Georgism

"Georgist" redirects here. For the Romanian political group, see National Liberal Party-Brătianu.

Georgism, named after Henry George (1839-1897) is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity. Georgism is also referred to as geoism, by those who feel a more generic term is desirable. The Georgist philosophy is usually associated with the idea of a single tax on land.

Main tenets

Henry George

See also: Land value tax

Henry George is best known for his argument that the economic rent from land should be shared equally by society rather than falling into hands of private individuals. The clearest statement of this view is found in Progress and Poverty: "We must make land common property." Although this could be done by nationalizing land and then leasing it out, George preferred taxing unimproved land value, in part because this would be less disruptive and controversial in a country where land titles have already been granted to individuals. With the revenue from this "single tax", the state could avoid having to tax any other type of income, wealth or transactions. Although introducing a large land value tax would cause the value of land titles to fall significantly, George was uncompromising on the idea of compensation for landowners, seeing the issue as a parallel to the earlier debate about compensating former slave owners.

A supply and demand diagram showing the effects of land value taxation. Note that the burden of the tax falls entirely on the land owner, and there is no deadweight loss.

Georgists also argue that all of the economic rent (i.e., unearned income) collected from natural resources (land, mineral extraction, the broadcast spectrum, tradable emission permits, fishing quotas, airway corridor use, space orbits, etc.) and extraordinary returns from natural monopolies should go to the community rather than a private owner, and that no other taxes or burdensome economic regulations should be levied. In practice, the elimination of all other taxes implies a high land value tax, and a correspondingly sharp drop in the value of land ownership, although there would be no change in land rental prices (other than those caused by reduction of other taxes and regulations) for reasons first explained by Adam Smith in his book The Wealth of Nations.

Standard economic theory recognizes that a land value tax would be extremely efficient – unlike other taxes, it does not reduce economic productivity. Modern economists, like the 1976 Nobel Memorial Prize winner Milton Friedman, agree that Henry George's land tax is potentially beneficial because unlike other taxes, land taxes do not distort economic activity, and imposes no excess burden on the economy. A replacement of other more distortionary taxes with a land tax would thus improve economic welfare. Additionally, a land value tax would be a tax on wealth, and so would tend to reduce income inequality, which would also improve economic welfare.

The idea of the earth as the common property of humanity has also resonated with modern-day environmentalists, and some have endorsed the idea of ecological tax reform as a replacement for command and control regulation. This would entail substantial taxes or fees for pollution, waste disposal and resource exploitation, or equivalently a cap and trade system where permits are auctioned to the highest bidder. This would also include taxes on the use of land and other natural resources.

Synonyms and variants

Most early advocacy groups described themselves as Single Taxers, and George endorsed this as being an accurate description of the movement's main political goal – the replacement of all taxes with a land value tax. In the modern era, some groups inspired by Henry George place more of an emphasis on environmentalism, while others place more emphasis on his ideas on economics.

As the world became economically more complex, and the government grew to become a larger part of the economy, an abrupt change to a single land value tax became correspondingly more difficult, and so the term "Georgist" has come into vogue. This more general term encompasses the idea of incremental changes towards the elimination of unjust and economically destructive taxes on economic activity, by recovering the economic rent from land for the benefit of the entire society.

Some adherents are not entirely satisfied with the label Georgist. Henry George is now little known and the idea of a single tax on land predates him. Some now use the term "Geoism", with the meaning of "Geo" deliberately ambiguous. "Earth Sharing", "Geoism", "Geonomics" and "Geolibertarianism" (see libertarianism) are also preferred by some Georgists; "Geoanarchism" is another one. These terms reflect a difference of emphasis, and sometimes real differences about how land rent should be spent (citizen's dividend or just replacing other taxes); but all agree that land rent should be recovered from its private recipients.

