That the Internet has a vast potential for improving public policies
around the world seems to be more or less agreed upon by all. The world's
"progressives"--those who're concerned with the welfare of humans beyond
their own communities--could obviously be a powerful force here as
Net-linked computers begin to show up in, for example, the hundreds of
thousands of village squares in the 3rd world. As always, though, there's a
problem: Whatever the difficulties of the "conservatives" have in getting
their act together, they're dwarfed by those on the progressive side. We
can agree that poverty, unemployment, environmental degradation, corporate
monopoly, and so on are bad things but we insist on killing our
effectiveness in the world of national policy by splintering ourselves into
scores and even hundreds of mutually exclusive "remedy" camps.
Want to join the world fight on poverty? Would you believe that
bright, concerned, articulate people on the Net--all badly needed to shape
sensible public policies that can be effectively used by the poorest of our
200 countries--are being siphoned off into such intellectual cul-de-sacs as
as the "land-tax" of Henry George (1839-1897)? One is reminded of that
ancient adage, "Providence weighs in different scales the sins of the
warm-hearted and those of the cold-blooded." But there is a heavy
opportunity cost here--the terrible price paid by the poor when those who
are disposed to help them dissipate their energies and talents in outworn
ideological disputes.
There are, I would guess, some 100,000 professional economists in
the world. Hopefully one or more of them will join all these "splinter"
progressive groups and do their best to disperse the present-day, crippling
influence of the less wise of those "academic scribblers" of an earlier age
that Lord Keynes deplored. The following is a recent post of mine to one of
these Georgist groups.
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
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Perhaps it would help to clarify things a bit here if I mention
that--contrary to an "assumption" made recently by one member--I had indeed
heard of Henry George prior to this week! Like most if not all college
students, I was introduced to George in my first economics course--which was
several decades ago. (Over the years, I've also taught economics, both at
the undergraduate and graduate levels.) That aside, let me go to what I
gather is the central issue here: Is George right and the rest of the
economics fraternity--certainly the overwhelming majority of it--wrong?
The last time I checked there were some 50 or so introductory
economics textbooks in use in America's universities. I've studied quite a
few of them and have yet to encounter one that takes George's land-tax
proposal seriously. One such text, for example, is Edwin Mansfield's
"Economics" (Norton, 4th Ed., 1983). George's economist critics, according
to Professor Mansfield, "argued that if land rents are unearned so are many
other kinds of income. In addition, they pointed out that it was
unrealistic to expect such a tax to raise the needed revenue... Arguments in
favor of a single tax continue to surface from time to time." Id, pp.
744-745. Mansfield also notes that in 1981, for example, rented accounted
for only 1% of U.S. national income. Id., p. 749.
Another popular university economics text, "Economics," by
Professors Richard G. Lipsey and Peter O. Steiner (Harper & Row, 6th ed.,
1981), refers to the "single-tax movement, of which Henry George (1839-1897)
was the guiding genius and his book, 'Progress and Poverty' (1880) the
bible... The chief difficulties with the proposal are that not all land
rents are economic rents, not all economic rents are land rents, and the
revenue from a land tax would surely not be enough to make it the only tax
needed in today's world." Id., p. 349. These authors point that, in 1978,
rental income amounted to l.5% of U.S. national income. Id., p. 331.
Still another prominent economics text, "Economics," by
Bronfenbrenner, Sichel, and Gardner (Houghton Mifflin, 3rd ed., 1990),
refers to "Henry George, an American social reformer" in the late 19th
century, who "proposed that all existing taxes be abolished and that they be
replaced by a single tax on the economic earnings of urban land (but not
buildings and improvements on the land)." Noting that taxes on land are
common everywhere, these authors conclude that "there is little
justification for placing the whole tax burden on landowners while letting
the owners of other resources go without paying any taxes on their economic
earnings." Id., p. 695.
Professor Robert Heilbroner, in his "The Wordly Philosophers" (Simon
& Schuster, 1961), discusses George's proposed land tax and concludes: "The
problem is not just that of rents, but of all unearned income, and while
this may be a serious problem, it cannot be adequately approached through
land ownrship alone." And: "Suffice it to point out that rental income in
the United States has shrunk from 6% of national income in 1929 to only 3%
in 1960." Id., p. 16l. He refers to "Henry George's fulmination against
rent and his ecstatic vision of a City of God to be built on the foundation
of a single tax." Id., p. 163.
What portion of U.S. national income is currently accounted for by
rent? It was 2.1% in 1995. By contrast, workers received 72.6%; corporate
profits, 10.1%; proprietor's income, 8.2%; and interest, 6.9%. (Statistical
Abstract of the United States, 1996-1997, p. 449.)
The federal budget alone, the last time I checked, consumed well
over 2.1% of the national income.
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
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