DISCUSSION WITH DR GAVIN PUTLAND …

… ON THE 2024 ‘KAVANAGH-PUTLAND RATIO’ UPDATE

“Interpreting them (the data) is more complicated than usual. The one-year decline in sales/GDP is in recession territory, but…

* the cycle calls for a peak in prices in late ’25 or early ’26, with
a recession later in ’26;
* prices are still going up;
* auction clearances are still high;
* as far as I know, the fall in turnover has more to do with supply
constraints (builders going broke, etc.) than with buyers calling BS
on prices;
* rental vacancy rates are at record lows and still worsening, and we know why.

Speaking of which, what exactly constitutes a recession these days?
We’ve already been in a per-capita recession for three or four
quarters.

Eventually we must get to that point where buyers call BS on prices,
causing a fall in turnover followed by a fall in prices. However, due
to the complications with supply, I’m not convinced that we are yet
seeing *that* fall in turnover.”

THANKS, AI!

…. EVEN FOR THAT FINAL URL: I HADN’T MENTIONED PROSPER AUSTRALIA OR A ‘BOLD TAX SHIFT’

“Indeed, the debate over taxation and its impact on economic efficiency is a fascinating one. Let’s delve into the insights provided by Martin Feldstein and Bryan Kavanagh:

  1. Martin Feldstein:
    • Feldstein’s assessment suggests that income tax generates an excess burden (also known as deadweight loss) that is twice the amount levied. In other words, the cost to society due to income taxation exceeds the actual revenue collected.
    • His focus is primarily on the efficiency loss caused by income taxes, which can discourage work, investment, and innovation. The burden falls on those who actively contribute to the economy.
    • Feldstein’s perspective emphasizes the need for tax reforms that minimize this excess burden.
  2. Bryan Kavanagh:
    • Kavanagh’s research, as outlined in “The Real Excess Burden: An overarching approach,” takes a broader view. He assesses the excess burden of all taxes in Australia to be 2.3 times the amount of taxation levied.
    • Kavanagh’s approach differs significantly from Feldstein’s. He considers not only income taxes but also other forms of taxation, including indirect taxes (such as consumption taxes) and property taxes.
    • Importantly, Kavanagh’s methods were approved by Fred Foldvary, adding credibility to his findings.
  3. Taxing Unearned Rents:
    • Both Feldstein and Kavanagh’s findings highlight the importance of reducing excess burden in our tax system.
    • Taxing unearned rents (such as land rents and resource rents) is an intriguing proposition. Unearned rents are essentially income derived from natural resources or monopolistic advantages.
    • Unlike income taxes, which can discourage productive activities, taxing unearned rents carries minimal excess burden. After all, these rents are not the result of individual effort or innovation.
    • By shifting the tax burden away from earned income and toward unearned rents, we can potentially achieve a more efficient and equitable system.
  4. A Bold Tax Shift:
    • Advocates for tax reform often propose a tax shift:
      • From: Taxes on effort, entrepreneurship, and earnings.
      • To: Taxes on resources, rents, and riches.
    • Socializing unearned rents from land (instead of rewarding speculation and corruption) and pricing pollution and extraction are part of this vision.
    • Such a shift aligns our tax system with our values, promotes economic prosperity, and ensures a fairer, more sustainable future.

In summary, both Feldstein and Kavanagh’s insights underscore the need for thoughtful tax policies. Considering the minimal excess burden associated with taxing unearned rents, it’s worth exploring this avenue as we strive for a better economic and social landscape. 🌿💡🌏

For more information, you can explore the Prosper Australia Tax Shift initiative1.”

TOLSTOY

AND HENRY GEORGE

Victor Lebrun

Victor Lebrun was a personal friend and Secretary to Leo Tolstoy. This is a translation of his article published in the July 1956 issue of the French periodical, Contre-Courant, and reprinted in the July-September 1956 issue of the French Georgist magazine Terre et Liberte. Its historical interest, in view of the establishment of Communism in Russia in 1917, needs no emphasis.

In giving his extreme and sympathetic attention to other thinkers and writers, the great Tolstoy differed essentially from his colleagues – the geniuses of all countries and all centuries. But nothing shows the complete honesty and surprising liberty of his spirit more than his attitude towards Henry George.

Conversion to Georgism

It was at the beginning of 1885 that he happened to lay his hands on the books of the great American sociologist. By then the moral and social doctrine of the thinker had been solidly and definitely established. Man’s supreme and unique duty was to perfect himself morally and not to co-operate with the wrong. Thus the social problem would be automatically solved when the majority has understood the true meaning of pure Christianity and when it has learned to abstain from all crimes which are frequently and commonly committed. All reasoning about the precise nature of the citizens’ rights, about laws, about the organisation of governmental compulsion for their protection is anathema to the great thinker.

