All Persons Have Equal Rights to Natural Opportunities

Joe Mazor


[Reprinted from GroundSwell, March-April 2008]


Joe Mazor, a PhD candidate at Harvard, spoke to those attending the Council of Georgist Organizations conference held at the University of Scranton, Scranton, PA on July 23, 2007. He is doing a dissertation on property rights and natural resources. (His presentation was typed up from an audio recording and written notes by GroundSwell editor Nadine Stoner and an edited version follows.)

Basically Henry George proposed that all people have equal rights to natural opportunities. I would defend Henry George's proposal of equal division of raw natural resources and provide a modern defense in the field of political philosophy.

Why haven't his ideas of natural resources become more mainstream? What are the obstacles to Henry George's approach to natural resources? Here I am going to focus on what I as a grad student in the field of political philosophy have observed as the main obstacles to George's ideas.

The first thing is a lack of recognition of what I call raw natural resources or unimproved natural resources. Basically a lot of theorists of distributive justice who are writing about property being divided in a particular country haven't given much thought to the uniqueness of raw natural resources and what makes them morally special, and I think that is because of a lot of confusion about what raw natural resources are.

The second obstacle to Henry George's ideas is these arguments by theorists saying that the entire value of natural resources is due to human action. If you believe that, you don't need a new theory about what to do with natural resources because you can say that people are entitled to themselves and they create all the value of natural resources and so they should own natural resources. We will talk about that interpretation and show that theory doesn't make sense.

The third obstacle is disagreement about what it means to best respect people's equal claims to raw natural resources. Some of us here have been struck by the fact that nobody created natural resources and therefore people have equal claims to natural resources, and that is a very plausible intuition. Most political philosophers actually agree with this statement that people have equal claims to raw natural resources. What I found in my research is that it is not about the statement but rather it is about how do you best respect these equal claims. Some theories respecting people's equal claim to natural resources lead you to George and some in different directions.

The final obstacle is disagreements about the best way to implement equal division. The version of equal claims I am defending depends on equal division. A lot of theorists endorse equal claims. A large subcategory of theorists endorse equal division. But there is disagreement even among the proponents of equal division about how do you implement equal division. I will be arguing for the Georgist way of implementing equal division.

The first thing you have to do is to define raw natural resources. I am just giving you a different name to something we are all very familiar with, unimproved natural resources. What are raw natural resources? A natural resource is some object of value that has not been created by human action. Natural resources have a portion of value that is due to human action and a portion that is raw or not created by human activity.

A lot of theorists writing on this topic equate raw natural resources with virgin or undeveloped natural resources. That is a mistake for two reasons. Even a resource that is developed still has a raw value. Think of a farmer clearing a piece of land to start farming. Once you have cleared the land, the land is no longer virgin or undeveloped. But it still has a significant portion of its value that is unimproved or raw value. Even virgin resources sometimes have a value that is due to some human action (e.g., discovery). Discoverers of virgin resources and people who invent uses for the natural resources have also contributed to its value. Someone invented the use for oil and somebody discovered that oil well; they are people who have added to the value of that raw natural resource. My definition of raw natural resources takes into account that we have to compensate inventors and discoverers as well. So we define raw natural resources as those natural resources that remain after all human actors (discoverers, developers, etc.) have been appropriately compensated for value they have added to natural resources.

When someone creates a certain form of wealth most theories of property grant that if you create the wealth, you have some special claim to that wealth. Raw natural resources, in the way we define them, are unique. They are a very valuable form of wealth that no human being created.

So if we have a theory of distributive justice, a theory of who should get what in society, we need a very special principle to deal with the question of raw natural resources. But if we try to introduce such a principle, we immediately come up against an objection by these right-wing libertarians, people like Murray Rothbard, who say human labor is responsible for the entire value of natural resources. They say that but for human labor, natural resources would have no value. Therefore, human labor is responsible for entire value of natural resources; human beings developed the natural resources and therefore they create their value.

