The Crime of Poverty by Henry George disputes the rising living standards attributed to the late 1800s. His explanation is land monopolization which seems plausible since the government owned much of the land. What do you all think?
I’ve spent quite a lot of time debating with Georgists over the past few months. You should be aware that when they say “land monopolization” they mean what we would call private ownership of land, or a free market in land. To them, a “free market” in land would require land holders to hand over 100% of the income they get by excluding others from the land to “the community”, because they believe land always and everywhere “belongs to” the community, i.e. that everyone ought to have equal rights to “access nature” (the Lockean Proviso), and therefore any land holder that wants to exclude others from a parcel of land ought to pay compensation to everyone else for the privilege of doing so. They refer to a land holder keeping his income as theft, and consider it a subsidy from the State to land holders that land rent is not currently collected by the State for equal redistribution.
I haven’t read through all of your link but I suspect George is arguing that if there had been a Land Value Tax (which modern Geoists like to call “land value recapture”, so they can continue to nominally reject “all taxes”) in the late 1800s, living standards would have been even higher than if there had been no “subsidy to land”. It is not merely government ownership of land that Georgists object to, but also private ownership of the land. Georgists blame private ownership of land (i.e. the lack of a 100% LVT) today for many economic ills, including the business cycle.
Thanks for that insight, Graham.
They have a point in that private ownership per definition means monopolization. If you think about it, that’s the point of ownership, that someone has exclusive rights to use a scarce resource. That’s how far they get before it all bogs down into a horrendous mess of collective terms. There is no such species as “the community” and it can not own anything. Public ownership means state ownership. The only alternative to private monopolization is thus state monopolization.
What’s the Austrian response to that whole land value tax thing? So far I’m kind of sympathetic towards the idea because it seems to avoid the distortionary effects of income or consumption taxes. Then again, the point of taxes is distortion. If the state wanted to reduce economic distortion it would not tax in the first place.
Nero - I like your point about the point of taxes being distortion. I think politicians will always find it easier to sell distortive taxes because by definition they create winners and losers, and having winners is what attracts campaign funds and votes.
Have you considered that the concept of absolute private property in land can be seen as an artifact of the existence of states, and that almost every state can be traced back in its infancy to a group of individuals using aggression against others in order to take control over land and monopolize its benefits?
Considered like that, LVT doesn’t just avoid the distortionary effects of other taxes, it actually attacks the root of what ultimately leads to the creation of states.
Dan
Land as private property predates the existence of the state by thousands of years. We have only had government in the form of states (the legal fiction that exercises a monopoly on law and violence) for like 350 years or so.
Welcome to the forums, dsyddall!
Actually, I would consider the concept of “community”-owned land an artifact of the existence of states. Since states emerged to monopolize land in the hands of tribes and city-states, not in the hands of individuals. As I mentioned, private ownership is the antithesis of communal (=state) ownership.
@Malachi: We’ve only had governments since 1650?
@Malachi I completely agree that private ownership of land pre-dates the existence of the state. This was implied by what I wrote above since I argued that absolute private ownership of land is the ultimate cause of many states, and a thing cannot cause another thing unless it is temporally prior to that other thing.
I disagree that states have existed only 350 years, but perhaps we are using a different definition of “state”. I use the word loosely in the sense used by Oppenheimer: “privileges and dominating positions which are brought into being by extra-economic power”. Examples of states covered by this definition include monarchies, organized crime networks, modern-day governments and so on.
@Nero Thanks. I think the important point is that the state arises primarily as a result of conflict over natural resources. Whether the state is attempting to dominate land held by individuals or other states is secondary. What geoism provides is an alternative to the state as a way of resolving the conflict over natural resources.
How so? I thought geoists wish to monopolize land in the hands of the state.
Here’s Murray: http://mises.org/rothbard/georgism.pdf
And here are some Georgist responses to this piece…
http://sites.google.com/site/justindkeith/home/geolibertarian-faq
I’ve read this elsewhere, and wouldn’t at all be surprise if this is the case, but would you post proof?
