George's Economics of Abundance:
Replacing Dismal Choices With Practial Resolutions and Synergies
GroundSwell, March-April 2009]
Introduction: Resolutions vs. Trade-offs
It is part of George's genius that his proposals solve one problem
by resolving it with another, turning two problems into one
solution. It is something like tuning up the orchestra for a
concert, turning dissonance into harmony, and keeping the beat
together, turning cacaphony into rhythm. It is the mark of good
solutions that they reconcile and resolve, rather than simply "trade-off."
That is what George means when he writes that "the laws of
the universe are harmonious." That is what Founding Fathers
like Washington, Jefferson and Franklin meant by a "natural
order." Like them, George is a deist in spirit, a believer in
the consistency of the universe. The concept that some things are
more "natural" than others is not arbitrary. The clue that
one has found the "natural" law is that it makes forces
harmonize and team together instead of clashing, and neutralizing
each other. The principle of constructive synthesis a touch
of Hegel is another way of perceiving the value of turning
cacophony into harmony.
Economists today offer us mainly "trade-offs" and hard
choices. For every good thing we must give up another, so net gains
are just marginal. That is the approved posture:
it makes one seem hard-headed, worldly, and practical.
Too much positive thinking sounds suspiciously optimistic, and
invites rebellious cynical muttering that "there ain't no free
lunch." It goes back at least to Malthus, who offered mankind
the hard choice of food vs. sex. That sort of thinking is what made
people call economics "the dismal science."
A true resolution is much more to be desired. To get one good
thing we get a second one as well. It is remarkable how many "hard
choices" are turned into benign resolutions in George's
program. He is a genius at finding the essential harmony of
interests now concealed beneath confused thinking. Instead of a
dismal trade-off, there is a "free lunch," or "synergy":
the whole is greater than the sum of its parts. Such grand
resolutions, when possible, deserve to be called "true win-win
The most obvious such true win-win solution is putting the
unemployed to work. Recognizing this truth is no monopoly of George:
Keynesian economists long insisted that there is no social cost in
putting the unemployed to work. It is a measure of the bankruptcy
and myopia of many economists today that even those voices are
muted, and that obvious gain is denied: working is called a "sacrifice
of leisure," just another trade-off. Unemployment has become "job-searching."
It is more likely a sacrifice of burglary, vandalism, drug-use, jail
time, loitering, looting, collecting welfare, and sullen misery.
Trading such bad time for the gratification, pride, on-the-job
learning, and moral uplift of working is not a trade-off, but a
double gain. It is a true "free lunch," if you will.
Many economists today react to such ideas with reflexive
disbelief. They put down optimistic claims by calling them "panaceas,"
too good to be true. TAANSTAAFL is their slogan; cynicism their
preferred posture. However, false pessimism is just as false and
damaging as false optimism. A truer slogan is TITSTAAFL: "There
Is Too Such a Thing As A Free Lunch." It's rather a question of
WIGGI?: "Who Is Going to Get It?". Many dismal alleged
trade-offs are just someone's mental blocks that stand athwart the
path to abundance, or, worse, ways to control and exploit us. Often,
in fact, "we can have it all." Is it too good to be true?
Let us itemize the many resolutions of alleged trade-offs and
standoffs that George's program will achieve.
Two of George's resolutions are to reconcile efficiency and
equity, and to square taxes and incentives. That is a good start,
and a compelling vision. What more can a reasonable person ask of
economic policy than to resolve these ancient basic standoffs that
have confused and divided us, blocked understanding, deadlocked
constructive action, and seized up the polity for generations? It is
an achievement on a par with resolving Evolution and Creation,
except George's program is something we can do something about and
put to use. As we proceed, however, we will see sixteen such
resolutions in George's program.