I want to argue that their theory is broken and leads to contradiction. For example, imagine that there is oil sitting somewhere and you dig for just an hour and all of a sudden you will hit this oil. Is it really plausible that hour of digging could be responsible for the entire value of the oil well? Basically, no, it is just not plausible that the entire value of oil is due to the one hour of digging that this person carried out. A lot of the intuitive appeal of this right-wing libertarian argument is that a lot of human labor takes a lot of effort. It is plausible that some of the human labor is responsible for some of the value of natural resources, but it is not plausible human labor is responsible for the entire value of natural resources. It is true that but for the labor many natural resources would be useless. But it's also true that but for the resources, the human labor would not produce any value. Either both the natural resource and the labor are completely valueless or both the natural resource and the labor are responsible for the entire value of the resource, and that is a logical contradiction. So the "but for" theory of value is actually too simplistic. We need a more sophisticated theory of value and then you find that natural resources really do have a raw value. Another example is that if undeveloped natural resources or raw natural resources are really useless, then what are people fighting over? Why are we fighting over oil or diamonds?

Once we dismiss the "but for" theory of value theory, we realize that most natural resources do have a lot of value. Except for these right-wing libertarians, most contemporary thinkers agree that most natural resources do have a value and agree that people have an equal claim to this raw value. So you might be wondering why we don't go from that to George right away. Let's briefly talk about the source of equal claim. Why do we say human beings have an equal claim to raw natural resources? People have used God as the basis. So they basically say that God gave the earth to mankind in common, and that is one of the foundations of Locke's theory.

And that is where George picks up a lot of this and I will quote from George, "If we are all here by the equal permission of the Creator we are all here with an equal title to the enjoyment of His bounty with an equal right to use all of nature. This is a right which is natural and inalienable. It is a right that is vested in every human being entering the world and which during his continuance in the world can only be limited by the equal rights of others."

So these thinkers use God in order to support the proposition that people have equal claims to natural resources. The problem from a modern political philosophy perspective is that you can't really start with God in political philosophy any more. Fortunately, a lot of contemporary thinkers who do not support the theological basis for people's equal claim to raw natural resources, still support it for other reasons. The reason they support this claim is because of the moral equality of individuals, the idea that every individual is deserving of an equal level of respect in some fundamental sense. That is the reason that most contemporary political philosophers accept that people have an equal claim to natural resources. If nobody created the natural resources and nobody created the value of the raw natural resources, and we believe that human beings deserve fundamental equal respect, we reach the conclusion that people in some sense have an equal claim to raw natural resources. Not to replace God , but this is a more modernized perspective of the basis for equal claims to raw natural resources. (Spencer, Steiner, etc.)

Then we come to heart of the modern political philosophical problem which is there are a whole bunch of interpretations of what it means to respect equal claims to natural resources. Equal division has a lot of advocates. Of course, Henry George, but even a lot of modern thinkers who don't consider themselves Georgists and yet they endorse equal division. I'll get back to argument of equal division or any division later on.

There are a lot of interpretations of equal claims. There is a view that everyone should be joint owners of natural resources. Then there is another view that equal claims means that everybody should be equally able to use natural resources, but nobody should own them.

I am going to go through the interpretations one by one and show that they are not as plausible as equal division of raw natural resources. So I need criteria to argue that equal use is not as good as equal division with respect to equal claims. I post three criteria for judging interpretations of equal claims.

The first criterion has to do with distribution of benefits and this has two parts. The first part is that benefit distribution shouldn't be arbitrary and unequal. If "A" is getting very few benefits from raw natural resources, and "B" is getting a lot of benefits from raw natural resources, I should be able to give you a reason why there is this level of difference in the level of benefits each of you are getting.

The second part of this criterion is that at the very least each person should get some benefit from raw natural resources. If everyone is receiving some benefits, then maybe you can argue that the benefits are equal in some proportional sense or argue that some procedural equalities are balancing out the fact that somebody is getting very low benefit, but if somebody is getting absolutely no benefit from raw natural resources, I think it is very hard to make the argument that their equal claims to natural resources are still being respected.

