A BLAST FROM THE PAST MAKES A POINT

Radio interview with Maurice Fabrikant on ABC Radio 774

Maurice Fabrikant, then President of Tax Reform Australia was invited onto Melbourne ABC 774 Radio’s  “Drive” Program on 20 August 1998 by Terry Laidler, ‘to explain the ideas of Henry George’.

On arrival, Maurice observes that academic, and former editor of Australian Tax Forum, Rick Krever, is also present in the studio.  Laidler, a bright interviewer, former priest, and now also an academic himself, may have become a little uncomfortable at the thought of interviewing a Georgist on his own, so it seems Krever has been brought along to ‘ride shotgun’, so that Laidler can better present himself as the ‘impartial’ interviewer. This interview is typical of the “good cop, bad cop” approach.

Henry George wrote his magnum opus Progress and Poverty after he had been given the sinecure position, Inspector of Gas Meters. That does not deter Krever from turning George into an uneducated gas meter-reader. The interview is a classic!  Look for all the usual diversions [from Laidler], and ad hominems [from Krever], that Georgists have come to expect in radio interviews. Remember, these men are not simpletons; they are both academics!

[INTRODUCTIONS …]

TERRY LAIDLER (TL):   …but I think what the Henry George League, and Maurie Fabrikant here representing it, is arguing is that the system which we know is a good one – you pay for what you take from the public domain and appropriate it to yourself – can be applied across the board.

RICK KREVER (RK):  Yeah, I always point it out, there’s certainly a long held, a lot of support for it over a long period, indeed Henry George came up with the theory in 1879, so it’s more than 100 years old now, and, well, it was a period when there was a lot of economic turmoil around the world. Karl Marx was writing “Das Kapital”, the movements towards income tax for the first time in a lot of developed countries, and faced with a lot of depressions and a lot of fluctuations in the market, a lot of Utopian economists – although Henry George wasn’t actually an economist, he was a gas meter reader, self-taught, who left school before he was 14, left school at 13, got on sailing ships, went to Canada to, trying to remember back to my history, but he went to Canada to go to the gold rush, missed the gold rush, got there too late, went back to California, got a job as a gas meter reader for the state government and starting reading, literally started reading economics, and came up with this theory which is….

TL:  Just because it’s an old idea doesn’t mean that it’s a bad idea.

RK:  No, no, no – but I’m just saying, just to understand, to put it in context, it was a time when people were looking for, …obvious, simple solutions ….that is, the world was really complex, so people look for an answer, there was half a dozen at the time, his has lasted longer….

TL:  But the simplicity argument with taxation has come back again – we’re been told this version of a consumption tax that we’re looking at in Australia at the moment is a better one because it’s simple. I can think of a whole lot of other consumption tax regimes you could have but one of the criteria you use to assess it is simplicity, and that’s what’s appealing with what Maurie’s arguing

RK:  Well, I think everyone agrees you want a simple tax – complex taxes cost the community money, they cost taxpayers money, they cost the government a lot to administer them. The difference between this proposal and others is it’s unique – that is, we get rid of everything, we have one tax, that solves all the problems, and I guess one of the reasons it never sort of caught on – two reasons it never caught on – One, the world’s a little too complex for simple solutions, so that it can’t apply to all sorts of modern commerce and modern transactions, and it also doesn’t work very well as it turns out, if you have an international economy. That is, you could possibly do it, indeed Hong Kong sort of did it for a little while, with a lot of reliance on land taxes in Hong Kong as the main source of revenue, but in terms of international trade it’s hard to do.

TL:  It’s not just a land tax you’re arguing for, is it, as I understand it, Maurie?

MAURIE FABRIKANT (MF) [at last !]:  … Natural resources, Terry – whatever is not man-made and to which some exclusive access has been granted to an individual or to a corporation – well, that individual or corporation has to compensate the rest of the community because …

TL:  So you don’t have any problem with a pollution tax? If I’m going to burn something and emit it into the atmosphere, I’m using up, in a real sense, the clean air, so you’d have no problem with that sort of tax?

MF:  Except that I believe that it would be very, very difficult to measure

TL:  A carbon tax – people are talking about it all around the world at the moment?

MF:  Yeah, well, what are the details, Terry?

TL:  Substantially, you pay on the basis of the amount of carbon dioxide you emit.

MF:  How is that measured?

TL:  Well, in millimoles – I don’t know.

RK:  It happens in a lot of countries, actually. And what they do, they simply say, “How much petrol produces how much carbon dioxide, so you tax at the input levy – you tax natural gas, petrol, coal and so forth.

MF:  Does that mean that I would be taxed more if I performed vigorous physical exercise because I’m going to exhale more carbon dioxide in a 24 hour period?

TL:  Well, I don’t know – I don’t think they could do that, could they?

MF:  Well, why would there be an exemption on my exhalations but no exemption on the use of a motor car?

