Keith,
Before I get to your points. I thought you might like to see Churchill's
speech before WWI during the land-value tax battles that led to the ending
of the power of the House of Lords.
Someone posted a bit of it and I thought you would be interested in the
Churchillian discussion of the Land Question. As a postscript, after WWII
during the Town and Country Planning Act Hugh Dalton smiled at Churchill and
said "I seem to remember the Honorable Member singing the Land Song ("God
gave the land to the people").
The old man staggered to his feet and said "I shall sing it again."
There is no record of Churchill again bursting into song.
Here's Churchill at his best.
Harry
\\\\\\\\\\\\\\\\\\\\\\\\\\\\\
Land differs from all other forms of property. It is quite true that the
land monopoly is not the only monopoly which exists, but it is by far the
greatest of monopolies -is a perpetual monopoly, and it is the mother of
all other forms of monopoly. It is quite true that unearned increments
in land are not the only form of unearned or undeserved profit which
individuals are able to secure; but it is the principal form of
unearned increment which is derived from processes which are not merely
not beneficial, but which are positively detrimental to the general public.
Land, which is a necessity of human existence, which is the original source
of all wealth, which is strictly limited in extent, which is fixed in
geographical position -land, I say, differs from all other forms of
property in these primary and fundamental conditions.
Nothing is more amusing than to watch the efforts of our monopolist
opponents to prove that other forms of property and increment are exactly
the same and are similar in all respects to the unearned increment in
land.
They talk to us of the increased profits of a doctor or a lawyer from the
growth of population in the towns in which they live. They talk to us of
the profits of a railway through a greater degree of wealth and
activity in the districts through which it runs.
They tell us of the profits which are derived from a rise in stocks and
shares, and even of those which are sometimes derived from the sale of
pictures and works of art, and they ask us, as if it were the only
complaint, 'Ought not all these other forms to be taxed too?'
Misleading analogies. But see how misleading and false all these analogies
are.
The windfalls which people with artistic gifts are able from time to time to
derive from the sale of a picture - from a Vandyke or a Holbein - may
here and there be very considerable.
But Pictures do not get in anybody's way. They do not lay a toll on
anybody's labour; they do not touch enterprise and production at any
point; they do not affect any of the creative processes upon which
the material well-being of millions depends; and if a rise in stocks and
shares confers profits on the fortunate holders far beyond what they
expected, or indeed, deserved, nevertheless, that profit has not been reaped
by withholding from the community the land which it needs, but, on the
contrary, apart from mere gambling, it has been reaped by supplying
industry with the capital without which it could not be carried on.
If the railway makes greater profits, it is usually because it carries more
goods and more passengers. If a doctor or a lawyer enjoys a better
practice, it is because the doctor attends more patients and more
exacting patients, and because the lawyer pleads more suits in the courts
and more important suits.
At every stage the doctor or the lawyer is giving service in return for his
fees, and if the service is too poor or the fees are too high, other
doctors and other lawyers can come freely into competition. There is
constant service, there is constant competition; there is no monopoly,
there is no injury to the public interest, there is no impediment to the
general progress.
UNEARNED INCREMENT.
Fancy comparing these healthy processes with the enrichment which comes to
the landlord who happens to own a plot of land on the outskirts or at
the centre of one of our great cities, who watches the busy population
around him making the city larger, richer, more convenient, more famous
every day, and all the while sits still and does nothing.
Roads are made, streets are made, railway services are improved,
electric light burns night into day, electric trams glide swiftly to
and fro, water is brought from reservoirs a hundred miles off in the
mountains - and all the while the landlord sits still. Every one of
those improvements is effected by the labour and at the cost of other
people.
Many of the most important are effected at the cost of the municipality
and of the ratepayers. To not one of those improvements does the land
monopolist as a land monopolist contribute, and yet by every one of them
the value of his land is sensibly enhanced.
He renders no service to the community, he contributes nothing to the
general welfare; he contributes nothing even to the process from which his
own enrichment is derived. If the land were occupied by shops or by
dwellings, the municipality at least would secure the rates upon them in
aid of the general fund, but the land may be unoccupied, undeveloped, it
may be what is called 'ripening' -ripening at the expense of the whole
city, of the whole country, for the unearned increment of its owner.
