Murray Rothbard on Georgism Part 2
- From: w_b_ryan@xxxxxxxxx
- Date: 30 Mar 2007 03:49:18 -0700
Murray Rothbard on Georgism--Part 2:
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Government ownership of land would end one
particular form of utter chaos brought about by the
single tax, but it would add other great problems. It
would raise all the problems created by any
government ownership, and on a very large scale.4
In short, there would be no incentive for
government officials to allocate sites efficiently,
and land would be allocated on the basis of politics
and favoritism. Efficient allocation also would be
impossible, due to the inherent defects of
government operation; the absence of a profit and
loss test, the conscription of initial capital, the
coercion of revenue -the calculational chaos that
government ownership and invasion of the free
market create. Since land must be used in every
productive activity, this chaos would permeate the
entire economy. Socialization as a remedy for the
evils of the single tax would be a jump from the
frying pan into the fire.
Thus we see that private site owners, by allocating
sites to productive uses, perform an extremely
important service to all members of society. It is a
service we would not do without, and the income to
owners is but their return for this service.
The view that the site owner is nonproductive is a
hangover from the old Smith-Ricardo doctrine that
"productive" labor must be employed on material
objects. The site owner does not solely transform
matter into a more useful shape, as the builder does,
though he may do that in addition. Lawyers and
musicians provide intangible services, just as site
owners perform a truly vital function although it
may not be a directly physical one.
What about the maligned speculator, the holder of
idle land? He, too, performs an important service-
a subdivision of the general siteowner function. The
speculator allocates sites over time. Even if a
speculator reaps an "unearned increment" of capital
value by holding land as its price rises, he can gain
no such increment by keeping land idle. Why
shouldn't he use the land and earn rents in addition
to his capital gain? Idle land by itself cannot benefit
him. The reason he keeps the land apparently idle,
therefore, is either that the land is still too poor to be
used by current labor and capital goods, or that it is
not yet clear which use for the site is best. The
"speculative" landowner has the difficult job of
deciding when to commit the site to a specific use.
A wrong decision would waste the land. By waiting
and judging, the speculative landowner picks the
right moment for bringing his land into use, and the
right employment for the land. Land speculators,
therefore, perform as vital a market function as their
fellow site owners whose land is already in use.
Land that seems idle to a passer-by probably is not
idle in the eyes of its owner who is responsible for
its use.
We have seen that the economic arguments for the
single tax are fallacious at every important turn, and
that the economic effects of a single tax would be
disastrous indeed. But we should not neglect the
moral arguments. Undoubtedly, the passion and
fervor that have marked the single taxers through
the years stems from their moral belief in the
injustice of private ownership of land. Anyone who
holds this belief will not be fully satisfied with
explanations of the economic error and dangers of
the single tax. He will continue to call for battle
against what he believes to be a moral injustice.
The single taxers complain that site owners benefit
unjustly by the rise and development of civilization.
As population grows and the economy advances,
site owners reap the benefit through a rise in land
values. Is it justice for site owners who contribute
little or nothing to this advance, to reap such
handsome rewards?
All of us reap the benefits of the social division of
labor, and the capital invested by our ancestors. We
all gain from an expanding market-and the
landlord is no exception. The landowner is not the
only one who gains an "unearned increment" from
these changes. All of us do. Is he, or are we, to be
confiscated and taxed out of this happiness in the
fruits of advancement? Who in "fairness" could
receive the loot? Certainly it could not be given to
our dead ancestors, who became our benefactors by
investing in capital.5
As the supply of capital goods increases, land and
labor become more scarce in relation to them, and
therefore more productive. The incomes both of
laborers and landowners increase as civilization
expands. As a matter of fact, the landowner does
not reap as much reward as the laborer from a
progressing economy. For landowning is a business
like any other, the return from which is regulated
and minimized, in the long run, by competition. If
land temporarily offers a higher rate of return, more
people invest in it, thereby driving up its market
price, or capital value, until the annual rate of return
falls to the level of all other lines of business. The
man who buys a site in mid-Manhattan now will
earn no more than in any other business. He will
only earn more if the market has not fully
discounted future increases in rent through
increasing the capital value of the land. In other
words, he can only earn more if he can pick up a
bargain. And he can only do this if, like other
successful profit-makers, his foresight is better than
that of his fellows.
Thus, the only landowners who reap special gains
from progress are the ones more farsighted than
their fellows-the ones who earn more than the
usual rate of return by accurately predicting future
developments. Is it bad for the rest of us, or is it
good, that sites go into the hands of those men with
the most foresight and knowledge of that site?
Among the specially farsighted is the original
pioneer-the man who first found a new site and
acquired ownership. Furthermore, in the act of
clearing the site, fencing it, and the like, the pioneer
inextricably mixes his labor with the original land.
Confiscation of land would not only retroactively
rob heroic men who cleared the wilderness, it would
completely discourage any future pioneering efforts.
Why should anyone find new sites and bring them
into use when the gain will be confiscated? And
how moral is this confiscation?
We have still to deal with the critical core of single
tax moral theory-that no individual has the right to
own value in land. Single taxers agree with
libertarians that every individual has the natural
right to own himself and the property he creates,
and to transmit it to his heirs and assigns. They part
company with libertarians in challenging the
individual's right to claim property in original, God-
given, land. Since it is God-given, they say, the land
should belong to society as a whole, and each
individual should have an equal right to its use.