TL:  Because I think, relative to the amount of carbon dioxide a car puts out, you’re pretty – now you won’t like this – you’re pretty insignificant, Maurie!

…………………

[Pay-As-You-Earn distraction on the timing of tax collection]

………………..

TL:  Do you have a view on this, Maurie, or are you so committed to the fact that an income tax is wrong that you won’t even have a view on which way you’re  going to collect it if you have one?

MF:  Terry, I believe that it’s incontestable that as you increase the rate of income tax you reduce the rate of employment. Now, if we’re really serious in trying to reduce unemployment, then we must reduce taxes on labour. Now, I don’t see any way over that.

TL:  OK, so the way you collect it is incidental, the tax itself is the problem.

MF:  Exactly!

RK:  It’s interesting, though, if you look at the empirical evidence, the United States had it’s period of highest employment – the top rate was just over 90% – and that, historically, most countries that rely more on income tax …. have …. higher rates of employment, so I don’t know if you’d  want to start drawing those conclusions.

TL:  The empirical evidence is against you, Maurie.

MF:  Well, I’m not even sure that’s true. It may well be that the maximum marginal rate is very very high, but the rates for the average person may be quite low. Until we know what the details are, I don’t think the generalisation Rick made is necessarily accurate.

…………………….

[Equity query]

…………………….

TL:  I think the equity argument, as it applies to taxation, Rick, typically means a theory which says, “Those who have access to more wealth contribute more to the common good.” That’s  basically how the phrase is used  in the taxation system, isn’t it?

RK:  Yeah, “ability to pay” is the catchword.

TL:  You say it’s wrong, of course, Maurie. You say that the generation of wealth is something we should encourage – it’s the use of resources when it’s inequitably distributed that’s accounted for in your taxation system.

MF:  I’m not sure that I followed all of that, Terry, but I would like to say that just because somebody earns a large income doesn’t necessarily mean that they have a great ability to pay because they may have some very, very heavy expenses. Now, regrettably, the personal income tax system does not allow most people to claim for highly legitimate expenses, so basically personal income taxes are based on gross income, which is grossly unfair.

TL:  Here’s an idea that came in an email the other day from a guy who – I can’t think of his name  – suggesting that, to the extent that there was an argument for a consumption tax to combat the Black Economy, there was a much simpler solution. He was suggesting that money have a “Use By Date” – that, in fact, a note was only current for 5 years, and that, every 5 years, you can see your “Use By Date” on your money, and every 5 years it had to be traded in at a bank for another note of an equal value, and that  way – at least every 5 years – any money that retained any value would move through the banking system and so there’d be no Black Market.

RK:  There isn’t much of a cash economy any more, really. We talk about this as being the cash economy but people don’t use cash, Terry – I mean, I never use cash… I have little cards that I stick in machines, and buy everything with cards.

TL:  You mightn’t, but I think there’d be a few trades in which you might find there’s cash changes hands.

RK:  Yeah, sure, sure, you might pay with cash but then it goes into somebody’s bank account.

TL:  Right, but it’s got to go into their bank account as something, doesn’t it?

RK:  No, no – our tax system doesn’t look at that at all, in fact the empirical evidence again – I hate to bring that up – the empirical evidence is that goods and services tax don’t touch the cash economy. They in fact lead to a huge blowout in the cash economy – that’s what’s happened elsewhere.

…………………

[query about a bank debits tax]

…………………

TL:  Is it just too simple? Could you combine the two ideas – the idea of money with a use-by date and only a banks’ transactions tax to make sure that all value that passed around in the community got taxed?

MF:  Terry, I can’t quite cope with this use-by date business. OK, if I’ve got a coin which is going to be absolutely useless to me tomorrow, OK, I go to a bank and I trade it in on a different coin. How the hell does that help anybody?

TL:  Well, I suppose you’d then have to put in place some taxation system on bank transactions.

MF:  We already have that.

RK:  There’s a movement in Queensland, a strong one similar to site value as a single answer – they say the only tax we have is taxing bank transactions. Unfortunately, it ignores the fact that you’d don’t have to move money through an Australian bank so that we wouldn’t actually be taxing anybody but, yeah, it’s another Utopian tax, as they call them. Come up with the …..

TL:  So you’re a “Repair Restore & Refine the current system” man, Rick?

RK:  Well, I think that’s right. I think that the more tax bases you have, the less damage there is if you got it wrong.

TL:  And, Maurie, you are still absolutely committed to basically some sort of natural resource rental taxation?

MF:  Terry, we can look at every country in the world – most of them derive most of their income from taxes on labour or taxes on exchange, and all of these countries are heading downhill.

………………..

[Program closes shortly thereafter]

If he was lucky, Maurie Fabrikant may have been permitted two minutes on Laidler’s program. The purported reason for the interview, remember, was to get the President of Tax Reform Australia to explain the benefits of the ideas of Henry George!

The tactic was classical. That’s how you work for the status quo.