1. Equity, Efficiency, and Incentives
a. Equity and efficiency
George refutes the commonplace idea that we must choose between
equity and efficiency. This idea is premised on identifying "equity"
with price and rent controls designed to help the poor against the
rich; or with counter-incentive progressive income taxation, with
its warping, suppressive effects. George rejects both price
controls and progressive income taxation, and identifies a
different tax policy that brings us both equity and efficiency
together. He would untax productive activity, and instead base
taxes on land, in proportion to its value. This combines the magic
of justice with the magic of incentive.
George's land tax promotes equity toward the landless in at
least four ways.
One, it relieves them of taxes, to the extent that landowners
Two, it makes jobs by removing all tax penalties from hiring
workers, and also because the land tax, a fixed charge, spurs
landowners to use land to earn cash to pay the taxes.
Three, while jobs are generating new money incomes, new
production supplies more goods and services. Those give substance
to the money incomes, precluding inflation such as poisoned the
springs of Keynesian "fiscal stimulus";
Four, it offers the landless new chances to acquire land
themselves, as old owners release surplus lands to the market.
b. Reconciling progressivity and motivation.
A land tax abates concentration of wealth and power without
limiting ambition or enterprise. It taxes wealth while sparing
both capital and income. It puts no cap on ambition and
enterprise, except to redirect those useful traits into creation,
production, hiring, and capital formation, and away from the
zero-sum game of land-grabbing.
It requires no incentive-warping progressive rate: all land is
taxed at the same rate, in proportion to value. The tax achieves
progressivity by using the observed reality that wealth rises with
income, faster than income; and landholdings rise with wealth,
faster than wealth. Otherwise put, the land tax offsets
concentration because ownership of wealth is more concentrated
than income; and ownership of land is more concentrated than other
forms of wealth. As George said, "The great cause of the
concentration of wealth is concentration of the ownership of land."
At the state or local level, George's program is the answer to
California Governor Pete Wilson's dilemma, and every governor's
dilemma: it untaxes and attracts capital, and encourages capital
formation, without giving away the store, or untaxing the rich, or
starving the schools and police. It raises state revenues from the
richest people while attracting business and wealth with the very
same stroke. The unique, remarkable quality of a property tax
based on land ex buildings is that you may raise the rate with no
fear of driving away business, construction, people, jobs, or
capital! You certainly will not drive away the land, however high
the tax rate. Not one square foot will walk out of town. The only
bad thing to say about this tax's incentive effects is that it
stimulates revitalization, and makes jobs. If some people think
that is bad, maybe they are the problem.
So George's simple program not only reconciles efficiency and
equity, it squares taxes and incentives.
2. Reconciling demand side and supply side economics
a. Aggregate. Consumption and production
George's tax program stimulates both the demand side and the
supply side. Here is the gist of why it works where other methods
fail. A land tax spurs landowners to use land to earn cash to pay
the taxes. A land tax creates pressure on owners to hire and
produce more; other taxes create pressures to hire and produce
less. That works because it is a fixed charge: it cannot be
avoided by underusing land, and it is not increased by using it.
It applies leverage to landowners, just as would a fixed debt
service. Leverage means that a landowner, by raising gross output
20%, for example, may raise his net income by 100%.
On the demand side, to repeat, it makes jobs by removing tax
penalties from hiring workers and creating capital. Second, a land
tax creates pressure on owners to hire more; other taxes create
pressures to hire less. Third, untaxing capital and its income
raises the incentive to invest, answering those who still dispute
Say's Law. Fourth, tax revenues are spent locally (whereas rents
paid to absentee owners are spent distantly).
The program operates at the same time on supply. Unlike the
travesty of supply-side stimulus offered from Washington these
last several years, this is supply-side economics with a real
kick. It works through tax transformation rather than tax
reduction. This is "true fiscal stimulus." A land tax
creates pressure on owners to produce more; other taxes create "fiscal
drag," i.e. pressures to produce less. We can raise taxes (if
desired), and stimulate supply in the same stroke: there is no
hard choice to make between them. The increase of supply gives
substance to the rise of demand: there is a flow of new goods to
meet the flow of new demand. This precludes inflation, the fatal
flaw in Keynesian "fiscal stimulus" (which is all on the
Georgist fiscal stimulus achieves full employment not only
without inflation, but also without deficits. The stimulus works
through the motivational effect of the tax on landowners. Unlike
other taxes, stimulus rises with the rate of taxation. We may run
surpluses and retire debt, pumping capital into the private
sector, while still providing fiscal stimulus from government.
