Thomas Nixon Carver.

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The single tax made an engine of social reform by Henry
George. It was the late Henry George, in his book entitled
" Progress and Poverty," who seized upon these ideas to make
the single tax an engine of social reform. He began his in-
quiry by pointing out that even in the midst of plenty, poverty
still persisted. He stated that, though the productive power
of the world had increased manyfold through mechanical im-
provements, nevertheless large numbers of people remained
in poverty. In fact, he went so far as to insist that increasing
numbers were compelled to live in conditions of increasing

The persistence of poverty the great reproach upon civiliza-
tion. This phenomenon of the persistence of poverty in spite
of the world's increase in productive power has been an enigma
ever since the rise of mechanical industries. Various answers
have been given to the puzzle. Karl Marx and his followers
attributed it to the fact that the owners of capital absorb all
the benefits of the increase in productive power, leaving the
nonowners of capital no advantage whatsoever.

It is very easy to say in fact, it looks like mere arithmetic
to say that, with the same rate of productiveness, if certain
classes who are now receiving large incomes should not receive
them, there would be more left for other people. If the incomes
of capitalists and landowners were cut off, more would be
left for the laborers, provided the total production remained
the same. It would be equally true from an arithmetical
standpoint to say that if the skilled laborers and the high-
salaried people did not receive so much, more would be left
for the rest, if the rate of production remained the same. In
other words, if you assume a given rate of production, and then
assume that the incomes of certain classes are cut off, you can
demonstrate that this would leave more goods for the other
classes. This, however, is not a convincing argument. If any-
one performs an important function in society, and thereby
makes society richer, it cannot be said that by cutting off this


person's reward for performing his function, society will be
improved. By the cutting off of his reward there is the danger
of killing the goose that laid the golden eggs ; by so doing
you may reduce his motive for labor and cause him to per-
form a less important function than he would if he were
adequately rewarded for his effort. The real question is, there-
fore, whether the capitalist performs a function in society com-
mensurate with the reward which he receives. If the answer
is in the affirmative, the cutting off of his income would hardly
be a help to society. The same reasoning applies to the
landowner ; if he performs a function commensurate with the
reward which he receives, it would obviously not help, matters
to cut off his income. So here again the real question is whether
or not the landowner performs a function commensurate with
the reward which he receives.

Distinction between location value and fertility value. In
the chapter on Land we saw that the two economic factors in
land value were location and fertility. In so far as the value
of land is based primarily on its fertility, that value may be
easily destroyed and with difficulty replaced ; and, in fact, the
land of little fertility may, by careful and scientific farming, be
greatly increased in fertility. This increase would be classed
as improvement, and the increase in value would be similar to
the increase which results from ditching, draining, irrigat-
ing, fencing, clearing, and other forms of improvement. Even
where the land possessed original fertility, that is, where
it is known as virgin soil, it may easily deteriorate under bad
management or improve under good management. It is as
much in the interest of society that good land be kept from
deteriorating as that poor land be improved in fertility. If the
owner of land is allowed the advantages of any improvements
in fertility which result from his management, no one could of
course consistently object to it. Again, if he is made to suffer
some penalty for allowing the land to deteriorate in fertility
by his bad management, it would seem equally just.


Putting these two propositions together, it seems as though
the owner of the land, whether it be good or poor land, should
be rewarded for any improvement resulting from his good
management, and penalized for any deterioration resulting from
his bad management. If the single tax were applied rigidly,
and the value not only of the location but of the soil itself
were taxed away, the owner would get neither reward nor
penalty. That is to say, if he were taxed for the full value of his
land, while the soil possessed its original fertility, he could easily
"mine" the soil, as it is called ; that is, he could rapidly exhaust
the fertility and pocket the temporary advantage from it. Then,
after the land became less valuable, the tax would have to come
down, or the owner could abandon the land or turn it over to
the state, whenever it became so poor as not to be worth the tax.

But if he is allowed the full value of the fertility of his soil,
he has a much stronger motive for preserving or increas-
ing its fertility. In the pursuit of this advantage, or in the
warding off of the disadvantage of deterioration, he performs
an important public function, that of conserving the fertility
of the soil. His reward will bear some ratio to the value of
the service which he performs. To cut of! his reward would
not be to the advantage of the public, because the result
would be that he would allow the soil to deteriorate, and this
would result in a smaller production. The rest of society would
surfer from this policy along with the landowner. The single tax
would put the owner in the position of a tenant who had to
pay the state, in the form of a tax, all that the land would
rent for. Tenants are notoriously, and for excellent reasons,
careless in the matter of conserving soil fertility.