You will unfortunately always be able to find any number of ignorant academics who will divert, obfuscate and deride, rather than discuss how Henry George’s ideas would make the plutocracy pay their fair share, stop bubbles and recessions, reduce land prices, and reduce all those taxes that tear societies apart … as is happening now in Greece, Ireland, Spain, Portugal, Italy … and across the USA.

Fortunately for Australia, Ken Henry’s panel reviewing Australia’s Future Tax System has considered with greater intellectual rigour than most academics the positive implications of land and resource rents .

PUBLIC DEBT AND INDIRECT TAXATION

Governments of the world, please note these wise words concerning why we refuse to be shackled to “public debt”.

We are, however, happy to pay our fair share of all proper government expenses. This will be found to be based upon the value of the land and resources we use or take, not upon what we earn or make.

THe US needs no further “public debt”, Barak Obama!

MAPPING THE TRUTH

I’ve always been amazed that early map makers were able to make such accurate charts. Sure there were errors. Amongst several other things, in his 1570 map of the world Abraham Ortlelius had attached the great south land of Australia to Antarctica.

But cartographers sought the truth, always progressing their science with the passing of the years.

By the end of the first decade of the 21^st century, we like to believe we are at the leading edge in all fields of study, but it aint so.

We’ve particularly retrogressed in the study of economics, because the plutocracy wants it that way. Some will say there are parallels in the areas of pharmacology, civics and government, but we’re patently in the throes of seeing modern economics exposed for the fraud it is.

In 1879 Henry George’s “Progress and Poverty” spelled out in detail the deceit undertaken by privileged interests in siphoning off the economic rent arising from the existence of the populace at large.

Although rent is as a surplus generated in the production process from nature, after deduction of costs and normal profits, the plutocrats didn’t want people to see things as shown in “Progress and Poverty”.  So, in a state of apoplexy at the favourable reception capital and the working classes gave to George’s exposition, the plutocracy bribed top economists to turn the science of economics into an arcane art form that would take people off the scent.

Mason Gaffney documented this chicanery in Neo-classical Economics as a Stratagem against Henry George in “The Corruption of Economics” (with Fred Harrison, Shepheard-Walwyn Ltd., London, 1994). It describes how the perpetrators airbrushed land in with capital, and classical economics morphed into the faux mathematics of neo-classical economics. There was no longer a clear distinction between nature (‘land’ in the lexicon of economics) and those articles fashioned from nature by workers into capital.

It’s unsurprising, then, that the Georgist School was over-represented amongst heterodox economists who were able to forecast the financial collapse.

Those who forecast the global financial collapse who weren’t Georgist by inclination were influenced either by study of the credit or property markets, both of which are proxies for the land price and tax pathologies of which Henry George wrote.

Since the GFC, formerly fainthearted economists, the likes of Joseph Stiglitz and James K Galbraith, have started to speak out about the manner in which economics has been doctored by removal of the land market from all studies. That’s a heartening development, because we need to discover and map the quantum of natural resource rent and its potential to remove the damage wrought by taxation on production and employment.

Unless we wish to remain in a limbo of financial collapse, Australians should take a peep at the map produced by Ken Henry’s panel for “Australia’s Future Tax System”.

Like Abraham Ortelius’ map of the world, the Henry review isn’t perfect, it can be improved upon, but it’s not founded upon the grand lie regarding land and resources upon which modern economics is now based.

PARADIGM SHIFT OCCURRING?

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Hegemony :  “Political and economic control exercised by a dominant class, and its success in projecting its own way of seeing the world, human and social relationships as ‘common sense’ and part of the natural order by those who are, in fact, subordinated to it.” – Fontana Dictionary of Modern Thought

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So here we are.  And it’s not a pretty picture, is it? All the graft, corruption, theft, fraud, bubbles in land prices, resource depletion, debt and warmongering coming home to roost: all of it perfectly legal and institutionally sanctioned.

Then there’s the second level of social disintegration: the massive amount of poverty-induced crime stemming, as a spin-off, from the abovementioned ‘legalised’ robbery: petty theft; violence; drug-related and other anti-social behaviours.

We do bother to lock up perpetrators for these misdemeanors because there are laws against such petty social crimes, and we feel a little safer when these people are off the streets; in America particularly.

But we’re unprepared to revisit first principles, and there are no laws against the plutocracy siphoning off the people’s rent. It is they who should be behind bars and their lock-up keys sent moonward.

And so it is that the people’s right to their rent doesn’t head up any Bill of Rights.  We’re constantly assured by proponents we don’t need any Bill of Rights which bothers to account for the economic rent owed to the community.

It all went wrong when the powers that be somehow managed to convince us we ought to dispense with the idea of a quit rent from time immemorial payable both for the occupation of leasehold or freehold land. Revenue must come from taxes upon us, they said – and we were foolish enough to believe them.

