A HALF-RIGHT, GARBLED VERSION OF ECONOMIC RENTS

Economic rents are really from the natural endowment–not high wages for specialist talents, as per neo-classical economists–but this article is heading in the right direction.  And, yes, rent-seeking is entirely responsible for the growing wealth divide in society.

 

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EXEMPT TORONTO’S BUILDINGS FROM TAXES

Frank_de_Jong

 

Frank de Jong’s BIG IDEA

 

 

 

 

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THE HIERARCHY

hierarchy

 

 

 

 

 

“And ye shall swell to an army vast,

And free men from the wrongs of the North and Past,

The land that belongs to you”

- Henry Lawson

 

 

 

 

 

 


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ROOTS REVOLUTION

Roots Revolution

- by Steve Wall (Scotland)

For me, there are times when spreading the green gospel can seem like wading up to your nose in a sea of apathy and wilful ignorance, buoyed up solely by a slowly deflating faith in human nature. Sometimes it seems as if nothing short of a major catastrophe will penetrate the thick-skulled silent majority’s complacency, upon which they will bestir their feeble minds and demand to know why they weren’t warned. Then again, learning of yet another ecological cock-up, I sometimes feel if only we could accidentally release one of our marvellous new lethal diseases that only affect humans, is virulent, incurable and unbelievably contagious, what a happy place this earth would be; but it passes.

Then I wonder why it should be so. As a child, I remember being taught how the daring explorer, newly stepping onto some distant shore, could lay claim to an entire country, merely by plunging a flagpole into the beach and saying, in effect, “I was here first.” It is quite possible to emerge from eleven years of compulsory education still believing in such fairy tales, which effectively mask the real process shaping the world we live in. History shows nearly all movements for change concentrated in active, vociferous minorities, usually aligned with economic factions, but not always so. (The frequent peasants’ revolts bore much of the character of riots rather than revolution).

To paraphrase, the apathetic are always with us. Yet this isn’t true when we travel further back into tribal society. Nineteenth century ethnological research is crammed with revealing accounts of tribal self-government, showing how we organised ourselves before we began to worship priests, politicians and princes. Greens are fond of buzzwords like decentralisation, responsibility for the earth, local democracy, community etc., yet very few seem to have any concrete ideas as to how to get there from here.

“Why don’t our politicians make the world a better place for us,” is the frequent pathetic bleat, heard all too often, both in and out of the movement. Is this not the self same leaders-and-led politics that greens claim to replace? This article is my attempt to cast off the sheep’s clothing.

Personally, I’ve learnt more about revolution from my garden than anywhere else. Watching and working the soil, the many parallels between the processes of birth, health, decay and inter-relationship taking place in the garden, and those in human society, have convinced me that the only true and lasting changes must come from the roots up. In human terms, not the politics of leaders, but the experience of each individual in the running and living of their own lives. If you have nothing to be responsible for, you have little interest in the organisation of your needs. That apathy allows others to gain power over you by their assuming responsibility for your needs, power and responsibility being the two inseparable faces of the same coin.

Today most people have abdicated all responsibility for even their most basic needs, such as finding their own work, food, building their own shelter, making their own clothes, maintaining their own health, educating their own children; then turn around and wonder why they are treated as a commodity, why they have no influence in modern society. Then too, there is the seemingly inescapable shadow-face of civilisation; alcoholism, child abuse, the abuse of women, vandalism, mugging, abuse of privilege, corporate greed, racial hatred; the desperate catalogue of a society unnaturally caged in, the human zoo plucking out its own fur in vicious fistfuls. The labyrinthine complexity of our society seems to defy understanding, leaving us at the mercy of a whole gamut of enthusiastic saviours, from the therapist to the jackboot, each trading on little more than their own prejudices. Yet as a healthy person arises from a healthy environment, so a healthy plant grows from a healthy soil; then a healthy society must arise from – what? Strangely simple though it may seem, the structure of any society arises from its patterns of use and access to land. We do not have a healthy pattern of land use.

This crucial position of land and its ownership in modern society is a peculiarly misunderstood one.

Today, the ownership of the earth, a concept once universally derided as ludicrous and immoral, is now not only honoured, but feverishly worshipped in every land. Billions grovel before tyrants who dispense morsels of the planet as rewards to their chosen servants, those deemed to serve both well and willingly. Any who are surplus to requirements, or unable to serve through age or disability are thrown aside, to perish in mind and body. The miserable few hundred square yards of earth that could support them, is denied them. The sacred and ‘just’ law of civilisation decrees that if we cannot pay for the earth, we must suffer the consequences, homelessness, hunger, sickness and death. A law obeyed in full by millions daily. The root cause of much of the world’ s misery, poverty, war, unemployment and famine, can be traced directly back to this same single abuse, i.e. the unlimited individual appropriation of the fixed resource of land, the sole source of all life. Any serious seeker of change, unless they first address this primary injustice, is a mere dilettante of revolution, and betrays all hope of achieving real freedom for anybody.

