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:

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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.

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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?]

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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.

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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?]

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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.”

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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?…”

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[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?”

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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.”

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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]

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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.”

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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.”

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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.

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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

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.

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

——————————oooOOOooo——————————–

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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LATEST NEWS!

Martin Wolf’s piece published in the Financial Times on 8 June 2006 is worthy of resurrection:-

LAND TAX IS SOMETHING TO BUILD ON

How should one finance infrastructure? How should one decide what infrastructure to build? The answer to these two questions would appear self-evident: we should build infrastructure if benefits exceed the cost and we should finance it by taxing the beneficiaries.

Who are those beneficiaries? Landowners is the answer. Land taxation is the natural, efficient and just way to finance the capital cost of infrastructure. That is the point of a thought-provoking pamphlet by Fred Harrison, research director of the Land Research Trust.*

Consider a simple example. In a busy town the average house price is £300,000, of which half is the cost of building (or replacing) the house and the rest the value of the land. Some way away is an isolated village. Here the identical house costs £200,000, of which just £50,000 is the land value.

Consider what would happen if a road were built, for the first time, between the town and the village. Residents of the town would want to move to the village to take advantage of the cheap houses and the amenities. Assume, for simplicity’s sake, that the benefit of the village’s amenities to the marginal movers offsets the cost of the extra time they would spend travelling. The price of village houses must jump by £100,000.

Owners of the village housing will capture the benefit of taxpayer-funded road-building. To them this will be a massive windfall gain. In general, the rise in the price of land will account for most, if not all, of the capitalised value of the surplus of benefits over costs to users of the infrastructure.

Often, as Mr Harrison shows, the benefit-cost ratio for infrastructure that improves accessibility of cities or mobility within them is very large. London’s Jubilee line cost £3.4bn to build, but raised land values in adjoining areas by close to £14bn. The benefits were evidently enormous. The same, no doubt, would be true of Crossrail, the endlessly postponed west-east rail link across London. The government’s 10-year transport plan would be another example: the cost was estimated at £180bn, but the gains to landowners might be far bigger.

Thus, increases in land values give not only a good indication of the benefits of infrastructure investments, but also provide an efficient and just way of financing their costs. It is efficient to tax these values because the tax would reduce the size of a windfall, while other taxes used to pay for infrastructure reduce effort, penalise the division of labour or discourage capital accumulation. It is also just, because the chief beneficiaries would bear the cost.

It is possible to charge users of infrastructure, as well. Where there is congestion or there are variable costs, such user charges are appropriate. But relying only on user pricing is undesirable if the infrastructure is then under-used. Often it is technically infeasible, as well: road use has long been an example.

William Vickrey, the Nobel-laureate economist, was an exponent of charging landowners: thus “equity and efficiency are both served”, he argued, “by having landlords contribute to the network costs of the services so as to enable their prices to be brought closer to marginal costs. In the long run, the increased efficiency of the local economy would tend to redound to the benefit of the landlords by raising their market rents by more than the subsidy.”

The use of the rise in the price of land as a means of defraying the cost of investment in infrastructure is easy when, as in Hong Kong, the government owns the ground. A monopoly private owner would also be able to internalise the benefits of the infrastructure investments he makes.

In the UK, however, such voluntary methods would fail because of the incentives for enjoying a free ride on investments made by others. That is why a land tax related to site value is the simplest way of extracting benefits from large-scale public investment.

The generation of data on land values is not impossible: Denmark has done it for 80 years. A simple way of financing local infrastructure would then be via a tax on site values. The revenue could go, in whole or in part, to the relevant local authorities. If the latter were also deprived of the right to vary the rate, they would have an incentive to make investments that raise land values and increase their revenue.