That rise of land taxes will not lower, but raise the MRORAT
b. Investing and Saving
Untaxing new investing raises MRORAT (the marginal rate of
return after taxes). This is what Keynes called the "marginal
efficiency of capital," which he identified as "the
inducement to invest." To demand-siders, it is the motor that
drives the macro-economy, raises national income via the
multiplier effect, and offsets the propensity to save.
Georgist tax policy raises MRORAT in at least three ways. First
is the obvious lowering of direct taxes on capital and its income.
Second is the lower payroll tax, part of which is borne by
investors when they hire workers. Lowering this tax raises returns
to investors, especially to those who invest in labor-using
operations. Third is the higher pressure on landowners to attract
capital and hire labor. A fourth way is cumulative: any policy
that has basic stimulative effects raises aggregate demand, which
in turn raises investor "animal spirits" in a benign
Untaxing buildings obviously draws in outside capital, which is
good locally, but is not capital formation to the whole economy.
In Keynesian models, higher income leads to higher saving, and
does create new capital. Supply-siders today worry more about
raising the rate of saving from any given income. In supply-side
models it is more important to increase the rate of saving,
without depending entirely on the Keynesian effect, where higher
income raises saving. Also, from the nationalist viewpoint, it is
better to supply investable funds from domestic savings, to
minimize foreign ownership.
Land taxation helps here, too. Land taxation, if heavy enough to
count, lowers the investment value of land, through "tax
capitalization". There is a diminishing marginal utility of
savings to any wealth-holder, meaning the more you have, the less
you need more. With land devalued, those needing wealth seek
substitute assets to replace land in their portfolios. To acquire
those additional assets they must save more, and invest the
savings in real new capital, rather than land.
Thus, Georgist taxation meets the proper goals of supply-side
economics: raising output, and raising saving. It reconciles
supply-side economics with taxation by providing a mode of
taxation that stimulates instead of dragging down production and
3. Micro "structural" reform coupled with macro reform
A weakness of Keynesian policy is its scorn for structural reform,
e.g. combating monopolies and sticky markets. It relies solely on
Federal fiscal policy. Its focus is so narrow that even monetary
policy, which seems so closely allied in spirit, is regarded as
rival rather than complementary. Thus, when inflation pricked the
Keynesian bubble, there was little left to offer except the dismal
Phillips Curve trade-off.
Georgist policy improves the structure of the economy in at least
a. It erases the "wedge effect" of indirect taxes,
while maintaining tax revenues. This might be called a "True
Laffer Curve effect" what Laffer and Reagan promised
in 1980, but Reagan could not deliver. The wedge effect is both
warping, and, in the aggregate, anti-incentive.
b. It actually lubricates the land market in the very process of
extracting more tax revenues from it. It is better than "neutral"
(lacking in wedge effects). It subjects landowners to a cash drain
that is more potent than mere "opportunity cost" in
prompting landowners to put land to its "highest and best
use," i.e. to allocate it optimally in the manner prescribed
by economic theory. The writer has developed this point elsewhere.
c. It combats monopoly restriction of output by making it
costlier to withhold land from use. Likewise, it combats
monopsonistic exploitation of workers.
d. It unlocks urban land markets that are frozen up by the
tendency of firms to buy and hold land for possible future
expansion. This is a form of vertical integration which, like all
withholding actions, is self-reinforcing and self-validating,
hence cumulative in its impact. That is, if A and B are tying up
surplus land for their possible future needs, that forces C, D,
and E to do the same because they cannot rely on the open market
to supply the land when and if needed. A fortiori,
speculative preemptors who hold key parcels to profit from others
attempts to assemble buildable parcels, or to compete in key
markets, force others to do likewise in self-defense. The pooling
function of the free market is impaired. Conversely, the gains
from correcting such market failures are also self-reinforcing and
cumulative, providing us with many "free lunches."
e. It makes landownership more available to small business, and
new businesses, by lowering the market price of land. It
substitutes a deferred annual charge for a high price up front.