Harsh words, but sadly necessary. Even though these are brutally inescapable economic realities world-wide, they are so deeply entrenched in the fabric of every society, that we have become blinded to their true significance by that very familiarity. These are the simple facts: If you have no land to live from, you are dependent on money to purchase the products of the land; if you have no money to live from, you depend on employment; if you have no employment, then dependent on the State; if the State refuses you, you beg for the charity of the rich; no charity, you steal or die. Such is the chain which binds us to each other, and to the land. It is the entire spectrum of human economic existence, and none can escape it. A moment’s thought reveals it is the rich, who by rationing the land, humanity’s life-support system, actively create the helpless dependence in the rest of us on money, employment etc.

How has this come about?

Historically at sword point; now maintained by a simple legal fiction, masquerading as Mosaic Law.

No matter how far our technology removes us from it, and refines its products, everything from computers to satellites, cars, ICBMs and TVs are all products of the land. Without exception, everything we use and consume either grows in the ground, or lies beneath it. In S. Africa the white minority own 86% of the land; in America (USA), 3% of the population own an incredible 95% of the land; in E1 Salvador 2% own 60% of the land; in Britain as a whole, 2% own 74% of the land whilst 52% of Scotland is owned by a mere 350 families and institutions. Whilst the land, the only true source of independence, remains thus imprisoned, money is a mirage, employment is slavery, democracy is privilege, charity is injustice. We may no longer be hanged for stealing loaves of bread in dire necessity, but that too is only a legal fiction, a paper privilege often withdrawn in times of war and scarcity.

The “impartial” law of this nation, and of the world, states that although no mortal created the earth, and although no individual creates the rental value of the soil, nevertheless we shall all pay our rents to whoever is rich enough to demand them from us. Rent in this sense is not the mere cost of a home, but the wealth gathered to him who can say “This is my land, or my oil-field, my gold-reef, my mineral deposit, my sea, and you must pay me if you wish to use them.” He will then effortlessly become richer, enabling him to purchase the legal right to demand further rents, making him yet richer still, so he can collect even more rents, making him……..the land monopolist. Simple isn’t it? Money isn’t power. It’s the legal right to purchase absolute ownership of natural resources, which is power. Ultimate power. Those who achieve wealth by the production of goods and services alone, are but the servants of those who own the earth, and are truly paupers by comparison. (Thus the financial might of the multinational conglomerate is due to their outright [land] ownership of the raw materials, together with lucrative land speculation, and massive up-market office space rentals, as much as actual production.)

Once started, this is a process which tends inevitably towards ever greater monopolies concentrated in the hands of ever fewer individual bodies, and since none of us can survive without making use of natural resources, we find ourselves increasingly powerless and insignificant beneath an ever more monolithic and anonymous tyrant. Why is there a dictatorial centralised government ruling in every nation? Why is there a world-wide movement towards ever larger economic units, entailing even the merger of sovereign states, as within the Common Market, and probably as the eventual fruit of East-West rapprochement? Whom does this really benefit? Why does famine-aid achieve nothing long-term; why is every wage increase met with a corresponding rise in the cost of living? Because the raw materials of life are controlled and priced by the tightest and most vicious monopoly known to history.

Because the land monopolist has ‘gotten in on the ground floor’, the cost of his demands are felt throughout the world economy. Every shop, every house, every factory and workplace stands on land which has to be bought or rented from the monopolist. Every manufactured item is made from raw materials whose cost incorporates the rental of the land they were produced from and/or extraction rights. Every service industry uses manufactured items and a workplace. All food is grown in the monopolist’s soil. Every single time money changes hands, it includes a handout for the monopolist. A society which allows the land to be kidnapped from under its feet in this way, cannot honestly claim to represent freedom, economic or political. Its people are a crop, harvested to the bone by the privileged few in every nation.

Uproot a tomato plant and it dies.

Uproot it and dangle the roots in a solution of nutrients flowing in a channel and you have hydroponics. Manipulate the nutrients and you can produce all sorts of tomatoes, big, small, many, yellow, green, blue – you have control. Uproot a person from the land that supports them, install them in a semi-detached, supply them with liquid credit, then sit back to await the ruddy fruits of their labours, threaten to turn off the money supply if they don’t perform – you have control. Let them vote for a welfare state, unionisation, wealth tax, nuclear disarmament, poll tax, proportional representation, it makes no fundamental difference, you will always have control. They cannot vote to stop eating or sleeping or loving their children. They must take the work you offer – simply to live. If you have no need of them, ideally they’d curl up and hibernate in a cardboard box somewhere till the next economic upturn. No doubt genetic engineers are even now working towards this economic masterstroke, which will finally achieve prosperity for all (those still awake at least!). Meanwhile the unnecessary can exercise their democratic choice – to starve on their own two feet, or become a scrounger on the State’s charity.

Thatcherites fondly lamented the ‘dependency culture’ which saps initiative, self respect and their own higher tax-band incomes, sanctimoniously screwing the faces of the helpless beneath their well-shod heels, whilst the loyal ‘opposition’ relish their own crack at the whip far too dearly to acknowledge the ultimate dependency upon which this society is founded, and through which silently draws its lifeblood. Constitutionally embedded between our feet and the ground we stand, lies the true, insatiable parasite, gobbling wealth, initiative and self respect from all but our wealthiest citizens, who are so by and large, solely by virtue of being the very stomachs behind its myriad mouths. The space between the leech and the whip is a very familiar one – it’s known as work.

