This entry is in response to Stillman's call for people to help blog a site to promote Henry George's ideas. "Progress and Poverty" is a long read, though one of the most beautiful works in the English language. It's very length will make it unaccessible to everyone. The following post is a modern and brief version of Henry George's philosophy. When progressives decide to get serious about gathering effective ideas they will return to their roots: Henry George.
When the state enacts rules that permit one person, or group of people, to do what others are not permitted to do, it creates a privilege. (From the Latin words for "Private Law") Some examples of privilege are: 1) allowing only one company to use a given broadcast frequency, 2) the exclusive right to use a portion of the earth's surface, or 3) the right to pollute; and 4) patent protection; and 5) the right to practice a restricted profession such as medicine. Privileges are created in order to advance civilization, and indeed most significant progress would not be possible if the state did not create privileges. No one would invest the effort and equipment to operate a radio or television station if anyone else were permitted to interfere with the signal. No one would construct a home or commercial building, or raise a crop, if they did not have the security of knowing that others could not take what they had produced. Many specialized professions such as engineering, medicine, or mass transportation require a level of trust that may be enhanced by the creation of a privilege that makes damaging fraudulent practice less likely. Each privilege, while beneficial to the creation of wealth, reduces the freedom of everyone else in some degree. Freedom dies one privilege at a time.
Privileges are almost always justified by the fact that they promote a more intense level of productivity. They tend to make society richer by creating the possibility of more intense use of natural resources or acquired knowledge. But privileges, as we presently maintain them, do something else too. Although they create the possibility of a richer society, they also guarantee that the additional riches will be shared in a very unequal way and the inequality has nothing to do with how productive any one person might be. By creating privilege and not requiring ongoing compensation, the state assumes an active role in promoting the production of wealth but also assumes an active role in the distribution of wealth. When people today commonly speak about the state altering the distribution of wealth, it is usually through taxes on "wealthier" people to pay for services for "poorer" people. The missing necessary progressive insight is to note that when the state creates privileges, and also refrains from demanding a reciprocal annual payment, the state likewise assigns a greater portion of the product of society to the few who hold the valuable privileges. Privileges are necessary for economic efficiency, but without an ongoing compensating payment, poverty for many will persist despite the increase in overall wealth. Without ongoing compensation for privilege the state rigs the game in favor of the few.
Taxes, as currently structured, aren't just unpleasant to pay, but also tended to make society less wealthy than it would be without them. Most taxes today are placed on productive activity. By responding to taxes on production people often do things that improve their own situation, although those actions may make society as a whole less wealthy. Examples of this principle are: 1) A tax on labor might induce people to work less simply because the last bit of work they wanted to do was no longer worth the bother to them, or 2) The owner of a barely-productive, older building might tear the building down if he had to pay a tax on the structure. In each of these cases the individual regards themselves as being better off for their actions, although clearly society as a whole is less wealthy because of these perfectly rational personal decisions. The Republicans do have the better of this argument, but it only a small part of the story.
The much bigger story is that we would be much better off as a society if we phased out taxes that fall on productive activities, while simultaneously charging for the value of state-created privileges. We could shift the entire conversation surrounding government revenue. Government must charge the holders of privilege an annual fee, not for any particular public benefit to be had from the spending of the money, but as a means of restoring equality among the citizens, where it had already created inequality through privilege. The government could provide needed services, but any excess over what was needed to provide those services would be rebated back to the citizens equally as an annual dividend. The most important purpose of government revenue collection based on privileges is to restore equality of opportunity between those who enjoyed privilege and those who did not.
This proposal is a re-framing of social-economic relationships. The fiscal adjustments are the mechanism for promoting equality of opportunity.
Most people would accept the basic fairness of the following propositions individually and as theoretical notions:
- We all have an equal natural right to be here on our planet and to enjoy it's many benefits and treasures.
- Individuals have a natural right to own what they create; to the creator belongs the created.
- Everyone has a natural right to do as they please subject to not inflicting harm on others.
Henry George's theory gives us a method to reconciles these three ideas.
The focus of conversation about government needs to be privileges. Through privilege the ultra-wealthy essentially have a private legal right to take from others. It is the privileged that are doing the taking and it is through privileges, created by the state, that the distribution of wealth is so skewed. Until the advantages of privileges are neutralized by charges (taxes) on privileges no amount of money will alleviate poverty and its many attendant evils. This is as true today as it was in 1879.