At present, however, the lack of any easy means of raising finance is proving a huge obstacle to desirable investments. Then, when investment does take place, as with the Jubilee line, it merely pours vast windfall gains on landowners at the expense of taxpayers. The result has been a long history of inadequate investment and undue reliance on inherently damaging and unjust taxation. The UK is choking on the inadequacy of its own infrastructure. The time to make a change is now.

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Fred Harrison, Wheels of Fortune: Self-funding Infrastructure and the Free Market Case for a Land Tax, Institute of Economic Affairs, 2006

martin.wolf@ft.com

THE IMPASSE

Newspaper editorials seem mystified that retail spending is down. They point to the fact that Australia’s national debt, unlike other nations, is well under control, as though this is somehow germane to our commercial slowdown.

Editors also reflect that maybe online shopping is responsible for cutting a swathe through spending in the shops.

In an obvious attempt to be optimistic, there’s no mention of the world record ratio of household debt to disposable income, i.e. above 150 per cent, to which Australians have shackled themselves in recent years.

Many people have hit the stumbling block and been forced to cut back on their spending, but others, aware of the catastrophic effects of the financial collapse overseas, have set themselves on a debt reduction program. Accordingly, a slight downturn in the ratio nearer to the 150 per cent mark shows their efforts are beginning to work. Unfortunately, such reduction in household debt doesn’t assist our economic performance.

Surely then Australia’s world record household debt levels explains the collapse in consumer confidence and demand? Mortgage debt, of course, accounts for by far the greatest part of household debt, and credit cards for much of the rest.

So, how does politics’ Left respond to this unwelcome slowdown?

Unions are looking for pay rises for their workers. They say this will help relieve their members’ debt and might get them spending again. The unions are aggrieved Qantas wants to put off 1000 staff to restructure towards Asia and at OneSteel’s announcement of job cuts, and they know more can be expected in retail if things don’t change. So, more money in workers’ pockets will resurrect economic activity, they claim. And they’re partly correct.

Meanwhile, marking the 20^th anniversary of the Superannuation Guarantee Levy, former Prime Minister Paul Keating notes that unit labor costs decreased every year the levy rose, from 4 per cent in 1991 to 9 per cent in 2002, despite employers claiming it would prove to be a cost to them. He’d like it increased to 15 per cent, but will settle for 12 per cent immediately.

Mr Keating apparently hasn’t noticed average weekly wages have trended down ever since 1972.  (Some apparent real increases since 1998 were at least partly the result of redefining Australian CPI following the US Boskin Commission’s recommendations in 1996, wherein it opined the CPI had been overstated, and  employed more stable “rental equivalents” in preference to house prices.)

As Paul Keating dusts down his Louis XVI clocks, one wonders whether he has workers’ interests at heart, or just his own place in Australia’s economic history. Isn’t workers’ most immediate need in hard times to be able to access their own earnings?  Isn’t compulsory superannuation based upon the incredibly patronising premise that governments and super funds know better than you how to manage your retirement and financial affairs?

For that matter, now that the union movement itself has an integral stake in industry superannuation funds, wherein lies its true allegiance? Does it lie in making favourites out of particular shares, or certain REITs, or in looking after the here and now of its members, as once it did?

On the other hand, business is becoming choleric about the possibility of further wage increases. Salary rises have recently exceeded increases in productivity, they rightly claim, despite the longer trend in real average weekly wages having declined from the outset of the 1970s.

So, you can bet that industrial relations, which for employers amounts to keeping the lid on salaries if production isn’t also increasing, is again about to hit the headlines and become contentious. Like the unions’ logic that wage increases will help increase effective demand, that these should not be allowed to occur unless there is a corresponding increase in productivity also seems a valid proposition.  Both sides are partly right.

However, as our economic performance worsens, the inevitable outcome of rapidly hardening attitudes between unions and business is likely to be greater strike action and IR conflict. Whilst this tension between labour and capital is age-old, neither side offers resolution to the immediate problem of ineffective demand.