The next criterion is the equality of claims over time. There is no sort of automatic date that people have equal claims to natural resources on and after that they no longer have equal claims. If so, then claims of raw natural resources should remain equal over time. In case of some new natural events, like a volcanic eruption on an island, people should still have equal claims to natural resources even after this eruption destroys certain natural resources or creates new land. Also, as new people are born into society; they should also have equal claims to natural resources, among their contemporaries and among people who preceded them and people who will succeed them. No one generation creates the value of raw natural resources. There is no particular reason why any one generation should get the benefits from raw natural resources.

The third criteria is efficiency, or no wasted natural resources. Why is efficiency a criteria for equal claims to natural resources? As an example, let's say I destroyed all the natural resources in world. That situation is perfectly equal; nobody is getting anything and that equality is maintained over time. But intuitively that is not the best way to respect people's equal claims to raw natural resources. The reasoning with respect to raw natural resources is that people have a claim to as many natural resources as possible and that no person's claim is any better than anybody else's. Efficiency is therefore an important criterion for judging among different idea of how to respect people's equal claims to natural resources.

Those are the three criteria and now we are going to go through each of the alternatives to equal division using the criteria.

The first alternative to equal division is joint ownership Joint ownership gives every person an equal effective veto over how raw resources are used. Under this interpretation, I can basically say no to whatever use you want to put the resources to, and you can say no to any use I want to put the resources to. And that is how our equal claims are respected. There are a lot of problems with this interpretation. It seems initially as though everybody gets some benefits from raw natural resources. But think about it; this is not really true.

Imagine if a person is unafraid of death. That person who is unafraid of death can say, "Unless you give me all the natural resources in the world, I am going to veto anything that you say. You can use your veto and we can all die, but I don't care about dying anyway. That person can get the entire natural resources of the world. This example might seem far fetched, but if you think about this veto system in a more realistic way, you can come up with very plausible examples where some people who have more bargaining power can get a lot of natural resources and other people get none at all. This joint ownership idea doesn't really guarantee anybody some benefits.

The second problem is that joint ownership is highly inefficient. You can just imagine the logistical difficulties if everybody had to agree on the particular use of a natural resource. It is really impossible. How can you get somebody in China to agree to the use of a particular natural resources when the natural resource is in the U.S.? It is logistically impossible. That would be highly inefficient. To change the way I am using a natural resource would be very difficult. I would have to get the approval of everybody in the world to make sure they don't veto. It is incredible. A lot of resources lie fallow and if you are worried about that vacant lot in the city, think about having to get everybody's approval.
Other problems are with risks to liberty. You can say not only do you have to give me all your natural resources, but you have to become my slaves. I will give you enough to live on but that is basically it. If natural resource use requires universal consent, and somebody has the veto power over natural resources, they can threaten the substantial liberties of everybody else in society. There are a lot of problems with this joint ownership interpretation. At first it seems as though everybody gets some benefits from raw natural resources. But if you think about it, this is not really true. Also, there would still be these huge inefficiencies which is a problem. This interpretation is really a straw man.

Let's turn to Locke's theory now. Actually Locke's theory is quite mainstream, if you are thinking about theory of natural resources taught to undergrads today. Locke's claims are pretty plausible. People's equal claims are satisfied as long as any person's appropriation leaves "enough and as good" left for everybody else to appropriate. However, there are problems important problems with Locke's theory in terms of the three criteria that I talked about before.

The first problem, and I think this problem has been under-recognized in literature goes to the ability and desire to appropriate resources. Think about a disabled person. Under Locke's theory, in order to gain benefits from natural resources you have to be able to appropriate the resources. If you are disabled you are not going to be able to do that. Also, think about a poet for instance who doesn't want to appropriate any natural resources. He just wants to write poetry. He is not going to get any natural resources value. You can say that is his choice; if he wants natural resources, he can go appropriate them. But why should you tie your benefit to natural resources to the ability and desire to physically appropriate them. The person who appropriates them will get higher benefits from making improvements but there doesn't seem to be a reason why the disabled person or the poet shouldn't also be entitled to equal benefits from raw natural resources. Under Locke's theory, though, the poet and the disabled person are not going to get anything because they don't want to or can't go out and appropriate the natural resources. This doesn't seem to be just.