This has the same effect as extending credit to all market agents
on identical terms, thus offsetting the otherwise overpowering
bias of credit rationing and discrimination in lending. Large
surpluses of land are released to the market as the tax cost of
withholding land forces it to be sold.
It should be apparent that each of those effects helps markets
work the way competitive theory says they should. Their aggregate
effect is overwhelming. Some Georgists have made their case on
structural grounds alone. We have seen, however, that these are in
addition to the macro effects.
4. Local, state, and national applications
Georgist policy can be applied at any level: local, state, or
national. To some extent it is even applied at a world level,
through the U.N., with its concept of "common heritage"
applied to oceanic resources of the deep seabeds.
Georgist tax policy can also be applied at any tax rate, low or
high. A low rate does a little good; a high rate does a lot of good.
In this Century, strenuous efforts have been made to box the
property tax into the local level, where local particularism tends
to cap the rate. In England, this policy is identified with the
half-brothers, Austen and Neville Chamberlain. Neville was so
successful that in 1938 he was forced to face Adolf Hitler without
any armed support, with the disaster at Munich. In America the
Federal government last taxed land in the Georgist manner during the
Civil War. After 1913 it taxed the income from land, but in recent
years the income tax has degenerated into a payroll tax primarily.
In tandem with the other payroll tax it has become a primary cause
of our depressed labor market.
In 1920, about half of all state revenues (not counting local)
came from state property taxes. These tended to focus on land,
rather than capital, much more than now. Both the state and Federal
governments could tax land again, any time the voters send that
5. Relieving labor without burdening capital
Georgist tax policy would downtax labor without uptaxing capital,
and without lowering public revenues. That is possible because the
economic world is not dualistic. There is a third factor, land,
which George would tax instead.
The taxable capacity of land is surprisingly high. It has been
concealed conceptually by many sophisms inherent in modern economic
theory, and concealed statistically by rolling land rent into other
categories. A good deal of potential rent has also been aborted by
the counterproductive tax methods used on buildings and labor. This
is a big topic, treated in "The taxable capacity of land,"
and "How to revive a dying city," and "Adequacy of
land as a tax base," and "The synergistic city," on
A great deal of latent rent would be generated by new, full
development. It is not just the individual sites that matter here,
but the synergistic community effects of active renewal and full,
timely development. The positive neighborhood effects of replacing
old buildings with new are irresistible and contagious, raising land
prices all around. The converse is also true: the negative
neighborhood effects of letting old junkers stand without
replacement are depressive. Thus, when you take the tax off new
buildings, and put it on the land under old tumbledowns, you kick
off a general process of revitalization that turns gloom into hope
into optimism: optimism that boosts land prices and the land tax
New development likes to anchor onto healthy neighborhoods.
Richard Hurd, father of urban studies in America, taught us in 1902
that land values are marked by continuity in space. It's still so.
Fashions and technology change, but principles endure.
Even Heinrich von Thuenen, father of location theory, approached
cities in an arid, antiseptic way that left out most of the sperm
and egg, enzyme and ferment that today we call urban linkages and
synergy. George was a mensch, like Holly Whyte or Jane Jacobs,
seeing cities in intensely human, interactive terms. George saw
cities as foci of communication, cooperation, socialization and
exchange, and these as the basis of civilization. He saw cities as
the new frontier, an endless series of new frontiers because the
city as a whole enjoys increasing returns: the presence of people
with good mutual access, associating on equal terms, expedites
cooperation and specialization through the market. Multivariate
interactions in cities are synergistic. Indeed, while each part
each parcel of land is developed in the stage of decreasing
returns, the composite city is generally in a stage of increasing
returns, thanks to synergy: the whole is greater than the sum of its
parts, and increases to the whole yield more than the sum of
increases to the parts.