A monarchy is not a legal fiction. A monarchy is government by a monarch, which is a person. A state is a legal fiction that exercises powers of governance. The state came about around the same time as the modern corporation, also a legal fiction. Prior to this there was no legal fiction to camouflage the fact that all power is personal.
when the king went to war, the people didnt say “we are at war” and they were customarily excluded from the direct harmful effects of war when convenient. Wars were seen as a means of settling disputes between sovereigns, and sovereigns exercised property rights over their dominions. Other forms of governance are the same way, we have only had the state (defined as a legal fiction distinct from the rulers’ persons.) since the 17th century or so. See “westphalian sovereignty”
I cant prove that no states existed prior to this time, but I am not aware of any. Preceding forms of governance were explicitly personal.
@Graham: Thanks, I was hoping for someone to post a response to that question.
So the argument I read out of this is basically that if there was no way to make a profit off land, then you can’t efficiently allocate it.
We’d basically exclude land from the capitalist economy, and we know how that leads to a calculation problem and, well, poverty.
Now here is my question: Why doesn’t that same argument apply to intellectual property? It’s scarce, why else would we need to pay programmers to create it. So why should we exclude it from the capitalist economy?
Interesting. Weird that I didn’t know that. We’re running the world according to a bunch of principles, and nobody bothered to tell me.
@Dan, welcome to the Mises forum, glad you joined.
Yes, that’s the main Austrian economic argument. The geoists will deny that the LVT hampers economic calculation or the efficiency of land use. In fact, they will say that land would be used more efficiently with the LVT than without it. I’m hoping someone will make that case so we can have the debate here.
I don’t want to derail this thread by getting into IP. There are plenty of other threads and resources to be found on this site about that.
you should read the book I am suggesting to everyone recently, Martin van Creveld’s Transformation of War. He explains how, in a sense, there is a sort of “argumentation ethics” for war in that we have law of war. A lot of people like to abuse this notion, suggesting that because people break the law, it doesnt exist, but the precise point of the fact is that the idea of a war criminal was created in order to place socially enforced limits on violence. I am paraphrasing to the extreme here, but he basically says what I said. I am terribly interested in fathoming what all this means for the future, and I would like to find some sort of inescapable performative contradiction inherent in warfare.
but basically those principles deal with who may and may not engage in what sorts of violence, and against whom.
Yeah, definitely. Thanks.
Any tax at all must necessarily reduce living standards by implication of what it means to tax.
Implied in the concept of action are values, costs, causality, profits, losses and time. When one acts, he is necessarily pursuing the goal he values most at that time, under those conditions, and with those scarce means he has. Because he values this goal most, he must value all else less. By valuing an end, to the extent that an actor means to acquire this end, the actor must have an understanding of causality (e.g. Means A leads to Means B, Means B leads to end C). An actor doesn’t always and at every time drink water merely to drink water, but may drink water as a means to drink water (or to quench thirst, or to rehydrate, or to make his urine not so yellow, or to seem fashionable to his friends, et cetera). And so, because actors understand the concept of causality, to whatever rudimentary or sophisticated degree, actors value means less than ends, not the other way around as means would have no value without ends and means couldn’t even be means without the presence of ends.
In the course of action, there are costs, benefits, profits, and losses as in economics (which is a subset of the category of action, elaborated in praxeology) present to actors. An actor’s valuations and perceptions can change and ends could gain or lose value accordingly. The cost of any action is always the deference of another end to this end. End A has a greater value to End B, but given scarce resources which have alternative uses, End B must be foregone in order to entertain End A (Even in the most superabundant situation that could possibly manifest itself, a Garden of Eden, there would still be scarce resources which have alternative uses and there would still thus be praxeological action; these three resources would be our bodies, physical space, and time).
