at one-third the expense now incurred in the collection of national, state, county, and municipal taxes.

Another inquirer asks: "Will not the new system offer abundant opportunities for corruption and partiality in fixing the amount of this tax annually to be paid for the exclusive use of a piece of land? And how do you propose the amount of the tax shall be determined?" It will be determined by the same law of demand and supply which now determines the amount of tax under the present system. The single tax will be fixed by the same machinery of an assessor and a board of equalization which fixes it now. For instance, under this system a piece of property on Main street rents for $5,000 a year. Interest at the prevailing rate on the building alone, added to the annual cost of insurance, repairs and caretaking, and a sum sufficient to provide a sinking fund for renewals amounted to, say $3,000 a year. The landlord is then collecting the difference between $3,000 and $5,000, or $3,000 for the use of this naked earth. That is to say, he is collecting $2,000 a year for the use of something never created by man, to which all are by natural right equally entitled, and which owes its rental value of $2,000 a year exclusively to the common enterprise and energy of the entire community.

This is the sum which, under Henry George's system, would be turned over to the government in the form of a tax for the common benefit of the community who collectively have made the use of this land worth $2,000 a year.

Here an interested friend anxiously inquires: "But if the landlord has to pay this tax of $2,000 a year for the use of the land, will he not take it out of the tenant by raising his rent to $7,000?" No, for the landlord's charges now all he can compel the tenant to pay. Suppose he tries to. Suppose he says to his tenant: "You must now pay me $7,000 a year." What happens? Just what happens every day now. If the tenant can do no better he pays the increase. But now, mark you, when the landlord goes to pay his tax what happens then? Why the board of equalization says to him, you have received $7,000 a year rent for the use of improvements worth only $3,000 a year. You are therefore collecting $4,000 a year instead of $2,000 for the use of the naked lot, and you will therefore pay the city or state $4,000 a year for the privilege of the exclusive use of the ground instead of $2,000 a year as heretofore. Now what has the landlord made by jumping up the rent? Nothing. What would be made by thus jumping up the rents under the present system? Everything. Under which system would landlords be more apt to force up rents?

DETERMINING THE TAX.

Another way by which the board of equalization under the George system would determine the amount of tax to be paid for the privilege of the exclusive possession of a tract of land, and which would also compel landlords to collect from their tenants and turn over to the government in the form of a tax the full value of the use of the land, would be from observation of the prices which real estate brought in the market. But note, at this point some smart fellow jumps up — and he is likely enough to be a newspaper editor — and vehemently protests, saying: "Why, sir, the taxation of ground values plan does not propose to allow any exclusive ownership of land. It demands that the government own it all and rent it out or divide it up into 60,000,000 or 70,000,000 little bits, or do something of that kind with it, and here you are talking about lands being bought and sold under the Henry George system. Why, man alive, you don't know what that system is!"

Now, Mr. Editor, or Mr. Who-ever-you-are, let me say to you that in your ignorance, or in your indifference to the sufferings of your fellowmen, or in your desire to pander to the greed of monopoly, or to the timidity of capital, you may say what you please; you may misrepresent as much as you please for the purpose of bringing odium and contempt upon the cause; you may call it what you please — state ownership, state landlordism, ownership in common, communism, nihilism, anarchism or anything else; but the fact, nevertheless, remains that, under the just and righteous land system which we are trying to explain, the land will continue to be bought and sold under the same form of paper deeds, precisely as it is bought and sold today. It will continue in precisely the same way to pass to devisees by will and to heirs by law of descent and distribution. The right of control, of exclusive possession and dominion over a piece of land and of the free and exclusive enjoyment of all improvements on it, will in no way be abridged or disturbed. When you buy a lot on Main street today worth $10,000 with a building on it worth $10,000 more, your deed recites a consideration of $20,000. Now when you buy this same property under the George system, the only difference in the whole transaction will be that your deed for it — assuming that the price accords with the market value prevailing at the time of your purchase — will recite a consideration of only $10,000, and $10,000 is all that you will then pay for the property. You will pay nothing for the land. After you have bought the property you will pay yearly in the form of a tax to the government, approximately the full market value of the (yearly) use of it — which will amount to the annual rental value of the land, and as the man from whom you purchased had to pay the government the same annual rental value, you will consequently pay nothing, or approximately nothing*, to him for the land itself when you purchase the property. You thus save an investment of $10,000 in dirt; instead of such investment you will pay for the common benefit of the community, including yourself, what the privilege of the exclusive use of that spot of earth is worth — nothing more, nothing less — and that is simply what you ought to pay. The $10,000, which, under the present system, you are compelled to bury in a bit of earth, you will have left you with which to increase your business; and if you do increase your business with it, and add another story to your building, no tax gatherer will come around and impose an additional fine upon you for doing something with your money which gives employment to labor.

* There will, no doubt, be instances where the desire of an individual to get and retain possession of a certain piece of property, will cause him tooffer a bonus over and above the market value of the improvements.

 

NO PROPERTY IN LAND.

