“Hawaiian Independence for National and Global Justice will present segments from the films Hawaii A Voice For Sovereignty, The End of Poverty [commissioned by Robert Schalkenbach Foundation], and Life and Debt on July 25, 2014. The event is a community outreach for the purpose of discussions regarding national and global justice.”
Tim Worstall, a senior fellow at the Adam Smith Institute, has been warming up to the Georgist paradigm.
“Optimal taxation theory tells us that we should therefore eliminate capital and corporate taxation and move to a progressive consumption tax and perhaps a land value tax.”
Adam Smith and the Physiocrats “knew perfectly well where inequality came from. It was simply a fact of life that most land and other natural resources belonged to a small hereditary nobility. In England, some 2% of the population owned most of the land. This nobility, or their ancestors, gained their estates by force, favoritism, or fraud: that is, conquest, gifts from the king, or bribes to magistrates.”
Polly Cleveland in this two part article outlines what later economists thought about future poverty and inequality. Here’s a summary:
- Malthus: Higher wages → higher population → outstriping available resouces/ starvation wages
- Ricardo: Only improved technology and trade can stave off Malthusian catastrophe.
- Marx: Growing inequality→ collapse of the capitalist system → new socialist society→ equality
- George: Economy grows→ landlords amass surplus→ collapse →repeats (sans intervention)
- Clark: Inequality is a result of differences in labor and capital contribution.
- Pareto: Inequality follows natural law, the 80:20 rule (prime example land)→ nothing to fix
- Solow: Richer economies grow slower than poor ones → rising equality
- Piketty: less growth + no change in investment → capital investment exceeds growth → growing inequality
Part 1: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-contxt-1.html
Part 2: http://dollarsandsense.org/blog/2014/07/pikettys-model-inequality-growth-historical-context-2.html
“When the United States had lots of free land, immigration was actively encouraged, because everyone benefited from it. Well, guess what? The US doesn’t have any FREE land today — but it has lots and lots of unused land. And a very big portion of that unused or ill-used land (in terms of its value, which is the important consideration) is in urban areas — exactly those areas toward which new immigrants gravitate, to struggle and strive in this land of opportunity.”
The RSF staff discovered the following note in a letter by Elbert Segelhorst in December 2003. He describes a “back of the envelope” calculation of national economic rent that is about 6 times higher than the official statistics say it is. He got approval from some Columbia University economists for his method. We recommend you talk to some economists in your area about this and report to us your findings.
“I find it useful to explain the very important role of economic rent in the following manner:
a. The average person spends about 1/3 (or more) of his or her personal income on housing (as either owner or renter). On average, 1/3 of the assessed property’s value is that of the unimproved site–the land value.
Consequently, 1/3 x 1/3 = 1/9 of national income is being paid to the owners [or mortgage lenders] of these residential sites.
b. The market value of land in all other uses (e.g., commercial, industrial, transport, government, etc.) is approximately equal to the residential land value, or 1/9 of national income.
c. Combining residential and all other land uses, the total amount spent on site rent is around 2/9 of national income, or 22%. I made this presentation to five fellow Ph.D’s from Columbia University in NYC in June 2003, and my estimate was accepted.”
Logically, they suggest, one would expect democracies, with a majority of landless and small-holding peasants, to vote for land redistribution. But, in fact, that has seldom happened because democratic constitutions are invariably set up with checks and balances that prevent redistributive coalitions from developing any stability.
The second puzzle they identify is “Why do land reforms grant incomplete property rights?” It has been understood for centuries that limited land titles, which restrict rights of use and transfer, will reduce the productivity of the soil. To understand why land reforms that break up large estates and distribute land to peasants founder on the shoals of only partial titling, the authors turn to a political explanation: partial titling makes the recipients dependent on particular political parties for ongoing credit and marketing services provided by the state.
