PROTECTION OR FREE TRADE?

Have you noticed how in the face of declining employment in the steel industry and demands from unions as we head into the depression, members of parliament on both sides are weakening on the principle of Free Trade?  They need to acquaint themselves with this brilliant exposition by EJ Craigie during World War II.  It may be lengthy, but it’s one of the best economic expositions I’ve read:-

PROTECTION OR FREE TRADE

It is often said that “Protection is the ‘settled policy’ of Australia.” This is an absurd contention. It is nearer the truth to assert that “Protection has almost ‘settled’ Australia.” As long as a large section of the community believes in freedom of trade it cannot honestly be said that the question is settled. “No question is ever settled until it is settled right.

Believing as we do that Protection is nothing but legalised robbery, this pamphlet is issued for the purpose of exposing some of the fallacies advanced by those who advocate the protectionist doctrine. The pamphlet is not a text book on the subject. It is circulated for the purpose of stimulating thought, and with the hope that readers will continue their investigations in regard to this important problem.

WHAT IS TRADE?

In considering the respective merits of Protection and Free Trade it is first necessary to determine: “What is Trade?” Trade is simply the exchange of goods or services for goods or services. No man in this country now tries to grow his own wheat, make his own clothes, build his own house, and make furniture for it. It is only people cut off from all intercourse with their fellows who do this.

Under civilized conditions we have a specialisation of industry and a division of labour. A carpenter works at his trade, and he receives his wages. But the transaction does not end there. Part of his wages goes to the baker for bread or flour. But the baker does not grow the wheat, and he did not even grind it into flour. He bought the flour from a miller, who bought the wheat from a farmer. So our carpenter, while he has been engaged in building houses in the city, has, by his purchase of bread with some of his wages, been working for a farmer hundreds of miles away; and the farmer in the country has been similarly working for the carpenter in the city.

Another portion of the wages goes for boots for himself and his children. But, again, his boot maker had to buy the leather and other materials. The leather may have come from the hide of a beast reared inAustralia, or it may have come from overseas. Here our carpenter has been exchanging his labour not only with the boot maker in his own country, but, if the leather came from a foreign country, with people in other lands and with the sailors who worked the ship which brought the leather to Australia.

Free trade means allowing all exchanges to take place as easily as possible.

Why does the Australian carpenter in some cases exchange with workers in other countries? It is because they give him better value in exchange than he can get in Australia. And the less the carpenter gives for a certain line of goods the more he has to spend on other goods, and the more goods he gets in exchange for his wages the better fed, clothed, and the more comfortable he and his family are.

Certain countries have natural advantages which enable its workers to produce some articles more cheaply than they can be produced in other countries. The true economy is to allow the workers in every country to use their labour and capital in the production of those commodities which give a maximum return for a minimum of exertion, and then by a process of trade, to exchange their surplus goods one with the other. This enables the people in all countries to enjoy the natural advantages associated with any country in any part of the world.

Protective duties hinder producers exchanging with whom they please, and compel them to put up with less for their money than they would get under Free Trade. Free Trade, we perceive, benefits the home as well as foreign trade, but Protection would hinder both.

This brings us to what may be termed the key to international trade: For every pound’s worth of goods imported into a country, goods to an equal value must be exported or services rendered, unless these goods have been sent in payment of debt; and vice versa, for every pound’s worth exported, unless in payment of a debt or in any way of loan, there must be a corresponding import.

Bearing these facts in mind we see the absurdity of the statements put forth by Protectionists. Let us examine some of these statements.

DUMPING

A favourite argument is that Free Trade would mean the dumping of foreign goods upon Australian shores. To hear the Protectionists talk one would imagine that foreigners watched their opportunity, and, when the people of Australia were not on guard, brought their ships into our ports and dumped all kinds of commodities upon our wharves and jetties, and then got away before we were aware of their presence. A little reflection will show that the foreigner is not quite so foolish as that. For every pound’s worth of goods he dumps in Australia, he wants an equivalent pound’s worth dumped upon his own wharves in return. It would be a good thing for Australians if foreigners would dump goods here for nothing.

Two parties are necessary before any trade can result. No matter how willing a foreigner may be to sell us goods, unless we desire to purchase those goods no trade can take place. In every transaction there must be a willing buyer as well as a willing seller. There cannot be one way traffic in trade, and no trade can take place with foreigners unless we are convinced that the goods we are to receive from them are of greater value to us than the commodities we give in exchange.

Therefore it is not possible for foreigners to dump goods on our shores to the detriment of Australian workers.

EXPORTS AND IMPORTS

Protectionists point to the value of goods imported into Australia, and ask people to believe that this importation is the cause of unemployment in our country. They ask that duties be levied on these goods so that the importation may be stopped and the goods manufactured locally.

They fail to see that if this import trade is stopped, the effect would be to restrict exports from our country. The consequence would be that the vast army of workers now engaged in producing for export, and those engaged in the shipping and transport services, would be placed on the unemployed list, and conditions would be worse for all sections of the community.

It has previously been pointed out that imports are paid for by exports, and vice versa. Therefore, to destroy the one is to destroy the other and thus to court disaster. It is a reflection on the intelligence of the people to assume they cannot be trusted to trade in a free market. Why should tariff barriers be erected to prevent the people from doing what they know to be in their best interest?

IMPORTS AND FACTORY EMPLOYMENT

It is also asserted that the importation of goods into Australia has the effect of causing less labour to be employed in our factories. This contention has frequently been shown to be wrong, and we now publish a comparative table giving the value of imports during a period of twenty years since the Great War, and the number of employees in Australian factories during the same period. These figures, taken from the Overseas Trade and Production Bulletins, show how erroneous is the statement made by Protectionists.

Year                      Imports                     Employees in Factories

1920‑21                £163,000,000          386,639

1921‑22                £103,000,000          395,425

1922‑23                £131,700,000          412,410

1923‑24                £140,600,000          429,990

1924‑25                £157,100,000          439,949

1925‑26                £151,600,000          436,297

1926‑27                £164,700,000          452,184

1927‑28                £147,900.000          449,728

1928‑29                 £143,600,000          450,482

1929‑30                 £129,500,000          419,194

1930‑31                 £60,959,633             338,843

1931‑32                 £44,712,868             336,658

1932‑33                 £58,013,860            370,727

1933‑34                 £60,712,926            405,909

1934‑35                 £74,119,496            449,598

1935‑36                 £85,252,458            492,771

1936‑37                 £92,640,462            523,948

1937‑38                 £113,975,060          559,160

1938‑39                 £102,156,352          565,106

1939‑40                 £115,675,505          588,000

 

It is interesting to note the effect of the high Customs duties introduced by the Scullin Labor Government. From April, 1930, to July, 1931, special duties equal to about 50 per cent were imposed. On April 4, 1930, a proclamation was issued under which 78 classes of goods were prohibited from entering Australia. The special customs duties were gradually reduced from May, 1932, to February, 1935; and the proclamation against certain goods was removed by 1933.

The official figures show that, with the increase in Customs duties and the prohibition against imports, there was a falling off in the imports. Although Protectionists claimed this would make for more employment in our factories, the figures reveal that a lesser number were employed.