Thus, under the single tax system, land would be sold and would change hands as it does now, but it would only bring in the market approximately the value of the improvements on it. If land in any locality should get to selling for considerably more than the value of the improvements on it, this would be a certain indication that the parties using the natural elements in that neighborhood were not paying for the benefit of all the people what the use of the same was worth, and so a board of equalization would put the tax up. As population increases the value of the use of land increases, and with it, under the George system, the revenue from this tax on land values will increase, and thus the entire people who collectively produce this increasing value will get the benefit of the values collectively produced by them. As it is now, the increase in the value of land, which amounts to several billions annually in the United States, four-fifths of which is increase in the value of city and town lots and mineral deposits, goes to a comparatively small number of individuals who do no more to produce these values than any other members of the community.

TAXATION ABOLISHED.

Another doubter puts this objection: Under the George system you would make the owner of a lot on Main street, with an improvement on it worth $10,000, pay as much tax as the owner of a similar lot adjoining, having a building on it worth $50,000. What justice is there in that?

Let us see. Take away the improvements and these two lots are of the same value — that is to say, the value of the use of both lots for ordinary business purposes is the same. Suppose it is $300 a year. Now, the man with the $50,000 improvement collects from his tenant ten percent on his $50,000, or $5,000. He also collects $300, the value of the use of the lot, making in all $5,300. The man with the $10,000 improvement also collects ten percent upon the valuation of his improvement from his tenant, of $1,000. He, too, collects $300 in addition for the use of the lot, making in all $1,300. Now after both have paid the government $300 apiece for the privilege of the exclusive use of these lots, each will have left ten percent upon the capital invested, and why should one be entitled to any greater percent upon the capital invested than the other?

The fact is, that under this system there will be no such thing as taxes. Taxation, as we now understand it, will be abolished. The revenue derived by the government from requiring all who use a natural opportunity to pay into the common treasury what the use of that opportunity is worth, if it is worth anything at all, will be more than sufficient to enable the government to dispense with every species of taxation. As it is now, when you pay your taxes, you are simply robbed of a portion of the fruits of your industry, for which you do not get, directly, any equivalent. Under the proposed system, when you pay your single tax on land values you will get directly a full equivalent for every dollar paid. You will get the privilege of the exclusive use of a tract of land for what that privilege is worth.
 

ACCESS TO UNUSED LAND.

If this system were adopted what would become of the vacant lots and lands, the unused coal beds and mineral deposits, the unoccupied water fronts and water privileges over which human vampires now stand guard, retarding enterprise and driving off labor? They would become absolutely free. No one could afford to hold them and pay taxes on them. The vampires would turn them loose. Land speculators and land sharks, instead of trying to grow rich by forestalling labor and capital and thus preying like devouring beasts on their fellowmen, would turn their talents to better account. Wherever labor could find an unused lot or coal bed or mineral deposit or unused tract of land, there labor could go to work and employ itself without being required to invest a dollar in the purchase of a right of access to the natural element, without being compelled to first make terms with a dog in the manger claiming it as private property and holding it for speculative purposes.

If that vacant natural opportunity were situated near a center of population, or were of a character to bestow peculiar money-making advantages upon the persons using it, this advantage would create a demand for it, and this demand would regulate in the manner already pointed out the amount which labor and capital would pay for the use of it, in the form of a tax for the common benefit of all. If that vacant opportunity, for instance, were a tract of land four or five miles from this city, it would have few advantages to make the use of it at present peculiarly valuable. Why? Because there is so much vacant land of the same character near it, the use of which is equally valuable, that no one would give a bonus, as it were, for the use of that particular tract. Labor would, therefore, at first get the use of that land for nothing. It would have no taxable value at all until all the other vacant land similarly situated was put into use. Under this most just and equitable system the taxable values of land would be confined almost exclusively to the cities and towns and the coal and mineral deposits. Where people congregate, there land has value. In New York City alone, capital and labor today pay to a few thousand land owners, in ground rent alone, exclusive of rent paid on improvements, for the bare privilege of living and doing business, tribute money amounting to hundreds of millions annually, a sum almost equal to the expense of carrying on the government of the United States. It is in these great centers of trade and commerce that land has its greatest value; it is here that land values are mostly found and from these centers nine-tenths of the revenue of the government from this tax on land values would be derived.

FARMERS WOULD BE BENEFITED.

If the George plan were suddenly put in force today, not only would all farmers be relieved from direct and indirect taxation, not only would farmers participate in common with all others in the universal and uninterrupted prosperity which would result from removing the obstructions which needlessly hamper and clog enterprise, but probably three-fourths of the working farmers in this country would pay no land tax at all. Why? Because with so much vacant or but partially cultivated land as there is here today three-fourths of the farmers would have no taxable value at all; and all who are counting on the farmers of America being so foolish as not to see how they will be as much benefited by a just and righteous land system as any other class will certainly be disappointed.

EFFECT ON FARMS.