Roads perhaps may have to be diverted to avoid this forbidden area.
The merchant going to his office, the artisan going to his work, have
to make a detour or pay a tram fare to avoid it.
The citizens are losing their chance of developing the land, the city is
losing its rates, the State is losing its taxes which would have accrued
if the natural development had taken place; and that share has to be
replaced at the expense of the other ratepayers and taxpayers, and
the nation as a whole is losing in the competition of the world -the hard
and growing competition of the world - both in time and money.
And all the while the land monopolist has only to sit still and watch
complacently his property multiplying in value, sometimes manifold,
without either effort or contribution on his part; and that is justice!
Unearned increment reaped in exact proportion to the dis-service done.
But let us follow the process a little further. The population of
the city grows and grows still larger year by year, the congestion in the
poorer quarters becomes acute, rents and rates rise hand in hand, and
thousands of families are crowded into one-roomed tenements. There are
120,000 persons living in one-roomed tenements in Glasgow alone at the
present time.
At last the land becomes ripe for sale - that means that the price is too
tempting to be resisted any longer - and then, and not till then, it is
sold by the yard or by the inch at ten times, or twenty times, or even
fifty times, its agricultural value, on which alone hitherto it has
been rated for the public service.
The greater the population around the land, the greater the injury which
they have sustained by its protracted denial, the more inconvenience which
has been caused to everybody, the more serious the loss in economic
strength and activity, the larger will be the profit of the landlord when
the sale is finally accomplished.
From: Keith Hudson [mailto:[email protected]]
Sent: Thursday, September 09, 2010 6:07 PM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION
Cc: Harry Pollard
Subject: Re: [Futurework] FW: paper on technology manias and gullibility
Harry,
You and I have been writing and arguing with each other ever since the
beginning of Futurework. Try as I might, I have never been able to
understand quite why land has to be so overwhelmingly important. Yes, it's
important -- even very important -- and I think the taxing of (visible) land
value rather than (the declared, but sometimes invisible) income would be a
great step forward.
At 20:02 06/09/2010 -0700, you wrote:
Chris,
We cannot survive without access to land -- one of the three Factors of
Production.
Land, Labour and Capital. Granted, but this still ignores a fourth factor of
production -- innovation -- which you and I have argued about before. In
Henry George's time innovation was going on at such a cracking pace that it
was hardly noticed as particularly important phenomenon. It was "natural",
just like the air we breath. If there'd been economists writing in the
Medieval period they wouldn't have considered land to be "a factor of
production" because it was too obvious. It had no monetary value, it was not
bought or sold, the idea of "renting" land was totally unknown to them.
Labour, too, wouldn't have been considered either because there were no
wages in those days. The Domesday Book of 1086 didn't compute the wealth of
England in terms of money but only acreages, numbers of beasts and numbers
of serfs (slaves) that had been granted to various favourites of William the
Conqueror. Gold, silver and copper were, it's true, losing their status-only
value and becoming currency as a handy form of exchanging small items (as
they were previously in Roman times). But economists in those days would
only have considered Capital -- Wealth and Power -- as the only factor worth
talking about when considering the "economic system". Land and labour,
improtant thought they were, were merely only ancillaries.
I think the reason why Land loomed so large in Henry George's thinking is
that he as living in a huge continent that was filling up so rapidly with
massive immigration that the struggle between Land and Labour was very
obvious.
The principal characteristic of all land is location. Locations are by their
nature monopolies.
And in Henry George's time, location was important because railways were
being built. But two more characteristics of land turn out to be even more
important than location per se -- though Henry George didn't realize it. One
is the fertility of the top-soil and the other is the resources underneath
the soil. These can't necessarily be assessed for many years and their
original location is not important -- the roads and railways can be built to
them later.
