Henry George

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Henry George
Classical economics
Henry George.jpg
Henry George
Born (1839-09-02)September 2, 1839
Philadelphia, Pennsylvania, USA
Died October 29, 1897(1897-10-29) (aged 58)
New York City
Resting place Green-Wood Cemetery, Brooklyn, New York
Nationality American
Influences
Influenced
Contributions Georgism; studied land as a factor in economic inequality and business cycles; proposed land value tax

Henry George (September 2, 1839 – October 29, 1897) was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land. He inspired the economic philosophy known as Georgism, whose main tenet is that people should own what they create, but that everything found in nature, most importantly the value of land, belongs equally to all humanity. His most famous work, Progress and Poverty (1879), is a treatise on inequality, the cyclic nature of industrialized economies, and the use of the land value tax as a remedy.

Biography[edit]

Early life and marriage[edit]

George was born in Philadelphia, Pennsylvania, to a lower-middle-class family, the second of ten children of Richard S. H. George and Catharine Pratt (Vallance) George. His father was a publisher of religious texts and a devout Episcopalian, and sent George to the Episcopal Academy in Philadelphia. George chafed at his religious upbringing and left the academy without graduating.[1][2] His formal education ended at age 14 and he went to sea as a foremast boy at age 15 in April 1855 on the Hindoo, bound for Melbourne and Calcutta. He returned to Philadelphia after 14 months at sea to become an apprentice typesetter before settling in California.

In California George fell in love with Annie Corsina Fox, an eighteen-year-old girl from Sydney who had been orphaned and was living with an uncle. The uncle, a prosperous, strong-minded man, was opposed to his niece's impoverished suitor. But the couple, defying him, eloped and married in late 1861, with Henry dressed in a borrowed suit and Annie bringing only a packet of books. The marriage was a happy one and four children were born to them. Fox's mother was Irish Catholic, and while George remained an Evangelical Protestant, the children were raised Catholic. On November 3, 1862 Annie gave birth to future United States Representative from New York, Henry George, Jr. (1862–1916). Early on, even with the birth of future sculptor, Richard F. George (1865 – September 28, 1912),[3][4][5] the family was near starvation. After a failed attempt at gold mining in British Columbia he began work in the newspaper industry in 1865, starting as a printer, continuing as a journalist, and ending as an editor and proprietor. He worked for several papers, including four years (1871–1875) as editor of his own newspaper San Francisco Daily Evening Post.[6][7][8]

Birthplace in Philadelphia

The George family struggled but George's increasing reputation and involvement in the newspaper industry lifted them from poverty.

George's other two children were both daughters. The first was Jennie George, (c. 1867–1897), later to become Jennie George Atkinson.[9] George's other daughter was Anna Angela George (b. 1879), who would become mother of both future dancer and choreographer, Agnes de Mille[10] and future actress Peggy George (who was born Margaret George de Mille).[11][12]

Economic and political philosophy[edit]

George began as a Lincoln Republican, but then became a Democrat. He was a strong critic of railroad and mining interests, corrupt politicians, land speculators, and labor contractors. He first articulated his views in an 1868 article entitled "What the Railroad Will Bring Us." George argued that the boom in railroad construction would benefit only the lucky few who owned interests in the railroads and other related enterprises, while throwing the greater part of the population into abject poverty. This had led to him earning the enmity of the Central Pacific Railroad's executives, who helped defeat his bid for election to the California State Assembly.[8][13][14]

One day in 1871 George went for a horseback ride and stopped to rest while overlooking San Francisco Bay. He later wrote of the revelation that he had:

I asked a passing teamster, for want of something better to say, what land was worth there. He pointed to some cows grazing so far off that they looked like mice, and said, 'I don't know exactly, but there is a man over there who will sell some land for a thousand dollars an acre.' Like a flash it came over me that there was the reason of advancing poverty with advancing wealth. With the growth of population, land grows in value, and the men who work it must pay more for the privilege.[15]