Urban blight is cumulative and self-reinforcing: blighted
buildings cast a pall on land around them, discourage upkeep and
stifle renewal. Whatever slows renewal of one site therefore slows
the neighborhood, which reflects back blight to the first, a vicious
Conversely, new buildings help stimulate renewal around them. The
rule is that new buildings draw tenants from old and weaken other
Defenders so other owners have to renew, too. When they do, where
better than next to the newest, hottest building? So renewal is
cumulative, just like blight, only upwards in a benign spiral. A
benign spiral is a "free lunch," the kind that cynics say "there
ain't no such thing as." These matters are treated in the works
When a city untaxes buildings its land prices, the new tax base,
are pushed up. Competition for sites raises the tax base not
buildings, now, but land prices derived from ground rents. Using the
higher base the city can improve public services, if needed, but
without taxing any building, without scaring away any generators of
fiscal surpluses. In this scenario, buildings raise the tax base
indirectly, by raising the value of land around them. So do
productive people, when their wages are not taxed away.
Land prices are raised just by the expectation of new buildings'
being tax free. The mere expectation will immediately boost the
value of land, even before the new buildings go up.
6. Urban renewal without subsidizing evictions
Georgist tax policy helps renew cities, without subsidizing or
administering teardowns and "clearance" of old buildings
and neighborhoods. Georgist policy does not speed renewal by
penalizing old buildings, but by encouraging new ones. It does not
subsidize new ones, it just stops penalizing them. Teardown is never
an end in itself; it only comes when incidental to releasing land
for new buildings of greater capacity. This matter is covered in "How
to renew a dying city."
7. Contains urban sprawl, improves urban linkages among
complementary land uses, without overriding market choices.
a. Taxing land sharpens market incentives via the leverage
effect noted earlier. Thus it makes the land market work better,
and follow its natural infilling, centralizing tendency. Curbing
urban sprawl does not overrule the land market; it is a byproduct
of making the market work better. Richard Hurd, as cited above,
noted that land values are marked by continuity in space. That
means the market is telling owners to develop land contiguously;
to anchor new building to established strength. Sprawl, then, is
not market driven, but market-defying. It is the product of market
failure. Georgist taxation makes the market work better.
b. Fosters resident ownership, civic participation
Riverside, CA built itself a lovely downtown pedestrian mall,
back when that was in vogue, and has been sorry ever since.
Nothing worked out, retailers deserted, and half the stores are
empty. Recently I asked the developer of Tyler Galleria, a
success, why he thought downtown failed, and got the answer in two
words: "absentee ownership". I should have known, I've
preached it for years.
An agricultural adviser in Fresno once told an impressionable
boy "The best dressing for soil is the owner's shadow,
applied daily". In town they say "Who's keeping the
store?" Absentees aren't the only negligent owners, nor are
they all bad. Torpid owners are the problem and they come in many
forms. Basically, to make a city go you want to be rid of owners
who see real estate mainly as a cash cow for their retirement, and
replace them with owners who see it as a vehicle for their
enterprise, who "apply their shadows" daily. Those
shadows will also follow them into local civic clubs, and
enterprising downtown and neighborhood associations for making
8. Reconciles common rights to land with private tenure
Georgist policy harmonizes collectivism and individalism;
government and the market; common rights and private tenure. It has
been called "commons without tragedy," because it lets
common-access resources like fisheries and open ranges be closed
off, without destroying common rights. The principle is simple and
basic. Common lands, with open access, become overcrowded. Optimal
management calls for restricting entry and usage. Entry is limited
by issuing licenses (or leases, permits, concessions, possessory
interests, etc.). However, instead of giving these away gratis, as
is the current practice, they are leased out annually to the highest
bidder. Thus, those excluded are compensated, while those included
get only what they pay for.