Necessary to the efficient operation of the market price mechanism is no
restriction on the production of goods, and no restriction on movement of
goods. Yet, no more land can be produced -- as said Will Rogers "They ain't
making no more dirt." Also land cannot be moved. We cannot move some Mojave
desert land into downtown Los Angeles to compete with high priced sites.
So the market cannot control land prices as it does with eggs and bacon and
other goods.
But there surely is a market in land just as there is with eggs and bacon.
It is very high in cities because that's where work is to be found, where
young people go in order to find partners, where specialists and innovators
can meet together.
Further land is all taken up. If you found a little bit of
apparently useless land and decided to put up the cabin it is likely that
before long someone would come running up waving a piece of paper.
Behind my previous house in Bath there was a patch of ground -- about 10
acres of forest on a steep hillside -- that no-one owned and no-one wanted
to own because of high costs of maintaining the trees (which could, and did,
sometimes fall on houses below). One chap lived there under a tarpaulin
sheet for a number of years. Few people ever saw him and, if he was spoken
to, he wouldn't reply. He repaired and maintained footpaths that led through
the woods. However, I've just mentioned that just for interest. It doesn't
refute your point.
When land rents and prices rise, the market price mechanism cannot bring
them down by drawing land to the market so the prices keep rising. They
continue to rise until they can go no further. This occurs when any further
increase would leave a wage too small for Labor's survival. At that point,
according to classical theory, the wages of those at the bottom of the wage
pyramid have descended to subsistence level.
Further, as a society progresses and the economy advances, rents and prices
rise to absorb the advance. This is why the poor are always with us.
As land prices move upward year by year, landowners frequently do not bother
to sell or rent out their land. The increase in land value receives better
tax treatment then income and if capital gains taxes can be ended, the
income is not taxed to all.
(The capital gains tax does not really tax capital, it taxes land value but
that is a further discussion.)
This leads to a situation where land cost makes production difficult. It
also leads to empty areas in cities that cause sprawl into the boondocks. It
also deters slum clearance. Landholders with blighted buildings on valuable
land spend as little as possible on them because it would be wasted if they
can make a land sale killing.
The economy moves merrily along, but in fact it is in a continual state of
tension, waiting for a trigger to send it over the brink. Anything might be
a trigger which is why there are so many "causes" of depression.
There is an argument that the land crash occurs every 18 years or so. I do
not altogether agree with it.
The particular problems with the banks are all based on land values. If you
are interested, I will be happy to say a little more about it. Also, how the
fatcats (or your Predators) cash in on it.
I would agree with most of what you have written above. But apart from
implying "greed" (which, I suggest, everyone suffers from, each in his own
way) you haven't really put your finger on it. The real reason is that
because governments got away with printing money so readily in times of
borrowing for warfare then the banks followed suit by departing from
traditional limits of fractional reserves when lending (100% in Renaissance
times and in the earliest "country banks" of early industrial times) to
lesser and lesser reserves -- down to about 2% at the time of the beginning
of the credit-crunch. At any one time a considerable part of the 98% of the
credit money was swimming around as banknotes and digital currency and very
much at the mercy of those who specialized in finance rather than those
engaged in value-adding occupations.
Keith
Harry
********************************
Henry George School of Los Angeles
Box 655
Tujunga CA 9104
818 352-4141
********************************
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Christoph Reuss
Sent: Monday, August 16, 2010 2:05 PM
To: [email protected]
Subject: Re: [Futurework] FW: paper on technology manias and gullibility
Harry Pollard wrote:
> The crash wasn't a contrivance of your Predators - whomsoever they may be.
> It was an inevitability, apparently happening every 18 years or so.
Within a boom-bust cycle system, the crash may be "an inevitability" (and
even a cyclic one). But the boom-bust cycle system is not inevitable at all
-- it is made and perpetuated by those who gain from it in every cycle.
Key components of that system are growth bubbles, fiat money and compound
interest.
> About the only policy that would help is to allow land prices to crash.
No. The boom-bust cycle system must be abolished, with its key components.
> There are so many government policies ranging from the potty to the
> disastrous that one cannot easily grasp their damaging consequences.
Depends on one's intelligence...
Chris
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Keith Hudson, Saltford, England
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