Furthermore, on a visit to New York City, he was struck by the apparent paradox that the poor in that long-established city were much worse off than the poor in less developed California. These observations supplied the theme and title for his 1879 book Progress and Poverty, which was a great success, selling over 3 million copies. In it George made the argument that a sizeable portion of the wealth created by social and technological advances in a free market economy is possessed by land owners and monopolists via economic rents, and that this concentration of unearned wealth is the main cause of poverty. George considered it a great injustice that private profit was being earned from restricting access to natural resources while productive activity was burdened with heavy taxes, and indicated that such a system was equivalent to slavery – a concept somewhat similar to wage slavery. This is also the work in which he made the case for a "land tax" in which governments would tax the value of the land itself, thus preventing private interests from profiting upon its mere possession, but allowing the value of all improvements made to that land to remain with investors.[16][17]

Henry George later in life

George was in a position to discover this pattern, having experienced poverty himself, knowing many different societies from his travels, and living in California at a time of rapid growth. In particular he had noticed that the construction of railroads in California was increasing land values and rents as fast as or faster than wages were rising.[13][18]

In 1880, now a popular writer and speaker,[19] George moved to New York City, becoming closely allied with the Irish nationalist community despite being of English ancestry. From there he made several speaking journeys abroad to places such as Ireland and Scotland where access to land was (and still is) a major political issue. In 1886 George campaigned for mayor of New York City as the candidate of the United Labor Party, the short-lived political society of the Central Labor Union. He polled second, more than the Republican candidate Theodore Roosevelt. The election was won by Tammany Hall candidate Abram Stevens Hewitt by what many of George's supporters believed was fraud. In the 1887 New York state elections George came in a distant third in the election for Secretary of State of New York.[8][20] The United Labor Party was soon weakened by internal divisions: the management was essentially Georgist, but as a party of organized labor it also included some Marxist members who did not want to distinguish between land and capital, many Catholic members who were discouraged by the excommunication of Father Edward McGlynn, and many who disagreed with George's free trade policy. George had particular trouble with Terrence V. Powderly, president of the Knights of Labor, a key member of the United Labor coalition. While initially friendly with Powderly, George vigorously opposed the tariff policies which Powderly and many other labor leaders thought vital to the protection of American workers. George's strident criticism of the tariff set him against Powderly and others in the labor movement.[21]

Death[edit]

The grave of Henry George, Green-Wood Cemetery, Brooklyn, New York

George's first stroke occurred in 1890, after a global speaking tour concerning land rights and the relationship between rent and poverty. This stroke greatly weakened him, and he never truly recovered. Despite this, George tried to remain active in politics. Against the advice of his doctors, George campaigned for New York City mayor again in 1897, this time as an Independent Democrat. The strain of the campaign precipitated a second stroke, leading to his death four days before the election.[22][23][24] An estimated 100,000 people attended his funeral on Sunday, October 30, 1897 where the Reverend Lyman Abbott delivered an address,[25] "Henry George: A Remembrance".[26]

Policy proposals[edit]

Single tax on land[edit]

Henry George is best known for his argument that the economic rent of land should be shared by society rather than being owned privately. The clearest statement of this view is found in Progress and Poverty: "We must make land common property."[27] By taxing land values, society could recapture the value of its common inheritance, and eliminate the need for taxes on productive activity. George believed that this would provide disincentives toward land speculation, but would continue to incentivize development, as landlords would not suffer tax penalties for any industry or edifice constructed on their land.[28]

Many environmentalists, such as Bolton Hall and Ralph Borsodi, have agreed with the idea of the earth as the common property of humanity. The US Green Party platform has endorsed the idea of ecological tax reform, including land value taxation and substantial taxes or fees on pollution as a replacement for "command and control" regulation.[29]

Free trade[edit]

George was opposed to tariffs, which were at the time both the major method of protectionist trade policy and an important source of federal revenue (the federal income tax having not yet been introduced). He believed that tariffs kept prices high for consumers, while failing to produce any increase in wages. He also thought that tariffs protected monopolistic companies from competition, thus augmenting their power. Later in his life, free trade became a major issue in federal politics and his book Protection or Free Trade was read into the Congressional Record by five Democratic congressmen.[30][31]

Secret ballot[edit]

George was one of the earliest, strongest and most prominent advocates for adoption of the secret ballot in the United States.[32] George's first article in support of the secret ballot was entitled "Bribery in Elections" and published in the Overland Review of December 1871. His second article was "Money in Elections," published in the North American Review of March 1883. The first state to adopt the secret ballot, also called The Australian Ballot, was Massachusetts in 1888 under the leadership of Richard Henry Dana III. By 1891, more than half the states had adopted it also. For a more complete discussion of the adoption of the Australian Ballot, see Saltman, Roy G., (2006), The History and Politics of Voting Technology, Palgrave Macmillan, NY, pp. 96–103.