The first man who, having enclosed a piece of ground, bethought himself of saying, “This is mine”, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes, might not anyone have saved mankind by pulling up the stakes, filling in the ditch, and crying to his fellows, “Beware of listening to this imposter; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.” Jean Jacques Rousseau (1712-1778) “Social Contract”

The legal system has become hopelessly enmeshed and complicit. With some notable exceptions*, it acceded to this monumental corruption. The churches went for it in a big way, too, because it reduced or exempted charges on their lands, and the study of economics fell in with this  grand play by hiding the reality of economic rent from rigorous analysis.

We fell for this – the world’s greatest con trick – hook, line and sinker, even seeing to it that any charges remaining on land or real estate (now incorrectly deemed to be ‘private property’) fell at the closest level of government, so we can simply pop down to the Town Hall and complain about them. This usually gets the support of big money and leads to such results as the property tax ceiling which wrecked California (commonly known as Proposition 13).

Mario Cuomo is about to try his hand at wrecking New York State by the same means, and Congressman Silver wants to do likewise for the city of New York. I’m sure they’ll succeed, because gross stupidity rules at this particular time in history.

Don’t fret, however …. be not solicitous, folks!  There’s good news. Charles Hugh Smith says we should relax and go with the flow, a necessary major paradigm shift is upon us, and I believe he may be right.

Tom Shadyac’s pretty relaxed about this enormous transformation, too.

I’d like to think we’re about to have the next of the “Great Religious Awakenings” Mason Gaffney believes may be underway.  The churches certainly need it, because they’ve forgotten their preferential option for the poor by having sold out to wealthy benefactors.

Seen in this light, the depression shouldn’t frighten us at all. Sit back, fasten up, and enjoy the ride, folks …. we’re in the early stages of a sorely needed paradigm shift.

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The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the creator
….there is no foundation in nature or in natural law why a set of words upon parchment should convey the dominion of land. – William Blackstone (1723-1780) “Commentaries”

I find it very difficult to disagree with the principles of Henry George …. I believe in the taxation of land
values only. – Justice Louis Brandeis (US Supreme Court)

In a society taxing labour, capital, thrift and industry, the concept of the economic rent of our natural resources can be difficult to get your head around .

Frank de Jong of EarthSharing Canada does a great job in explaining it in this interview.

The reaction of the two interviewers is typical.  Thanks to Frank’s clear exposition, they become receptive.  They see the cleverness and importance of the principle, but also foresee the political hurdles, first, educating people to the idea, then withstanding attacks from those vested interests holding monopoly ‘rights’ over economic rent.

AN ICELANDIC IRELAND?

David McWilliams has just provided a fine analysis of Ireland’s financial plight.
I commented on it:-

David says: “… we are being excluded from the bond market not because we might default on bank debt but because we won’t!”

That’s incredible, isn’t it?

When will the big boys learn that for Ireland and Greece to succeed financially, they must select the route chosen by Iceland?

For the sake of the world financial collapses we are about to experience (yes, including the so-called “strong” Australian economy) the term “the Icelandic option” should immediately graduate into common usage.

Of course, all countries can’t default on their international debt yet, but I agree with David McWilliams that it’s time Ireland and Greece chose to do so.

This would resolve the uncertainty, hanging like the sword of Damocles over Ireland and Greece, in the same manner Michael Hudson observes it’s been resolved for millennia. It’s only bank handmaidens Enda Kenny and George Papandreou that stand in the way.

Ireland and Greece must select the Icelandic option, because debt that can’t be repaid, won’t be repaid, no matter how the banks might try to tell us otherwise as they seek to shackle us, for decades, to their sins.

Hudson forecast the global financial crisis and is worth reading

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How a $13 Trillion Cover

Story was Written

If you’re up for a bit of philosophy, you might want to hear former Australian Treasury tax expert Dr Terry Dwyer suggest that taxation has subordinated our natural rights to the political numbers game.

It’s a gallant foray into the manner in which a rampant utilitarianism has acted to destroy our rights at natural law.

Scroll down on this page to the seventh item “4. Is Taxation Immoral?” for Terry Dwyer’s challenging address to Christians for an Ethical Society.

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Posting Dr F.W.G. Foat’s early 20^th century article yesterday reminded me of setting up the EarthSharing site in 1995 and doing all the HTML work myself.   Foat’s strong piece on LAND was one of the first I posted on EarthSharing.

The website featured a revolving Earth accompanied the Star Trek “Voyager” theme.

OK, so it’s kitsch-looking and outdated – a bit like the appearance of this website – but isn’t it content that matters?

Let’s complete this little 100-year retrogression with some revealing thoughts on poverty and land price from Winston Churchill. His mum was a Henry George supporter, and he probably learnt Georgism on her knee.