What is the explanation for the increased number of factory workers during the years when imports increased? It is due to the fact that the prosperity of this country rests – not upon its secondary industries – but upon its great primary production. When there is a good wheat crop and a good wool clip, a greater quantity of primary products is exported and sold overseas.

Naturally, with greater exports there must also be greater imports to pay for the products sent away. This greater production in the primary industries gives a greater purchasing power to wheat and wool producers, and thus they are able to make an increased demand, not only for imported goods, but also for goods manufactured in Australia: hence, more employment for factory workers in our own country. The removal of barriers to trade would give a much greater purchasing power to all sections of the community, and our secondary industries would develop to a greater extent under natural conditions than they are able to do under Protection.

KEEPING THE MONEY IN THE COUNTRY

A favourite argument used by Protectionists is that when duties are imposed against foreign goods, and imports thus restricted, we “keep the money in our own country.” Such a contention reveals only a superficial knowledge of the principles of trade. It assumes that all goods landed on our shores are paid for in money. This is a fallacy.

Take the trade figures for 1938‑39, the latest available, as an example. In that year the value of imports into Australia was £101,121,445, and the value of exports £140,496,312. Included in these figures was the amount of specie (money) of which our imports amounted to £53,208, while the money exported amounted to £65,571.

Manifestly, if we imported goods to the value of £101,121,445, the export of £65,571 in money was not sufficient to pay for the commodities received.

How, then, was the payment made?

As already explained, payment was made by exporting goods produced by Australian workers. That any money was sent away was due to the fact that the things we got in exchange for it were of greater value to us than the currency exported. Further, it must be remembered that it is not money that the workers require. What they actually need are the commodities which will sustain life. Money is simply the medium of exchange and the measure of value.

If people would only consider this question they would realise the absurdity of the claim made by Protectionists. They would understand that Australian money is not legal tender in other countries, therefore traders in those countries do not want it. Just as we do not desire American dollars, French francs, German marks, or the Japanese yen, when we export goods to those countries, so in similar manner traders in those countries do not desire Australian currency when trading with us.

This simple truth should be sufficient to explode the bogey of “keeping the money in our own country.”

A NATION DOES NOT TRADE

We often hear it said that Protection is beneficial to the nation. As a matter of fact a nation – as a nation – does not trade. It is an individual, or a group of individuals, within the nation that trades. There is a certain amount of trade to be done and individuals go out after it.

Metaphorically speaking, the merchant in this country would cut the throat of his brother merchant residing here in his effort to get that trade, just as freely as he would that of a foreign merchant. When a protective tariff barrier is erected against any commodity entering a country it is not the nation that is protected, the protection is afforded to an individual or group of individuals within the nation, who get a privilege at the expense of the rest of the community.

TAXING FINISHED PRODUCTS

It is frequently stated that Protection is only needed for “finished products” and that “raw materials” should be allowed to enter the country duty free. This opens up a very interesting question as to what may correctly be termed a “finished product.” Take sugar as an example. Sugar is the finished product of the sugar industry. It is the raw material used by fruit preservers, biscuit makers, aerated water manufacturers, and confectioners. When a duty of £9/6/8 per ton is levied upon sugar, coupled with an embargo against the entry of sugar into Australia, other industries are called upon to suffer a great disadvantage.

The duty levied upon sugar not only increases the price of that article, it also increases the price of all articles of which sugar is the raw material. Take leather as another example. Leather is the finished product of the tanning industry, but it is the raw material used by the boot maker and the saddler. A tax on leather means dearer boots and harness, in fact, every thing made from leather is made dearer. Steel may be used as a further example. Steel is the finished product of the steel industry, but it is the basis of all machine production. Duties on steel and steel products therefore increase the price of the implements and tools of production and do great injury to all forms of industry.

When it is realised that the finished product of one industry is the raw material of another, it will be seen that it is not possible to give special privilege to any one industry without calling upon many other industries to suffer a great disadvantage.

INFANT INDUSTRIES

Some well meaning people, who do not approve of Protection for a lengthy period hold the view that tariff duties are necessary a limited time so that “infant industries” may have an opportunity of getting firmly established.

They claim that the duty has the effect of shielding the “infant” from competition in its early stages, and thus permits it to become established on a sound basis, after which the duties can be removed.

Such a contention has been put forth by Protectionists in all parts of the world.

Unfortunately the facts of history show that instead of these “infants” doing without tariff assistance as they grow older, they demand and get a bigger protection than they originally started with. They use some of their great profits to make contributions to party funds, so that higher duties shall be imposed.

Anyone conversant with the tariff history of America will know this is true regarding the woollen, cotton, and pig iron industries of the United States; and it is also true in regard to many industries in Australia. If an industry cannot become established without Customs duties, then it is merely a parasitic growth upon industries which are natural to the country, and it should not receive special consideration by the government.

PAUPER LABOUR

Perhaps the greatest bogey used by the advocates of Protection is that of “pauper labor competition.” The workers are told that if we had Free Trade the country would be swamped with goods made in other countries under sweated labor conditions, and they would be out of employment.

If the Protectionists are pressed to give the name of the country where the sweated Labour exists, they invariably refer to a continental country that is living under the alleged blessing of Protection; thus destroying their own argument that Protection makes for good labor conditions. This “pauper labour”question is merely a bogey to frighten superficial thinkers.

If there was any truth in the statement that cheap labor made for cheap production, then India, China, and Japan should be leading the world in trade. As a matter of fact, it is high wage countries which lead. The reason is that when high paid labour comes into competition with low paid labour, the high paid wins every time in lower cost of production. Why? Because the high paid labourer has his physical powers well developed and he has a higher standard of education which enables him to take advantage of and use all the intricate and costly machinery and labor saving devices which make for cheap production.

On the other hand, the lowly paid worker usually has a lower standard of education, his physical powers are not fully developed owing to an insufficiency of food, therefore he cannot be trusted to handle and take charge of costly machinery, consequently his production cost is high.

Protectionists tell the Australian workers that it “does not pay” to produce a certain article in Australia, because we “cannot compete with pauper labor,” and then they demand a duty on that article so that men may start work producing an article which they have declared “it does not pay to produce.”

Protection does not increase the value of any article. It merely increases the price. Therefore the men at work in protected industries are actually engaged in pauper labor industries. While men are at work producing wealth they at the same time are consuming wealth. If their consumption is greater than their production they are a distinct loss to the community, and the sooner such an industry is abolished the better.

NEW SOUTH WALES AND VICTORIA – A COMPARISON

Apart from the theoretical arguments in favour of Free Trade, we have so far as New South Wales and Victoria are concerned practical experience of the operation of the tariff to support the theory that Free Trade is the best

economic policy for a nation. In pre‑Federation days we had these sister States, the former working under a near approach to a Free Trade policy, the latter living under the alleged blessings of Protection. It is interesting to note the economic effect of the respective policies in each State.

In presenting the comparisons certain facts must be stated. Victoria had a start in population, wealth and industrial development, owing to the richness of her alluvial goldfields in the middle of the last century. The discovery of gold carried Victoria far ahead of the older and larger State of New South Wales. Other factors in favour of the protectionist State were the greater extent of her seaboard compared with area, which very materially reduced the cost of transportation; the more uniform fertility of her soil, and her more general and copious rainfall, which made her less subject to drought than New South Wales.