Hard currency and national debt[edit]

George supported the use of government issued paper currency such as the greenback. He opposed the use of metallic currency (such as gold or silver), and money issued by private commercial banks.[33]

Legacy[edit]

Landlords Game board, based on Magie's 1924 US patent (no. 1,509,312).

George's influence has ranged widely across the political spectrum. He is claimed as an intellectual influence by many libertarian and progressive figures. A large number of famous individuals, both historical and contemporary, claim inspiration from his ideas.

A follower of George, Lizzie Magie, created a board game called The Landlord's Game in 1904 to demonstrate his theories. After further development this game led to the modern board game Monopoly. [2]

Various political parties around the world were founded on George's ideas. The controversial People's Budget was partly inspired by Henry George. Non-political means have also been attempted to further the cause. A number of "Single Tax Colonies" were started, such as Arden, Delaware and Fairhope, Alabama.

Although both advocated worker's rights, Henry George and Karl Marx were antagonists. Marx saw the Single Tax platform as a step backwards from the transition to communism.[34] On his part, Henry George predicted that if Marx's ideas were tried, the likely result would be a dictatorship.[35]

The Robert Schalkenbach Foundation [3], an incorporated "operating foundation," also publishes copies of George's work on economic reform and sponsors academic research into his policy proposals [4].

The city of Pittsburgh was host to a "Henry George" club that debated and discussed his theories.[36]

Henry George Theorem[edit]

In 1977, Joseph Stiglitz showed that under certain conditions, spending by the government on public goods will increase aggregate land rents by an equal amount. This result has been dubbed by economists the Henry George Theorem, as it characterizes a situation where Henry George's "single tax" is not only efficient, it is also the only tax necessary to finance public expenditures.[37]

Economic contributions[edit]

George developed what he saw as a crucial feature of his own theory of economics in a critique of an illustration used by Frédéric Bastiat in order to explain the nature of interest and profit. Bastiat had asked his readers to consider James and William, both carpenters. James has built himself a plane, and has lent it to William for a year. Would James be satisfied with the return of an equally good plane a year later? Surely not! He'd expect a board along with it, as interest. The basic idea of a theory of interest is to understand why. Bastiat said that James had given William over that year "the power, inherent in the instrument, to increase the productivity of his labor," and wants compensation for that increased productivity.[38]

George did not accept this explanation. He wrote, "I am inclined to think that if all wealth consisted of such things as planes, and all production was such as that of carpenters – that is to say, if wealth consisted but of the inert matter of the universe, and production of working up this inert matter into different shapes – that interest would be but the robbery of industry, and could not long exist."[39] But some wealth is inherently fruitful, like a pair of breeding cattle, or a vat of grape juice soon to ferment into wine. Planes and other sorts of inert matter (and the most lent item of all – money itself) earn interest indirectly, by being part of the same "circle of exchange" with fruitful forms of wealth such as those, so that tying up these forms of wealth over time incurs an opportunity cost.[citation needed]

George's theory had its share of critiques. Austrian school economist Eugen von Böhm-Bawerk, for example, expressed a negative judgment of George's discussion of the carpenter's plane. In his treatise, Capital and Interest, he wrote:

(T)he separation of production into two groups, in one of which the vital forces of nature form a distinct element in addition to labour, while in the other they do not, is entirely untenable[...] The natural sciences have long ago told us that the cooperation of nature is universal. [...] The muscular movement of the man who planes would be of very little use, if the natural powers and properties of the steel edge of the plane did not come to his assistance.[40]

Later, George argued that the role of time in production is pervasive. In The Science of Political Economy, he writes:

[I]f I go to a builder and say to him, "In what time and at what price will you build me such and such a house?" he would, after thinking, name a time, and a price based on it. This specification of time would be essential.... This I would soon find if, not quarreling with the price, I ask him largely to lessen the time.... I might get the builder somewhat to lessen the time... ; but only by greatly increasing the price, until finally a point would be reached where he would not consent to build the house in less time no matter at what price. He would say [that the house just could not be built any faster]....

