Georgism

URL = http://en.wikipedia.org/wiki/Georgism

Definition

Variety of political movements inspired by the work of Henry George:

1.

"Georgism is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. The Georgist philosophy is usually associated with the idea of a single tax on the value of land. Georgists argue that a tax on land value is efficient, fair andequitable, and will generate sufficient revenue so that other taxes, which are less fair and efficient, can be reduced or eliminated." (http://en.wikipedia.org/wiki/Georgism)

2.

"Georgists tend to believe that all humanity rightfully owns all land in common and that individuals should pay rent to the rest of society for taking sole or exclusive use of that land. People in this movement are often referred to as "single taxers," since they believe that the only legitimate tax is land rent. However, they do typically believe that private property can be created by applying labor to natural resources." [1]

Discussion

What kind of political philosophy is Georgism ?

"One might say that George’s philosophy mixes capitalism and socialism, but it is more accurate to say that it is a distinctive philosophy that is neither capitalist nor socialist.

The central principles of capitalism in its purest form are

1) free exchange of goods in an unregulated market;

2) limited taxes to pay for limited government, and

3) private ownership of property.

The central principles of socialism are

1) government control or regulation of the market;

2) high taxes to pay for expanded government services; and

3) government ownership of major industries (particularly large industries that are prone to monopoly control).

The central principles of Georgism are

1) free exchange of goods in markets, with limited regulation of commerce;

2) no taxes on labor; high taxes on certain kinds of property;

3) private ownership of property, but fully offset by taxes that virtually eliminate unearned wealth.

Georgists agree with socialists that capitalism has failed to reconcile fairness with efficiency. Whereas capitalist policies increase national income, they also cause extreme inequality.

Georgists agree with capitalists that socialism is inefficient because government monopolies are rarely any better than private monopolies. Most policies to help the poor by equalizing incomes have the negative side effect of reducing the productive power of the economy. That is why China and Russia shifted from socialism to capitalism in recent decades.

Georgists believe it is possible to unite fairness and efficiency by taxing away the rewards of privilege so that people can earn money only by being productive. Since much of the power of modern corporations derives from those privileges, proper taxes could reduce that power."

(http://povertythinkagain.com/controversies/a-word-from-the-sponsor-of-the-film-the-end-of-poverty-georgism-capitalism-and-socialism/)

The Defects of Georgism

Author, n.a.:

"Henry George, whom we met earlier, proposed what was perhaps the most prominent idea among economists for solving the monopoly problem. He argued that the “simpler, easier and quieter way” to achieve common ownership than state ownership would be to “appropriate land rent for public use, by taxation.”15 George’s land tax differed from today’s property taxes, which are charged at a low rate, usually 1–2%, but take as a base the full value of a home, which is usually determined by a government appraiser. On the one hand, George’s land tax would have been much higher: the full value of the rent one would have to pay to occupy the land. On the other hand, it would have completely exempted the value of structures built on the land. Assessors would have to determine how much of the house’s value arose from the unimproved land lying beneath the house (that is, how much the property would be worth if the house were knocked down) based on recent sales of nearby vacant lots. This full land value would be taxed away, but the homeowners would keep any extra value created by the structures on the land. Taxing away all such “land rent” would mean that while owners could enjoy the full value of anything they built on the land, they would have to pay to the government any value of the land itself, just as someone who leased the land would. “Land monopolization would no longer pay. Millions of acres, where others are now shut out by high prices, would be abandoned or sold at trivial prices.”

If the government imposes a ax on ownership of land, then people who can use their land productively will do so and be able to pay the tax, while those who would otherwise be happy to let it sit vacant will sell the land in order to avoid the tax. George’s proposals quickly captured the public imagination. Monopoly, perhaps the most popular board game ever, was originally titled The Landlord’s Game. Elizabeth Magie designed it in 1904 as a way to educate the public about George’s ideas. According to the rules we are now familiar with, each player tries to monopolize properties in order to bankrupt the other players and drive them out of the game. However, the original game (which one can purchase from Folkopoly Press on eBay) had different rules under which a tax on land rents (though not on the houses built upon them) funds public works, giving players free access to the utilities and railroads, and paying out a social dividend that augments the wages earned when passing what is now called “Go.”