As to land already in private tenure, taxation asserts common
rights to the income of that land, without impairing private tenure
rights. Indeed, private tenure is strengthened when the owner can
truly say "This is my land, I pay the taxes on it."
Squatters, trespassers, and vandals may be evicted with a clear
conscience: their common rights have been protected otherwise,
through the tax system. Thus, the policy reconciles common rights
and heavy taxation with the free market and strong private tenure
In addition, taking tax revenues from land lets capital and labor
go untaxed. Private property in labor the basic right of a
person to himself, as posited by John Locke and private
property in capital, the right of a person to the full value of what
he saves, are strengthened.
9. Paying the debt while also making jobs
President Clinton adopted a policy based on the premise that
Keynesian "fiscal stimulus" is really "crowding out,"
so paying the debt can stimulate the private sector via "reverse
crowding-out." The problem here is that it is based entirely on
pushing more investable funds into the private sector, with nothing
to raise the demand for those funds.
Georgist taxation lets the debt be paid, while at the same time
raising investing opportunities in the private sector, as shown
10. Making labor cheaper to hire without lowering wage rates
Georgist policy removes the many big tax wedges between worker and
employer, and employer and customer, and worker and consumable
goods. Thus labor can cost the employer less, while the worker gets
more disposable income after-tax. Many economists inveigh against
the minimum wage, claiming it overprices labor. It is a matter of
suspicion that they are then silent on the deadly effects of the
payroll tax, which affects workers at all levels. Sales taxes, too,
cut into real wages, yet many of these same economists would raise
sales taxes and introduce VAT. President and Mrs. Clinton spoke
seriously of raising payroll taxes even more, to finance the new
There is a high elasticity of demand for labor. This may be
observed in farming, for example, where landowners have avoided
union wage rates simply by shifting their land from fresh fruits and
vegetables to labor sparing uses like small grains or cotton.
Conversely, removing the payroll tax burden will move owners to
shift land back into labor-using enterprises.
11. Adding people and capital without diluting resource base
Georgist policy lets a region, nation, or the world add population
and/or capital without diluting its resource base. It is as though
rescuers pulled drowning people into a lifeboat, and their presence
made the boat expand instead of sink! Call it "The
Accommodating Lifeboat Theorem." It sounds like the Miracle of
the Loaves and Fishes, but it is a different kind of miracle:
synergy. It comes from the power of enlarging the market, as
described by George in his chapter on the effects of increased
population, and Adam Smith in his aphorism, "the division of
labor is limited by the extent of the market." An indication of
it is that bigger cities around the world have more land value per
head than small ones, as documented by William Alonso.
We must temper this claim. Bigger cities are often located on
better land, so size isn't all that accounts for Alonso's finding.
However, more than sheer size, and more than good natural location,
is the internal circulation of a city. Georgist policies are
essential to financing good circulation, containing sprawl, and
inducing private land development complementary to the circulatory
12. Fostering economy in government in the very process of
Anti-governmentalists often identify any tax policy with public
extravagance. Georgist tax policies, on the contrary, help save
public funds in at least two general ways.
a. Putting the unemployed to work saves many public costs, like
welfare, obviously, crime-fighting, and, ultimately, putting down
civil disturbances and insurrections.
b. Putting the unemployed to work also raises demand and, by so
doing, helps make plain to all the desirability of unleashing
supply. Now, supply in some industries is deliberately held down
to support prices. U.S. agriculture is a good example: supply
restraints are transparent because they are matters of public law.
The U.S.D.A. pays landowners to fallow some 60 million acres each
year, to raise food and clothing prices. Under Georgist policy
those acres would go to work producing food and paying taxes,
c. Georgist policies obviate subeconomic extensions of public
works, which now are pushed by the powerful combination of land
speculators seeking increments, the jobless seeking work, and the
homeless seeking shelter. Georgist policies open up the naturally
better land to settlement, thus relieving the pressure to invade
flood plains, steep erosive slopes, flammable brushlands,
wetlands, and other places that soak up heavy public funds to
reach, develop, service, and protect.