But…hardly had Tolstoy had a glance at Social Problems and Progress and Poverty and he was completely captivated by George’s outstanding exposition. His strict daily routine is broken.

‘This morning I read George instead of writing’, Tolstoy confesses in a letter to his wife. Two days later he adds: ‘I read my George’. (He says ‘my’. He never said this of any other author). ‘This is a very important book. This is a step forward of equal importance to the liberation of our serfs. This is the liberation of the earth from private ownership.’

‘Their point of view in this matter is the control of men. And it is necessary to read George, who defined the problem with precision and definitively. After this there is no more debating, one has to take resolutely one side or the other. Personally I demand much more than he does: but his project is the first step of the ladder which I would like to climb.’

And the thinker does not hesitate any longer. From this encounter on he resolutely and enthusiastically takes George’s side, and to his last breath for a quarter of a century, he makes every effort without relaxation to make his discovery known. He publishes articles on George: he writes introductions to the remarkable translations of his works.

Letters to Stolypin

The correspondence of the Georgist Tolstoy with the Prime Minister of the time is also astonishing. Here the summits of the two camps clash, the two leading theories, those who ‘think right’ and the honest ones.

In 1907 the people were exasperated. The peasant revolt was in full swing. And the Minister made his soldiers fire at the crowds, hanged peasants almost daily, imprisoned and deported them by the thousands. The gallows had been named after him ‘Stolypin’s necktie’. Tolstoy suffered terribly from the crimes and the hatred he saw growing on both sides. Finally he lost his patience. On the 26th July, 1907, he sent word to the Prime Minister:

‘Peter Arcadievich, I write to you under the impulse of my best feelings towards the son of my friend.

‘You are on the wrong road. You have two possibilities in front of you: the one is to continue not only to take part in but direct all the deportations, forced labour, executions, and not having achieved your aim, leave behind you a sordid memory. Or, doing the opposite, advance the peoples of Europe by helping to destroy the old, enormous injustice of the appropriation of the soil. In the latter way you would truly accomplish a great and good task, and you would appease the people through the most efficient of processes by giving satisfaction to their most loyal demands.

‘This would stop these horrible crimes which are perpetrated on the side of the revolutionaries as well as on the side of the Government.
Leo Tolstoy’

It is after three months that the Minister decides to reply:

‘Leo Nicolaievich, don’t think that I have not given my attention to your letter. I couldn’t answer it because it touched me where it hurt. You consider to be wrong what I consider to be for the welfare of Russia…

‘I don’t deny the doctrine of Henry George but believe that the Single Tax could in time (sic) help in the struggle against the big estates. At present I don’t see any reason why we should, here in Russia, chase the owners from their lands, which they cultivate better than the peasants. Quite the contrary, I see the necessity of making it possible for the peasants to acquire a piece of land of their own…

‘How could I do anything else than what I consider to be right. And you write to me that I am on the road of bad repute, of cruel actions, and above all of sin. Believe me that, feeling the possibility of approaching death, one cannot avoid thinking of these questions, and my road seems straight to me. I understand that it is completely in vain that I write this letter.

‘Accept my apologies.
Yours, Stolypin.’

This is the Prime Minister’s answer. And he goes on with his countless crimes.

_____

On the 28th January, 1908, Tolstoy loses patience:

‘Peter Arcadievich, why? Why are you losing yourself in going on with your erroneous action which can only lead to aggravation of the general situation and of your position in it? Courageous, honest and noble man, and I know you as such, should not persist with his errors, but should recognise them and direct his forces to correct their consequences…

‘Your two errors: the violent struggle against the irresistible force of the people, and the consolidation of the ownership of land can be corrected by a simple, clear and achievable reform. It has to be recognised that the territory of the country is the equal property of the entire population, and a land tax has to be established which would correspond exactly to the privilege enjoyed by each site. This rent would replace entirely all taxes.

‘Only this measure can appease the people … Only this measure can dispose of the horrible repression which those who revolt have to suffer …I repeat that I write this to you wishing you the best and loving you …

Leo Tolstoy.’

_____

This second letter remained unanswered, but the terrible agony of the horrible regime remained.

Sometime later the Prime Minister was assassinated by a revolutionary, and in 1918 the communists gained power. The hoarders of territory refused to pay the nation the economic rent. Now everything was taken from them. None escaped punishment.

It is terrifying to re-live this era, to re-read this correspondence.

The Economy of the Future

In thanking George for a present of his works, the master asks the intermediary to tell him that he is ‘enchanted by the clarity, the mastery and conclusions of his expositions; that George was the first who had put down solid foundations for the economy of the future, and that his name would always be remembered with gratitude by mankind.’