If unions have their way with pay rises, it will be inflationary and put further pressures on business to reduce staffing levels. If business holds its line on no further pay rises, from whence shall effective demand arise?

If the current approaches of labour and capital can be seen not to address the problem, is there any alternative to these rapidly bifurcating attitudes? Must we find ourselves in one camp or the other?

Let us consider how to provide wage increases without adversely affecting business or generating inflation.

THE SOLUTION

The Henry review of the tax system seems to offer the only solution for Australia. Ken Henry’s panel strongly argued the need to abolish many inefficient taxes that adversely affect business, increasing its costs and adding to consumer prices.

The tax inquiry showed a transition to a greater reliance upon natural resource rents and reformed State land taxes, both being in the nature of a community-generated surplus product, otherwise known as economic rent, won’t add to business costs if a greater part of it is captured to revenue coffers.

As natural resource-based revenues do not add to business costs is the one point on which all economists do agree, it’s a pity neither of the major parties has been prepared to take this up and educate the public to that effect. Vast ignorance exists on this critical point, and the parties remain fearful and delinquent in not mentioning it.

It is therefore clearly possible that tax cuts can deliver increased incomes both to businesses and consumers without being inflationary.

Is this not the solution to the impasse currently confronting unions, businesses and all Australians? Would not this action assist debt to be paid down whilst also restoring consumer confidence that the tax system is finally providing better signals, namely, that increased productive effort will be rewarded instead of punished?

If the public tax forum to be held in Canberra on 4^th and 5^th of October fails to grasp this nettle, Australia’s economic future appears certain to grow increasingly bleak.

Chapter 13:   Freemen!

By a sarcasm of law and phrase they were freemen. Seven-tenths of the free population of the country were of just their class and degree: small “independent” farmers, artisans, etc.; which is to say, they were the nation, the actual Nation; they were about all of it that was useful, or worth saving, or really respectworthy; and to subtract them would have been to subtract the Nation and leave behind some dregs, some refuse, in the shape of a king, nobility and gentry, idle, unproductive, acquainted mainly with the arts of wasting and destroying, and of no sort of use or value in any rationally constructed world.

And yet, by ingenious contrivance, this gilded minority, instead of being in the tail of the procession where it belonged, was marching head up and banners flying, at the other end of it; had elected itself to be the Nation, and these innumerable clams had permitted it so long that they had come at last to accept it as a truth; and not only that, but to believe it right and as it should be.  The priests had told their fathers and themselves that this ironical state of things was ordained of God; and so, not reflecting upon how unlike God it would be to amuse himself with sarcasms, and especially such poor transparent ones as this, they had dropped the matter there and become respectfully quiet.

…when the harvest was at last gathered, then came the procession of robbers to levy their blackmail upon it: first the Church carted off its fat tenth, then the king’s commissioner took his twentieth, then my lord’s people made a mighty inroad upon the remainder; after which, the skinned freeman had liberty to bestow the remnant in his barn, in case it was worth the trouble; there were taxes, and taxes, and taxes, and more taxes, and taxes again, and yet other taxes – upon this free and independent pauper, but none upon his lord the baron or the bishop, none upon the wasteful nobility or the all-devouring Church.

Millionaire Joseph Fels (1815 – 1914) once received the following begging letter from the Dean of a theological institution:

Having read much of you and your many acts of charity and philanthropy, I write to ask for a donation from you for our institution. It may seem strange that I ask this of one who is not of our faith, yet I have read in some of your speeches that you make no distinction of race, creed, or color, and that you regard all men as your brothers; that you believe in the Brotherhood of Man and the Fatherhood of God. Thus you are teaching what our institution teaches, and our school is doing, as best it can with limited means, the work you are trying to do. …

Fels’ response cut the ground from under the Dean and those who believe charity can ever be a replacement for economic justice:-

TRUE CHRISTIANITY AND MY OWN RELIGIOUS BELIEFS

Replying to your communication, I am at a loss to know where you have read of my acts of charity and philanthropy.” I am not a philanthropist, and give nothing to charity. When you say I am not of your “faith,” I suppose you mean of your creed. Let me state my faith, and we can see wherein we differ.