In conditions of scarcity, it is unclear how Locke's "enough and as good" condition can be met. Locke's theory seems intuitive if I take land and you have as much and as good left for yourself, then it doesn't seem to be much of a problem. But unfortunately we don't live in a world of plenty, we live in a world of scarcity. That's where Locke's theory starts to break down. How can his "enough and as good" conditions be met in this world of scarcity. Locke has a couple of answers. If you don't like the distribution of benefits in England, at the time Locke was writing, you can just go to America; there are plenty of resources left for you there. That answer is problematic. In Locke's time the land in the US was not nearly as valuable as in the land in the UK. So that land available in the far away US is not really a good answer to someone who is complaining about the distribution of land in England. Basically that is saying you have got to leave your family and friends and go to the wild frontier. A person might logically ask why doesn't the landowner who has the resources now have to do all that to have benefits from natural resources.

Locke doesn't have a good answer. The distribution of benefits from natural resources seems arbitrarily unequal if you have to go to America to get benefits. There are differences between somebody who has to go all the way to America and somebody who can just stay in England and enjoy the benefits of land.

This unequal distribution of benefits is a problem. You might say well, maybe Locke has some problems with his own theory. Maybe we shouldn't insist on enough and as good, and if there isn't enough and as good then you can't appropriate. But that would be highly inefficient. In world of scarcity then any person's appropriation wouldn't leave enough and as good for others. Then nobody would be able to appropriate anything.

Not a lot of theorists found Locke's theory very convincing. They didn't think he showed why very unequal distribution of natural resource property that he was justifying was actually respecting people's equal claims to natural resources, and so thinkers like Rousseau said no, the problem with Locke is that you are allowed ownership of property. What you should allow is that we should equally use natural resources.

Basically, Rousseau said the earth is no one's but fruits should be everyone's. Rouseau said anybody is allowed to use natural resources but nobody is allowed to own them. One of the problems with this is that it again ties the benefits of natural resources to the ability and desire to use them. Think about disabled person again. Under equal use the disabled person doesn't get any resources and neither does the poet.

The second problem is arbitrary and unequal benefits. I may be situated on a very fertile piece of land and when I use it I get subsistence very easily, but you may be situated on a barren piece of land where you have to work very hard to get the same benefit out of your piece of land that I got on my piece of land. There seems to be no way within equal use to really answer this question. Some equal users rely on first occupancy logic: first come, first served. The first person who gets to the land gets to use it. The first occupancy solution is problematic because how do you justify the first occupancy (giving the land to the first user) as being just. It seems like the best way to justifying it is some sort of lottery and then we all have an equal chance to be the first user. But it is really not true that everybody has an equal chance to occupy the best piece of land. Over time, future generations don't have the chance to be the first occupants as those who came before them. First come, first served is a very problematic theory to respect people's equal claims to natural resources.

Equal use is also very inefficient. A lot of natural resources require people to develop them in a variety of ways. Some of them require permanent and immovable capital improvements - you want to irrigate, add a building to your land. You don't have incentives to do those things if you are only allowed to use it in a very specific sort of way. You don't have the incentives to make improvements that are necessary for efficient use of natural resources. That is the biggest problem of equal use; it just doesn't allow for efficient use of resources. Rousseau would say that's true but the problem is being willing to accept the efficiencies because that is the only way to maintain equality. I would argue that there is a way to get both equality and efficiency.

