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A Neglected Thinker, Part Three
Mar. 29th, 2024 12:41 pmHere is the next installment of the presentation I gave on February 28, on the topic, “Henry George: A Neglected Thinker, His Thoughts, and Their Relevance in Today’s World.” You may recall that in the second installment, I told a story which was intended to get people thinking about land prices, and how they were the result of things like population and government services, not anything which the particular landowner had done. Then I proceeded to summarize Progress and Poverty:
“With that as a provocation to thought, what did Henry George say in Progress and Poverty? He argued that low wages and the lack of jobs were not due to lack of capital, or to Malthusian overpopulation. He followed the standard political economy of his day in distinguishing land, labor, and capital. (Modern economists mostly conflate land and capital.)
“The Law of Rent: The rental value of land is the advantage a given piece of land has over the best land freely available.
“If there is free land available where a laborer can produce twenty bushels of potatoes, and you own superior land where the same labor can produce twenty-five bushels of potatoes, you can charge a tenant five bushels of potatoes as rent. Or you can pay a worker twenty bushels of potatoes, and keep five for yourself, which is pretty much the same thing. Land does not just mean agriculture; land in a city can be enormously valuable because of access to potential customers, employees, merchants and manufacturers wit( stuff for sale, and so forth.
“So, as productivity increased, most of the benefit went to landlords, not laborers or even capitalists.
“Furthermore, land speculators drove up the price of land and reduced the availability beyond even what the increased rent dictated. A would-be settler in George’s day had to go past unsettled or thinly settled land held as railroad grants, or otherwise owned by speculators, in order to find any land he could homestead or attempt to purchase. In effect, landlords locked laborers out from working, and that was what led to depressions and high unemployment.
“As an aside, a modern economics professor, Mason Gaffney, refined Henry George’s explanation of just how speculative bubbles in land prices lead to crashes and depressions.
“Henry George argued that various proposed remedies would not work, or at best would do very limited good.
“He proposed a single tax on the value of land, and the abolition of other taxes. This would, in effect, make land common property, without interfering with the ability of landowners to use their land as they saw fit, or with the security of their improvements.”
That will do for now. I will proceed to describe the public reaction to this proposal in the next installment.
“With that as a provocation to thought, what did Henry George say in Progress and Poverty? He argued that low wages and the lack of jobs were not due to lack of capital, or to Malthusian overpopulation. He followed the standard political economy of his day in distinguishing land, labor, and capital. (Modern economists mostly conflate land and capital.)
“The Law of Rent: The rental value of land is the advantage a given piece of land has over the best land freely available.
“If there is free land available where a laborer can produce twenty bushels of potatoes, and you own superior land where the same labor can produce twenty-five bushels of potatoes, you can charge a tenant five bushels of potatoes as rent. Or you can pay a worker twenty bushels of potatoes, and keep five for yourself, which is pretty much the same thing. Land does not just mean agriculture; land in a city can be enormously valuable because of access to potential customers, employees, merchants and manufacturers wit( stuff for sale, and so forth.
“So, as productivity increased, most of the benefit went to landlords, not laborers or even capitalists.
“Furthermore, land speculators drove up the price of land and reduced the availability beyond even what the increased rent dictated. A would-be settler in George’s day had to go past unsettled or thinly settled land held as railroad grants, or otherwise owned by speculators, in order to find any land he could homestead or attempt to purchase. In effect, landlords locked laborers out from working, and that was what led to depressions and high unemployment.
“As an aside, a modern economics professor, Mason Gaffney, refined Henry George’s explanation of just how speculative bubbles in land prices lead to crashes and depressions.
“Henry George argued that various proposed remedies would not work, or at best would do very limited good.
“He proposed a single tax on the value of land, and the abolition of other taxes. This would, in effect, make land common property, without interfering with the ability of landowners to use their land as they saw fit, or with the security of their improvements.”
That will do for now. I will proceed to describe the public reaction to this proposal in the next installment.