At the same time, these policies deflate the "rent-seeking"
motivations of land speculators to sue for state and federal aid.
Under George's scheme, the unearned increments secured by "rent-seeking"
lobbying for public works would be taxed away.
In the longer run it seems reasonable to expect that more genuine
productive job opportunities at home would reduce the pressures for
military spending, at least those portions which are strictly
boondoggling of a make-jobs nature.
13. Enhance the environment and conserve resources while making
Georgist tax policy acts to abort subeconomic extensions of public
works, as noted just above. Not only does this save public funds, it
protects the environment. Saving public funds and saving wildlands
and waters are perfect complements.
"Jobs vs. the environment" is the dismal trade-off
offered by confused thinking. A Georgist economy is resource-saving
as well as job-making. It saves resources by focusing human
activities intensively on the lands that are used, leaving or
releasing marginal lands for wildlife, recreation, wetlands,
watershed protection, etc.
There was once a tendency for environmentalists to oppose human
use of land wherever and whenever they could. Now, most of them are
looking at the whole human system. The Sierra Club is supporting
urban infilling, seeing that demands that are not met here are bound
to pop up there. John Baden, a Pacific Northwest forest economist,
sums it up in a few words: timber should be grown on lands that are
flat, warm, wet, and near markets. Georgist tax pressure applied to
those "Site I" lands will promote exactly that, leaving
the steep, arid slopes for scenery, watershed, and recreation
Dismal trade-offs, deadlocks, and standoffs are just mental blocks
and smokescreens. Henry George began with a quest for justice in
sharing the rent surplus. He found that justice and efficiency are
not at odds, we can have both. This trade-off that many economists
expound is a stall, a put-off to enervate and unman us so we won't
do anything. It may ease the conscience to think justice must be
sacrificed for efficiency, and schools starved and libraries closed
to free up incentives, so nothing, really, can ever be done. We all
feel compassion by nature but, to survive and stay whole in this
world of beggars and bandits, learn to harden our hearts and cork it
in. We learn to screen out evidence of suffering and injustice, and
rationalize what we cannot deny. This mindset, while understandable,
is unaffordable in a period of dangerous national decline, and
growing division between haves and have-nots.
What we have shown here is not just that we can have both justice
and efficiency, but more, we cannot have either one without the
other. If we don't share rents efficiently, in the Georgist manner,
social and political pressures will continue to cause inefficient
sharing and eventual dissipation.
Economic discourse is afflicted with pessimists who firmly cling
to mutually inconsistent positions at the same time, each posing an
insoluble problem. Some, for example, believe the world is racing to
starvation, and favor limiting demand through birth control, while
in another context they deplore "overproduction," or "underconsumption,"
and favor choking off farm production to keep farmers from losing
George, of course, would see demand as the answer to supply, and
land as the field on which the twain may meet and satisfy each
other, leveling them upwards.
Again, some favor cheap power and good roads for rural areas,
regardless of cost, and then favor low-density zoning to keep people
out. George, of course, would favor infilling to make full use of
short interior lines at high capacity, and lower cost per customer.
A summary of reconciliations
Herewith is a summary of reconciliations that Georgist tax policy
- Couples equity with efficiency.
- Couples progressivity with motivation. Abates concentration of
wealth and power while widening the scope of productive ambition
- Makes more jobs without inflation. Raises demand-side and
supply-side together, "leveling them upwards."
- Raises both inducement to invest and inducement to save, at any
income level. Also raises saving by raising income level.
- Couples structural reform and macro reform.
- May be applied at local, state, and national levels, together
or jointly, in small degrees or large.
- Relieves labor of taxation without burdening capital, and vice
- Renews cities without subsidizing evictions.
- Contains urban sprawl, infills and coordinates cities without
superimposing planning on the market.