This work, that we are all indoctrinated from birth to alone value ourselves by, to pursue as an abstract value, devoid of any quality other than to have, or have not – what is its role in the great scheme of things as laid out for us by the powers that be?

Police, soldiers, prison warders, legal clerks, lawyers, bailiffs, tax-inspectors, all the expendable fingertips of state oppression, without whom the State would be powerless, all ‘just doing their job,’ though ever mindful of their own liquid credit status. Obviously these people would only reluctantly class themselves as wage slaves, thinking themselves superior to traditional stereotypes, say assembly line workers in Digital, or Texas Instruments, chained by the clock to their sanitised, soulless task. But whether they as individuals enjoy their work or not, the fact remains that the restrictive monopoly of land is THE fundamental source of power for the State and monopoly Capitalist alike. Which is why no remedy can be expected from either quarter. The violent ‘liberation’ of the land is no answer either, for what has been taken by violence, will as easily be taken away again.

There is however, a bloodless, perfectly constitutional means for cauterising this ancient parasite.

Since the power of monopoly resides solely in his legal ability to collect the entire rental value of land to himself, to destroy it utterly it is only necessary for government to collect the rental value created by the bare land alone, wholly to the public purse. (This government MUST be decentralised, if we are not simply to exchange one monopoly for another, equally if not more dictatorial, as under State Communism). The greens have aptly christened this system of public finance, Community Ground Rent (CGR), proposing it as a replacement for the present system of taxing productive activity. Taxation as anciently conceived and currently practised, is the States infinitely flexible weapon for selectively oppressing its citizens, according to how it views its own priorities and objectives. Hardly a recipe for democracy or justice. In the rental value of unimproved (i.e. bare) land though, CGR has a finite, un- evadable and unique natural base, a value created by the democratic and self-adjusting demand of the whole community.

The first hurdle, in grasping the mechanics of this original system for equalising opportunity in life, is to realise that inhabited land acquires a distinct, measurable value entirely separate from the use made, or developed upon, that land. The most blatant evidence for this is the wide differential in housing prices across Britain, due entirely to unimproved land values, since the cost of construction varies but little from one place to another. Because this is a community created value, over which the monopolist can have no direct control, he is forced to resort to indirect manipulation. Since it is a demand-led value, the oldest trick in the book is to hoard supply, forcing prices up, a technique practised to obscenity with housing land today.

But Britain is overpopulated we are told

(by whom?). Try this: At a density of only eight dwellings, housing thirty two persons per acre (urban density is typically around two to three hundred per acre), the entire U.K. population could be housed within a 62 mile diameter circle, complete with 100 foot gardens in each dwelling and all service roads. We could all fit comfortably into N. Ireland three times over. It’s not the space we’re short of, it’s the land monopoly we’re needing shot of, and how.

Assuming you own it, think how much your home cost. Depending on where you live up to 65% of that price is what you paid for the land underneath it. Think of a streetful of houses, add up the value of the land under them all, then think of a whole city full of houses, factories, shops etc., add them up. lnstead of being privately pocketed, creating poverty and inflation, imagine that money, as ground rents, funding hospitals, schools, welfare services, old age pensions. It could be done, CGR could replace all taxes. It can easily be locally administered, passing onto central executives only what the locality deemed necessary to fund those central functions. Revenue, and thus decision-making and accountability, would be turned on its head – decentralisation a reality, rather than an election ploy.

As CGR falls only on the unimproved land value, it must be paid for all land regardless of its use or development status. These more properly belong with local planning authorities, sensitive to local needs. By this means, universal liability, CGR would unlock the millions of acres fenced away as private estates, empty houses and factories, speculative holdings etc. Wastefully used these will become an unbearable financial burden to their proprietors, instead of being the license to live at your neighbours expense, they now are. By abolishing income tax, and expensive farming subsidies, which are anyway almost entirely pocketed by landowners, not working farmers (the average British family pays 10 pounds 50 a week extra to support EEC food subsides), and by ending the inflated monopoly value of land: economic, sustainable farming would be brought within the reach of more people, reducing food prices and increasing quality. Similarly, housing costs and business overheads would be dramatically reduced, making self-employment a more attractive option, releasing the energy and potential millions in money of poor people now trapped and pigeon-holed as ‘not needed on voyage’ by out great western ‘democracy.’

Millions of people no longer caught in a treadmill, endlessly trying to keep ahead of the debt man, simply to live. Land freely available at its true cost to any who can make good use of it, or who just wish to live more directly from it. Local government actually able to decide local priorities AND possessing the funds to implement those decisions without dictatorship from Westminster. Central government totally dependent on hand ups from local authorities, no central treasury forking out billions on state censorship and surveillance, secret projects, status weapons systems etc. No income tax, VAT, CAP, rates, only one single public charge, liability limited to the amount of the earth you fence off to call your own. A land where freedom could take a firm root.