The next interpretation and this is really the only one besides Locke's that is taught to undergrads in the universities is Nozick's theory of justice and acquisition. A lot of Georgists think of Nozick as a right-wing libertarian who doesn't respect people's claims to natural resources. That's not true. Nozick does think people have equal claims to natural resources. But his way of these claims leads to very unequal natural resource property rights. Basically Nozick's idea is that I can appropriate a natural resource as long as I don't harm you. The question he leaves unanswered is unharmed compared to what. This can't stand as a free-standing theory of equal claims because it leaves an important question unanswered. If we think of everybody starting off jointly owning all natural resources, then no unilateral appropriation by any one person can leave me unharmed because I am a joint owner. Nozick's answer to the "unharmed compared to what?" question is unharmed relative to equal use. So if everybody had equal access to natural resources and as long as I leave you equally well off as you were on equal use, I haven't harmed you. This is a very questionable kind of baseline. Why equal use? Why not something else? Nozick seems to rely on the argument made for equal use by previous thinkers such as Rousseau.

But if you think about it, equal use is attractive because it maintains equality of claims over time pretty well. Nozick's theory doesn't do that anymore. Nozick's theory allows even more inequality than Locke's theory because as long as I leave people as well off as they would have been in a subsistence state of equal use, I have respected their equal claims. But once you allow everyone to engage in private appropriation, is there really going to be equality in property claims over time? So Nozick does away with the best feature of equal use yet he relies on it as the baseline and that is problematic. He doesn't really give any reason why equal use should be the baseline counterfactual.

Nozick's theory also leads to arbitrarily unequal distribution of benefits, with some not receiving any benefits. The disabled person doesn't get any benefit from natural resources, so Nozick's theory doesn't give that person any benefits from natural resources at all. Also, under Nozick's theory leave each of you as well off as you would have been in a world of equal use and appropriate all the remaining natural resources in the world for myself. Having equal use as a baseline only guarantees that I have to leave very small amounts of resources for everyone else because equal use is so inefficient. Also, it's worth emphasizing that my getting almost all the resources is just one permissable distribution. Another possible distribution is you appropriate almost all of the natural resources in the world, and leave me just as well off as under equal use (i.e. with very few resources.) Nozick has no reason for why you should get the resources versus me besides first come, first served which we already talked about

Why not guarantee everyone the resources they would have had under equal use and then divide the remaining resources equally? Nozick doesn't discuss that. Nozick says that any sort of theory like equal division or theory that gives people the value of value added will come up with criticisms that failed Henry George. But he doesn't say what those criticisms actually are.

The next interpretation of equal claims that I want to look at is "equal voice." That is supported by a theorist named James Grunebaum. In his theory, people's claims to raw natural resources are respected when each person has an equal voice in how the resources are used. This idea is intuitively plausible for some of us who have very strong ideas about democracy. But upon examination, it is probably not all that plausible, since you could get into a situation where some people receive no benefits from raw resources. If you are in the minority and you just have an equal vote, the majority can just take away your land and not give you anything. And according to Grunebaum then everybody's claim has been respected because you had equal voice in the process, but you may say but I didn't get any resources, and Grunebaum doesn't really have a good answer to that. Equal voice doesn't seem to be the best interpretation of equal claims to raw natural resources.

The second problem is that it can be very inefficient. Using the majority rule, if I need everybody to sign off collectively on every use of every natural resource, that is going to take a long time. If I change the use of my land and have to ask everybody about it, it can be very difficult to do.

The fifth amendment of the constitution protects us from the problem of some individuals receiving no benefits from raw natural resources if they happen to be in the minority. The constitution protects us from those kinds of actions by the majority.

The next interpretation I consider is equal welfare division (this is the last interpretation I examine before I get to what I consider to the right interpretation, equal division.) Equal welfare division on the other hand is supported by political theorist Michael Otsuka who says that raw natural resources are to be divided to attempt to equalize individual welfare. So if you are Bill Gates, you are not going to get any natural resources because you already have a high level of welfare. But if you are very poor, you are going to get a lot of natural resources. All of these theories seem intuitive. The problem with this kind of theory is it is misrepresented as a type of equal division. Otsuka argues that this is a version of equal division, but if you think about it, the shares that are provided aren't equal in any objective sense. Bill Gates gets nothing. There is no sense in which his share is equal to the share or anybody else. It is not true that Bill Gates even gets some sort of subjectively equal share compared to the average person; really this is just a misnomer; a subversion of the idea of equal division to support dividing natural resources to achieve a certain goal of equalizing the individual welfare. This is a conceptual problem. There are also some other problems with respect to the three criteria.