This second explanation also largely answers their third question: “Why are complete land reforms politically risky?” Regimes that keep the carrot of full ownership in front of peasants can stay in power forever. Well almost. Suppose a new party comes along and promises the peasants to grant them full title to their land, as PAN did in Mexico in the 1990s? (PAN is a mostly Catholic, free market oriented political party, which overturned the century-long control of the PRI in Mexico. The PRI originally redistributed land through the ejido system, a system of incomplete property rights and low productivity.) To win the presidency of Mexico in 1999, PAN got millions of votes by promising land title reform. But after a decade, the reforms were largely completed. Now the peasants no longer need PAN to sustain them economically. The fortunes of PAN have begun to wane, and the PRI, which fully understands the politics of patronage, is making a come-back. Thus, as the authors of the article conclude, one-time rights transfers may not correspond with continuing political loyalty.
What does this mean for the politics of public rent collection? The reforms sought by Georgists are similar in one way to the titling reforms achieved by PAN. In both cases, the reform has a very limited political shelf-life. PAN at least had the advantage of offering an immediate, one-time benefit to a defined constituency. That enabled them to gain the presidency and a legislative majority, even though it was tenuous.
Georgism lacks the capacity to offer any sort of targeted benefits. Instead, we offer long-term benefits to a diffuse constituency. We propose to benefit everyone, but at the same time, we cannot promise any individual or group a special and immediate benefit, which is the currency of politics. So, we are left at the starting gate. (The two-rate tax does benefit owners of fully-developed property and pinches the owner of underused land, but even that modest reform still has not developed an identifiable constituency after half a century.)
If Georgists ever succeeded on a large scale–at the national or state level–would we be able to sustain the constituency that initially supported the change? Or would we end up like PAN, deserted by our supporters the moment victory was in hand?
(2014 May-June) Contents
Posted June 13, 2014
THE GEORGIST NEWS
– Serving the Earth Sharing Community
1. (2014 May-June) From the Editor: California Conferences and Book Orders
2. (2014 May-June) Likeable Link: San Francisco Inequality Rivals Developing Nations
3. (2014 May-June) Good Press: Monbiot on Modern Feudalism in Scotland
4. (2014 May-June) At the Margin: Mexican Cartel, More Money in Rents than Drugs
5. (2014 May-June) Opinion: The Stiglitz Report
6. (2014 May-June) Good Press: Picketty & George
Next month, two Georgist conferences will convene in California.
On July 5th, an exciting and affordable young Georgist conference will take place in San Francisco ($49 before Sunday June 15th). We’re calling it “Community Gone Viral”.
Georgists will team up with representatives from land trusts, intentional communities, and other activist groups to discuss how current models of real estate speculation, gentrification, and taxation aren’t working to create the prosperous and green communities we need. They will further discuss how change can be created from the ground up, through community.
This is a great opportunity to connect with enthusiastic young Georgists as they collaborate with other groups towards shared wins! The combination of breakout sessions and team building exercises will ensure a fun, engaging, and productive experience. This conference is open to all ages.
Young Georgist Conference, July 5, 2014: http://www.communitygoneviral.com/#!register/c1h6a
Starting two days later (July 7th-11th), the annual conference for the Council of Georgist Organizations will take place in Newport Beach for the 175th Celebration of Henry George’s legacy (1839-2014). Attendees will explore ways to deal with our seemingly intractable economic problems: financial instability and corruption, unaffordable housing, inequities with Proposition 13, corporate privilege and deepening poverty.
Note, there was a typo in the CGO conference brochure. The correct phone number for Sue Walton is (847) 475-0391. She asks that folks register ($300) before the end of today June 13th in order to pay the reduced room rate ($105/night).
Council of Georgist Organizations, July 7-11, 2014: http://cgocouncil.org/
RSF staff will be attending both conferences. Book orders can still be placed online during the conferences. However, orders received after June 25th will be processed after July 15th in the order received.
San Francisco seems to be a factory for overnight millionaires. Much of the surplus income has surfaced as exorbitantly high land prices, causing a great deal of displacement and hostility between renters and the tech sector. Apparently, San Francisco is more unequal now than Rwanda. These issues serve as much of the impetus for the young Georgist conference taking place in San Francisco next month.
“…the nation with the rich world’s greatest concentration of land ownership remains as inequitable as ever… You begin to grasp the problem when you try to discover who owns them. Fifty per cent of the private land in Scotland is in the hands of 432 people.”