The importance ... of this principle – that all production of wealth requires time as well as labor – we shall see later on; but the principle that time is a necessary element in all production we must take into account from the very first.[41]

According to Oscar B. Johannsen, "Since the very basis of the Austrian concept of value is subjective, it is apparent that George's understanding of value paralleled theirs. However, he either did not understand or did not appreciate the importance of marginal utility."[42]

Another spirited response came from British biologist T.H. Huxley in his article "Capital – the Mother of Labour," published in 1890 in the journal The Nineteenth Century. Huxley used the principles of energy science to undermine George's theory, arguing that, energetically speaking, labor is unproductive.[43]

See also[edit]

References[edit]

Notes
  1. ^ Dictionary of American Biography, 1st. ed., s.v. "George, Henry," edited by Allen Johnson and Dumas Malone, Vol. VII (New York: Charles Scribner's Sons, 1931), pp. 211–212.
  2. ^ David Montgomery, American National Biography Online, s.v. "George, Henry," Feb. 2000, http://www.anb.org/articles/15/15-00261.html Accessed September 3, 2011
  3. ^ Obituary, New York Times
  4. ^ Richard F. George The Artist at Work
  5. ^ "SINGLE TAXERS DINE JOHNSON; Medallion Made by Son of Henry George Presented to Cleveland's Former Mayor", The New York Times – May 31, 1910
  6. ^ Charles A. Barker, "Henry George and the California Background of Progress and Poverty," California Historical Society Quartery 24, no. 2 (Jun. 1945), 103–104.
  7. ^ Dictionary of American Biography, s.v. "George, Henry," pp. 211–212.
  8. ^ a b c Montgomery, American National Biography Online, s.v. "George, Henry," http://www.anb.org/articles/15/15-00261.html Accessed September 3, 2011.
  9. ^ Obituary – The New York Times, May 4, 1897
  10. ^ Agnes de Mille – Biography
  11. ^ Peggy George (I) – Biography
  12. ^ Agnes de Mille Papers, 1980–1993 : Biographical and Historical Note
  13. ^ a b Henry George, "What the Railroad Will Bring Us," Overland Monthly 1, no. 4 (Oct. 1868), http://www.grundskyld.dk/1-railway.html Accessed September 3, 2011.
  14. ^ Dictionary of American Biography, s.v. "George, Henry," 213.
  15. ^ Quoted in Nock, Albert Jay. "Henry George: Unorthodox American, Part IV".
  16. ^ Jurgen G. Backhaus, "Henry George's Ingenious Tax: A Contemporary Restatement," American Journal of Economics and Sociology 56, no. 4 (Oct. 1997), 453–458
  17. ^ Henry George, Progress and Poverty, (1879; reprinted, London: Kegan Paul, Tench & Co., 1886), 283–284.
  18. ^ Charles A. Barker, "Henry George and the California Background of Progress and Poverty," California Historical Society Quartery 24, no. 2 (Jun. 1945), 97–115.
  19. ^ According to his granddaughter Agnes de Mille, Progress and Poverty and its successors made Henry George the third most famous man in the USA, behind only Mark Twain and Thomas Edison. [1]
  20. ^ Dictionary of American Biography, s.v. "George, Henry," 214–215.
  21. ^ Robert E. Weir, "A Fragile Alliance: Henry George and the Knights of Labor," American Journal of Economics and Sociology 56, no. 4 (Oct. 1997), 423–426.
  22. ^ Dictionary of American Biography, s. V. "George, Henry," 215.
  23. ^ Montgomery, American National Biography, s.v. "George, Henry," http://www.anb.org/articles/15/15-00261.html
  24. ^ "Henry George's Death Abroad. London Papers Publish Long Sketches and Comment on His Career". New York Times. October 30, 1897. Retrieved March 7, 2010. "The newspapers today are devoting much attention to the death of Henry George, the candidate of the Jeffersonian Democracy for the office of Mayor of Greater New York, publishing long sketches of his career and philosophical and economical theories." 
  25. ^ School of Cooperative Individualism / Biographical History of the Georgist Movement – UNITED STATES – A
  26. ^ http://cooperativeindividualism.org/abbott-lyman_on-henry-george.html
  27. ^ George, Henry (1879). "2". Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth VI. New York: Robert Schalkenbach Foundation. ISBN 0-914016-60-1. Retrieved May 12, 2008. 
  28. ^ Backhaus, "Henry George's Ingenious Tax," 453–458.
  29. ^ The Green Party 2010 Platform : Economic Justice & Sustainability
  30. ^ Weir, "A Fragile Alliance," 425–425