Like all practical radical proposals, the vested interests, by filibuster and ridicule, violently oppose even the discussion of CGR and its potential, having long known and feared in it their nemesis. Their tame economists dismiss it as irrelevant without examination, since examination could not but demonstrate its validity. The overwhelming majority would substantially gain from its implementation, so public ignorance is the only safeguard. A widespread information campaign, high-lighting CGR as a real alternative to the medieval poll-tax proposals, could find much support, sufficient to establish a basis in local governments funding, as already exists in several countries which could later be expanded to fulfil its radical potential.

Remember, this is no new imposition, but a radical redistribution. Right now, with every single penny you spend, the community already pays its ground rent, straight into the well-lined pockets of the select band who, quite simply, are charging you the entrance fee to life on planet earth.

I hope this article has shown not only that our bodies, and all our possessions, are literally created of the soil, but that our laws and morals as to who should use the soil and how, also create, with equal finality, the skeletal framework around which our economic potential, and social tissue forms itself. Humanity may shake its technological fist in defiance, but the earth was, and will always, be here first. Land is still the root of all being; ignoring its realities can only lead to delusion and blind despair.

The tollbooths clustered beneath that ancient flag, barring the road up from the beach need dismantling, if humanity is ever going to advance beyond the discovery of slavery, and the consecration of greed, as the basis for civilisation.


 

 

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GEORGISM IN AUSTRALIA: THE FIRST THIRTY YEARS

geoffrey hawker

 

 

The Henry George Commemoration Address given in Sydney on 1 September 1996 by Professor Geoffrey Hawker

 

Tonight we could anticipate the time a year hence when the life of Henry George, on the centenary of his death, will be celebrated in so many parts of the world. My hope is that my remarks tonight will play some positive part, however small, in that soon forthcoming review of the man and the movement.

Tonight though my subject is less Henry George as a man and a life than Georgism as a movement of social and political change in Australia.

Let me start with the much celebrated visit of Henry George to Australia in 1890. When he spoke at the Sydney Town Hall, barely a hundred yards from where we are gathered tonight, he was greeted by large and enthusiastic crowds – as indeed he was in the other towns he visited in Victoria, South Australia and Queensland during his visit.

On the occasion of his first speech in the town hall the local newspaper which gave the closest coverage to his visit – the Daily Telegraph, at that time it was a progressive, even a radical newspaper – noted:

“One remarkable fact that could not fail to strike the observer at last night’s gathering . . . was the large proportion of comparatively young men present . . . The great majority of those present were men of the class with whom the future of Australia largely rests. It is one of the most gratifying features of the single tax movement that it should have brought to the front a greater proportionate degree of youthful energy, vigour and aggressive intellectuality than almost any other phase of our public life.” (7 March 1890)

It is this group of “young men” or some of them at least – that I would like to follow tonight. That group – who might have been twenty or thirty years old in 1890 and who reached their maturity of 50 or 60 years or so by the end of the first world war. And so the decades on either side of the century is our historical span tonight. What happened to them, to their political aspirations, to the Georgist message that they carried into twentieth century Australia?

This was a turbulent period in Australian politics and Georgism is a very important part of the story.

Two cautionary points first. One, to speak of “young men” is not quite right. No doubt there were women there, and we should not ignore their history in the Georgist movement. Clyde Cameron has reminded us of this in describing his mother:

. . . the writer who came nearest to her own inclinations was Henry George . . . Every mealtime she used to talk with us about the state of society explaining that it did not have to be the way it was . . . It was her influence that caused me to become the secretary of the Henry George League in Gawler“.  (Connell, Confessions of Clyde Cameron pp 5-6)

A second point is that Georgism is important in Australian political history but that is not much or well documented. No doubt people here tonight are acutely aware of this fact. Much still needs to come from beyond mainstream Georgism, from the critics and from the academy.

The fact remains that unavoidably – with the material and in the time available – I’m led tonight to focus on public life: public office and parliament; and the creation of political parties. The fact remains too that essentially Georgism has been written off by most historians as a movement that had a significance, at a certain limited point, for a certain limited period. For example, Nairn says:
George’s influence has been overrated by several historians and publicists. None of his doctrines was original and all were theoretically and practically flawed however beguilingly propagated. His views on lease-hold and taxation of unimproved land values were held independently by many Australians and their partial legislative adoption owed little to George. His central ideas of the “unearned increment” and single tax are now historical curiosities“. (Nairn ADB p 242)

I would like to put it another way: to see Georgism as a movement with a history and ask could Georgism have become a political party? What difference might this have made?

For our purposes tonight it’s convenient and I think helpful to divide the early story of Georgism in Australia into periods of about equal length – of about a decade long. These uniform periods of time will I hope give some sense of the relative weight of Georgism in political debate and action in Australia as time unfolds.

And I can’t hide my broad conclusion that Georgism declined in political force across the period as a whole: the Georgist movement was not as strong by 1920, that is to say, as it had been in 1890 at the time of Henry George’s visit.