While actors are always rational (that is to say, they always attempt to acheive ends through means) by definition, they are not infallible; actors can err and are liable to reassess courses of action, ex poste, when values change (as must always be the case; my values at Time T without End A are necessarily different from my values at Time T2 with/without End A at my possession after action [costs/production] has taken place). Taxes, properly understood as increased costs, necessarily affect the course of action by producers relative to terms in which these taxes are not present. A situation in which taxes would be present would be earning income from labor, production, sale, or consumption but these activities are taxed. Consequently, relative to activities in which these taxes are not administered, these activities must be more costly. Because this is the case, actors must now change their subjective valuations of these activities and act to what courses they perceive as incurring the least costs or accruing to themselves the most benefits.
Living standards, properly understood (if what George said is true, then it is doubtful that he understands what living standards are) are the average acquisition of economic goods in a population (there are various measurements which try to quantify this, but they are useless; the question that must be asked is a living standard relative to what?). Land ownership is one of the most fundamental factors of economic means (apart from labor) available (fundamental even to justifiably argue that it is fundamental!). Considering that the costs of owning land, under the Georgist position, would cost more than otherwise, we can conclude that certain activities would be deferred more than they otherwise would have been absent a land tax (or any tax, for that matter). The necessary results of this would be: reduced consumption and reduced production and a reduced standard of living, as a result of the reduction of the prior two categories (which are mirrors of each other) relative to a situation in which no such tax, or any tax, was placed.
Taxes aren’t merely abstract costs; they are a negation of property rights: they are an aggressive, noncontractual exchange of property between producers and non-producers. Taxes are property aggressively seized from producer A and are redistributed to non-producers B, C, and so on either directly or indirectly. An actor contemplating taking part in production will consider all costs that he is capable of comprehending and choose whether to produce, or not produce, through land investment as a primary factor. Given this added cost, and that a cost allows an actor to value an action less than another action in which a cost to as great a degree, as this actor perceives costs, is not taken, it is not unlikely that this actor is more liable to prefer not-producing to producing relative to an imagined situation where this added cost is not incurred.
Should this continue, it may be the case that population A2 (which is taxed) places less investment in production and becomes more present oriented (higher time preference) relative to population A1 (which is not taxed) in which, because of not so high costs incurred during production, there are more producers and is more future oriented (lower time preference). This increased investment allows for less costly production which allows for greater production and greater consumption. In natural conditions (I use here to refer to a theoretical situation in which there is an absence of aggression, e.g. tax), living standards are necessarily maximized.
Hope this helps.
An aggressive war, a war that is waged not as a means of defending legitimately (through either original appropriation, production or contract) acquired property, would be an example of such a performative contradiction. One cannot justifiably argue with another the aggressive negation of property rights as argument presupposes the legitimacy of the NAP and property rights.
A war of self-defense, a war waged to defend legitimately acquired property in response to an aggression on such property, is justifiable in that it is within the category of property rights. Any limitation on this right may be legitimately self imposed for reasons of morality, but this doesn’t negate the fact that defending oneself through violence is within one’s rights as it can be done naturally (through the use of legitimately acquired property) against one who tries to assert ownership of property (illegitimately and through aggressive means).
This is consistent with the NAP, and therefore property rights, insofar as one does not aggress against the property rights of another person beyond what the aggressor has done. For example:
Situation 1
Aggressive action: An intruder standing on my front lawn and refusing to leave.
Aggressive action: Me shooting him in the face and killing him.
By standing on my lawn and refusing to leave, the intruder in question disturbs my right to enjoy my property and thus curtails me rights. By murdering him, in “self-defense”, I eliminate all of his property rights, which is inconsistent with the NAP.
Situation 2
Aggressive action: An intruder standing on my front lawn and refusing to leave.
Defensive action: Asking the intruder to leave and, if he refuses but still does no further aggression than to verbally refuse, I may move him off of my property.
By first using the most gentle means of removing the tresspasser, by asserting my rights and disqualifying his assumed “rights”, I act within the confines of the NAP.
That’s the gist of what I’ve found defended by Rothbard, and Hoppe whereas Block differs a tad. I’d like to read more about the NAP as it relates to NAP (are there quantitative limits to what one may do in self defense or lists of justifiable actions for ad hoc situations?) myself.
Hope this helps.