I believe in the Fatherhood of God, and therefore in the Brotherhood of Man. By “Man,” I mean all men. So far, I suppose we agree.

I believe that the Creator freely gave the earth to all of His children, that all may have equal rights to its use. Do you agree to that?

I believe that the injunction, “In the sweat of thy brow shalt thou eat bread,” necessarily implies, “Thou shalt not eat bread in the sweat of thy brother’s brow.” Do you agree?

I believe that all are violating the divine law who live in idleness on wealth produced by others, since they eat bread in the sweat of their brothers’ brows. Do you agree?

I believe that no man should have power to take wealth he has not produced or earned unless freely given to him by the producer. Do you agree?

I believe that brotherhood requires giving an equivalent for every service received from a brother. Do you agree?

I believe it is blasphemous to assert or insinuate that God has condemned some of His children to hopeless poverty, and to the Crimea, want, and misery resulting therefrom, and has, at the same time, awarded to others lives of ease and luxury, without labor. Do you agree?

I believe that involuntary poverty and involuntary idleness are unnatural, and are due to the denial by some of the right of others to use freely the gift of God to all. Do you agree?

Since labor products are needed to sustain life, and since labor must be applied to land in order to produce, I believe that every child comes into life with divine permission to use land without the consent of any other child of God. Do you agree?

Where men congregate in organized society, land has a value apart from the value of things produced by labor; as population and industry increase, the value of land increases, but the value of labor products does not. That increase in land value is community-made value. Inasmuch as your power to labor is a gift of God, all the wealth produced by your labor is yours, and no man nor collection of men has a right to take any of it from you. Do you agree to that?

I believe the community-made value of land belongs to the community, just as the wealth produced by you belongs to you. Do you agree to that?

Therefore, I believe that the fundamental evil, the great God-denying crime of society, is the iniquitous system under which men are permitted to put into their pocket, confiscate, in fact, the community-made values of land, while organized society confiscates for public purposes a part of the wealth created by individuals. Do you agree to that?

Using a concrete illustration: I own in the city of Philadelphia 11½ acres of land, for which I paid 32,500 dollars a few years ago. On account of increase of population and industry in Philadelphia, that land is now worth about 125,000 dollars. I have expended no labor or money upon it. So I have done nothing to cause that increase of 92,500 dollars in a few years.

My fellow-citizens in Philadelphia created it, and I believe it therefore belongs to them, not to me. I believe that the man-made law which gives to me and other landlords values we have not created is a violation of the divine law. I believe that Justice demands that these community-made values be taken by the community for common purposes instead of taxing enterprise and industry. Do you agree?

That is my creed, my faith, my religion. Do you teach that, or anything like it, in your theological school? If not, why not?

I have a right to ask, since you have asked me for money. If you agree to my propositions, but do not teach them, tell me why. If I am in error, show me in what respect. I am using all the money I have to teach my creed, my faith, my religion, as best I can. I am using it as best I know how to abolish the Hell of civilization, which is want and fear of want. I am using it to bring in the will of our Father, to establish the Brotherhood of Man by giving each of my brothers an equal opportunity to have and use the gifts of our Father. Am I misusing that money? If so, why, and how?

If my teaching is wrong and contrary to true religion, I want to know it. I take it that if you are not teaching religion to its fullness, you wish to know it. Am I correct?

What I teach may be criticized as mixing politics with religion, but can I be successfully attacked on that ground?

Politics, in its true meaning, is the science of government. Is government a thing entirely apart from religion or from righteousness? Is not just government founded upon right doing?

If my religion is true, if it accords with the basic principles of morality taught by Jesus, how is it possible for your school to teach Christianity when it ignores the science of government? Or is your school so different from other theological schools that it does not teach the fundamental moral principles upon which men associate themselves in organised government? Do you question the relationship between taxation and righteousness?