For reasons I will explain later, I don’t think that fact pre-ordained the later history of Georgism – after 1920 – and I don’t think it determines what is possible in the politics of the 21st century: but more of that later perhaps.

1.  The Early Years 1880-1890

I define these as the years of the 1880s, before Henry George visited Australia of course. For Georgism was important before George arrived in Australia. ‘Progress and Poverty’ was published in 1879 and was serialised in part in an Australian newspaper that very year. The book itself was in circulation by the early 1880s and the Essays of 1883 were also available in a short time to readers. In today’s technological age we celebrate the immediacy of telephone, fax and the computerised Internet but we may underrate how quickly the important messages of a century ago were communicated.

It is certain that the message of Georgism was indeed spread quickly and widely throughout the Australian colonies. The time was ripe for the message.

I take just a few quotations from well-known commentators. According to one historian:

‘Progress and Poverty’ was discussed, damned, praised, and analysed on all levels from the professorial to the political”. (Picard p 46)

According to Billy Hughes, looking back over many years:

This was the hour of Australia’s great awakening . . . Henry George with his panacea for all economic and social ills – the single tax – captured the imagination of thousands of young and ardent spirits. Single Tax leagues sprang up as if by magic and converts, fired by enthusiasm, went about like the early Christians preaching the gospel. and Multitudes heard them and enlisted under their banner.
(Hughes, ‘Crusts and Crusades’ p 60)

But these are sardonic words. Hughes was 83 years old when he wrote those words after the Second World War and I think his memory distorted the contemporary reality – or more likely he had some scores to settle, perhaps with his own young self, in rewriting history.

The words of Hughes, written in retrospect, were not representative of contemporary reaction to Georgism. Whilst it would be absurd to say that everyone was a Georgist, the evidence is that a broad majority of the reforming elements of the polity came at least for a time under the banner of Georgism.

Included were radicals, labourites, socialists, reforming liberals, populists and others, including some voices that later were very well known, though their Georgism by that time was obscure. One was Alfred Deakin, thrice prime minister, who as early as 1882 declared himself “a declared Georgist”; another was (Sir) Samuel Griffith, premier and chief justice of of Queensland and founding high court justice. In the Labor party, apart from Billy Hughes, were Andrew Fisher, the second Labor prime minister; George Pearce, the long-serving defence minister; and William Holman, a premier of NSW. The voice of Georgism was also heard powerfully at the inter-colonial trades union congress of 1888 when the famous motion, passed without opposition, was that:

It is the opinion of this Congress, that a simple yet sovereign remedy which will raise wages, increase and give remunerative employment, abolish poverty, extirpate pauperism, lessen crime, elevate moral taste and intelligence, purify government, and carry civilisation to a yet nobler height, is to abolish all taxation save that on land values.”

By the middle of the 1880s the political system that had dominated all Australian colonies since self government in the mid 1850s was breaking down, though what would replace it was not clear. That system had revolved everywhere around domination by a political elite – a mixture of landowners in the upper houses and middleclass professionals and business men in the lower. Excluded from politics were women, Aborigines, and virtually all the labouring or working classes and what has been called broadly “the democracy”. Georgism was part of the movement that gave these new classes their identity and representation. What exactly was the form and shape of that broad movement requires further detailed historical work, but it is clear that the influence of Georgism was seminal.

From the mid 1880s to around the turn of the century politics everywhere was turbulently reshaped, initially through the construction of politics as a battle between freetraders and protectionists. Georgism was crucially important in this transition, in influencing both the ways in which the freetrade and protectionist parties replaced the earlier factions, and then in turn how those parties were replaced by Labor and anti-Labor (as for convenience I must summarise the liberal and conservative parties for the moment).

FarrelI and Cotton

Let us examine briefly the lives of two well known Georgists – not quite of the rank of those just mentioned but nevertheless important in revealing the political currents in which Georgism flowed. These are John Farrell (a journalist and poet) and Frank Cotton (a member of parliament). Both were prominent and active Georgists, especially in the Sydney of the 1890s. In some ways these two men represented the common core of Georgism, but also to some extent its differences, at least where political tactics were concerned.

They were both born in the 1850s and read Henry George in their early thirties, though they had rather different backgrounds. Farrell’s was pioneering and tough, Cotton’s a little more settled and moneyed. John Farrell born to Irish immigrants looking for work off the coast of Argentina at the time of his birth, and he ended up in the Victorian goldfields with his family; work was chancy and at the age of 15 he turned to droving. So did Frank Cotton, born in Adelaide to a richer family about six years later; he was droving bv the mid 1880s too, at which time it surely was that both men became immersed in Georgism. As Farrell later said of those times:

Out in the great bush where men have time to think, Progress and Poverty was read with understanding and passed from hand to hand until the sublime truth of it was impressed on many.

Their lives took shape accordingly though somewhat divergently.