"Yes," says our farmer friend, "but you propose to confiscate the farmer's land." Let's see about that. You are a farmer owning say a hundred-acre farm, situated like a majority of farms, in a neighborhood where for every acre of land in cultivation there are two or more acres unimproved or but partially improved. Your farm is worth under the present system, say $2,000. A hundred acres of this unimproved land adjoining it of the same quality is held by some speculator at $500. Your tax on your hundred-acre farm is $10 a year, the speculator's tax on the hundred acres of land adjoining of equal value, exclusive of improvements, is $2.50 a year — one-fourth as much as yours. You give employment to labor on your land, and thereby add to the prosperity of the community. The speculator excludes labor from employment on his land, and thereby retards the prosperity of the community. Why should you be taxed any more for using your hundred-acre tract, and giving employment to labor on it, than the speculator is taxed for holding in idleness a tract of equal value and preventing labor from using it? Why should not the speculator pay at least as much tax for the privilege of excluding labor from his tract as you have to pay for the privilege of employing labor on yours? Have you hurt anyone by turning up the wild sod and building fences and houses and putting $1,500 worth of improvements on your land? If not, why should you be fined for it by having your taxes increased?

Where our plan is adopted you will have no taxes at all to pay until this vacant land around your farm is put into use. Until then no land value could attach to your farm, and the tax which, with increasing population, you would ultimately be required to pay, would seldom equal and rarely, if ever, exceed that which farmers now pay on the improvement valuation. Assuming that you spend say $600 a year on your family, then under the present system your taxes, direct and indirect, and the toll which the merchants take for collecting indirect taxes, amount to at least $100 a year. You may not know it, because an indirect tax always fools a fellow paying it. You will be relieved from all these taxes, but best of all, men who are now idle and who can't buy what you raise will all be at work, and not only that, but their wages will be high enough to pay good prices for what you raise. It is true that under the new system you could only sell your place for $1,500. Still, with this same $1,500 you could buy just as good a place from some one else. The purchasing power of your farm, when it comes to buying another farm, would not have been reduced. Do not your interests as producer or a laborer vastly exceed your interests as a land owner?

LANDLORDISM AND GOVERNMENT

Now, coming back to the elements of the new political economy, some one says: "What difference does it make to the workmen whether labor and capital pay this ground rent to the individual or to the government, since, according to your theory, it must be paid all the same?" In the first place, if it is paid to the individual none of it ever comes back to labor and capital unless value received is paid for it; so far as labor and capital are concerned, it might about as well be cast into the sea. But when it is paid to the government in the form of a tax on land values it does come back to labor and capital again in the form of relief from every species of taxation, direct and indirect.

Again, the amount that Enterprise would pay the government for the privilege of access to the natural elements would be less under the single tax than is now paid individuals for this privilege. Under the land value tax the prices could not be advanced by monopolization of these elements, as is being done now.

But best of all, and by far the most glorious result that will flow from the establishment of a just and righteous land system, is that it will enable the wealth creator to stand erect, presenting to capital an unterrified front.

Return for a moment to the coal beds of northern Alabama and imagine the Henry George system adopted. Labor now again objects to the terms offered by capital, and again capital tells him to go. And again labor goes forth hunting for work. But how different he finds the aspect of things. He finds the same unused natural elements, the same unused coal beds and mineral deposits, the vacant lots and lands, but he no longer finds a fellowman sitting upon every vacant opportunity for work and waving him off. They have vanished. They have gone to work themselves. He finds every unused opportunity for labor, wherever it may be, absolutely free. Not a dollar of capital need be invested in buying a natural opportunity, in paying for the privilege of work. When labor went forth hunting work before, he not only had to ask capital to pay for the tools, but also to pay, usually a greater sum, to some forestaller, in addition, as blackmail, for the privilege of access to a natural element.

This will all be changed. It won't take near as much capital to start enterprises as it did, or in other words, to give employment to labor. In fact, labor could then take even an axe and hoe and find plenty of vacant opportunities on which he could make a living without having to bury himself in a wilderness to do it. All this makes him feel independent and enables him to bargain with capital for employment on equal vantage grounds.

MONOPOLY IS PROFITABLE.

Some time since a large manufacturing firm in Massachusetts adopted the eight-hour system. After trying it a year they gave it up and went back to the ten-hour system. The general manager said they could only make five percent profit on their investments by requiring only eight hours' work, and that unless they could make a bigger percentage than that, they would not be bothered with the management of the business — they would put their money into town and city lots, because that species of property would certainly enhance in value as much as five percent annually, and that, too, without any trouble to the owner, and so it is everywhere. Now, is it not absurd to expect to reduce the rate of profits with which capital will be content below this steady percent of increase in the value of town and city lots, by any combination of labor, or by any legislation which falls short of restoring these land values to the people who collectively create them?