In respect to location value, this argument scarcely applies.
In some cases, it is true, the enterprise of the landowner has
created location value. This occurs when he himself builds a
road instead of asking the public to do it, or when he beauti-
fies a spot and makes it attractive as a place for dwellers, or
when he builds a trolley line or any other means of access to


his land. He may then be said to have created the location
value of his land. In such cases all that we have said regard-
ing fertility value will apply also to location value.

In most cases, however, the location value is not the creation
of the individual owner but of the general public, since it is
the general public, rather than the individual owner, that builds
schools, libraries, and streets, maintains police systems, and
brings various utilities within reach. Many notorious cases are
cited of men who have bought land favorably situated and have
done nothing to improve it and have even resisted taxation
and all improvements. Yet, in spite of such inertia, these men
have found themselves rich as the result of the rise in the
location value of the land. A few such conspicuous cases
furnish effective arguments in favor of the single tax.

A land tax not necessarily a single tax. The arguments for
a single tax are not the same as for a mere increase of the
land tax. One may favor the increase of taxation upon the
location value of land without being in any sense of the word
a single taxer. He may believe in many different taxes, such
as the inheritance tax, licenses, the income tax, etc. It would
be absurd to call such a man a single taxer, even though he
favored a special tax on the location value of land. Again,
even though one were in the strict sense of the word a single
taxer, one might advocate it on purely financial grounds rather
than on the grounds of social reform ; that is, one might be-
lieve that all public revenues should be raised from the taxation
of location values of land merely because he believed that this
would be an easy way of raising revenue, and not because it
would go very far toward the curing of poverty.

The financial arguments in favor of the land tax are fairly
simple. Land cannot be hidden in the way that much personal
property is. There may be some difficulty in appraising its value
for purposes of taxation, but the difficulty is not greater than
that of appraising for purposes of taxation the value of personal
property, buildings, or anything else which is taxable.


Again, a tax on location values could hardly be said to have
a repressive effect at all. If the tax on the products of indus-
tries tends to discourage production, this cannot be said to be
true of land. Since location values are not produced by the
payer of the tax, there is no production to discourage. You
may tax land and still have it in undiminished quantities. As
a cold-blooded financial proposition this has some merit. Even
though one may take away from the landowner all its location
value, the land itself still exists in undiminished quantities.

Arguments for the single tax. The argument for the single
tax as an engine of social reform rests on three general
propositions. In the first place, since those who receive rent
because of the location of their land create nothing in return
for the rent they receive, their incomes are merely subtracted
from those of the rest of society. If their incomes should be
taken away, this would not in any degree diminish the total
productiveness of the community. By a mere process of arith-
metic it is easy to show that if the incomes which they now
receive were divided among the rest of the people, these other
people would have larger incomes.

Is land kept out of use for speculation? In the second
place, it is alleged that a great deal of land is kept out of use
for speculative purposes, and that a high tax on land values
would force this land into use. The validity of this argument
is doubtful. The illustrations given are usually those of tracts
of land found lying idle in cities and suburbs. The owners
are holding them apparently in the hope of getting a higher
price in the future. It is easy to jump to the conclusion that
if there were no prospect of gain by so doing, the owners would
at once find a use for the land or sell it to others who could
use it ; but this does not take into consideration the fact that
there may be no immediate use to which the owner could
profitably put the land.

If an individual, Jones by name, has a tract of land which
is not being used, there is no reason for believing that he


would be averse to getting some income year by year while
the land itself is rising in value on his hands. Thus he would
get the rise of the value of the land just the same as though
it were idle, and he would get, at the same time, whatever
income it would bring him. There are not many men who
deliberately prefer a smaller to a larger income. If he knew
that by putting $1000 into even a small building, or $100,000
into a large one, he could rent the building for enough to pay
the interest on what it cost him, together with insurance,
deterioration, etc., and have left even a small sum in addition,
he would certainly be willing to have the small additional sum.
If, however, he did not see the opportunity to use or rent such
a building, but, on the contrary, foresaw that he would be obliged
to lose a part of the interest, insurance, or deterioration, there
would be no motive for him to have it built. In that case, "even
if he had to pay the single tax, he would still leave the land
idle. He would rather pay the single tax without additional
loss than to pay it and incur an additional loss besides.

The only common cases in which the land is actually kept out
of use because of speculation are where garden land is pur-
chased and divided into building lots in advance of the demand
for them. After the division has been made, the land is no
longer suitable for farm land or garden tracts, because it is
broken up into parcels too small to be cultivated economically.
Meanwhile the public may be slow in buying the lots for
building. The result is that for a number of years this land
practically goes to waste.