Although the total area of New South Wales is far greater than Victoria, her really effective area at that time was not. It consisted of the Eastern Division, containing 94,000 square miles, as against 87,000 square miles in Victoria.

Protection was introduced in Victoria in 1865 by a small series of duties of 10 per cent, and it was promised they would be removed when, after a few years, they had made the protected industries capable of standing alone.

Needless to say this promised removal did not take place, and in 1871 there was an extension of the protective policy, both as regards the number of dutiable articles and the rates of duties.

This tariff of 1871 was regarded by Protectionists as the first efficient application of their principles, and the protective period of Victoria is generally dated from that year. From that time until 1895 further extensions of the area covered by duties, as well as increases in their rates took place, until in that year the protective duties averaged 40 per cent.

The professed aim and object of the sponsors of the protective duties in Victoria was to find employment for those whom the gradual failing of the alluvial goldfields made workless. Although it was claimed the tariff policy produced the desired effect, other forces operated to open the avenues of employment.

Simultaneously with “Protection,” laws were passed enabling settlers to obtain land for agricultural purposes (free selection), and from 1866 to 1873, approximately 50,000 homes were created on the land. During

the same period the additional employment offered by manufacturing industries was comparatively insignificant, the increase being, males, 9,216, and females, 2,466. It can be truthfully asserted that most homesteads gave employment to more than one person of wage‑earning age, therefore, it is no exaggeration to say that while agriculture absorbed close upon 100,000 persons, the manufacturing industries, in spite of Protection, absorbed only 11,682. Most of these were employed in order to meet the demand for goods by those engaged in rural occupations, and practically all the increase in factory employment would, therefore, have arisen if no protective duties had been imposed.

STATISTICAL COMPARISON

The following statistics will prove of interest. They are taken from Coghlan’s “Seven Colonies of Australia.” The first Federal Parliament was opened in May 1901, therefore, that year may be accepted as practically the last year of the operation of State Protectionist policies.

……………………………………………………………….. New South Wales  ……….                 Victoria

Population, 1891        ……………………..………              1,132,234                                    1,140,405

Population, 1901        …………………………….               1,354,846                                     1,201,070

Increase in population from 1891 to 1901                    222,612                                    60,666

Gold production, 1891 to 1901                                            £11,058,984                         £33,006,906

Total value of production in all industries, 1901         £38,954,000                         £28,926,000

Total value production per head of pop’n, 1901          £28/7/9                                   £24/0/l1

Value of production in primary industries, 1901        £28,872,000                         £21,454,000

Value primary production per head                                  £25/15/1                                 £21/0/10

Value added in factory production                                    £10,081,756                           £7,472,389

Value of plant employed in manufacture, 1901            £5,770,295                             £4,847,130

Persons employed in factories, 1901:        Males             54,461                                 47,069

……………………………………………………..  Females      ……….  11,674 ………………………..     19,470

………………………………………………………….. Total       ………. 66,135                                       66,529

Wages paid in factories, 1901                                                  £4,948,079                              £4,589,412

Total Imports, 1901                                                                    £26,928,218                             £18,927,000

Imports per head of population                                              £19/12/6                                  £15/14/8

Total Exports, 1901                                                                       £27,351,124                           £18,646,097

Exports per head of population                                                £19/18/8                                 £15/10/9

Value of property, 1901                                                               £358,934,000                        £278,887,000

Value of property per head                                                         £265                                            £234

Total Incomes, 1901                                                                       £64,936,000                           £51,422,000

Average total income                                                                     £47.3                                           £42.7

Number of persons with income over £200 1901            29,700                                         28,498

Number of breadwinners, 1901, Males                                  451,403                                        389,381

……………………………………………       Females                            113,396                                       144,668

Bank deposits, 1901                                                                         £34,382,529                            £30,839,444

Bank assets, 1901                                                                              £43,611,977                            £39,636,768

Savings bank deposits, 1901                                                         £10,901382                             £9,662,007

Average per depositor, 1901                                                        £38/11/4                                  £24/11/8

Public Debt, 1900                                                                              £65,332,993                            £49,324,885

Increase in Public Debt per head, 1891 to 1900                    £2/9l4                                        £4/10/2

 

These figures show that for the ten years preceding Federation, Victoria, the protected State, had a decided advantage over the Free Trade State of New South Wales, so far as gold production was concerned; the output in Victoria being about three times that of New South Wales. Despite this fact, owing to the free conditions of commerce, the industries of New South Wales began to expand and people were attracted to that State from all over Australia. The population figures show that whereas in 1891 Victoria had a population in excess of New South Wales, during the next decade New South Wales had overtaken and passed the protected State.

She increased her population by 222,612 as against an increase of 60,665 in Victoria. It is significant that, of the N.S.W. increase, a considerable number emigrated there from Victoria. It is a well known fact that people do not leave a prosperous country to go to one where there is stagnation; therefore the movement of population from the “protected” State to the one: working under Free Trade is striking testimony to the better social conditions ruling there.

The figures of production bear eloquent testimony to the benefit of freedom of trade. Both as regards total values and value per head of population New South Wales gained a substantial lead. Despite the assertion that “protection stimulated factory production,” the figures given show there was greater expansion in the manufacturing industries in New South Wales under a Free Trade policy. The value of production was greater and it must also be noted that in New South Wales they were natural values, whereas in Victoria the values were inflated by reason of the tariff.

Further, although the total number of employees is slightly higher in Victoria, it will be seen that New South Wales factories employed 9,402 more males than were employed in Victoria, whilst in the employment of females, Victoria exceeded New South Wales by 7,796. It is well known that female labor is paid at a lower rate than male labor, hence Protection in Victoria did not make for that high standard of labor we are told is associated with such a policy.

The export and import figures show that the Free Trade State enjoyed a greater volume of trade, the total and the average per head showing a marked excess over that of the protectionist State. And notwithstanding the fact there was not any tariff to keep out the alleged “cheap labor” goods of China, India, and Japan, the imports from these three countries constituted less than £1,000,000 of the total imports into New South Wales. This should be an effective answer to those who assert that under freedom of trade we should be swamped with cheap labor goods from low wage countries.

PROTECTION AND EMPLOYMENT

It is claimed that Protection means work for all at high wages. We have only to consider the position in the Continental countries and in the United States of America prior to the war in 1914‑1918 to see the fallacy of this contention.  In the protected countries there were millions of people out of employment, poverty and low wages were rampant, and the masses suffered deplorable conditions.

A tariff neither creates employment nor raises wages.

Employment is the result of the opening of natural opportunities to labor, and in securing to all wealth producers the full earnings of their labor.

This opening of natural opportunities is only made possible by collecting the rent of land for public purposes, thus preventing the holding of land – the source of all jobs – out of use for speculative purposes.

With Land Rent going into the public treasury there is no need for the continuance of the taxation of industry, and with freedom in the exchange of goods all wealth producers have a much greater purchasing power than is possible under Protection. This increased purchasing power means a greater demand for goods, hence a greater demand for more labor to produce the goods.