Suppose you have $10,000 today. The best and safest thing you can do with it is to invest it in town lots in or near some growing town. Ten years from today, unless the George theory becomes generally understood, the lots will be worth $20,000 and you will have drawn to yourself $10,000 worth of wealth for which you have given no equivalent. You will simply have robbed the labor of the country of $10,000. But now suppose ground values to be appropriated to the public use by taxation. What are you to do with your $10,000? You would not buy vacant lots now; there is no speculation in them. The tax which you would have to pay for the privilege of excluding capital and labor from the opportunities for employment which vacant lots afford, would be too heavy for you. In fact, you couldn't even loan on land alone, because land alone will have no selling value in the market. The result is, that unless you let your money lie idle and so lose interest on it, you will be compelled to invest it so as to give employment to labor. You must put it into buildings, into machinery, into manufactory stock, into farm implements, into some channel where it will be active and where it will afford employment to labor.

Not only must you do this with your capital, but every other capitalist must do the same with his capital. Capitalist thus must bid against capitalist, since capital can only increase by calling labor to its aid and giving it employment.

Under the present system the rich can grow richer without calling in the aid of labor, without giving employment to labor. They do so by buying space and monopolizing land.

Under the present system, as wealth accumulates, the wealthy seek to invest in land, to get control of natural elements, and get into a position from which to blackmail labor, thus becoming an obstacle in the way of the production of more wealth.

Under the better system, however, wealth could not thus be made to set up an obstacle to the creation of more wealth, or, in other words, to the employment of labor. It can then only obtain a profit by investing in lines of enterprise which give employment to labor.

Under which system will the demand for labor be greater? Under which will earnings be higher?

Do tax structures affect aggregate economic growth?

Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries.

Do tax structures affect aggregate economic growth?  Empirical evidence from a panel of OECD countries 

This paper examines the relationship between tax structures and economic growth by entering indicators of the tax structure into a set of panel growth regressions for 21 OECD countries, in which both the accumulation of physical and human capital are taken into account. 

The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property.  More precisely, the findings allow the establishment of a ranking of tax instruments with respect to their relationship to economic growth.  Property taxes, and particularly recurrent taxes on immovable property, seem to be the most growth-friendly, followed by consumption taxes and then by personal income taxes.  Corporate income taxes appear to have the most negative effect on GDP per capita. 

These findings suggest that a revenue-neutral growth-oriented tax reform would be to shift part of the revenue base towards recurrent property and consumption taxes and away from income taxes, especially corporate taxes.  There is also evidence of a negative relationship between the progressivity of personal income taxes and growth. 

All of the results are robust to a number of different specifications, including controlling for other determinants of economic growth and instrumenting tax indicators.

The full study, 28 pages, is at http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&doclanguage=en

Readers of this blog will know that I favor shifting to a tax on land value, and eliminating the portion of the conventional property tax which falls on buildings and other improvements to land.    But I'm fascinated that their analysis shows that even taxing buildings and other improvements to land, along with land value, is superior to taxing consumption or personal income or corporate income, in terms of the effects on economic growth.

So I'll leave you with this question: if we know that income taxes and consumption taxes discourage growth more than the conventional property tax does, in whose interest is it that we not rely heavily on the property tax?   Cui bono?

Go to the root of the problem.  Recognize who benefits from the status quo.  They like the current system just fine, and will fund heavily efforts to conserve it.

And when California (Proposition 13 forces reliance on wage and sales taxes to "protect" property owners) and other states, including soon Indiana, start complaining about a lack of economic growth, and when New York State's new Governor Cuomo starts talking about "property tax relief," understand that this is code for "we'll take care of our friends who own the choice urban sites, the ordinary man be damned!"   This is called conservatism.  Like Aleve, it works for them.  Does "landed gentry" still resonate?

Notice that this study has been around for two years now.  How many times have you heard about it? (It was news to me.)  Even the "FairTax" (23%+ consumption tax) folks haven't mentioned it, as far as I know.