Farrell found a good job at a brewery in Queanbeyan for a time and became something we might not have expected: a writer, a poet, a representative of that new literary movement that was taking shape in Australia as a vital expression of the new sense of Australian nationalism permeating the still separate colonies. Such nationalism found its expression above all in the Sydney Bulletin, for which Farrell wrote. Indeed he is credited with having written the first short story about Australian local life (“One Christmas Day”) in 1884. By the late 1880s, still barely 40, he felt confident enough to move to Sydney as a wrtiter and journalist – and political activist. He accompanied Henry George on his tour throughout the Australian colonies and wrote extensively about it. His poems, stories and journalism continued throughout the rest of the decade until his death in 1904, aged 57.

Frank Cotton’s droving in the cattle country and later activities among the shearers of Wagga Wagga made him a powerful unionist by the late 1890s and he came to Sydney – like Farrell – around 1890. Political action was sharpest in Sydney and it was the energies of the two men in Georgist politics that drew them to the city. The two must have known each other well, though from somewhat different positions: Farrell was the writer and propagandist and Cotton the political activist. Cotton’s position as a union organiser gave him prominence in the early Labor party and he was elected to Parliament as one of its original members in 1891. Though he left the party in the first big split, he retained his parliamentary seat as a free-trader until 1901. Cotton was to live until 1942 and remained an active Georgist to the end.

At the time of the political flowering of Farrell and Cotton, around 1885-95, it was not clear exactly what the Georgist movement would become. Clearly it was an influence upon the labor and free trade parties but it could still be an open question as to whether Georgism might itself constitute a definitive and strategic political grouping within the polity – what we would now call a political party, though we must resist the urge to apply terms out of order. But could Georgism have emerged as a party in its own right? There is some evidence that this was in the sight of the early activists. Thus in February 1887 the Land Nationalisation League became the Single Tax League and by April 1889 its 15 branches were an independent and active force in NSW politics”. Then in 1889 or 1890 Farrell argued to old Sir Henry Parkes – in an important letter for my argument, though one which has not been precisely dated – that “It would be politic and advantageous for the Free Trade party to realise that we are both working towards the same end and we should work together . . . We – I speak of course for the Single Tax Party – do not expect Free-traders to come out and proclaim themselves in favour of our reform . . . but a Local Government Bill and a tax, . . . on land values . . . we may . . . expect.”

We might call this an approach consistent with a possibly emerging party, perhaps with a pressure or interest group. Even if Georgism had a limited claim to be a party, so too at that time did the other political forces that were coalescing around new poles.

In summary of the first decade, Georgism was everywhere evident as a political and social creed but it was not, or was not yet, a political party; and already perhaps the developments that were to rule out that possibility were gaining strength. Still, some real choices were almost certainly there, and they deserve further exploration.

2.  THE PARTIES EMERGE 1890-1900

For our purposes, the principal fact of the decade leading up to federation was that the protectionist and free-trade parties did begin visibly to give way to a new nexus: of Labor versus anti-Labor. Georgism was an active force on both sides of the emerging politics. Here the visit of Henry George was important, though in ways that can be debated. One result of his tour was to identify Georgism in the popular mind with the free-trade doctrine, especially as it was manifested in NSW at the time, for George himself spent much time in attacking the NSW protectionists. Thus the link between free-trade and Georgism was greatly strengthened, as was of course already evident at the philosophical and policy level. Whether the identification of Georgism with a particular, emerging party in one colony was the correct tactical move at the time could perhaps be examined. At all events, Henry George did not see himself as a leader of a political party, and nor did others. Rather was he seen as a man of vision, as “the teacher” as he was called, but not as leading an alternative to both free-trade and protectionism. He was interpreted as being for free-traders against protectionists and thus was taken within the colonial terms of the debate; he was made local in a sense.

Whether or not that was a limiting strategy, politically speaking, we need to understand how quickly and deeply embedded Georgism became within the political parties of both left and right, to use a modern term. The link with the free-trade – later liberal party – was solidified through James Carruthers, the minister for education in the Parkes ministry of 1891, and later himself premier. As he wrote to Parkes on 19 April 1891: “As to Finance I hold . . . that we should put a tax upon the unimproved value of land and that tax should be sufficient to make up for the following items of revenue to be abolished viz, Stamp duties on trade documents such as promissory notes, receipts, policies of insurance, and transfer of land and other fees which are either impediments to trade or to enterprise.”

Georgism was thus active in the old free-trade party and Carruthers was later an important figure. In 1895 George Reid, Parkes’ successor, made skillful use of Georgist ideas and rhetoric in marshalling support for a reforming land act which though it could not be called strictly a Georgist measure was yet some testimony to the force that the ideas of Henry George then commanded.

And many also coming into the emerging labor party continued to be guided by George. Here Frank Cotton had a great influence, when he was the decisive force behind the famous article of the first platform which called for the “recognition in our legislative enactments of the natural and inalienable right of the whole community to the land . . . by the taxation of the value, which accrued to land by the presence and needs of the community, irrespective of improvements effected by human exertion.”

Bede Nairn, the historian most hostile to Georgist thinking, has written that the platform “could be interpreted as simply implying a tax on the unimproved value of land and not necessarily a single tax“; but this seems to miss the point that the measure was fought for and won as a specifically Georgist policy and was adopted as such. Debate on this item occupied a whole day! It is true that the plank was a crucial factor in dividing the Labor party soon after but the story of the “first Labor split” of December 1891 in NSW must be for another occasion.