  31. ^ Henry George, Protection or Free Trade: An Examination of the Tariff Question, with Especial Regard to the Interests of Labor(New York: 1887).
  32. ^ 'Jill Lepore' (October 13, 2008). "'Rock, Paper, Scissors: How we used to vote'". New Yorker. New Yorker. 
  33. ^ "To illustrate: It is not the business of government to interfere with the views which any one may hold of the Creator or with the worship he may choose to pay him, so long as the exercise of these individual rights does not conflict with the equal liberty of others; and the result of governmental interference in this domain has been hypocrisy, corruption, persecution and religious war. It is not the business of government to direct the employment of labor and capital, and to foster certain industries at the expense of other industries; and the attempt to do so leads to all the waste, loss and corruption due to protective tariffs." "On the other hand it is the business of government to issue money. This is perceived as soon as the great labor saving invention of money supplants barter. To leave it to every one who chose to do so to issue money would be to entail general inconvenience and loss, to offer many temptations to roguery, and to put the poorer classes of society at a great disadvantage. These obvious considerations have everywhere, as society became well organized, led to the recognition of the coinage of money as an exclusive function of government. When in the progress of society, a further labor-saving improvement becomes possible by the substitution of paper for the precious metals as the material for money, the reasons why the issuance of this money should be made a government function become still stronger. The evils entailed by wildcat banking in the United States are too well remembered to need reference. The loss and inconvenience, the swindling and corruption that flowed from the assumption by each State of the Union of the power to license banks of issue ended with the war, and no -one would now go back to them. Yet instead of doing what every public consideration impels us to, and assuming wholly and fully as the exclusive function of the General Government the power to issue money, the private interests of bankers have, up to this, compelled us to the use of a hybrid currency, of which a large part, though guaranteed by the General Government, is issued and made profitable to corporations. The legitimate business of banking – the safekeeping and loaning of money, and the making and exchange of credits, is properly left to individuals and associations; but by leaving to them, even in part and under restrictions and guarantees, the issuance of money, the people of the United States suffer an annual loss of millions of dollars, and sensibly increase the influences which exert a corrupting effect upon their government." The Complete Works of Henry George. "Social Problems", p. 178, Doubleday Page & Co, New York, 1904
  34. ^ Karl Marx – Letter to Friedrich Adolph Sorge in Hoboken
  35. ^ Henry George's Thought
  36. ^ http://news.google.com/newspapers?id=0LdRAAAAIBAJ&sjid=OmkDAAAAIBAJ&pg=4411%2C2540037
  37. ^ Arnott, Richard J.; Joseph E. Stiglitz (Nov 1979). "Aggregate Land Rents, Expenditure on Public Goods, and Optimal City Size". Quarterly Journal of Economics 93 (4): 471–500. doi:10.2307/1884466. JSTOR 1884466. 
  38. ^ Frédéric Bastiat, That Which is Seen, and That Which is Not Seen," 1850.
  39. ^ Henry George, Progress and Poverty,, 161.
  40. ^ Eugen von Böhm-Bawerk, Capital and Interest: A Critical History of Economic Theory transl. William Smart (London: Macmillan and Co., 1890), 417.
  41. ^ Henry George, The Science of Political Economy (New York: Doubleday & McClure Co., 1898), 369–370.
  42. ^ Johannsen, Oscar B. Henry George and the Austrian economists. The American Journal of Economics and Sociology (Am. j. econ. sociol.) ISSN 0002-9246. Abstract.
  43. ^ T.H. Huxley, "Capital – the Mother of Labour: An Economical Problem Discussed from a Physiological Point of View," The Nineteenth Century (Mar. 1890).
Bibliography
Further reading
  • Barker, Charles Albro Henry George. Oxford University Press 1955 and Greenwood Press 1974. ISBN 0-8371-7775-8
  • George, Henry. (1881). Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth; The Remedy. Kegan Paul (reissued by Cambridge University Press, 2009; ISBN 978-1-108-00361-2)

External links[edit]