- Fosters resident ownership and civic participation without laws
against absentee ownership, or other use of compulsion, but in the
very process of lubricating land markets.
- Asserts common rights to land while strengthening private
tenure. Permits of privatizing without giveaway.
- Allows paying off public debts while fostering full employment
through (true) fiscal stimulus.
- Makes labor cheaper to hire while raising real wage rates
(take-home pay, disposable income). Thus makes jobs without
lowering wage rates or "making work."
- Lets regions, nations, and the world add population and capital
without diluting their resource bases.
- Fosters economy in government in the process of raising
- Saves the environment in the process of intensifying land use.
- Smoothes business cycles without depending solely on
contra-cyclical fiscal or monetary policy. Stabilizes and secures
financial institutions with only minimal regulation.
- Effects land reform and redistribution abroad and at home,
urban as well as rural, without government expense, and without
acreage limitations, working through free markets.
- Equalizes credit ratings for land buyers without any controls
Epilogue: how the public demonstrates its preference for
resolutions over dismal choices
Preaching hard trade-offs is not popular. Voters see through it as
a confession of cluelessness. We hear a lot about voter apathy, but
voters have responded positively at various times to candidates with
positive resolutions, or apparent ones.
Remember the "Phillips Curve" of the late 1970s? "The
public has to grow up and choose," the gurus said with some
condescension. It's either inflation or unemployment. Soon the
voters came up with a third choice, they retired those unavailing
Next it was Reagan and Laffer, who said you can have lower tax
rates and higher tax revenues, more defense and a lower deficit.
Talk about panaceas! This one proved to be a fraud, but the voters
loved it until they slowly realized the promise couldn't possibly be
Now it is the privatizers. They have learned to sell the product
by soft-pedaling "trade-offs." Instead, they talk about "win-win"
solutions, a new euphemism for trade-offs that camouflages them as
resolutions, and hides the sneaky truth that much of the wins come
from privatizing public property without compensation. The public
will stop falling for it as they finally realize that most of these
are really "win-win-lose" solutions, with the public as
30 years ago, it was "demand-side economics" (as it was
later called). It was mostly Keynesian "fiscal policy,"
with some monetary policy, also demand-sided, as its Tweedledum
rival. Keynes became popular because orthodox economists,
unavailing, had reduced themselves to posing a hard choice. To
escape from depression, they said, you must first suffer dismally:
cut wages, consume less. It's like a hangover, you must repent of
the good times you had in the roaring twenties. The voters rejected
that preaching thumpingly.
Keynes had better news. He said you can have it all: raise wages,
consume more, enjoy more public services, and in result find people
saving more and working more! People who followed his ideas won
elections for years. With all its faults and charlatanism, Keynesian
economics was at least optimistic and hopeful. It lasted until his
successors fell into the dismal trade-off mode of the Phillips
Before that it was the New Deal panacea: national planning. Before
that, at least in the States under Herbert Hoover, it was business "Associationism":
cartels plus peace pacts, red-baiting, debt retirement, the
corporate state, two chickens in every pot and a car in every
garage, and "prosperity is just around the corner." We
know where that led.
Before those panaceas there was Henry George. He, like popular
figures after him, was anything but dismal. He, too, said "we
can have it all." It made his ideas very popular. We are often
told that Georgism never really made it, but that is warped history.
It never "took over" lock, stock and barrel, but it won
substantial minorities, to whom real concessions were made. His
ideas were at their political crest roughly from 1901-20. They were
incorporated into The Progressive Movement.
Unlike the other panaceas cited, George's never failed. It would
be fairer to say it fell to the loss of young leaders in World War
I, and the marathon Red Scare that dominated much of the world from
1919 to 1989. The Red Scare energized property defenders everywhere;
by confusion, its victims included Georgism. It made Georgists pull
in their horns until their message lost its vigor and excitement:
its resolving qualities, which were derided as "panaceas."
Now, with the fall of the Soviet Empire, is a good time to pick up
where the Progressive Movement was aborted.