Tariff duties have the effect of increasing the price: of goods, thus reducing the purchasing power of wages, and restricting the demand for commodities. A Free Trade policy by lowering prices causes an increased demand,

Consequently, such a policy is the best one for increased employment.

Protection makes for scarcity, Free Trade for an abundance of the good things of life, therefore it raises the standard of living for all. Encouragement of industry Tariff duties are asked for by Protectionists on the plea that they encourage local industries.

In Australia we do not depend upon our city factories for our national well‑being, as that rests upon the success of our great primary industries. No amount of Protection, scientific or otherwise, can benefit the great primary industries, for the simple reason that the prices for their products are fixed in open competition in the markets of the world.

The effect of Protection is to increase the cost of production, thereby restricting the production of wealth and making it more difficult for these industries to exist.

When the wool clip is a failure, when we have a bad wheat harvest, and a limited production of mineral wealth, there is general stagnation. The spoon‑fed factories cannot prevent a depression. Why? It is because the success of our factories depends upon the demand made for factory products by those engaged in primary production. If there is a restricted demand from that quarter trade will be dull, hands will be discharged from the factories, and many faced with unemployment. Free Trade allows the primary industries to be developed under natural conditions. It permits those engaged in wool and wheat production to buy their requirements in a free market, thus ensuring a lower cost of production.

This means that more land is put under cultivation, production becomes more profitable, with the result that a greater amount of wealth is put into circulation. It is generally admitted that for every person engaged in primary production, at least three others are wanted in other industries to supply their needs.

From this it will be seen that the only logical way in which local industries can be encouraged is to first settle the land question on right lines.

FREE TRADE AND PEACE

It is now more generally becoming recognised that if we are ever to enjoy the blessings of permanent peace all trade barriers must be removed. Wars are fought for “spheres of influence,” “access to raw materials,” and for valuable mineral and oil deposits.

Privileged interests in many countries control the source of these wanted materials, and by tariff duties and other restrictions make it very difficult for certain nations to acquire the commodities which they must obtain. If they cannot get their requirements by peaceful negotiation, the time comes when they are so desperately in need of them that they are prepared to go to war to secure them.

Trade restrictions played a very important part in starting the great war and the one now raging. We cannot afford to allow the youth of the country to be called to the slaughter every quarter of a century. The cause of the trouble must be removed.

As declared in the Atlantic Charter the source of raw materials must be opened on equal terms to victors and vanquished alike, and trade restrictions must be removed. Richard Cobden realised this economic truth many years ago when he said: “Free Trade is the great peace‑maker.” He saw that the removal of tariff barriers was not enough, and he declared: “You who shall liberate the land of England will do more for the people than we have done by the liberation of its trade.

The collection of Land Rent for public purposes will free the land, and until land is available to all on equitable terms we cannot have Free Trade in the true sense of the term. Before any one can trade he must have something to trade with. That something can only be produced from land by the application of labour. Therefore, if there is not equal right of access to land for all, trade is blocked at its source, and we cannot have that freedom of trade which is necessary to ensure permanent peace.

Everyone should understand the effect of a tariff. It keeps goods out of a country. That is what we do to our enemies in time of war. We close their ports by means of a blockading squadron and submarine warfare, because we are anxious that commodities shall not enter the enemy country. A tariff has the same effect in preventing the entry of goods into a country in time of peace as blockading squadron has in time of war.

Both policies penalise and injure the people who are denied the right to take possession of goods which they desire.

EVIL EFFECTS OF PROTECTION

The tariff policy of Australia is incompatible with the spirit of Federation. It gives benefits to privileged interests in certain States at the expense of the community generally. The effect of Protection has been to disturb the natural relationship existing between primary and secondary industries, to increase the cost of production, and to hamper the development of the great primary industries upon which we depend for our national well‑being.

The tendency of the tariff has been to concentrate secondary industries in two of the Eastern. States and to bring about centralisation. More than one half of the population of the Commonwealth resides within the metropolitan areas.

The Customs and Excise duties very materially add to the cost of living. The amount paid in Customs duties, plus importers and retailers profits on same, is added to the prices of commodities and passed on for consumers to pay. In addition to this, local manufacturers take advantage of the natural and tariff protection to artificially inflate the prices of the goods locally produced.

It is within the mark to assert that owing to the scheme of legalised robbery known as “Protection” the cost of the goods consumed in Australia is increased by at least £200,000,000 annually.

The purchasing power of money being reduced by this indirect taxation, the trades unions have endeavoured to secure better conditions for their members by appealing to Arbitration Courts for increased rates of pay. After more than forty years experience of this method of attempting arbitrarily to increase the wages of labor, it is admitted that the system is a lamentable failure. Evidence in support of this is found in the Labor Call, of February 12, 1942, where Senator Don Cameron, a Federal Labor Minister, asserted that: “Actually, there has been no real improvement in the position generally of the workers since 1907. What appears so or is said to be an improvement, is merely so much make‑believe or an illusion. The purchasing power of wages has not increased since 1907, and practically all improvements in working conditions have been more than offset by added disadvantages or the intensified exploitation of the workers.

Figures issued by the Commonwealth Statistician supports this contention as regards the purchasing power of money. The goods that could be purchased in 1901 for 17/7 cost 39/1 in 1940. This is the confidence trick worked upon the people under the guise of “Protection.”

In Australia we have been working in a vicious circle. Our policy has been to impose a tariff to keep out foreign goods under the plea that it would find employment for our own workers. The result was increased prices for commodities. Trade union leaders then went to the Arbitration Courts to secure higher money rates of pay to meet the increased prices, and when the increase was granted prices again advanced. The higher prices again reduced purchasing power and restricted the demand for commodities. This brought forth an appeal for still higher tariff protection, and this, in turn, through a further increase in prices, necessitated another appeal to the Court for higher rates of pay.

Thus we have had this vicious circle system working for more than thirty years, and it has brought ruin and disaster upon the primary industries. The people engaged in pastoral, agricultural and mining pursuits found the prices of all their requirements advancing and their cost of production increased through the operation of tariff taxes and Arbitration Courts. They were called upon to pay higher prices for their machinery, fencing materials and general requirements, but were unable to demand a higher price for their products. Their wool, wheat and minerals were sold under Free Trade conditions in the markets of the world, but they have been compelled to pay abnormal prices for their necessities.

Is it any wonder that a big percentage of wheat growers have been forced from their holdings and compelled to seek relief from their debts in the Insolvency Courts? There must be stagnation and misery whilst such a pernicious policy is allowed to operate. The only way to reduce the cost of living, lower the cost of production, and improve the condition of all the people is to abolish the tariff taxes and adopt a policy of real Free Trade – that is freedom to produce and freedom to exchange.

PROTECTION AND REVENUE

The question is often asked: “If you abolish the present system of Customs duties, how do you propose to raise the revenue lost to the government?”

The answer is simple – by collecting revenue from its natural source – the Rent of Land. This is the only method that is in accord with ethical and economic laws. In the early days of a country population is sparse, there is little in the way of social services, and land values are low. As population increases, the need for social services arise. Roads and railways have to be constructed, jetties and wharves provided, water and sewerage systems installed, as well as other public utilities.