Some individuals, for instance Bill Gates, receive no benefits at all from raw natural resources. Some of you might say I am fine with Bill Gates not receiving any natural resources because he already has so much money. Whatever your position on that, it is clear that leaving Bill Gates with no natural resources is not the best way to respect his equal claims to natural resources if he is receiving no benefits from natural resources. Finally, if you wanted to implement anything like this you would have to go out and actually measure individual's welfare and also have to make interpersonal comparisons between different people's welfare. This is what you would need to do in order to say that if you have more welfare than another person, then you should not get as many natural resources.

Finally, I am going to talk about the proposal that I think is the right way of respecting people's equal claims: equal division. Equal division is in some sense the most intuitively obvious way of respecting people's claims to natural resources. Just divide them equally.

Divide raw resources into equally good shares and distribute one share per person. These are criticisms of equal division made by other theorists. First, some say that it can lead to unacceptable distributable outcomes. An example is a giant and a dwarf and a blanket. If you divide the blanket equally, then the giant will freeze, and that is an unacceptable intuitive outcome. You may say there just needs to be another principle of justice to deal with this case of giants and dwarfs. Maybe in this case the giant will work for the dwarf to get some of the blanket. Maybe you might think there is an argument for government to provide an insurance policy in this kind of situation of being born giants and not being able to survive with their fair share of the blanket. But the point is intuitively some unacceptable consequence is not enough to condemn equal division because I can just come back and say maybe there is another principle of justice we are not thinking about.

Another argument against equal division is that it ignores the claims of discoverers, inventors, etc. (That argument is made by theorist Mathias Risse.) We actually dealt with this problem through our definition of raw natural resources. Riese's criticism applies only if you confuse undeveloped resources with raw resources. When you talk about raw natural resources we have already compensated discovers, inventors appropriately. His criticism does not really apply to the attempt to divide all raw natural resources equally. If you have some natural resources, you can proportionately compensate discoverers and investors and divide the rest of the rest of the resources equally. The last criticism of equal division is that it does not provide for natural autonomy. Grunebaum says giving people an equal voice actually gives them more control over natural resources than equally dividing natural resources. That is not true if you think about it. If I am a native of the US and I have an equal vote over how every piece of land is used, it may be I have no influence at all given that there are a few hundred million other people with a vote who also have equal voice. Under equal division at least I get my own share of natural resources; I can do exactly what I want with that. Even accepting the autonomy goal, Grunebaum was wrong about equal division.

So we have defended equal division in principle and now we want to implement equal division. The first problem we have is how to divide heterogenous resources equally. If we lived in a world that is just one big homogenous resource, equal division is very straightforward. I take a natural resource and I divide it into equal portions - like slicing a cake. The problem is that natural resources aren't like a cake. If I give you a particular share and you say my share isn't equal to everybody else's, how do we deal with that?

One possibility is to use the lottery. I give you a lottery ticket and I divide the shares into as many shares as there are people and I give each person a lottery ticket. You might end up with a share of useless desert land without any oil or anything else. You may say I ended up with something useless. You may say, "That is too risky for me. If I get desert land, I could starve to death. I just want something of average value. I don't want a 50% chance of ending up with something worthless and a 50% chance of ending up with something better than that. Just give me something of average value and I will be happy." Most people are like that and that is why we should reject the lottery option. You might think this whole discussion is esoteric. But think about it, the lottery idea is one of only a few justifications of the way of how property rights work in the world today. When Saudis discover oil they get to keep oil, why should they keep the oil? They didn't create the oil. They can say well you have an equal chance of discovering oil in your country, so if we discover oil in our country, we should keep it; it is sort of like lottery. Not every country has an equal chance of discovering resources. People in very poor countries that don't have a lot of resources wouldn't have wanted to take the chance of ending up with nothing.