<p><a title="Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries" href="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries</a>.</p>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html"><strong>Do tax structures affect aggregate economic growth?&nbsp; Empirical evidence from a panel of OECD countries&nbsp;</strong></blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">This  paper examines the relationship between tax structures and economic  growth by entering indicators of the tax structure into a set of panel  growth regressions for 21 OECD countries, in which both the accumulation  of physical and human capital are taken into account.&nbsp;</blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property.&nbsp;  More precisely, the findings allow the establishment of a ranking of  tax instruments with respect to their relationship to economic growth.&nbsp;   Property taxes, and particularly recurrent taxes on immovable property,  seem to be the most growth-friendly, followed by consumption taxes and  then by personal income taxes.&nbsp; Corporate income taxes appear to have the most negative effect on GDP per capita.&nbsp;</blockquote>
<blockquote cite="http://www.oecd.org/LongAbstract/0,3425,en_2649_34325_41487020_119684_1_1_37443,00.html">These  findings suggest that a revenue-neutral growth-oriented tax reform  would be to shift part of the revenue base towards recurrent property  and consumption taxes and away from income taxes, especially corporate  taxes.&nbsp; There is also evidence of a negative relationship between the  progressivity of personal income taxes and growth.&nbsp;</blockquote>
<p style="padding-left: 30px;">All  of the results are robust to a number of different specifications,  including controlling for other determinants of economic growth and  instrumenting tax indicators.</p>
<p>The full study, 28 pages, is at <a href="http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&amp;doclanguage=en">http://www.oecd.org/officialdocuments/displaydocumentpdf?cote=eco/wkp%282008%2951&amp;doclanguage=en</a></p>
<p>Readers of this blog will know that I favor shifting to a tax on land value, and eliminating the portion of the conventional property tax which falls on buildings and other improvements to land.&nbsp;&nbsp;&nbsp; But I'm fascinated that their analysis shows that even taxing buildings and other improvements to land, along with land value, is superior to taxing consumption or personal income or corporate income, in terms of the effects on economic growth.<br /> <br />So I'll leave you with this question: <strong>if we know that income taxes and consumption taxes discourage growth more than the conventional property tax does, in whose interest is it that we <em>not rely heavily on the property tax?</em>&nbsp;&nbsp; Cui bono?</strong></p>
<p>Go  to the root of the problem.&nbsp; Recognize who benefits from the status   quo.&nbsp; They like the current system just fine, and will fund heavily   efforts to conserve it.</p>
<p>And when California (Proposition 13 forces reliance on wage and sales taxes to "protect" property owners) and other states, including soon Indiana, start complaining about a lack of economic growth, and when New York State's new Governor Cuomo starts talking about "property tax relief," understand that this is code for "we'll take care of our friends who own the choice urban sites, the ordinary man be damned!"&nbsp;&nbsp; This is called conservatism.&nbsp; Like Aleve, it works for them.&nbsp; Does "landed gentry" still resonate?</p>
<p>Notice that this study has been around for two years now.&nbsp; How many times have <em>you </em>heard about it? (It was news to me.)&nbsp; Even the "FairTax" (23%+ consumption tax) folks haven't mentioned it, as far as I know.</p>

Housing Choice - Help Today’s Owners or Future Buyers?

Housing Choice - Help Today’s Owners or Future Buyers - NYTimes.com.

Here are the opening paragraphs:

The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

It seems as if the suggestion is that we ought to let the housing market crash, and then hope that we will pick up again where we left off, and experience this boom-bust cycle again.

There doesn't seem to be much discussion of the factors that produce the boom-bust cycle, or of the notion that we can actually prevent the next boom-bust cycle through wise policy.

What policy?  A tax shift.  Shift taxes off wages (starting at the bottom); off sales (starting with essential items); off buildings of all kinds and equipment.  What's left to tax?  

That which we should have been taxing all along: the value of land.   Henry George (b. Philadelphia, 1839; died NYC, 1897) introduced the idea in his 1879 book, Progress and Poverty, which remains 130 years later the best selling book ever on political economy.  It sold over 6 million copies by 1900, and George, Thomas Edison and Mark Twain were perhaps the three best-known public figures of their day.  George's "remedy" came to be known as the "Single Tax."  It was a recipe for small government -- right-sized government, funded by the only legitimate revenue source: value created by nature and by the community.  Land, to the classical economists -- Adam Smith, David Ricardo, John Stuart Mill, Henry George, etc. -- was distinctly different from capital. (The neoclassical economists -- and those who only know their sort of economics -- can't seem to see the difference, and conflate them, leading to all sorts of stupid -- and unnecessary -- messes!)  Land includes not just the value of locations (on earth, in water, in space) but also electromagnetic spectrum, water rights, non-renewable natural resource values, pollution "rights," and lots of other like things.  (Mason Gaffney provides some excellent lists.)   Those locations include urban land, land made valuable by favorable climate, water supply, access to ports, to transportation systems, to desirable views, to vibrant cities with jobs, cultural amenities, educational opportunities; geosynchronous orbits; congestion charges; parking privileges, etc.    Those of us who claim title to a piece of land ought to be required to compensate the community in proportion to the value of that land, for the right to exclude others from it.  That compensation should be paid month in and month out, to the community.

Our current system is perverse.  We must purchase the rights to the land from the previous holder at whatever price the market will bear, or what the seller's circumstances require him to accept.  Rich landholders can hold out for higher asking prices; poorer ones may be forced to accept lower prices.   Few of us enter the market with more than a few percent of the asking price in hand; we mortgage our future earnings in order to pay the seller's asking price. 

In most coastal cities, that price is predominately for the location, not for the building itself.  A May, 2006, Federal Reserve Board study found that land represented, on average, 51% of the value of single family housing in the top 46 metro markets in 2004; in the San Francisco metro, land represented 88.5% of the value, and in no metro in California did it represent less than 62%.  Boston metro was around 75%, NYC metro was about 70% (I'm doing this from memory), Oklahoma City about 20%; Buffalo about 28%.   Extrapolating from some of their tables, I found that the average value of a single-family structure across the 46 metros was about $112,000, with a range from perhaps $88,000 in the lowest metro to a high of perhaps $130,000 in the highest.  The range of average land values across the 46 metros, though, was much wider, from perhaps $25,000 to $750,000! 