These rules make domination by one player impossible and ensure that as every player develops her properties, all players benefit. By 1933, American philosopher John Dewey estimated that George’s Progress and Poverty “had a wider distribution than almost all other books on political economy put together.”

Many eminent politicians and thinkers were Georgists, including the aristocratic Winston Churchill, the radical progressive Dewey, and the Zionist visionary Theodore Herzl. Yet Georgism had some serious defects. Because the tax would expropriate all the value of land lying beneath any structure, it provided no incentive for possessors to invest in, or even care for, the land. This is the problem of investment inefficiency. At the time, investment inefficiency for land was not considered a problem, because people thought that land did not need maintenance and the only value that could be added to land was through above- ground structures like houses. But these assumptions ignored environmental damage. As ecologist Garrett Hardin observed many years later, land without a single owner often becomes overgrazed, eroded, and polluted in what he labeled the “tragedy of the commons.”

George’s scheme ran into even greater problems with natural resources that can be depleted, like metal from mines or oil from wells. If all the value of land is taxed away, the possessor of such a resource will remove the oil or ore as quickly as possible, leading to waste. In addition, George’s scheme would have been an administrative nightmare. George distinguished between naturally occurring land, which should be taxed, and everything built on top of it or using it—what he called artificial capital—which should not be taxed. This distinction was, well, artificial. Factories are built from metal drawn from mines and, once built, may be monopolized just as much as land may be. Also, a factory cannot be easily moved about, and it may help develop a neighborhood, which increases the value of the land. This would have made it fiendishly difficult to distinguish between the value arising from the land and the value of the structures built on top of it. Consider, for example, the Empire State Building. What is the pure value of the land beneath it? One could try to infer its value by comparing it to the value of adjoining land. But the building itself defines the neighborhood around it; removing the building would almost certainly change the value of the surrounding land. The land and the building, even the neighborhood, are so tied together, it would be hard to figure out a separate value for each of them. The same would hold true for many neighborhoods, defined less by their purely physical location than by many other factors, such as the look and feel of their architecture and the relationship among buildings, streets, parks, and paths. The Battle for the Soul of “Socialism” George’s ideas gained popularity in the early twentieth century, a period of social upheaval and intellectual ferment. Growing inequality and industrial tensions strained the social fabric of wealthy countries. The Social Democratic party in Germany, the Labor Party in England, the Progressive movement in the United States, and the French Section of the Workers International rose to prominence. Colonies increasingly chafed under the domination of the empires. Two world wars threw the established social order into question and destabilized many governments. In the 1930s, the first truly global depression undermined confidence in traditional laissez- faire capitalism."

(http://assets.press.princeton.edu/chapters/s11222.pdf)

More Information

1. Introduction to Henry George
2. Henry George and the Reconstruction of Capitalism

Websites

1. Resources for high school teachers and home schoolers: http://www.landandfreedom.org/
2. The Henry George Institute: http://www.henrygeorge.org offers free online courses
3. Henry George Foundation: http://www.henrygeorgefoundation.org/
4. The Council of Georgist Organizations (CGO): http://www.progress.org/cgo
5. The Wealth and Want website: http://www.wealthandwant.com/index.htm

Recommended by Kevin Carson of mutualist.org

1. Debbie Clark : Her site includes an extended debate over Georgism with libertarian George Smith.
2. The Geonomy Society: Forum on Geonomics
3. Michael Hudson : Radical economist who has proposed taxes on land value and resource extraction as radical geoist response to neoliberalism in Russia and China.
4. Saving Communities : Dan Sullivan's site. Lots of stuff on how geoist taxation can be used to promote progressive ends (especially eliminating urban sprawl, factory farming, etc.) within a free market framework, and on geoist taxation as an alternative to the regulatory state.
5. Robert Schalkenbach Foundation : Sells lots of classical Georgist literature.
6. School of Cooperative Individualism :

Ralph Borsodi's and Mildred Loomis' organization.

1. Dan Sullivan's main page.