July 25, 2015
I think Henry George's analysis of land rent and land speculation exposes a big problem for citizens concerned with the general good of a country. Rent is a surplus stealer.
As you know, the monetary system and lending system are also big problems for nations seeking increasing standards of living for the common man. When every dollar in circulation (as currency or transferable bank deposit) is co-created with a debt obligation equal to that amount (principal = loan amount) plus compound interest, the mathematically inevitable defaults always end with wealth transferred to the creditors, bringing about a nation of a few oligarchs and many powerless paupers.
And the people controlling the perverse money and lending machinery end up owning the land and charging high rent.
Some thoughts on a solution to both problems together:
When businesses begin to concentrate in a geographical area, each new business brings new consumers, workers, and income to that location. With lots of labor and consumers nearby, the place become much better for buying, selling, and producing. Rents obviously increase, the closer a parcel of land is to that center of commerce. (The location may have been picked originally because of its proximity to water, roads, or other centers.)
Henry George points out that all speculators have to do is buy the land before the location is developed, then wait for new enterprise and population around it to increase demand for use of that land – so that rent can be raised and raised, and tenants will be found to pay it.
Henry George offers as his solution the "single tax", as they say, to tax away the surplus and thus fund government to do good things. I am fuzzy on how that solves or does away with the problem.
The solution I favor for both problems is for the government to authorize a legal tender dividend to households – to each citizen human being – that instantly becomes new money (a new deposit in the bank) that people can either spend into circulation or save, as they choose. All new money would be created and distributed in this way, at minimal cost. Very simple: one amount goes to each citizen on a regular basis. This will accomplish one great thing: it will distribute strong demand (purchasing power) throughout the country, concentrated where the population is biggest. But every place where people live will have new money appear for someone to earn.
People will have money to buy more from people around them. They will have money to pool and make available to small entrepreneurs they know. Start-ups will increase because there is more hope of steady demand for the product or service. The new demand will call for the production of a larger "total economic pie" for the people to consume.
Big cities with big populations will be places where demand is very strong, but high rent (following as per Henry George's thesis) will also obtain. The money, however, now follows the people. People can move to lower-rent areas, knowing that all people everywhere have money to spend.
I am opposed to a Federal land tax. I believe the Federal Government should be funded from direct taxation only, and from fees for services (e.g. use of national utilities and national parks). Government should never deficit finance. The Federal Government should repudiate its debt and accept the worst possible credit rating as a way of burning its bridges behind it. It can settle up with foreign governments by giving them all American-citizen-owned assets in other countries. Foreign investment and foreign reserve currency status should be eliminated. Trade must be balanced, and both favorable and unfavorable trade policies must be abandoned.
A city can fund itself with property taxes. A state of the United States can fund itself as their citizens and elected representatives provide.
I favor an excess wealth tax, but not an income tax. Only bankers benefit from income taxes, because income taxes prevent the profitable entrepreneur or worker from self-financing his own expansion from profits. Only the bankers who lend to businesses would want a crazy tax like that. How absurd to tax the incentive to human productivity in providing goods and services to households and businesses.
How to replace the present money and finance system with the populist national money system where banks can't create or destroy money, but are simply intermediaries between people with saved money and entrepreneurs with promising ventures to finance or families who want to buy homes? When each citizen becomes a fount from which new money entering the economy flows, then there will be people wanting people to move and bring their personal "new money fountain" with them. Every city and town will compete to invite people to come there because they bring new money with them. This demand for households will accompany the new demand for labor, giving people the wonderful advantage of living in a society where there is a seller's market for labor. A worker can quit a bad employer, with the assurance that plenty of other employers are looking for workers to meet the never failing demand created by the national new money dividend.
Not only will new enterprises begin, but there will be a new economics of community building, based on attracting people as new money fountains to locations that are underdeveloped but promising.
I mentioned an excess wealth tax. That tax addresses people who own a lot of IOUs and corporation stock, but also people who own a lot of high-rent land. The excess wealth tax is the best of all taxes because, unlike the income tax, it does not penalize productivity. (Then why did we get the income tax in the first place? We got it because the owners of corporations wanted a means of financing World War I – and also a means of taking away money from people earning money, so that the profit-making little man could not roll his profits back into his little company and thereby become a threat to the market share held by the corporations that are owned by bankers.) An excess wealth tax removes wealth that is already amassed and that can only be replaced with more production of goods and services.
Of course, those who are rich get together to prevent such a thing from happening: they form a conspiracy to subvert representative government, so that excess wealth will not be taxed. The conspiracy of rent and interest collectors is to make sure that the crooked system is not altered – and that the general population is dumbed down and misinformed, so that they cannot make an effective challenge to the nation plundering system preferred by the bankers and their allies.
Dick Eastman <email@example.com>
Henry George's land value tax – Phony laissez-faire libertarianism – Land title monopoly – Rentier aristocracy – State property vs. common property