Suppose we did let the housing market crash, and then shifted over to George's proposal, collecting our tax revenue first from land rent, and only after we'd collected the lion's share of the land rent, tapping other less desirable revenue sources such as wages, sales and buildings.  What would happen?

• The selling price of housing would drop to approximately the depreciated value of the structure in which one would live.  A large new house would be more valuable than an older house of the same size.  A large house would cost more than a smaller one.  But one would not pay the seller for value that related to the location of the home.
• One would pay, month in and month out, the rental value of the land on which the house sits.  Fabulous locations would require high monthly payments; less fabulous ones would have lower monthly payments.  Small lots would pay less than larger lots nearby.  Owners of condos in a 20-story building would share the cost of the land rent for the site, perhaps in proportion to the quality of their location within the building (fabulous views would pay more than ordinary ones; larger footprints and/or more floors occupied would pay in proportion to their share of the total space).
• That monthly payment would go to one's community, and would replace one's property tax, sales taxes, wage taxes.  A portion of the payment would be forwarded to one's state, and at the state level, a portion would be forwarded to the federal government.
• The selling price of housing would drop, requiring one to borrow far less.  The difference would be quite pronounced in San Francisco, Boston, NYC, etc.   One's monthly mortgage payment would be significantly lower.  
• Housing would no longer be an investment, in the sense that one expected to sell a property for more than one paid for it. 
• Housing would be more liquid; one could own a home, but have a reasonable expectation of being able to sell it if one wanted to move elsewhere.
• The credit not used to purchase homes would be available for businesses.  Businesses, too, would not be "investing" in land, but would have capital available to invest in equipment and to pay better wages to their employees.
• Land which under our current system is both well-located and underused would either be redeveloped by its owners, or come onto the market so that someone else could put it to use.  There would be no incentive to keep it underused, as there is today.   The redevelopment process itself would create jobs in construction-related businesses, and the resulting buildings would either provide housing or commercial venues -- or both: whatever the market was asking for.  And that housing would be at a wide range of points on the income spectrum and the ages-and-stages spectrum: young people starting out, families, retirees, singles, couples -- not just the luxury market.   And those newly-created homes would be closer in to the jobs which would support them, rather than separated by long commutes and drive-till-you-qualify.
• Land made valuable by public investment in infrastructure and services would provide a continuous revenue stream to the community, providing funding for next year's services, instead of funding for self-selected individuals' retirement.
• So if one can't hope to get rich from the appreciation of the land under one's home, how is one to have security?  How does one participate in the economy?   By investing in businesses that serve customer desires.  And when one's housing plus taxes are lower, one has more left over for that.  When there is enough housing for all, one isn't paying so much of one's income for it.  When no one expects to grow wealthy automatically, people can dream up the business which they will enjoy working in.  And with so many businesses competing for workers, wages will tend to rise.  With so many businesses competing for customers, services will improve, and specialization increase.

Back to the title of the article: "Grim Housing Choice: Help Today's Owners or Future Buyers?"    Maybe economics doesn't HAVE to be the dismal science.  Maybe our choices are not so grim after all.   Maybe we can put ourselves on a firmer footing, without the boom-bust cycles we've been experiencing so regularly.  (See Mason Gaffney's recent book, After the Crash: Designing a Depression-free Economy.  And while you're on that site, you might read "The Great Crash of 2008" and "How to Thaw Credit Now and Forever.")   Maybe we can leave our children a society in which all can prosper. 

Not too much to ask for, is it?

Or shall we leave them a society in which 10% of us are receiving 48% of the income, and 10% of us possessing 71.5% of the net worth.

Which side are YOU on? 

How to End the Great Recession

Where have all the economic gains gone? Mostly to the top. The economists Emmanuel Saez and Thomas Piketty examined tax returns from 1913 to 2008. They discovered an interesting pattern. In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.

It’s no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns — sometimes that’s here, but often it’s the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.

Meanwhile, as the economy grows, the vast majority in the middle naturally want to live better. Their consequent spending fuels continued growth and creates enough jobs for almost everyone, at least for a time. But because this situation can’t be sustained, at some point — 1929 and 2008 offer ready examples — the bill comes due.

This time around, policymakers had knowledge their counterparts didn’t have in 1929; they knew they could avoid immediate financial calamity by flooding the economy with money. But, paradoxically, averting another Great Depression-like calamity removed political pressure for more fundamental reform. We’re left instead with a long and seemingly endless Great Jobs Recession.

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity.

via www.nytimes.com

I think Robert Reich sees part of the problem, but he doesn't see the solution.   How do we achieve more widely shared prosperity?  By a variation on Alaska's theme.  In Alaska, a significant share of the value of the state's natural resources is used to fund state government, and another significant share is placed each year into the Alaska Permanent Fund, which is invested in a broadly diversified portfolio and pays an annual dividend of $1000 to $2000 to every permanent resident of Alaska, of all ages.  [See http://www.nytimes.com/2010/09/04/us/politics/04alaska.html for an article mentioning this, and the Alaska Permanent Fund link, at the left of this page.]   Alaska has it half right: they collect a decent share of the value of the natural resources, but they don't tax their land value much.