The last solution is to use market value. Why use market value in dividing natural resources? Market value insures that everyone receives some benefits from natural resources. If my share is just some bunch of water and you say that is a good share; I will say that is useless, I can't do anything with this share, I can't drink all this water, and even if I try to sell it on the market, unless to Avian or Poland Spring, it is just regular old water, and it is not really going to help me very much. But if I get a share of equal market value it is going to be very helpful to me. If you get a share of market value, it insures an envy free end result. If you get a share of some farmland, and you want a piece of beach, if you get something of equal market value, you can sell your share and buy somebody else's share.

So how do you divide these resources according to market value. One possibility is equal physical division. I can divide up resources equally physically and give you a piece of farmland, give you a piece of beach, a piece of oil field , but that is very inefficient. You may not want an oil field; you may not want any natural resources. You may not want any farmland; you may not want any natural resources. You just want to live your life. You don't want to actually be managing these things. In order to be of benefit to you, you have to sell it off. Everybody else is going to have to sell off their natural resources and there is going to be a whole bunch of transactions in the economy if you try to do that. And that is very inefficient. You just have to have a lot of costly transactions. The more important problem is that if the government is to implement equal market value, what is the market value of the resources and how are we going to know that. If you ask, people would lie about value of resources. This is really valuable, or this is not very valuable at all, depending on what kind of resources they want to end up with. We need a way to know market value.

So how do you solve both these problems? Auction off resources and distribute the proceeds equally. The auction determines the market value of the resources. It allocates the raw resources to the most economically productive use with a minimum of costly transactions. Think of equally physically dividing the resource and letting people buy and sell their shares, and you are going to end up with the same outcome as if you just auctioned off the resources and divided up the proceeds equally to begin with. But this outcome is just much more efficient. Auction off all the resources and divide the proceeds equally and everybody gets an equal share of the benefits of the raw resources.

Now where do the taxes come in? Here is the problem. We auction off all the resources. That is great. But there is a problem because this doesn't maintain equality over time. One view is that you auction off the resources every year and distribute the proceeds equally. I just take this undeveloped piece of land and auction it off and every year distribute the proceeds. If somebody discovers oil on some farmland, the farmer on top of the oil field doesn't get the oil value, we auction off the farmland again publicizing the oil that is there and distribute proceeds equally. The problem is that once the farmer has developed the farmland, we can't auction it off anymore without depriving him of the product of his labor. He already has the farm house on there and seeded and fertilized and irrigated the land, so what we do is we impose a Georgist tax equal to what unimproved farm land would have gotten at an auction. That is the way we can actually implement equal division. We can use professional assessors to determine market value. Equal proceed auctions are a way of implementing equal division, and we can use the Georgist tax equal to what the unimproved resources would have gotten at the annual resource auction as a way of maintaining equality over time as long as we continue to distribute the proceeds equally.

So that is really the way the main idea. There are other problems with resources and Mason Gaffney has written about that so I won't talk too much about that.

Nic Tideman has written a whole lot about the efficiency of land value taxation. I won't talk too much about this. The important thing is it is one of the ways the government can make sure that people don't inappropriately use up the raw value of the resource.

I think this topic is very important. From a political philosophy perspective, the Georgist Solution doesn't only appeal to Georgists but it takes the most powerful intuitions of each of the other interpretations that I discussed and achieves these intuitive outcomes. So the thing about joint ownership and equal use is that it seems like everybody benefits, and actually I have shown that is not necessarily true.