The greatest expenditure on these social services is in those centres where the population is greatest, the lowest being in the rural areas where the population is sparse. It will also be found that where the people congregate in the greatest number there also will be found the highest land values, whilst in the country areas where there is little in the way of population, land values are low as compared with the big towns and cities. This increase in land values is due to the operation of a natural law which automatically brings into existence a fund sufficient to meet the whole cost of necessary government. This is known as the Land Rent Fund.  Instead of this Rent being collected for the benefit of the community it is now permitted to flow into the pockets of the landholding class.

We propose that in future this legalised robbery shall cease, that all taxes now levied on the wages of labour shall be abolished, and Land Rent taken for public purposes. The immediate effect of such a change would be to prevent the holding of land out of use for speculation, thus freeing the source of production, without which it is impossible to have real free trade.

FREE TRADE MEANS LOWER COST OF GOVERNMENT

A point frequently overlooked is the effect of a Free Trade policy in lowering the cost of government. Under the policy of Protection, high tariff taxes are levied upon all commodities required for Federal and State instrumentalities. Tariff taxes levied upon railway and tramway requisites increase the cost of transport and thus mean higher rates and fares. Taxes levied upon materials needed for jetties and wharves increase harbour dues.

Taxes imposed upon hospital equipment, drugs, and medicines very materially increase the charges in connection with our health departments, and penalise the sick and the afflicted.

Our educational costs are likewise increased by taxes levied upon material needed for school buildings and furnishings. In every phase of government activity costs are increased by the ridiculous policy known as “Protection.” The inevitable effect is that this increased cost of all social services has to be met by a heavier burden of Federal and State taxation.

The adoption of a Free Trade policy would mean the abolition of many taxing departments, and the releasing of men, buildings and equipment for use in production – instead of now being used to hinder production – and thus afford relief to a long suffering body of taxpayers.

EFFECTS OF FREE TRADE

The change we suggest would prove beneficial in many ways to all wealth producers. By the abolition of Customs and Excise duties not only will the prices of imported goods be reduced, but prices of locally produced goods will also be lower. The full play of international competition will effectively prevent local manufacturers from artificially inflating their prices as they do today under the shelter of the tariff.

The latest available official statistics reveal that Customs and Excise duties now amount to £7/13/5 per head of population, or £38/7/1 per family of five.

Assuming that a married man with a wife and three children held £200 of unimproved land values, his contribution to revenue under the Free Trade policy would be £10 per year as compared with over £38 now paid in indirect taxation. Further benefits would accrue as the result of the abolition of other taxes now levied upon industry.

A further point associated with the change in the method of collecting revenue would be the effect upon wages.

The collection of Land Rent would make land monopoly unprofitable and thus open natural opportunities for the employment of labour. This would mean an increase in wages, because wages are governed by what a person can make working on the free land available. Land monopoly lowers the margin of cultivation and makes for lower wages.

Freedom of access to land would raise the margin and increase wages. Another benefit would be the greater purchasing power of money. It is only natural that taxes levied upon commodities depreciates the buying power of the pound, but with taxation removed the pound will buy twenty shillings worth of commodities. This means that all wealth producers will be able to get more of the good things of the earth.

WHO WILL BENEFIT BY FREE TRADE?

Primary producers who are now called upon to suffer a great injustice by buying in a closed market and selling in the markets of the world will benefit by (1) having land made cheap for legitimate users, (2) their improvements being exempt from taxation, (3) the cost of production being reduced by the abolition of the duties now levied upon agricultural and pastoral machinery and upon fencing materials, (4) their cost of living reduced by the abolition of the duties now levied upon the general necessities of life.

Miners will benefit by (1) the abolition of the monopoly in mineral lands, (2) the reduction in the cost of production by the abolition of the duties now levied upon mining machinery, timber, explosives and general stores.

Businessmen will be freed from (1) the restrictions which now hamper and harass trade, (2) the inconvenience of having to send in special returns to the government, (3) the abolition of the taxes now levied upon their warehouses, shops and stores, (4) and the taxes now imposed upon their industry.

Workers in general will benefit by (1) more avenues of employment being opened, (2) higher wages, (3) greater purchasing power for money, (4) better housing conditions and lower rents by the removal of the duties now levied upon building materials and the taxes upon improvements.

The main contentions put forth by Protectionists have been examined, and it will be seen they will not bear logical investigation. With the Rent of Land going into the public treasury and complete freedom of trade, everyone who renders service will benefit: The idlers and the parasites will be removed from society, and there will be just conditions for all.

QUOTES ON FREE TRADE

“Give labour a free field and its full earnings. Take for the benefit of the whole Community that fund which the growth of the community creates, and want and the fear of want would be gone. The springs of production would be set free, and the enormous increase of wealth would give the poorest ample comfort. Men would no more worry about finding employment than they worry about finding air to breathe; they need have no more care about physical necessities than do the lilies of the field. The progress of science, the march of invention, the diffusions of knowledge, would bring their benefits to all.” – Henry George.

“A tax on any commodity, whether laid on its production, its importation, its carriage from place to place, or its sale, and whether the tax be a fixed sum of money for a given quantity of the commodity or an ad valorem duty, will, as a general rule, raise the value and price of the commodity by at least the amount of the tax. There are a few cases in which it does not raise them by more than that amount.” ‑  John Stuart Mill, Principles of Political Economy

“It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it from them with some part of the produce of our own industry, employed in a way in which we have some advantage.” ‑ Adam Smith, Wealth of Nations

“To levy a direct tax of 7 per cent is a dangerous experiment in a free country, and may excite revolt; but there is a method by which you can tax the last rag from the back and the last bite from the mouth without causing a murmur against high taxes, and that is to tax a great many articles of daily use and necessity so indirectly that the people will pay them and not know it. Their grumbling will then be of hard times, but they will not know that the hard times are caused by taxation.”  – William Pitt (British Prime Minister).

Landlord Takes What’s Left

“Labour may be likened to a man who, as he carries home his earnings, is waylaid by a series of robbers. One demands this much, and another that much, but last of all stands one who demands all that is left, save just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers?” ‑ Henry George, Protection or Free Trade

 

KICKING GOALS

It was a satisfying experience to be one of the 85,000 at the ‘G’ last night to cheer on the Cats in their 96 point drubbing of the ’Pies. Their ten goal second quarter set up the win, Kelly and Menzel displaying supreme skills. Ben Reid was one of the few Collingwood players who could leave the ground with his head held high.

Now for the finals, Cats!

Another win on the day came in the form of a good review of Prosper Australia’s new documentary film “Real Estate 4 Ransom” by Chris Vedelago in THE AGE.

It was nice, too, to meet Philip Soos, author of the insightful paper “Bubbling Over”, at an enjoyable 120th Henry George commemoration dinner on Thursday night.

A pleasant end to the week altogether.

 

STEWARDSHIP?

Tasmania’s Leo Foley last night gave the 120th Henry George commemoration dinner address at the Pumphouse Hotel in Carlton.