By the middle of the 1890s, then, Georgist principles were well represented in two of the three major parties, and only the protectionists still continued to be both hostile to and uninfluenced by the Georgist approach. But by the turn of the century Australia was entering federation and Georgists had new problems of political action.

3.  THE FIRST DECADE OF FEDERATION 1901-10

Not long after federation was achieved, it was apparent that political alignments were changed for the long term as, on the one side, a labor party had emerged; and on the other, the liberal and conservative parties were moving gradually or quickly (depending on the state) towards a fusion which eventually produced the liberal and later country or national parties much as we know them today. And the new federal electorates were large and hard to win by any but a large, organised group. Throughout the following century, up to our own time, Georgists were thus more likely to win local than state electorates or, most difficult of all, federal seats. There were Georgists at all levels of government but a clear Georgist identity, distinct from a party allegiance, became very difficult to achieve at the “higher” levels of the federal system. In brief, the parties which emerged in the 1890s were able to capture a hegemony in a federal system which they have maintained since.

Still the substantial achievements of Georgist politicians in this period should not be under- estimated. From 1901 the federal platform of the labor party had a plank calling for flat tax on unimproved value land, watered down in 1905 with a so called progressive tax and then in 1908 by a 5000 pound exemption; the fact that the 1910 federal election was fought on the issue of land tax – and though a debased land tax with sliding exemptions – showed that the political fight was real.

When Labor won the election and implemented the tax it did not win unqualified Georgist approval but it did affect the pattern of land holding and shift the incidence of taxation. In 1912 and 1915 and later years attempts were made to insert the original plank of a flat rate on unimproved land values and Clyde Cameron has detailed how the fight continued through until the 1950s and 1960s, with Georgist opponents resorting to unscrupulous tactics when necessary.

At the state levels of the party, Georgist principles were strong, especially in South Australia, Western Australia and Victoria; in the last, unimproved revenue remained a central plank until 1909.

Within the conservative parties, New South Wales under the premiership of Carruthers in 1904-07 was especially important.

As Carruthers said, “He could tell them [the Georgists] that he still continued to support the body advocating that principle [the single tax] and he trusted to be able to continue to give his mite in the same direction“.

Indeed Carruthers is remembered for his local government reforms of 1906 which set the method of revenue raising for local government throughout Australia and which exists in large part today. But Carruther’s success was limited and he remained a pragmatic politician who would take the fight only so far:

He lived in the realm of politics and there the hour had not yet come when they could expect the politician to bring into play the full force and effect of the single tax doctrine. The work of education had to go on, and all that a public man could do was to give effect to public opinion“.

4.  1910-20

In brief conclusion, it became increasingly the pattern of Georgist politics that individuals could be elected to parliamentary office but usually at the price of subsuming their Georgist principles within a party organised on other lines. Two notable examples were Sir Elliot Johnston, twice speaker of the House of Representatives, and Senator Jack Grant, a deputy leader of the Labor party, whose lives I have dealt with elsewhere. Like other Georgists they continued to have an influence on the policies of their respective parties. By the end of our period, it seems fair to say that they and others had kept open a Georgist space within which effective criticism of public policy did lead to certain achievements: an argued alternative to the existing economic and financial system, focussing especially on inequities in taxation; the introduction of the unimproved valuation system within local government; the planning and development of Canberra; and the maintenance generally of land taxation and site revenue as the basis for an alternative paradigm of public policy. Much of this history remains to be written in detail.

It is said that in Britain some 80 per cent of democratic leaders around the turn of the century “passed through the school of Henry George”. By the early twentieth century it was becoming clear in Australia that many had indeed passed through and not stayed; but the possibilities of the early years still command attention, not least because those possibilities are still unfolding. We have seen that Georgism became confined within a party system which is, in world terms, relatively ancient. That might mean that today the party system is inflexible and out of date, or even that it is beginning to break down and enter another cycle of construction. The success over the last 20 years of so-called “minor” parties in upper houses and in the Senate might suggest that. Tonight we have concentrated on the past and have seen that the historical achievements of Georgism are highly significant. The historical record is still of course unfolding and it may be that some of the struggles of the past have lessons for the future.


Reproduced from ” Good Government” (February 1997)

 

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ANATOMY OF A TRAGEDY

Shakespearian tragedy

THE FATAL FLAW

The privatisation of publicly-generated land rents

THE REPERCUSSIONS

The 0.1% parasitically leeching off the land rents owed equally to the 99.9%

A widening wealth divide between the 0.1% and the 99.9%

The growth of debt, poverty and crime (Did not Marcus Aurelius say “Poverty is the mother of crime”?)

Despair, social fracture, and purposeless revolts, such as across the Middle East, the Ukraine, etc.

AIDED AND ABETTED BY THE FOLLOWING CHARACTERS

Cocked-up tax regimes designed by ‘the born-to-rule’ 0.1%

The 99.9%, believing we have an obligation to pay our taxes but, in not seeing the vast benefits of land rents compared to the ravages wrought by taxation, thereby throw their lot unwittingly in with the carefully-constructed hegemony of the 0.1%

The divorce of the theory of land valuation from the study of economics  (What other disciplines are based upon this sort of deceit?)