Influence

Several communities were founded along Georgist principles during the height of the movement's popularity. Two such communities that still exist are Arden, Delaware, which was founded in 1900 by Frank Stephens and Will Price, and Fairhope, Alabama, which was founded in 1894 under the auspices of the Fairhope Single Tax Corporation.

The German protectorate of Jiaozhou Bay (also known as Kiaochow) in China fully implemented Georgist policy. Its sole source of government revenue was the land value tax of six percent which it levied on its territory. The colony existed from 1898 until 1914.

In UK in 1909, the Liberal Government of the day attempted to implement his ideas as part of the People's Budget. This caused a crisis which led indirectly to reform of the House of Lords. George's ideas were also taken up to some degree in Australia, Hong Kong, Singapore, South Africa, South Korea, and Taiwan. In these countries, governments still levy some form of land value tax, albeit with exemptions.

In Denmark, the Georgist Justice Party has previously been represented in Folketinget. It formed part of a centre-left government 1957-60 and was also represented in the European Parliament 1978-79.

In the 2004 Presidential campaign, Ralph Nader mentioned Henry George in his platform.

Also in the U.S., the Lincoln Institute of Land Policy is based on the ideas of Henry George

Hong Kong is perhaps the best example today of a successful implementation of a high land value tax. The Hong Kong government generates more than 35% of its revenue from land taxes. Because of this, it can keep other taxes low or non-existent, and still maintain a budget surplus.

Criticism

Although both advocated for workers' rights, Henry George and Karl Marx were antagonists. Marx saw the Single Tax platform as a step backwards from the transition to communism. He argued that, "The whole thing is...simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one." Marx also criticized the way land value tax theory emphasizes the value of land, arguing that, "His fundamental dogma is that everything would be all right if ground rent were paid to the state."

On his part, Henry George predicted that if Marx's ideas were tried the likely result would be a dictatorship. Fred Harrison provides a full treatment of Marxist objections to land value taxation and Henry George in "Gronlund and other Marxists - Part III: nineteenth-century Americas critics", American Journal of Economics and Sociology, (Nov 2003).

More recent critics have claimed that increasing government spending has rendered a land tax insufficient to fully fund government, although the tax revenues would probably have been adequate for limited governments of the type that dominated during the period in which George was active. Also, George has been accused of exaggerating the importance of his "all-devouring rent thesis" in claiming that it is the primary cause of poverty and injustice in society.

Georgism, which today is associated with left-libertarian thought, has endured criticism from those right-libertarians who believe that common land ownership would result in an infringement of the rights of self-ownership and individual property.

Predecessors

Those who expressed similar thoughts before Henry George include:

• John Locke,
• John Stuart Mill,
• William Ogilvie of Pittensear,
• Thomas Paine (notably in "Agrarian Justice"),
• Adam Smith,
• Thomas Spence
• Herbert Spencer, and
• the Physiocrats.
• Mencius, Chinese Philosopher.

Famous Georgists

• Ambrose Bierce
• William F. Buckley, Jr.
• Winston Churchill
• Clarence Darrow
• Henry Ford
• Mason Gaffney
• David Lloyd George
• George Grey
• Walter Burley Griffin
• Fred Harrison
• William Morris Hughes
• Aldous Huxley
• Blas Infante
• Mumia Abu-Jamal
• Tom L. Johnson
• Samuel M. Jones
• Wolf Ladejinsky
• Francis Neilson
• Albert Jay Nock
• Sun Yat Sen
• Herbert Simon
• Leo Tolstoy
• Mark Twain
• William Simon U'Ren
• William Vickrey .

See also

• Tragedy of the anticommons
• Mutualism
• Geolibertarianism
• Excess burden of taxation

External links

• The Henry George School, founded 1932
• The Henry George Institute
• Henry George Foundation of America
• Henry George Papers, New York Public Library
• Understanding Economics
• Henry George Biography
• Robert Schalkenbach Foundation
• Center for the Study of Economics
• Maryland Land Value Tax Project