“The 120th!” mused Prosper Australia’s President, Lloyd Churches, in introducing Leo.  “Do you realise that means the first annual dinner was in 1891, the year after Henry George visited Australia?  He actually addressed thousands of people at the Exhibition Building in 1890, just across the other side of the road from where we’re gathered tonight?”

Well, we weren’t there in thousands tonight, but in an urbane, encouraging and thoughtful speech, Leo Foley urged Georgists to consider returning moral compass to an electorate grown tired and cynical of the foundering political process.

We should consider standing for office to explain how taxes and the increasing privatisation of our natural resource rents had placed the world in the situation it finds itself at this critical point in history.

We need to show people how the value of government is actually embedded in our land values, Foley observed.

He announced he is throwing his own hat in the ring to stand as a candidate for the October municipal elections in the City of Hobart.

The Georgist road in politics is not an easy one, but we do have people with deep knowledge of economics and the ability to counter the electorate’s confusion of land with “private property”.

He suggested the word “stewardship” should loom larger in the Georgist approach, as a counter to the problematic term “ownership”.

In delivering the vote of thanks to Leo on behalf of an appreciative audience, I agreed if we are to progress the movement we do indeed need to choose our words and actions carefully, and that he was onto something with “stewardship” as relating to our tenure of land.

On further reflection this morning, as stewards also of the ideas of Henry George, it does seem to be time for Georgists to step into the political arena.

 

 

BERNANKE HOLED UP IN JACKSON WYOMING

If you want to stuff economies up completely, you’ll continue to treat the crazy thoughts of the modern day economist with some respect.

The current financial state of world economies attest to the veracity of this statement, which at first flush might appear like an exaggeration. Unfortunately, it’s not.

With the help of a nonsensical training that teaches them to ignore that between one third and one half of all economies is publicly-generated economic rent*, they’ve managed to turn the commonsense logic of daily living into an occult art, underpinned by nonsensical mathematical models.  Reality, it seems, comes a bad last with economists.

Whilst economies founder against the specious rocks of supply and demand economists have created, the wonder of it all is that we, and our politicians, still take heed of these modern day high priests of obfuscation and nonsense!

At the Federal Reserve Bank’s annual get-together for these twisted souls at Jackson Hole, their leader-in-chief  Ben Bernanke has at last admitted he’s out of tricks about how to resurrect the US economy. He’s wiping his hands!  Wonder of wonder!  I said as much back here. He now says “political leaders will have to do more to boost jobs and the housing market.”

Fat chance! Our so-called political leaders are in the thrall of OTHER economists, and the following facts continue to elude them:-

  1. Tax systems currently punish workers and producers alike
  2. Tax systems reward the parasitical rentier class by allowing them to privatise the public’s  land and natural resource rents*
  3. Tax systems therefore send production offshore, to where land, labour and taxes are cheaper
  4. If we really want to resurrect economies, we need to shift revenues off production, exchange, thrift and industry and onto natural resource rents, including land

As these simple details are far too difficult for the failed modern economist, business analyst and political leader to contend with — and a number of people (though rapidly diminishing) still believe economists have something to offer us — the world economic depression is therefore destined to continue having its way with us, when it need not.

Errant tax regimes will meanwhile help keep rentier-thief billionaires’ methods invisible to the vast majority of humanity.  Where the only certainties in life are death and rents, we’ve come to believe their spiel that it’s death and taxes – and don’t quite understand the difference.

 

 

Bill Batt warns New York State

Metroland ONLINE THE ALTERNATIVE NEWSWEEKLY OF NEW YORK’S CAPITAL REGION  10 February 2011

Tax the Land

—  Bill Batt

I put property-tax cappers in the same category as flat-Earthers. It’s troubling that we have policy shapers who understand so little of land economics. That other states—with disastrous results like California’s Proposition 13—have gone down this path is no reason for New York to drive off a cliff too.

When we realize that the property tax is really separate taxes on land and on buildings, each with its own very different dynamics, we’ll better be able to address an alternative. Buildings are a stock—a thing—that depreciates just like a car or a computer, and penalizes owners that improve their property. Land has a flow of value that economists call “rent,” or sometimes ground rent. One can no more cap the flow of rent than one can stop gravity. If one caps the part of rent taken in taxes, it leaves more to flow through the land sites into private pockets.

Sure, the Legislature can enact a tax cap, but this will create more problems than it solves. In Shakespeare’s Henry IV, Glendower boasts, “I can call spirits from the vasty deep.” To which Hotspur answers, “Why, so can I, or so can any man; But will they come when you do call for them?” The property-tax cap or a circuit-breaker proposal is an equally hollow boast: We can cap the tax burden, but land values will increase, which only disrupts real-estate markets and development further, just when we need them most.

Rent flow reflects the vitality of the economy and is stifled when that wealth is frozen in land sites, which are as much as half the total real estate value in a locality. What we really need is as much turnover in wealth as we can get, not locking it up in land wasted as slums, parking space and vacant lots.

Recently, in The Atlantic, conservative writer and the New America Foundation’s Reihan Salam asked, “What if the problem isn’t the property tax at all but rather, well, all other taxes? In 1879, Henry George . . . found it perverse that we tax productive activities like work and innovative investment while letting landowners grow rich simply because they scooped up property at the right time. . . . When you tax income, aren’t you punishing people for working hard? But when you tax an asset like land, you’re simply encouraging the most valuable use of that land. . . . Simply put, the better you govern, the more valuable the property. The more valuable the property, the more revenue you raise.”

There are solutions, tried and true: The first is to un-tax buildings altogether and remove the penalty it imposes on people who improve or maintain their property. Most residential parcels pay less, and underused and vacant parcels in high-value urban cores pay more, providing an incentive to develop. That reverses sprawl and fosters urban revitalization, without throwing precious public dollars at the problem. Another is to have taxes paid in increments rather than in a yearly lump sum.

The third part is to give households the option of deferring their tax burden until they sell. Then they pay up with interest what they rightfully owe and don’t shift their burden onto others unfairly. Twenty- four states do this in some way.

The value of land is due not to what any landowner does—often they don’t even live in the area—but what the total community does. The increase in value is a windfall gain often called the “unearned increment.” Since that value is socially created wealth, it follows that it’s the rightful source of public revenue, and we should recapture its flow rather than tax people’s work and products which they’ve earned with brain and brawn.

A land value tax fits best all textbook principles (as well as actual practice) of solid tax theory: It is “neutral,” meaning it doesn’t interfere in market choices; it is efficient in not damping vitality; it is progressive as it can’t be shifted to tenants. It is easy to administer, simple and stable.

There’s a reason why so many nations, as well as some places in the United States, are now looking anew at taxing land value.

______________________________________

Bill Batt, a political scientist, has worked as a university professor and a policy analyst for the New York State Legislature.  He serves on the board of the Center for the Study of Economics, and the executive committee of the London-based International Union for Land Value Taxation. More at urbantools.org

THE MORTGAGE

 

 

 

 

 

Will Carleton (1845-1912) “Farm Yard Ballads”

The Mortgage

We worked through spring and winter, through summer and through fall,

But the mortgage worked the hardest and steadiest of all:

It worked on nights and Sundays, it worked each holiday

It settled down among us, and it never went away;

 

Whatever we kept from it seemed almost as bad as theft

It watched us every minute and it ruled us right and left.