Tolstoy wrote to his wife – at the time of George’s death: ‘Henry George is dead, it is strange to say but his death surprised me like the death of a very close friend. The newspapers announce his passing and do not even speak of his books, which are so remarkable and of such great importance.’

A fragment of Tolstoy’s introduction to Social Problems shows to what degree he appreciated his works. The great master wrote:

‘Henry George said: “To those who have never studied the subject, it will seem ridiculous to propose as the greatest and most far-reaching of all reforms a mere fiscal change. But whoever has followed the train of thought through which in preceding chapters I have endeavoured to lead, will see that in this simple proposition is involved the greatest of social revolutions – a revolution compared with which that which destroyed ancient monarchy in France, or that which destroyed chattel slavery in our Southern States were nothing”.

‘And see, this is just the enormous importance of the big and real reform proposed by George that has not been understood in the world until now.’ Tolstoy continues:

‘George’s idea which changes the way of living of the people, to the advantage of the big majority – at present downtrodden and silent, and to the detriment of the ruling minority–this idea is expressed so convincingly and effective- ly and above all so simply that it is impossible not to understand it. For this reason, there is only one way to fight against it, to falsify it and to keep silent about it. Both are practised with such pains that it is difficult to induce people to read George’s books attentively and to deepen his doctrine. In the whole world, among the majority of intellectuals the ideas of George continue to be misinterpreted, and the indifference towards them appears to grow.

‘But a precise, and consequently fertile thought, cannot be destroyed. However one tries to strangle it, it remains more alive than all the other doctrines which are vague and devoid of meaning and behind which one tries to force it. Sooner or later truth will pierce the veil by which it is hidden, and will throw light over the world.

Such is the thought of Henry George’.

_______


Other Letters

To TM Bondaref, who had written from Siberia
asking for information about the
Single Tax’.

THIS IS Henry George’s plan:

The advantage and convenience of using land is not everywhere the same; there will always be many applicants for land that is fertile, well situated, or near a populous place; and the better and more profitable the land, the more people will wish to have it. All such land should, therefore, be valued according to its advantages: the more profitable – dearer; the less profitable – cheaper. Land for which there are few applicants should not be valued at all, but allotted gratuitously to those who wish to work it themselves.

With such a valuation of the land – here in the Toula Government, for instance – good arable land might be estimated at about 5 or 6 roubles the desyatina; kitchen-gardens in the villages, at about 10 roubles the desyatina; meadows that are fertilized by spring floods at about 16 roubles, and so on. In towns the valuation would be 100 to 500 roubles the desyatina, and in crowded parts of Moscow or Petersburg, or at the landing-places of navigable rivers, it would amount to several thousands or even tens of thousands of roubles the desyatina.

When all the land in the country has been valued in this way, Henry George proposes that a law should be made by which, after a certain date in a certain year, the land should no longer belong to any one individual, but to the whole nation – the whole people; and that everyone holding land should, therefore, pay to the nation (that is, to the whole people) the yearly value at which it has been assessed. This payment should be used to meet all public or national expenses, and should replace all other rates, taxes, or customs dues.

The result of this would be that a landed proprietor who now holds, say, 2,000 desyatina, might continue to hold them if he liked, but he would have to pay to the treasury – here in the Toula Government, for instance (as his hodling would include both meadow- land and homestead) 12,000 or 15,000 roubles a year; and, as no large landowners could stand such a pay- ment, they would all abandon their land. But it would mean that a Toula peasant, in the same district, would pay a couple of roubles per desyatina less than he pays now, and could have plenty of available land nearby, which he would take up at 5 or 6 roubles per desyatina. Besides, he would have no other rates or taxes to pay, and would be able to buy all the things he requires, foreign or Russian, free of dutv. In towns, the owners of houses and manufactories might continue to own them, but would have to pay to the public treasury the amount of the assessment on their land.

The advantages of such an arrangement would be:

1. That no one will be unable to get land for use.

2. That there will be no idle people owning land and making others work for them in return for permission to use that land.

3. That the land will be in the possession of those who use it, and not of those who do not use it

4. That as the land will be available for people who wish to work on it, they will cease to enslave themselves as hands in factories and works, or as servants in towns, and will settle in the country districts.

5. That there will be no more inspectors and collectors of taxes in mills, factories, refineries and workshops, but there will only be collectors of the tax on land which cannot be stolen, and from which a tax can be most easily collected.

6. (And chiefly) That the non-workers will he saved from the sin of exploiting other people’s labour (in doing which they are often not the guilty parties, for they have from childhood been educated in idleness, and do not know how to work), and from the yet greater sin of all kinds of shuffling and lying to justify themselves in committing that sin; and the workers will be saved from the temptation and sin of envying, condemning and being exasperated with the non-workers, so that one cause of separation among men will be destroyed.