They say, therefore, that appropriation of any land
by an individual is immoral.
We can accept the premise that land is God-given,
but we cannot therefore infer that it is given to
society; it is given for the use of individual persons.
Talents, health, beauty may all be said to be God-
given, but obviously they are properties of
individuals, not of society. Society cannot own
anything. There is no entity called society; there are
only interacting individuals. Ownership of property
means control over use and the reaping of rewards
from that use. When the State owns, or virtually
owns, property, in no sense is society the owner.
The government officials are the true owners,
whatever the legal fiction adopted. Public
ownership is only a fiction; actually, when the
government owns anything, the mass of the public
are in no sense owners. You or I cannot sell our
"shares" in TVA, for example.
Any attempt by society to exercise the function of
land ownership would mean land nationalization.
Nationalization would not eliminate ownership by
individuals; it would simply transfer this ownership
from producers to bureaucrats.
Neither can any scheme exist where every
individual will have "equal access" to the use of
land. How could this possibly happen? How can a
man in Timbuktu have as equal access as a New
Yorker to Broadway and 42nd Street? The only way
such equality could be enforced is for no one to use
any land at all. But this would mean the end of the
human race. The only type of equal access, or equal
right to land, that makes any sense is precisely the
equal access through private ownership and control
on the free market-where every man can buy land
at the market price.
The single taxer might still claim that individual
ownership is immoral, even if he can find no
plausible remedy. But he would be wrong. For his
claim is self-contradictory. A man cannot produce
anything without the cooperation of original land, if
only as standing room. A man cannot produce
anything by his labor alone. He must mix his labor
with original land, as standing room and as raw
materials to be transformed into more valuable
products.
Man comes into the world with just himself and the
world around him-with the land and natural
resources given him by nature. He takes these
resources and transforms them by his labor and
energy into goods more useful to man. Therefore, if
an individual cannot own original land, neither can
he in the same sense own the fruits of his labor. The
single taxers cannot have their cake and eat it; they
cannot permit a man to own the fruits of his labor
while denying him ownership of the original
materials which he uses and transforms. It is either
one or the other. To own his product, a man must
also own the material which was originally God-
given, and now has been remolded by him. Now
that his labor has been inextricably mixed with land,
he cannot be deprived of one without being
deprived of the other.
But if a producer is not entitled to the fruits of his
labor, who is entitled to them? It is difficult to see
why a newborn Pakistani baby should have a moral
claim to ownership of a piece of Iowa land someone
has just transformed into a wheat field. Property in
its original state is unused and unowned. The single
taxers may claim that the whole world really
"owns" it, but if no one has yet used it, it is really
owned by no one. The pioneer, the first user of this
land, is the man who first brings this simple
valueless thing into production and social use. It is
difficult to see the morality of depriving him of
ownership in favor of people who never got within
a thousand miles of the land, and whose only claim
to its title is the simple fact of being born-who
may not even know of the existence of the property
over which they are supposed to have claim.
Surely, the moral course is to grant ownership of
land to the person who had the enterprise to bring it
into use, the one who made the land productive. The
moral issue will be even clearer if we consider the
case of animals. Animals are "economic land"-
since they are original nature-given resources. Yet
will anyone deny full title to a horse to the man who
finds and domesticates it? Or should every person in
the world put in his claim to one two-billionth of the
horse-or to one two-billionth of a government
assessor's estimate of the "original horse's" worth?
Yet this is precisely the single taxer's ethic. In all
cases of land, some man takes previously
undomesticated, "wild" land, and "tames" it by
putting it to productive use. Mixing his labor with
land sites should give him just as clear a title as in
the case of animals.
As two eminent French economists have written
"Nature has been appropriated by him (man) for his
use; she has become his own; she is his property.
This property is legitimate; it constitutes a right as
sacred for man as is the free exercise of his
faculties. Before him, there was scarcely anything
but matter; since him, and by him, there is
interchangeable wealth. The producer has left a
fragment of his own person in the things
which...may hence be regarded as a prolongation of
the faculties of man acting upon external nature. As
a free being he belongs to himself; that is to say the
productive force, is himself; now, the cause, that is
to say, the wealth produced, is still himself. Who
shall dare contest title of ownership so clearly
marked by the seal of his personality?"6
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4 For a further discussion of these problems, see the
author's "Government in Business," The Freeman
(September 1956): 39-41.
5 "'What gives value to land?, asks Rev. Hugh O.
Pentecost. And he answers: 'The presence of
population-the community. Then rent, or the value
of land, morally belongs to the community.' What
gives value to Mr. Pentecost's preaching? The
presence of population-salary, or the value of his
preaching, morally belongs to the community."
Benjamin R. Tucker, Instead of a Book (New York:
B.R. Tucker, 1893), p. 357. Also see Leonard E.
Read, "Unearned Riches," in On Freedom and Free
Enterprise, Mary Sennholz, ed. (Princeton: D. Van
Nostrand, 1956), pp. 188-95; and F.A. Harper,
"The Greatest Economic Charity," in ibid., pp. 94-
108.
6 Leon Wolowski and Emilet Levasseur, "Property"
in Lalor's Cyclopedia of Political Science (Chicago:
M.B. Cary, 1884), p. 392.
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[End of Part 2--will continue into Part 3]
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