The rust and blight were with us sometimes and sometimes not

The dark-browed, scowling mortgage was for ever on the spot.

 

The weevil and the cutworm, they went as well as came,

The mortgage stayed for ever eating hearty all the same.

It nailed up every window, stood guard on every door,

And happiness and sunshine made their home with us no more.

 

Till with failing crops and sickness we got stalled upon the grade,

And there came a dark day on us when the interest wasn’t paid.

And there came a sharp foreclosure, and I kind of lost my hold,

And grew weary and discouraged, and the farm was cheaply sold.

 

The children left and scattered, when they hardly yet were grown;

My wife she pined and perished, and I found myself alone.

What she died of was a mystery, and the doctor never knew,

But I knew she died of mortgage just as well’s I wanted to.

 

If to trace a hidden sorrow were within the doctor’s art,

They’d have found a mortgage lying on that woman’s broken heart.

Worm or beetle, drought or tempest, on a farmer’s land may fall,

But for first class ruination trust a mortgage ‘gainst them all.

_________________________________

–         As reprinted in PROGRESS February 1928

THE PERFECT SQUELCH?

DEMOLITION JOB

With great humility, a certain libertarian once wrote to Georgist libertarian Dan Sullivan:

You should not presume to speak on behalf of libertarians, since you are obviously in the position of not understanding. Instead you should ask for clarifications.

To whose belly Sullivan proceeded to apply a blow torch along these lines:-

OK. Complete novice that I am, I will undoubtedly benefit from your erudition on what the following passages mean. Please do explain them. Feel free to interpret each sentence and go into detail, so that we might benefit from your intellectual prowess:

***

from Albert J. Nock, founder and first editor of The Freeman, and author of Our Enemy the State, which you can get from Laissez Faire Books:

“The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero.  He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it….One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had.  He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry.”

***

from Nock, The God’s Lookout, February 1934, p. 320-324:

“So long as the State stands as an impersonal mechanism which can confer an economic advantage at the mere touch of a button, men will seek by all sorts of ways to get at the button, because law-made property is acquired with less exertion than labour-made property.  It is easier to push the button and get some form of State-created monopoly like a land-title, a tariff, concession or franchise, and pocket the proceeds, than it is to accumulate the same by work.  Thus a political theory that admits any positive intervention by the State upon the individual has always this natural law to reckon with…”

The American state at the outset took over the British principle of giving landlords a monopoly of economic rent.  That shifted the switch; it established the State’s character as a purveyor of privilege. Then financial speculators sought a privilege, and Hamilton, with his “corrupt squadron in Congress,” as Mr. Jefferson called them, arranged it.  Then bankers, then industrialists; Hamilton also arranged that.  Then, as the century went on, innumerable industrial subgroups, and subclasses of special interest, were heard from, and were accommodated.

Then farmers, artisans, ex-soldiers, promoters of public utilities, began to accumulate political power with a view toward privilege.  Now, since the advent of universal suffrage, we are seeing the curious spectacle of the “unemployed” automatically transformed into the strongest kind of pressure-group; their numerical strength and consequent voting-power compelled Mr. Roosevelt to embrace the extraordinary doctrine that the State owes its citizens a living–an expedient little noticed at the time, I  believe, but profoundly interesting to the student of historical continuity.

Moreover,…when the State confers a privilege, natural law impels the beneficiary to work it for all it is worth; and therefore the State must at once initiate a whole series of positive interventions to safeguard, control, and regulate that privilege.  A steady grist of “social” legislation must be ground; bureaus, boards and commissions must be set up, each with its elaborate mechanism; and thus bureaucracy comes into being.

As the distribution of privilege goes on, the spawning of these regulative and supervisory agencies also goes on; and the result is a continuous enhancement of State power and a progressive weakening of social power, until, as in Rome after the Antonines, social power is quite extinguished–the individual lives, moves, and has his being only for the governmental machine, and society exists only in the service of the State.  Meanwhile, at every step in this process, natural law is pushing interested persons, groups and factions on to get clandestine control of these supervisory agencies and use them for their own advantage; and thus a rapid general corruption sets in, for which no cure has ever yet been found, and from which no recovery has ever yet been made.

***

James Buchanan (1986):

The landowner who withdraws land from productive use to a purely private use should be required to pay higher, not lower, taxes.

[I don’t know much about Mr. Buchanan. Is he a Marxist?]

***

Adam Smith, Wealth of Nations:

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed.

***

Karl Marx:

“Henry George is the capitalists’ last ditch.”

[Since you say Georgism is Marxist, then this must be some kind of cryptic endorsement.  Perhaps you could decrypt it?]

***

Thomas Jefferson:

[Feel free to skip the first four paragraphs, which are undoubtedly due to Marx’s influence on Jefferson. I particularly would like to hear your analysis of the last and longest quote.]

“I set out on this ground, which I suppose to be self-evident, that the earth belongs in usufruct to the living; that the dead have neither powers nor rights over it. The portion occupied by any individual ceases to be his when he ceases to be, and reverts to the society…”

“Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right.

“In Europe the lands [that are not] cultivated are locked up against the cultivator.  …This begets dependence, subservience and venality, suffocates the germ of virtue and prepares fit tools for the design of ambition.

“I think our governments will remain virtuous..as long as there are vacant lands [available] in any part of America.  When [Americans] get piled up on each other in large cities, as in Europe, they will become corrupt, as in Europe.

“That the lands within the limits assumed by a nation belong to the nation as a body has probably been the law of every people on earth at some period of their history.  A right of property in movable things is admitted before the establishment of government.  A separate property in lands not till after that establishment. The right to movables is acknowledged by all the hordes of Indians surrounding us.  Yet by no one of them has a separate property in lands been yeilded for individuals.  He who plants a field keeps possession till he has gathered the produce, after which one has as good a right as another to occupy it.

“Government must be established and laws provided, before lands can be separately appropriated and their owner protected in his possession.  Till then the property is in the body of the nation.”

***

[This intro is from The World’s Great Speeches, 1942, Garden City Publishing, Inc.]

“Richard Cobden [1804-1865], statesman and economist, has won world fame as a powerful advocate of free trade.”

“I hold that the Landed proprietors are the parties who are responsible if the laborers have not employment. You have absolute power; there is no doubt about that. You can, if you please, legislate for the laborers, or yourselves.”

***

Frank Choderov: Second editor of The Freeman, and author of One is a Crowd and Income Tax, Root of All Evil. This quote is out of From Christmas to Christmas, Analysis, Vol 1., No. 4:

“On earth as it is in Heaven.” Whatever Heaven connotes to the theologian, to the layman it sublimates the highest aspiration of the human spirit– which is Freedom.  Can a Heaven which embraces slavery, economic or political, have any meaning?  It is fantastic, blasphemous, if you will, to speak of Heaven-on-earth as a place where one man must pay another for the privilege of living.  Surely, the Milky Way has not been reduced to private ownership, nor are the Elysian Fields preempted and for sale.