The Georgist solution actually achieves making sure that everybody benefits from raw natural resources, because everybody gets the proceeds from these auctions and taxes so that they can use them to achieve their goals. Locke's theory was appealing in a world of plenty. It seems very intuitively appealing if I can take the resources as long as I leave enough and as good for you. The Georgist solution achieves the same thing. In a world of plenty, the auction price of the natural resource would be zero. There is more than enough for everybody's use and as good and so the auction price would be zero. And the natural resource tax would also be zero as long as the resource remained plentiful.

So under the Georgist solution as long as the resource is plentiful and you are not really hurting anybody, by using the resource you can use the resource for free. And so really Locke's theory is just a special case of George, which is very interesting.

Nozick's theory is intuitive because of the idea of compensation. If I appropriate a resource I have to leave you unharmed and so I have to compensate you. That is what Georgist auction is doing. If I appropriate a resource, I have to buy the resource at an auction and then distribute proceeds to everybody else in society and so I have compensated everybody else in society for the fact that they are no longer able to use the resources. You might say the compensation is not enough. But because the resource goes to the highest bidder, the compensation is as high as it possibly can be, given that everybody is getting compensation. It is certainly higher than you would give people since you are not the highest bidder. The other intuitively plausible part of Nozick's theory is it allows people to enjoy the value of their labor added. Actually the Georgist option does that too because the only tax you have to pay is for the unimproved value of the natural resource; people then get to keep the value added by their labor. And that is something that is attractive about both the Georgist theory and Nozick's theory.

About equal voice, some of us do agree that sometimes the government should own some natural resources, maybe land for a school or maybe it's the Grand Canyon or some rare animals like whales. If you feel that is true and you think there is a strong case for it, the government can certainly bid in the auction just like anybody else. Maybe you want to own some resources together, some land, well we can get together and bid for the resource just like anybody else, and then we can have communal ownership. The Georgist solution is compatible in theory with any form of possession as long as I compensate everybody else for their lost ability to use the resources.

Finally, a theory of equal welfare division is intuitively attractive in that it protects people from really bad outcomes. It makes sure that the worst of people get at least some resources. But we live in a resource-rich world; we should have enough so that if we actually divide the benefits of natural resources equally, then everybody would have some significant wealth.

I am not going to talk a lot about the other benefits of the Georgist solution. These are just some of the other things I am working on. The most important effects of the Georgist solution is in terms of reducing global poverty, and encouraging world peace, where we have a lot of these natural resources wars internally and externally and also considering it is affecting the environment. We need to do a better job to make the system just and have all these other political benefits of the Georgist system.

In conclusion, basically what I want you to take away from this presentation is that raw natural resources are a morally unique form of wealth. They are defined as the resources left over after everybody has been appropriately compensated for the value or their labor. By definition their value is not due to anybody's labor. They are therefore a morally unique form of wealth, and people have equal claims to these raw natural resources. Many political theorists agree with this basic proposition. But they disagree on how to best respect people's equal natural resource claims. The most convincing interpretation of equal claims is equal division, and that is what I argued by showing all these other interpretations running into these problems of not giving people benefits, of not being efficient or not maintaining equality over time. The best way to implement equal division is basically simply to hold initial natural resource auctions and to implement Georgist taxes.

On last thing I want to highlight: I focused on equal division of the proceeds from the auctions and taxes. That solution involves the government actually writing checks out to everyone. But if we live in a world where people have to pay any other form of taxes, like income taxes or wage taxes, it turns out that on efficiency grounds, we should tax people's natural resource check before we put taxes on those other forms of wealth. Just take that check and use that for government purposes and reduce people's wage tax or any distortionary tax like that. So even though I focus on equal division of the proceeds of the auction and the taxes actually I am not too wedded to this idea. I think people like Bill Gates aren't going to be getting a check in the mail for the raw value of natural resources. It is more likely going to be people that are not paying a lot of income taxes like the poor that are actually going to get the natural resource wealth check in the mail.



Common Ground-U.S.A. does not share name/address/phone/email information with any other organization without your written permission.


Send questions or comments about this web site to WEBMASTER
Copyright © 1997-2015 Common Ground-U.S.A.