Let us see. If government is a natural growth, then surely God’s natural law provides food and sustenance for government as that food is needed; for where in Nature do we find a creature coming into the world without timely provision of natural food for it?

It is in our system of taxation that we find the most emphatic denial of the Fatherhood of God and the Brotherhood of Man, because, first, in order to meet our common needs, we take from individuals what does not belong to us in common; second, we permit individuals to take for themselves what does belong to us in common; thus, third, under the pretext of taxation for public purposes, we have established a system that permits some men to tax other men for private profit.

Does not that violate the natural, the divine law? Does it not surely beget wolfish greed on the one hand, and gaunt poverty on the other? Does it not surely breed millionaires on one end of the social scale and tramps on the other end? Has it not brought into civilization a hell, of which the savage can have no conception? Could any better system be devised for convincing men that God is the father of a few and the stepfather of the many? Is not that destructive of the sentiment of brotherhood?

With such a condition, how is it possible for men in masses to obey the new commandment, “that ye love one another”? What could more surely thrust men apart? What could more surely divide them into warring classes?

You say that you need money to train young men and fit them “to carry the Word to the heathen of foreign lands, and thus be instrumental in dispelling the darkness that reigns among millions of our brethren in other lands.” That is a noble purpose. But what message would your school give to these young men to take to the benighted brethren that would stand a fire of questions from an intelligent heathen? Suppose, for example, your school sends to some pagan country an intelligent young man, who delivers his message; and suppose an intelligent man in the audience asks these questions:

“You come from America, when your religion has been taught for about 400 years, where every small village has one of your churches, and the great cities have scores upon scores. Do all the people attend these churches? Do your countrymen generally practice what you preach to us? Does even a considerable minority practice it? Are your laws consistent with or contrary to the religion you preach to us? Are your cities clean morally in proportion to the number of churches they contain? Do your courts administer Justice impartially between man and man, between rich and poor? Is it as easy for a poor man as for a rich one to get his rights in your courts?

You have great and powerful millionaires. How did they get their money? Have they more influence than the poor in your churches and in your congress, your legislatures and courts? Do they, in dealing with their employees, observe the moral law that “the laborer is worthy of his hire”? Do they treat their hired laborers as brothers? Do they put children to work who ought to be at play or at school? Do your churches protect when the militia is called out during a strike, or do they forget at such times what Jesus said about the use of the sword?

After four centuries of teaching and preaching of your religion in your country, has crime disappeared or diminished? Have you less use for jails? Are fewer and fewer of your people driven into madhouses, and have suicides decreased? Is there a larger proportion of crime amongst Jews and infidels than among those who profess the Christian Religion?”

What answers would your missionary return to these questions? How would you answer them?

I do not attack Christianity. The foregoing questions are not intended as criticism of the great moral code underlying Christianity, but as criticism of the men who preach, but do not practice that code. My contention is that the code of morals taught to the fishermen of Galilee by the Carpenter of Nazareth is all-embracing and all-sufficient for our social life.

I shall be glad to contribute to your theological school or to any other that gets down to the bedrock of that social and moral code, accepts it in its fullness, and trains its students to teach and preach it regardless of the raiment, the bank accounts, the social standing or political position of the persons in the pews.

–         Joseph Fels

Prosper Australia has every reason to be proud of its new documentary “Real Estate 4 Ransom” which debuted to a packed audience at the Australian Centre for the Moving Image at Federation Square in Melbourne last night.

Fast, focused and entertaining, it is a tribute to co-directors Karl Fitzgerald and Gavin Emmanuel that they were able to produce such complete, timely and powerful insights on a shoestring.