Window dressing provided by designed-to-fail regulatory bodies (The Australian example of ASIC having US equivalents, such as the SEC)

THE DENOUEMENT

Financial collapse (the ‘Great Recession’ in the USA, the GFC in Australia, etc.)

Confused mainstream and social media economic analyses

Shameless backing and filling by the 0.1%, in order to retain their position of privilege (‘private legislation’) which brings about:

THE CLIMAX

War

Collapse of western civilisation

LESSON

Addressing ‘the fatal flaw’ could have avoided the tragedy: the 0.1% stealing from the 99.9% and generating boom and bust

 

 

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AUSTRALIA ADDRESSES ITS PROBLEMS: KNIGHTHOODS RETURN!

Sir Pository of Wisdom

 

 

 

 

 

 

 

 

 

From THE AGE today

 

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KATE SHAW ON AUSTRALIAN HOUSING POLICY

kate_shaw

 

In August last year Kate Shaw proved to be a knowledgeable moderator in a public meeting in Melbourne on real estate.  Here, in “The Conversation” she argues the Australian taxation system is giving signals antithetical to affordable housing.

 

 

 

 

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YES – CHINA, TOO!

CHINA

If the Georgist case is valid–i.e. that we need to publicly capture the rent of land in its broader sense (i.e. the economic rent of all natural resources), if land rent is not to be increasingly privatised into bubbles that burst into recession and depression–it will not only apply to western-style capitalist economies.

It will also apply to communist China.

Jesse Rota Fortunae’s blog has been aware of this for some time, but when you think about it, natural laws do apply across the board: they won’t differ on the basis of the political system under which an economy operates. As I sometimes say, if you jump off the top of a tall building, you’re going to go splat at the bottom – although you might win a bet posthumously with an economist on the point.

Whilst I was at the seminar on land value taxation in Chengdu last November, I had the good fortune to be able to visit Dr Han Bing at the University of Sichuan who had been unable to attend the seminar.

Professor Han is both an economist and valuer, an unusual combination of disciplines in western economies. He informed me the country was well into producing land valuations on all properties in China, something achieved in Australia, but still not in America. Although Australia, New Zealand and South Africa have all been assessing site values on properties for well over a hundred years, professors of economics  are still to be found in the USA who argue that it can’t be done. [!]

My final inquiry with Professor Han was to ask whether China currently had a bubble in its land prices. “Of course!”, he replied simply.

This was a remarkable response, because I doubt you’d find an Australian economist, much less a professor of economics, who’d be prepared to say “Of course Australia has a bubble in its land prices”, because, unlike Professor Han, they’re ignorant of what’s really happening in the property market. The professions of economists and valuers are pointedly kept separate in Australia, as in the west in general.

Unlike western economists, Dr Han Bing was unable to dismiss the facts staring him in the face.

But at least China is trying to put a lid on its real estate bubble, although the measures it is applying, as in the west, are inadequate to the task. China’s municipal deed tax, urban real estate tax, the property tax, farmland occupation tax, urban land use tax, and land value increment tax have proven to be a pimple on a giant pumpkin.

These could all be rolled into a land value tax, struck at a significant rate in the dollar that would capture sufficient land rent to drive speculators out of the market but leave the genuine developer.

Professor Fu Shihe has suggested an alternative approach that would ultimately achieve the same result: capture the full capital gain on property transactions to the public purse (which we known in the west to be ‘the [JS] Mill tax’).

Short of these measures, it’s unfortunately certain that China is “going to go splat at the bottom”. See the BBC’s “China Debt Fears”.

THE PATHOLOGICAL SEPARATION OF THE ECONOMY FROM THE THEORY OF VALUATION EXPLAINS WHY “EXCESSIVE CREDIT” DOESN’T QUITE CUT IT

In the current world financial crisis, the final sentence in this quote from Dr JFN Murray’s “Principles and Practice of Valuation” is proving to be something of an understatement:

“The theory of [real estate] valuation is a pragmatical extension of economic theories relating to value and price, but it is remarkable to find that there is an almost complete dissociation between economic theory and the theory of valuation, although the latter from the materialistic viewpoint stands in the forefront of the social sciences. ….

The professional valuer with his insistence on demonstrative proof and acceptance of harsh realities has displayed intolerance of the tenuous abstractions of pure economics. His is a branch of applied economics, which takes into account all the complexities of land utilization and of commerce, and is closely aligned with scientific method, in that it depends upon empirical verification of hypothesis. ….

With some notable exceptions the principles of valuation are in general correspondence with economic theory, but a reintegration of the two sciences, which have been separated since the time of Adam Smith, would greatly advance learning.”  [My emphases and parenthesis.]

 

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“WORLD HEADING FOR A BUST UNLIKE ANY OTHER”

And, although the stock market may act as a trigger as in 1929, Jeremy Grantham, this credit morass was founded upon a bubble in land prices.

 

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