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LAND PRICE AS A CAUSE OF POVERTY

Winston Churchill’s Speech in the House of Commons, 4 May 1909,
in response to Mr AJ Balfour, Leader of the Opposition

The immemorial custom of nearly every modern State, the mature conclusions of many of the greatest thinkers, have placed the tenure, transfer, and obligations of land in a wholly different category from other classes of property. The mere obvious physical distinction between land, which is a vital necessity of every human being and which at the same time is strictly limited in extent, and other property is in itself sufficient to justify a clear differentiation in its treatment, and in the view taken by the State of the conditions which should govern the tenure of land from that which should regulate traffic in other forms of property.

Unearned Increment

When the Leader of the Opposition seeks by comparisons to show that the same reasoning which has been applied to land ought also in logic and by every argument of symmetry to be applied to the unearned increment derived from other processes which are at work in our modern civilisation, he only shows by each example he takes how different are the conditions which attach to the possession of land and speculation in the value of land from those which attach to other forms of business speculation.

“If,” he inquires, “you tax the unearned increment on land, why don’t you tax the unearned increment from a large block of stock? I buy a piece of land; the value rises. I buy stocks; their value rises.” But the operations are entirely dissimilar. In the first speculation the unearned increment derived from land arises from a wholly sterile process, from the mere withholding of a commodity which is needed by the community. In the second case, the investor in a block of shares does not withhold from the community what the community needs. The one operation is in restraint of trade and in conflict with the general interest, and the other is part of a natural and healthy process, by which the economic plant of the world is nourished and from year to year successfully and notably increased.

Landowner and Railway

Then the right hon. gentleman instanced the case of a new railway and a country district enriched by that railway. The railway, he explained, is built to open up a new district; and the farmers and landowners in that district are endowed with unearned increment in consequence of the building of the railway. But if after a while their business aptitude and industry create a large carrying trade, then the railway, he contends, gets its unearned increment in its turn.

But the right hon. gentleman cannot call the increment unearned which the railway acquires through the regular service of carrying goods, rendering a service on each occasion in proportion to the tonnage of goods it carries, making a profit by an active extension of the scale of its useful business – he cannot surely compare that process with the process of getting rich merely by sitting still? It is clear that the analogy is not true.

The Glasgow Example

I do not think the Leader of the Opposition could have chosen a more unfortunate example than Glasgow. He said that the demand of that great community for land was for not more than forty acres a year. Is that the only demand of the people of Glasgow for land? Does that really represent the complete economic and natural demand for the amount of land a population of that size requires to live on? I will admit that at present prices it may be all that they can afford to purchase in the course of a year. But there are one hundred and twenty thousand persons in Glasgow who are living in one-room tenements; and we are told that the utmost land those people can absorb economically and naturally is forty acres a year.

What is the explanation? Because the population is congested in the city the price of land is high upon the suburbs, and because the price of land is high upon the suburbs the population must remain congested within the city. That is the position which we are complacently assured is in accordance with the principles which have hitherto dominated civilised society.

The “Poor Widow” Bogey

But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement.

Sometimes it is the widow. But that personality has been used to exhaustion. It would be sweating in the cruellest sense of the word, overtime of the grossest description, to bring the widow out again so soon. She must have a rest for a bit; so instead of the widow we have the market-gardener – the market-gardener liable to be disturbed on the outskirts of great cities, if the population of those cities expands, if the area which they require for their health and daily life should become larger than it is at present.

What is the position disclosed by the argument? On the one hand, we have one hundred and twenty thousand persons in Glasgow occupying one-room tenements; on the other, the land of Scotland. Between the two stands the market-gardener, and we are solemnly invited, for the sake of the market-gardener, to keep that great population congested within limits that are unnatural and restricted to an annual supply of land which can bear no relation whatever to their physical, social, and economic needs – and all for the sake of the market-gardener, who can perfectly well move farther out as the city spreads and who would not really be in the least injured.

The Mother of All Monopolies

From a Speech Delivered at King’s Theatre in Edinburgh on 17 July 1909

It is quite true that land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies – it is a perpetual monopoly, and it is the mother of all other forms of monopoly. It is quite true that unearned increments in land are not the only form of unearned or undeserved profit which individuals are able to secure; but it is the principal form of unearned increment which is derived from processes which are not merely not beneficial, but which are positively detrimental to the general public.

Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position. Land, I say, differs from all other forms of property in these primary and fundamental conditions.

Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same and are similar in all respects to the unearned increment in land.

Misleading and False Analogies

They talk to us of the increased profits of a doctor or a lawyer from the growth of population in the towns in which they live. They talk to us of the profits of a railway through a greater degree of wealth and activity in the districts through which it runs. They tell us of the profits which are derived from a rise in stocks and shares, and even of those which are sometimes derived from the sale of pictures and works of art, and they ask us – as if it were the only complaint: “Ought not all these other forms to be taxed, too?”

But see how misleading and false all these analogies are. The windfalls which people with artistic gifts are able from time to time to derive from the sale of a picture – from a Vandyke or a Holbein – may here and there be very considerable. But pictures do not get in anybody’s way. They do not lay a toll on anybody’s labour; they do not touch enterprise and production at any point; they do not affect any of those creative processes upon which the material well-being of millions depends.