How do we share the prosperity beyond the top 10%?  By shifting our incentives so that those who currently grow wealthy in their sleep by collecting economic rent find themselves sharing that rent with the rest of us.  Untax wages, starting with incomes under the median.  Untax sales.  Untax buildings.  Tax land value.  Tax the value of those things which the classical economists would have recognized as land -- water rights, "rights" to pollute, airport landing rights at congested airports, geosynchronous orbits (which prevent satellites from bumping into each other), electromagnetic spectrum (those airwaves which most people would say "belong to the American people" but which we have permitted corporations -- public and private -- to privatize), natural resources such as oil, natural gas, copper, coal, lithium, etc..   All these things are going into corporate portfolios (here and abroad -- and some of those corporations are families in power, despite attempts at nation-building), week in and week out, and their value accrues to the shareholders of the corporations.  Stock ownership is quite concentrated, and these benefits flow into the pockets of a relative few, who, as Reich rightly points out, may or may not spend or invest in America's products.  When they do invest, they often acquire our best land and resources, buying thereby the labor of thousands of Americans.  When an acre in Manhattan can be worth $400 million, the seller of that land didn't make it valuable.  WE did!  So why should an individual, or a corporation, or a trust, or a university, or a pension fund -- or any private entity -- get to pocket that value as if they did?   (The kindest thing I can say is that we have a bad habit!  Something like chattel slavery -- and look at how long it took us to end that.)

Pocketing that value has two sorts of effects: when they sell, they pocket that so-called "capital" gain.  It isn't capital!  It is land value!  Capital depreciates; what rises in value is land, and it rises for reasons which have nothing at all to do with the "fellow" who owns it.  

But even when they buy and hold, there are important effects of permitting that privatization.  The rich don't need to put the land to its highest and best use, because they can get by with something less while they wait for the community to cause it to grow.  (See The Taxpayer at 72nd and Madison.  Notice all the surface parking lots in Manhattan, Philadelphia, Hartford and many other cities.  See the 4.3 acre "hole in the ground" in Stamford, CT, right near the city's 100% location, vacant since the early 1980s.) They're patient!  They can afford to be.  The top 10% of us hold 71.5% of the chips, according to the 2007 Survey of Consumer Finances.)   Not using the land well reduces the supply of housing close to the center of things (adding to sprawl) and/or of jobs (which we say we want) and contributes to a wide range of our most serious social, economic, environmental and justice problems.

If we collected more of the annual rental value of our urban land, the holders of that land would turn into active users or sell it to someone who would put it to good use.  Good use creates jobs, and homes and other things that the market wants.  But when the market can't afford them, it does without.  People are priced out of housing in the places they'd prefer to live.  They lack jobs or are underemployed, and the rich keep getting richer.

Reich advocates extending the EITC, exempting the first $20,000 of wages from payroll taxes, improving and extending early childhood education, making public universities free in return for 10% of the first 10 years of full-time earnings, creating "earnings insurance."  He concludes,

Policies that generate more widely shared prosperity lead to stronger and more sustainable economic growth — and that’s good for everyone. The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that’s barely moving. That’s the Labor Day lesson we learned decades ago; until we remember it again, we’ll be stuck in the Great Recession.

Well, 130 years ago, Henry George spoke to some of the kinds of measures that have been proposed over the years for reducing poverty and promoting widely shared prosperity.  See "Part VI -- The Remedy" and particularly "Ineffective Remedies" and "The True Remedy"

"Ineffective Remedies" begins,

OUR CONCLUSIONS point to a solution. It is so radical that it will not be considered if we believe less drastic measures might work. Yet it is so simple that its effectiveness will be discounted until more elaborate measures are evaluated. Let us review current proposals to relieve social distress. For convenience, we may group them into six categories:

1. More efficient government
2. Better education and work habits
3. Unions or associations
4. Cooperation
5. Government regulation
6. Redistribution of land

That 10% of us who hold 71.5% of the net worth also received 41.3% of the current income. [Note that these percentages are understated, since the SCF purposely omits the Fortune 400 families.  They hold about 1% of the nation's net worth.] 

Picketty & Saez provide annual updates on income concentration.  For 2008, they report that the top 10% of us (sorted by income, not net worth) received 45.60% of the income when capital gains are excluded and 48.23% of income including capital gains.   (For 1988, the corresponding figures are 38.63% and 40.63%; in 1958, 32.11% and 33.56%.   Do we notice a trend here?  Do we like it or think it a healthy trend?)

We have permitted and supported a structure which funnels wealth and income into relatively few pockets.   We have to reform this structure, and we have to recognize that the current beneficiaries are not likely to be keen on reform -- conservatives have a lot to conserve for themselves -- and those who are dependent for their salaries on being popular with those beneficiaries are not likely to be particularly interested in looking at the underpinnings of the structure with an eye to removing some of the ladders (escalators!!) or  gentling the chutes.