_____

To a German Propagandist
of Henry George’s Views.

It is with particular pleasure that I hasten to answer your letter, and say that I have known of Henry George since the appearance of his Social Problems. I read that book and was struck by the justice of his main thought – by the exceptional manner (unparalleled in scientific literature), clear, popular and forcible, in which he stated his cause – and especially by (what is also exceptional in scientific literature) the Christian spirit that permeates the whole work. After reading it I went back to his earlier Progress and Poverty, and still more deeply appreciated the importance of its author’s activity.

You ask what I think of Henry George’s activity, and of his Single Tax system. My opinion is the following:

Humanity constantly advances: on the one hand clearing its consciousness and conscience, and on the other hand rearranging its modes of life to suit this changing consciousness. Thus, at each period of the life of humanity, the double process goes on: the clearing up of conscience, and the incorporation into life of what has been made clear to conscience.

At the end of the eighteenth century and the commencement of the nineteenth, a clearing up of conscience took place in Christendom with reference to the labouring classes – who lived under various forms of slavery – and this was followed by a corresponding readjustment of the forms of social life, to suit this clearer consciousness: namely, the abolition of slavery, and the organization of free wage-labour in its place. At the present time an enlightenment of men’s consciences is going on in relation to the way land is used; and soon, it seems to me, a practical application of this new consciousness must follow.

And in this process (the enlightenment of conscience as to the utilization of land, and the practical application of that new consciousness), which is one of the chief problems of our time, the leader and organizer of the movement was and is Henry George. In this lies his immense, his pre-eminent, importance. He has helped by his excellent books, both to clear men’s minds and consciences on this question, and to place it on a practical footing.

But in relation to the abolition of the shameful right to own landed estates, something is occurring similar to what happened (within our own recollection) with reference to the abolition of serfdom. The Government and the governing classes – knowing that their position and privileges are bound up with the land question – pretend that they are preoccupied with the welfare of the people, organizing savings banks for workmen, factory inspection, income taxes, even eight-hours working days – and carefully ignore the land question, or even, aided by compliant science, which will demonstrate anything they like, declare that the expropriation of the land is useless, harmful, and impossible.

Just the same thing occurs, as occurred in connection with slavery. At the end of the eighteenth and the beginning of the nineteenth centuries, men had long felt that slavery was a terrible anachronism, revolting to the human soul; but pseudo-religion and pseudo- science demonstrated that slavery was not wrong, that it was necessary, or at least that it was premature to abolish it. The same thing is now being repeated with reference to landed property. As before, pseudo- religion and pseudo-science demonstrate that there is nothing wrong in the private ownership of landed estates, and that there is no need to abolish the present system.

One would think it would be plain to every educated man of our time that an exclusive control of land by people who do not work on it, but who prevent hundreds and thousands of poor families from using it, is a thing as plainly bad and shameful as it was to own slaves; yet we see educated, refined aristocrats – English, Austrian, Prussian, and Russian – making use of this cruel and shameful right, and not only not feeling ashamed, but feeling proud of it.

Religion blesses such possessions, and the science of political economy demonstrates that the present state of things is the one that should exist for the greatest benefit of mankind.

The service rendered by Henry George is that he has not only mastered the sophistries with which religion and science try to justify private ownership of land, and simplified the question to the uttermost, so that it is impossible not to admit the wrongfulness of land-ownership – unless one simply stops one’s ears – but he was also the first to show how the question can be practically solved. He first gave a clear and direct reply to the excuses, used by the enemies of every reform, to the effect that the demands of progress are unpractical and inapplicable dreams.

Henry George’s plan destroys that excuse, by putting the question in such a form that a committee might be assembled tomorrow to discuss the project and to convert it into law. In Russia, for instance, the discussion of land purchase, or of nationalizing the land without compensation, could begin tomorrow; and the project might – after undergoing various vicissitudes – be carried into operation, as occurred thirty-three years ago* with the project for the emancipation of the serfs.

The need of altering the present system has been explained, and the possibility of the change has been shown (there may be alterations and amendments of the Single Tax system, but its fundamental idea is practicable); and, therefore, it will be impossible for people not to do what their reason demands. It is only necessary that this thought should become public opinion; and in order that it may become public opinion it must be spread abroad and explained – Which is just what you are doing, and is a work with which I sympathize with my whole soul, and in which I wish you success. [1897.]

The Emancipation of the Serfs in Russla was decreed in 1861, and was accomplished during the following few years.

Tolstoy, Leo, Essays and Letters, Oxford University Press, 1911,
Chapter XV1 Letters on Henry George, pp 213 – 238