Rewards for Service

If a rise in stocks and shares confers profits on the fortunate holders far beyond what they expected or indeed deserved, nevertheless that profit has not been reaped by withholding from the community the land which it needs, but, on the contrary, apart from mere gambling, it has been reaped by supplying industry with the capital without which it could not be carried on.

If the railway makes greater profits, it is usually because it carries more goods and more passengers. If a doctor or a lawyer enjoys a better practice, it is because the doctor attends more patients and more exacting patients, and because the lawyer pleads more suits in the courts and more important suits. At every stage the doctor or the lawyer is giving service in return for his fees, and if the service is too poor or the fees are too high other doctors and other lawyers can come freely into competition. There is constant service, there is constant competition; there is no monopoly, there is no injury to the public interest, there is no impediment to the general progress.

Fancy comparing these healthy processes with the enrichment which comes to the landlord who happens to own a plot of land on the outskirts or at the centre of one of our great cities, who watches the busy population around him making the city larger, richer, more convenient, more famous every day, and all the while sits still and does nothing.

Enrichment Without Service

Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people. Many of the most important are effected at the cost of the municipality and of the ratepayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is sensibly enhanced. He renders no service to the community, he contributes nothing to the general welfare; he contributes nothing even to the process from which his own enrichment is derived.

If the land were occupied by shops or by dwellings, the municipality at least would secure the rates upon them in aid of the general fund, but the land may be unoccupied, undeveloped, it may be what is called “ripening” – ripening at the expense of the whole city, of the whole country for the unearned increment of its owner. Roads perhaps have to be diverted to avoid this forbidden area. The merchant going to his office, the artisan going to his work, have to make a detour or pay a tram fare to avoid it. The citizens are losing their chance of developing the land, the city is losing its rates, the State is losing its taxes which would have accrued if the natural development had taken place, and that share has to be replaced at the expense of the other ratepayers and taxpayers; and the nation as a whole is losing in the competition of the world – the hard and growing competition of the world – both in time and money.

And all the while the land monopolist has only to sit still and watch complacently his property multiplying in value, sometimes manifold, without either effort or contribution on his part. And that is justice!

Monopoly is the Keynote

But let us follow the process a little further. The population of the city grows, and grows still larger year by year, the congestion in the poorer quarters becomes acute, rents and rates rises hand in hand, and thousands of families are crowded into one-roomed tenements. There are 120,000 persons living in one-roomed tenements in Glasgow alone at the present time. At last the land becomes ripe for sale -that means that the price is too tempting to be resisted any longer. And then, and not till then, it is sold by the yard or by the inch at 10 times, or 20 times, or even 50 times its agricultural value, on which alone hitherto it has been rated for the public service.

The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact, you may say that the unearned increment on the land is on all fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done. It is monopoly which is the keynote, and where monopoly prevails the greater the injury to society the greater the reward to the monopolist will be.

Land Monopoly Hampers Industry

See how this evil process strikes at every form of industrial activity. The municipality, wishing for broader streets, better houses, more healthy, decent, scientifically planned towns, is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town the more it has increased the land value, and the more it will have to pay for any land it may wish to acquire.

The manufacturer proposing to start a new industry, proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase price hangs round the neck of his whole business, hampering his competitive power in every market, clogging him far more than any foreign tariff in his export competition, and the land values strike down through the profits of the manufacturer on to the wages of the workman. The railway company wishing to build a new line finds that the price of land which yesterday was only rated at its agricultural value has risen to a prohibitive figure the moment it was known that the new line was projected, and either the railway is not built, or, if it is, is built only on terms which largely transfer to the landowner the profits which are due to the shareholders and the advantages which should have accrued to the travelling public.

It does not matter where you look or what examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself. and everywhere today the man or the public body that wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an in- ferior use, and in some cases to no use at all. All comes back to the land value, and its owner for the time being is able to levy his toll upon all other forms of wealth and upon every form of industry.

The Error of Public Tollways

A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord’s pocket. If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more. If the opening of a new railway or a new tramway, or the institution of an improved service of workmen’s trains, or a lowering of fares, or a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there.

Some years ago in London there was a toll-bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and returning from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings appealed to the public conscience; an agitation was set on foot, municipal authorities were roused, and at the cost of the ratepayers the bridge was freed and the toll removed. All those people who used the bridge were saved 6d. a week. Within a very short period from that time the rents on the south side of the river were found to have advanced by about 6d. a week, or the amount of the toll which had been remitted.

Neutralising Philanthropy

And a friend of mine was telling me the other day that, in the parish of Southwark, about 350 pounds a year, roughly speaking, was given away in doles of bread by charitable people in connection with one of the churches, and, as a consequence of this, the competition for small houses, but more particularly for single-roomed tenements, is, we are told, so great that rents are considerably higher than in the neighbouring district.