“Then again, are the standards of eternal life fixed by monopoly exactions? Is there a tax on immortality? Do soul bureaucrats hound the spirits into collectivized subjectivity?  Or rather, do we not think of Heaven-on-earth as an existence wherein every man may do that which he will, provided he infringe not on the equal right of every other man?…”

***

[Perhaps you could not only interpret Herbert Spencer’s meaning, but answer his questions? Then he and I will both become enlightened by you.]

from Social Statics:

“It can never be pretended that the existing titles to landed property are legitimate. The original deeds were written with the sword, soldiers were the conveyancers, blows were the current coin given in exchange, and for seals, blood. Those who say that ‘time is a great legalizer” must find satisfactory answers to such questions as — How long does it take for what was originally wrong to become right? At what rate per annum does an invalid claim become valid?”

***

Stephen Pearl Andrews is quoted here from Liberty and the Great Libertarians, which, according to Laissez Faire Books, “offers choice selections from many of the greatest authors on liberty”.

Andrews’s works include Comparison of the Common Law with the Roman, French or Spanish Civil Law, and The Constitution of Government in the Sovereignty of the Individual, from which this quote is taken:

“The very foundation principles of the ownership of lands, as vested in individuals and protected by law, cannot escape much longer from a searching and radical investigation…. Land reform, in its present aspect, is merely the prologue to a thorough and unsparing, but philosophical and equitable agrarianism, by means of which either the land itself, or an equal participation in the benefits of the land, shall be secured to the whole people. Science, not human legislation, must finally govern the distribution of the soil.”

***

Robert G. Ingersoll, as quoted in Liberty and the Great Libertarians, p. 189

“Now, the land belongs to the children of nature. Nature invites into this world every babe who is born. And what would you think of me, for instance, tonight, if I had invited you here — nobody had charged anything, but you had been invited — and when you got here you had found one man pretending to occupy a hundred seats, another fifty, another seventy five, and thereupon you were compelled to stand up — what would you think of the invitation? It seems to me that every child of nature is entitled to his share of land, and that he should not be compelled to beg the privilege to work the soil of a babe that happened to be born before him.”

***

Louis F. Post as quoted in Liberty and the Great Libertarians, p. 349, Land Liberty and Justice

“Since in justice rights are equal, there must in justice be equal rights to land. Without land man cannot sustain life. It is to him as water to the fish or air to the bird — his natural environment. And if to get land whereby to support life, any man is compelled to give his labor or the products of his labor to another, to that extent his liberty is denied him and his right to pursue happiness is obstructed. Enforced toil without pay is the essence of slavery, and permission to use land can be no pay for toil; he who give it parts with nothing that any man ever earned, and he who gets it acquires nothing that nature would not freely offer him but for the interference of land monopolists.”

[That last sentence deserves detailed analysis]

***

Edwin C. Walker, from Liberty and the Great Libertarians

“The conception and the facts of liberty and slavery result from association, not isolation; and the sparseness or density of population, the simplicity or complexity of association, will create the customs, rules and laws governing human relations. Therefore, what the solitary man may rightfully do is no measure of what he may rightfully do when he comes into contact with another man. The liberty of one is conditioned upon the liberty of the other.”

***

William Lloyd Garrison, as quoted in Liberty and the Great Libertarians, p.355

“Men mistake when they imagine the Single Tax agitation to aim only at fiscal change, a new method of taxation. Its sole purpose is to secure the larger freedom of the race. It is not the method but the result that is precious. For it is idle to talk of the equal rights of men when the one thing essential to such equality is withheld. The Physiocrats of France grasped the central truth, and saw that freedom of natural opportunity, composed in the term land, was the foundation-stone of freedom and justice. Had the French Revolution proceeded along their line, it would have had a different ending. The succeeding spectre of Napoleon, devastating Europe and wading through the blood of his sacrificed countrymen to the throne, would not have affrighted mankind. The fruits of liberty would have been gathered.”

***

Luke North (Editor of Everyman) as quoted in Liberty and the Great Libertarians, p. 356

The demand of the centuries, never so virile and insistent as today, is for equal freedom. The modern Everyman asks not for himself what all may not have. The asking were vain, indeed, for there is no freedom till all are free. Master and slave are bound by the same thong. Human solidarity is not a moral fancy but a stern fact.

***

Karl Hess, Sr., speechwriter for Barry Goldwater and creator and first editor of The Libertarian Party News:

“All taxes should be placed on land values until the state is abolished entirely.”

[Of course, Hess also said, “I loved education, which is why I spent as little time as possible in school.” This is suspiciously similar, if not as succinct, as the quote by George Bernard Shaw in my tagline. Perhaps, then, Karl Hess was also a Marxist Collectivist. There is one under every bed, you know.]

–      Dan Sullivan

The only time my education was interrupted was when I was in school.” –George Bernard Shaw

HOUSING SHORTAGE – PHOOEY!

 

Click on Prosper Australia’s Karl Fitzgerald to see him help dispel the ‘housing shortage’ myth on Channel 7’s TODAY TONIGHT.

 

I’m sure Karl doesn’t agree with the Pauline Hanson dog whistle tilt:  I’d bet there are many, many more Australians than foreigners holding residential properties vacant, but that’s not the line Channel 7 chose to go with.

KNOW YOUR ENEMY

WHAT DO THESE THINGS HAVE IN COMMON?

Housing unaffordability

The global financial collapse

National governments moving to own, or guarantee, banks

Governments cutting costs and increasing taxes

Governments increasing expenditures and failing to cut costs

Ineffectual government

Failing infrastructure

Ineffective demand

Failing businesses

Ineffectual economic and financial analysis

Increasing unemployment

A widening gap between the rich and poor

Protests in Canberra tomorrow about the importation of New Zealand apples

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Few people concerned with any of the items on the list define the FUNDAMENTAL situation correctly. I’ll use the last item on the list to make the case.

Apple growers are obviously concerned about importing the apple disease, fire blight, if New Zealand apples are permitted into Australia. New Zealanders don’t allow our apples to be imported because of the possibility of importing our fruit flies, so why should we risk introducing their fire blight?

But isn’t the pre-eminent concern about what the importation of apples might do to the local apple industry? Is fire blight as likely, or as common, as fruit fly? Isn’t the opposition to importing apples mainly because the New Zealand dollar is cheaper than ours, therefore their apples might be able to be brought to our markets cheaper, and out-sell Australian apples?

Why is our dollar and our labour dearer than New Zealand’s? Might it have anything to do with our taxes and land prices being higher, therefore (as with Chinese goods) we are unable to compete with them?

OK, maybe we don’t want to risk importing fire blight, but the “protectionist” argument against other imports usually comes back to Australia’s relatively higher taxes and land prices generating our uncompetitive labour costs.  (I showed in the second-last blog how we can have higher wages without higher costs.)

It’s little understood that Australia has the dearest land in the world, and that our tax regime blatantly encourages the pathology to infect the whole economy. Despite the fact that land price can disappear overnight, banks then proceed to lend against it.

In considering any item on the above list, it’s only when we come to appreciate that current tax regimes act to inflate land prices that we can begin to find solutions to it – and to the world’s deepening financial crisis.

Land and natural resource charges represent the antidote for the enemy within the gates – which is not just the financial crooks, but the main enemy of economic prosperity – taxes and land prices.

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