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Thursday, August 27, 2015

The 1893 revolt of the Georgists Against Henry George

I reported the 1890 Formulation of the Georgist platform in my last post and how his 1890-1892 platform supported attacking monopoly at it's source. Modern Georgists don't seem interested in that part of his efforts. Well the Georgist movement revolted against Henry George on this issue!

The Revolt of the "Unsound Followers"

In the 1893 platform they:

This wording "In securing to each individual his equal right to the use of the earth, it is also a proper function of society to maintain and control all public ways for the transportation of persons and property and the transmission of intelligence;.." takes out the term "managed." In that way it was a Trojan Horse for the continued private monopolization of private, for profit entities.

This could explain why modern Georgists aren't as anti-monopoly as George was. George Voted against the change in wording of Paragraph 11.

George's version of paragraph 11 was:

"With respect to monopolies other than the monopoly on land, we hold that where free competition becomes impossible, as in telegraphs, railroads, water and gas supplies, etc., such business becomes a proper social function, which should be controlled and managed by and for the whole people concerned, through their proper governmental, local, state or national, as may be." [Georgist Constitution]

Essentially by taking out the challenge to the Giant Monopolies they were caving to the anti-"socialist" pressure then sweeping the country, but also hollowing out the value of the LVT tax as a tax to eliminate unearned privilege.

If they'd left the term "managed" and the reference to competition, they probably would have offended the Giant corporations who already were monopolizing those infrastructures (and whose support they craved). But in doing this to Georgism they took out the moral teeth of what made Georgism progressive.

And it Goes on to this day

When Henry George was talking about land he was using a broader definition than many realize. In progress and poverty he writes:

"The term land necessarily includes, not merely the surface of the earth as distinguished from the water and the air, but the whole material universe outside of man himself, for it is only by having access to land, from which his very body is drawn, that man can come in contact with or use nature. The term land embraces, in short, all natural materials, forces, and opportunities, and, therefore, nothing that is freely supplied by nature can be properly classed as capital." [Progress and Poverty Book I, Ch. 2]

More importantly he's not talking about a simple reformed Real Estate Tax. If his followers had understood this they might not have had so much trouble making the case that his tax was an "indirect tax" -- since it is essentially a tax on the privilege of collecting rent based on monopoly over land. This revolt was serious because it led the movement to go further and further away from Georgist principles and to find other reasons to justify Land Value Taxes than simple equity. But George had made his moral case. He didn't need unsound supporters to make a hash of things to the point that when someone points out the errors they are labeled as heresies and bullied, as has happened to several friends of mine. I joined "Bully-Anon":

"I realized that my best power over bullies was to follow my own best path and keep out of their way."

They can call me what they want to. I'm not a Georgist but I'm in love with George's moral authority and think his tax on "economic rents" is part of the solution for our nation's woes. I'm trying to do the leaders of the Georgist movement a favor. "You too are mortal". George states the reason this is important:

"Nothing is to be gained by having the Single Tax advocated for wrong reasons"

and he italicizes "wrong reasons" (I added the bolding). And he continues:

"Men brought over by erroneous arguments can never be relied on in a cause that rests on truth."

It matters, whether it is an author whose work is otherwise valuable, my friends or myself. Both the moral and fiscal rationale are important to the integrity of the effort. And on the integrity of ones efforts rests whether there is complete success or ultimate failure. I've quoted this before, but it is the next phrase in his article in the Standard in November 1891:

"The unsound supporter is, in fact, more dangerous than an opponent."

This is not hyperbole. It is incredibly easy to get little things wrong. But in economics, chaos rules and the "Butterfly Effect" kills the best intentions of folks who make incredibly tiny errors that get carried downwind as Tornados of destructive fury. Undermining the moral and logical argument undermines the possibility for success in the overall effort. Henry George wrote this in 1891. This was around the same time he had his "Constitution" I referred to earlier. When he had his first stroke around that time, it seems to have proved an opportunity for others to take over and go off on their own tangents. And that hasn't stopped. They need to correct course and get back to first principles.

"Unless he sees that taxes on Land Values or economic rent which is what we mean by the Single Tax must be borne by the owners of the valuable land from which it is collected, and that it cannot fall on users of land as users, and cannot add to the cost of production or increase prices, no one can appreciate the moral side of our argument or the full weight of the fiscal side."

This is so basic that I think that most Georgists if they reflect on it will see that it's simply true. Then they can stop talking about LVT as if it were a mere income tax or a tool for more efficient development. In this day when equity issues have once again reared their head, it is very important. In 1890, in the Standard, George said it again:

"Every man has an equal right to land, but the equality of that right to land involves the limitation that he has no more right than anybody else, and consequently no right to any better land than anyone else could get. He has a right to land to which no economic rent [i.e., unearned income] attaches; and on that land, under our [Single Tax] system, he would pay no taxes---neither for land nor for improvements, nor for anything else. We do not propose to tax land. We propose to tax [unearned] land values, and all land has not real value [i.e., has not real economic rent or real unearned value]." Henry George, The Standard, Sept. 17, 1890"

So all this talk about seizing someone's house because it can be better used as a downtown factory or store and because it is worth huge sums as "speculation" -- misses Henry's point and reflects the revolt of the Georgists against George.

I invite you to read the other article again. It's in an image file. I believe there is a readable one somewhere but I can never find it when I need it, so I have an image of it in another post:

http://holtesthoughts.blogspot.com/2015/03/the-target-of-progressive-taxation-and.html
Further Reading:
The reference to the change in the Georgist Platform comes from the Ebook:

The Single Tax Movement -- Arthur Nichols Young
http://holtesthoughts.blogspot.com/2015/08/the-georgist-constitution.html
George's smaller book:
ourlandlandp00georgoog.pdf
Easier to Read Version: http://schalkenbach.org/library/henry-george/grundskyld/pdf/George/pe-Our-Land-and-Land-Policy.pdf
Progress and Poverty Book I, Chapter 2: [http://www.econlib.org/library/YPDBooks/George/grgPP3.html#Book]
Originally published 8/19/2015, revised and added several paragraphs on 8/27/2015. I'm revising previous posts based on corrections to the material as I learn more that fully develops the themes I'm talking about.

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