All goes back to the land, and the landowner, who, in many cases, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched, is enabled with resistless strength to absorb to himself a share of almost every public and every private benefit however important or however pitiful those benefits may be.

Let Us Alter the Law

I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual landowner. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally a worse man than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack, it is the system. It is not the man who is bad, it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do, it is the State which would be blameworthy were it not to endeavour to reform the law and correct the practice. We do not want to punish the landlord. We want to alter the law.

Take the case to which I have already referred, of the man who keeps a large plot in or near a growing town idle for years, while it is “ripening” – that is to say, while it is rising in price through the exertions of the surrounding community and the need of that community for more room to live. Take that case. I daresay you have formed your own opinion upon it. Mr. Balfour, Lord Lansdowne, and the Conservative Party generally, think that that is an admirable arrangement. They speak of the profits of the land monopolist, as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate.

The Dog in the Manger

We do not take that view of the process. We think it is a dog-in-the-manger game. We see the evil, we see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and in congested centres of population, and we say here and now to the land monopolist who is holding up his land – and the pity is it was not said before – you shall judge for yourselves whether it is a fair offer or not-we say to the land monopolist – “This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at 10 times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment then at least you shall be taxed at the true selling value in the meanwhile.”

Free Trade – Free Land!

Every nation in the world has its own way of doing things, its own successes and its own failures. All over Europe we see systems of land tenure which economically socially, and politically are far superior to ours; but the benefits that those countries derive from their improved land systems are largely swept away, or at any rate neutralised, by grinding tariffs on the necessaries of life and the materials of manufacture.

In this country we have long enjoyed the blessings of Free Trade and of untaxed bread and meat, but against these inestimable benefits we have the evils of an unreformed and vicious land system. ln no great country in the new world or the old have the working people yet secured the double advantage of Free Trade and Free Land together, by which I mean a commercial system and a land system from which, so far as possible, all forms of monopoly have been rigorously excluded.

An Hour of Tremendous Opportunity

Sixty years ago our system of national taxation was effectively reformed, and immense and undisputed advantages accrued therefrom to all classes, the richest as well as the poorest. The system of local taxation to-day is just as vicious and wasteful, just as great an impediment to enterprise and progress, just as harsh a burden upon the poor, as the thousand taxes and Corn Law sliding scales of the “hungry forties.”

We are met in an hour of tremendous opportunity.

“You who shall liberate the land,” said Mr. Cobden, “will do more for your country than we have done in the the liberation of its commerce.”

By F.W.G. Foat, MA, DLitt.

There is a Secret of History. The mot de l’enigme is Land. The great historians of the rank, for instance, of Mommsen, say the word, but then pass on, as though in haste to leave a dangerous ground. Lesser historians shun the mention of it altogether, or mention it in faltering accents. Time, with its effacement of old meanings, helps this obscurantism and oblivion falls upon the theme.

What is the cause of this conspiracy of silence? The answer is again in one word, landlordism. Historians are protégés of those whose interest lies in keeping dark concerning land. Now a protégé must not discuss what patrons do not wish to mention. But that would come to writing nothing of man’s greatest struggles, longest wars, and bitterest distress. “Well, then, let the historians write of wars, political struggles, and distress in social life. Let them write freely of the things that happened, and the suffering endured. But let them never mention land and the ownership of land as being the ultimate causes of these happenings. They can write out the story, showing their knowledge of the facts; and if they are pressed for explanations they can point to intermediate collateral causes: man’s natural pugnacity, notions of honour, foolish mistakes, wild aspirations towards political freedom, and the like. That will satisfy the few inquiring minds, and the rest will never question. Only no mention of the land and the landlords!”

These were the orders tacitly given by those who had the powers of censorship and suppression of books, removal of professors, and withdrawal of patronage. How could a man explain that land and landlordism were ultimate causes of nearly all wars and sufferings of the peoples, when his payments and his patrons were of the landlord class, or members of that nameless party whose sincere and secret faith was landlordism?

Besides, the peoples loved the soldiers. Tales of great battles always interested. Pity could be awakened and wild patriotism. There was no need to talk of land and ownership in order to fill up the lecture time or make a book of history. “Agrarian laws?” Well, they made such dull reading!

Dull, yes, but the dullness was deliberate, or else was due to plain stupidity. Let us consider a few national histories, and see what could have been made of the story of land and landlordism The national history best known throughout the English-speaking world is that of the “Children of Israel”. The story of the Hebrews is the only history which has been read aloud for centuries in the hearing of the people, and diligently taught in all the schools. It is a story of a struggle to “possess the land”, then to maintain a fair division of it among descendants of the conquerors. The institution of the Jubilee return of lands to their original owners is now known to have been a dream of prophets and idealist lawmakers, but its importance as a principle cannot be over-estimated. Although the cleverer landholders retained (by what the Bible calls oppression) lands of their less ambitious “brethren”, they kept them against the express injunction of the Tribal God – that is, of the prophets and liberators who declared they spoke for Him. “The land shall not be sold for ever”, said Yahweh, “for the land is mine; and ye are strangers and sojourners with me”. (Leviticus XXV. 23).