Those who get to privatize the value of what ought to be common assets grow wealthy in their sleep.  Until enough of us understand the mechanism to constitute a majority, we aren't likely to correct it.

 

It is a bit disheartening to think how many well-regarded economists live in California, the land of Proposition 13, and haven't lifted a finger or opened their mouths to suggest that it is not in the best interests of California's people.   Milton Friedman acknowledged many times that the tax on land values was the "least bad" tax -- and didn't have anything to say about Proposition 13, which was the antithesis of what a wise person or society would do with that information.    So I guess I shouldn't be surprised that today's California economists, with very few exceptions, aren't all that concerned with the economic wellbeing of ordinary people any more than economists elsewhere are.  Or maybe, as my late mother would have expressed it, their educations have simply been neglected.  (At which point she would proceed to fill in my newly-identified knowledge gap.)    Economists can start with the links in this post, and then explore from there.

What labor unions should demand is freedom » Ventura County Star

What labor unions should demand is freedom » Ventura County Star

Gary Calles, professor of economics at Pepperdine University wrote an excellent piece in the Ventura County Star. These are the final few paragraphs; I commend the entire piece to your attention.

Especially around Labor Day, unions reiterate long-debunked assertions that they benefit all workers. But their domestic and international protectionism by its nature harms the vast majority of workers, as George recognized.

He also saw that they did not really believe their own propaganda because “Protectionists are only protectionists in theory and politics. When it comes to buying what they want, all protectionists are free traders.”

That is why George’s work justifies renewed attention from workers and policy makers. It reveals that union protectionism “has been invented merely to serve the purpose of its inventors,” and that for workers to advance their true interests, “instead of accepting protection, what labor should demand is freedom.”

Read more: http://www.vcstar.com/news/2010/sep/04/what-labor-unions-should-demand-is-freedom/#ixzz0ybOqqXaD - vcstar.com

America's Biggest Jobs Program -- The U.S. Military | TPMCafe

America's Biggest Jobs Program -- The U.S. Military | TPMCafe.

America's biggest -- and only major -- jobs program is the U.S. military.

Over 1,400,000 Americans are now on active duty; another 833,000 are in the reserves, many full time. Another 1,600,000 Americans work in companies that supply the military with everything from weapons to utensils. (I'm not even including all the foreign contractors employing non-US citizens.)

If we didn't have this giant military jobs program, the U.S. unemployment rate would be over 11.5 percent today instead of 9.5 percent.

And without our military jobs program personal incomes would be dropping faster. The Commerce Department reported Monday the only major metro areas where both net earnings and personal incomes rose last year were San Antonio, Texas, Virginia Beach, Virginia, and Washington, D.C. -- because all three have high concentrations of military and federal jobs.

This isn't an argument for more military spending. Just the opposite. Having a giant undercover military jobs program is an insane way to keep Americans employed. It creates jobs we don't need but we keep anyway because there's no honest alternative. We don't have an overt jobs program based on what's really needed.  . . .

The Pentagon's budget -- and its giant undercover jobs program -- keeps expanding. The President has asked Congress to hike total defense spending next year 2.2 percent, to $708 billion. That's 6.1 percent higher than peak defense spending during the Bush administration.

This sum doesn't even include Homeland Security, Veterans Affairs, nuclear weapons management, and intelligence. Add these, and next year's national security budget totals about $950 billion.

That's a major chunk of the entire federal budget. But most deficit hawks don't dare cut it. National security is sacrosanct.

Yet what's really sacrosanct is the giant jobs program that's justified by national security. National security is a cover for job security.

This is nuts.

Wouldn't it be better to have a jobs program that created things we really need -- like light-rail trains, better school facilities, public parks, water and sewer systems, and non-carbon energy sources -- than things we don't, like obsolete weapons systems?

Historically some of America's biggest jobs programs that were critical to the nation's future have been justified by national defense, although they've borne almost no relation to it. The National Defense Education Act of the late 1950s trained a generation of math and science teachers. The National Defense Highway Act created millions of construction jobs turning the nation's two-lane highways into four- and six-lane Interstates.

Maybe this is the way to convince Republicans and blue-dog Democrats to spend more federal dollars putting Americans back, and working on things we genuinely need: Call it the National Defense Full Employment Act.

Suppose, just suppose, that we shifted our federal spending to create those things we really need -- nation building, if you will --  like light-rail trains, better school facilities, public parks, water and sewer systems, and non-carbon energy sources  -- but instead of letting the land value that such investment creates be privatized by whoever owns the land they serve, we collected the value WE created, and used it to fund next year's investment in public goods and services?

Sounds like a virtuous circle to me.

And one which we could recommend to the voters in resource-rich countries.

And collecting that value would have a lot of other highly desirable effects, including reversing urban and suburban sprawl, reducing the price of housing, increasing wages, reducing the concentrations of wealth and income, stabilizing our economy.   Pick one of those that you don't think would be good for America.

And it isn't pork if it creates value which is then recycled for public purposes.  It is pork when we permit it to be privatized