Whilst economics is often boring, this wasn’t the case as “Ransom” transported its audience right to the heart of the reasons for the global financial collapse.  It is arguable even the resplendent and commercially successful “Inside Job” failed its viewers against this criterion, settling instead only for a fascination with crooked financial personalities and the Glass-Steagall Act.

As “Ransom” exposes a connection between the world’s tax systems, escalating land prices and the financial collapse, l hope it finds a much wider audience than last night’s obviously appreciative one.

It most certainly merits it.

The rioting in England is indefensible, but how to understand it?

I’ve mentioned several times throughout these blogs that the rent of land represents community.  However, although land and natural resource rent is community-generated, less and less of it has been captured back for public revenue over the last forty years.  Thereby, a sense of a community has been lost.

That’s because it has become fashionable to privatise the rent of land and natural resources in the misbegotten belief that ‘user pays’ and increased taxation is preferable to the public capture of publicly created resource rents. It is largely privatisers of our natural resource rents who’ve been able to put about this self-serving idea. And they’ve sold it successfully to government.

The cumulative effect of the process over forty years has been to widen the gap between rich and poor. This now vast divide is well documented, but the role of land rent remains virtually invisible.

Right wing shock jocks consider that parasitic leeching of natural resource rents by private interests is respectable employment, and, unable to think through the logical consequences, they’re flabbergasted by London’s street riots.

The rising of the hun in the city is obviously a function of poverty and dispossession. Feeling disenfranchised and disconnected, these predominantly lower class youth exhibit their hate for a system that keeps them down and often unemployed whilst bank CEOs who crashed the system flaunt their multi-millions.  Unlike many of us, the rioters see the game is rigged and their frustration has spilled over into aggression and excess.

But it’s not just happening in the west.  It’s a worldwide contagion.  This compelling cover story in India’s national magazine “Frontline” shows private rent-seeking is also doing gangbusters in India.

Dear Austan,

You didn’t reply to my last e-mail on 10 March 2009, but that’s OK, because I know you’re pretty busy. But most people can see this thing’s become a full-blown financial depression now, and I thought you might be more interested in what I want to suggest to you this time around.

I e-mailed you because I know you’re a mate of President Barack Obama’s, and you might convey to him this recipe for a quick exit from this collapse.

It’s all about the ONLY way to get out of it, Austan. Nothing else can possibly work, believe me. There’s much history to this effect.

President Obama needs to do a near-immediate tax shift, off producers, off workers, off exchange and thrift – and onto the rent of land and natural resources.

We’ve just had a major inquiry into tax reform here in Australia, Austan. The panel for ‘Australia’s Future Tax System’ was headed up by Treasury Secretary, Ken Henry. Henry and his panel did a great job.

The panel has come out in favour of abolishing most of our hopelessly inefficient taxes and getting significantly more rent revenue from mineral resources and from land.

The mining tax is being amended to a less effective format, but it’s going ahead. There’s to be a public meeting in Parliament House, Canberra, from 4th to 5th of October this year to see what other of Ken Henry’s panel recommendations Australia ought to employ.

I’m hoping we’ll take up the recommendation for an all-in single rate land tax – more correctly (as you’d realise) a land rent.

That’s because, as you’ll see at this particular hyperlink, the land rent/tax has an incredibly strong pedigree.

You’ll know, as any economics text book says, Austan, the charge on land values won’t be able to be passed on in prices, and it will help to allocate our natural resources more efficiently. It will put an end to monopoly and speculation in land, virtually reversing the process that led to this financial collapse, because we’ll also be taking taxes off productivity and getting things moving again.

Such a revenue shift will give all the right signs to productivity.

We have a politician here, Barnaby Joyce, who warned us of this ‘economic Armageddon’.  I doubt, however, he’ll take it further, because it would need guts for him to take the next step and press for the implementation of Ken Henry’s reformed State land tax to get us out of this mess.

I hope you might have the gumption to do so with President Obama, Austan.

Good luck, and best regards,

–      Bryan Kavanagh