To paraphrase: “No just man of our people must make claim to permanent ownership of any land: the land has been distributed to all our free men on a principle of equal justice, and the good patriot must be loyal to the general system. No individual can own land absolutely; he has it only in usufruct; it belongs to the whole tribe, and is in the unchanging guardianship of the Nation’s God” .

The usual struggle, of course, went on, in the course of which much land was claimed and kept, and the expropriators got such wealth and influence that they controlled even the opinions of the people; and the peasants of Galilee thought Jesus mad when he declared that the rich men of His time were not the best of men. “How hard it is for a man of property to come to see the higher truth”, the Master pointed out to His disciples. “Well! Who, then can be saved?” the poor men said, in pure bewilderment.

When He went on to pour His condemnation on those same high-placed proprietors because they “devoured” widows’ houses and “for a pretence” made long prayers, “the common people heard Him gladly” – and the landowners knew they must take action.

In the history also of Sparta redistribution of the land was tried. The reforms in this direction, piously credited to the great Lycurgus, were really undertaken by Agis and Cleomenes at a later date. The struggle was keen between the true patriots, who were prepared to give allotments in Laconia to the landless citizens, and those who meant to keep exclusive privilege.

At Rome, again, if there is any meaning in the hundred years’ revolution which divided the Senate (mostly the landowning classes) from the people, from the reforms of Gracchus to the settlement made by Caesar, it is that the people wanted land in Italy and the Senate would not yield it; that the people wanted to assert the principle that the ager publicus was the domain land of the State. i.e., the property of the community alone, and the Senatorial party, with others who came in for profiteering, wanted to keep rent-free the lands assigned to them, and make them instruments of economic slavery; and that the lawless individuals of the nation, tempted by the notion of the absolute ownership, themselves in time and on occasion became petty landlords, too, and asserted the same claim to dominium where they should have been content with usufruct.

Of course there were wars in Italy and in the provinces, and very few of them were about anything but this dominium and its consequences, until at last the Roman world grew weary of the strife, and the great statesman Julius Caesar made some adjustment of the claims of common freedom against privilege. If Caesar had not seen that provinces must live their own lives, in the enjoyment of their lands within one common state, and made the taxation represent acknowledgment at once of freedom and responsibility, there would have been no Roman Empire to endure five hundred years.

The story of our own land for the thousand years between the fifth century and the fifteenth is a story of land and land ownership far more than anything else. Our Saxon forefathers came to win land, and all through the so-called Heptarchy engaged in ceaseless fighting over what they had won.

The Feudal System brought another new order in. The English law (according at least to Coke and Blackstone), asserts that as a changeless principle all land is holden, mediately or immediately of the King, ie., no one can have true freehold land; all land is subject to old charges, services which sale or transfer cannot remit. Civil wars occurred through efforts of land-holders to shake off the claim for these services due to the State or larger community, represented by the feudal overlord.

One meaning of Magna Charta, as Professor Pollard has pointed out, is that it was such an effort; the liberty which certain barons wanted was liberty to decline to render these dues, the “liberty” was a freehold each one wished to have created out of his feudal tenure. The lawless Barons of Stephen’s and other weak reigns were playing the same game, and as in the Roman Republic, so here landless individuals have gradually joined in it, until most Englishmen suppose that land can be private property, and that “freehold” land, so far from owing rent or service to the State, can be actually let or sold to the State, as well as to other tenants or purchasers, for the private profit of the alleged “owners”.

The purchaser of any “freehold” piece of land owes to the community the services which have anciently been charged upon it, for example, that he should present himself in the full armour of a knight on horseback at the call of the proper superior representing the State, unless he pays for another person to go in his place. “But”, it may be said, “such services ceased to be required”; to which the reply is, only when money payment was accepted instead. Again, it may be said: “Well, but it is three hundred years since the claim was made”; to which we reply – then there are arrears long overdue! How else could the public charges have been met? How in the interval have the public moneys been raised? The answer is that they have been raised pro tem. by taxes laid upon the workers’ work, the employers’ capital, and the people’s food and homes gradually and almost secretly: no wonder that historians were not to mention the transference.

No wonder that much was made of John Hampden’s protest against ship-money. No wonder that histories represent the English people as madly desirous of “the vote”, “the Charter”, religious equality, and other desirable things. No wonder that we are supposed to have been oppressed by tyrannous kings. No wonder that the thirst for the destruction of neighbouring peoples and the glory of warfare have been emphasised – anything rather than that the people should know that the one indefeasible title which the English law permits is the title of the whole community to inalienable possession of the land, the soil of Britain. Anything rather than that the peoples of Europe should know that they are fighting each other throughout the centuries, in order that the unlawful ownership of State lands may be left without taxation, and that attention may still be diverted from the history of Land.