A heavy tax on land would exempt other forms of property.
A third argument for the single tax is to the effect that when
a large amount of revenue is raised from a tax on land, there
is no necessity for so high a tax, probably no necessity for any
tax whatever, on other things. This reduction of taxation on
other forms of property would serve as a stimulus to greater
production. When, for instance, a farmer finds that his cattle,
his crops, and his buildings are not taxed, or not taxed so


heavily, he is encouraged to develop these forms of property.
If, as stated above, the taxation of location values of land
enables the public to raise enough revenue from this source,
and thereby to eliminate the taxes on all other things, this will
tend to stimulate business and production in general. This
argument is based on the repressive character of other forms
of taxation than the land tax.

It is probably true that if the incomes of landowners which
come to them in the form of rent or location value were
cut off, more would be left to divide among others ; that if
land values were taxed away, a few owners would be forced
to use land which is now idle ; and that if a heavy tax were
put on the location value of land, the taxes on other things
could be greatly reduced, thereby stimulating production. The
combined result of these three things would be to the profit of
the nonlandowning classes. The unskilled laborers and other
poor people would probably gain a fraction of this general
advantage, along with all other nonlandowning classes, such
as merchants, bankers, manufacturers, professional men, and
skilled laborers ; but that it would greatly alleviate poverty is
a proposition which may be regarded as very doubtful.

Putting idle talent to work. A fourth argument, not usually
brought forward by single taxers, may be added to this list.
In so far as certain owners of valuable land are enabled to live
on the rent which comes to them because of its location value,
and to remain idle instead of doing productive work, the com-
munity loses the productive power of these men. This is more
important than all the land kept out of use for speculative pur-
poses. If such persons were deprived of their incomes and
thereby forced to do productive work, the community would
gain by this addition to its list of productive workers. This
would make for national prosperity.


What the liberalist believes. A liberalist in economics is
one who believes in the freedom of the individual rather than
in compulsion, either by the mass or by a despot. He relies
mainly but not exclusively upon individual initiative. He be-
lieves that individuals will, without compulsion and under free-
dom of contract, do whatever is necessary to provide for the
needs of the community. He believes that it is not necessary
continually to impose upon the individual the authority either
of a benevolent despot or of a well-meaning majority. In
somewhat extreme cases, such as can be covered by the crim-
inal law, laws for the enforcement of contracts and other obli-
gations, and laws for the standardization of various aspects of
business, compulsion is necessary and helpful. He believes
that the interests of the public are expressed quite as accu-
rately on the market and through the price lists as through
the ballot box and the statute books. He even believes that
poverty and most of the social ills can be eliminated under the
system of voluntary agreement freedom to accumulate, to own,
and to operate private property and without subjecting individ-
uals to the necessity of becoming government employees.

Freedom versus compulsion. There are only two ways of
getting men to do what is necessary for their own maintenance
and that of the public ; one is to induce them by the offer of
a reward either of a material or of an immaterial kind ; the other
is to compel them by authority. For example, an army can be
recruited and men led to fight for their country either by the
volunteer system or by conscription. The one is the method
of freedom ; the other is compulsory so far as the individual is



concerned, whether the government be despotic or democratic.
In the case of despotism a despot exercises compulsion over
the individual ; in the case of a democracy it is the mass
which exercises the compulsion. On general grounds popular
government is very much better than despotism ; but so far as
the conscripted individual is concerned, he has no more choice
as to whether he will fight or not in one case than in the other.

Industries may likewise be recruited on the volunteer system
or by conscription. Men may be induced to work on the farms
and in the factories and mines by the offer of wages, profits,
etc. or they may be directed by authority to do so.

If no one were allowed to accumulate capital or to own a
farm, or a factory, or a mine, we should have much less free-
dom to choose our own occupations and to direct ourselves
than we have under a system of free private enterprise and
voluntary agreement. Even in an army the higher officers
are not conscripted, though there is a story of a man who
went into hiding until the government should begin to draft
captains. Under a regime of complete government ownership
and operation, men would have to be chosen by authority for
the higher as well as for the lower positions in the industrial

Opposed to socialism. That there would be less freedom
under universal government ownership than under private
ownership will be clear to anyone who will stop dreaming long
enough to think about it. No one could begin farming on
his own initiative under that system, but would have to be
placed in charge of a farm, or told to work under a boss,
according as those in authority should decide. Under a lib-
eralistic system anyone who can handle a farm successfully
can become a farm manager and ultimately a farm owner, as
thousands have already done. By serving an apprenticeship as
a farm hand under a free contract with another free man,
if the farm hand is a success he can always, after a few
years of experience, become a share renter. Again, making a


contract with another free man, if he can make a success
of this he can in a few more years become a cash renter.
Again, if he is successful he can become a mortgaged owner,
and finally a free owner.

Every stage of this advancement is conditioned upon his
making a success of the next lower stage. If he can, it is,
according to the philosophy of liberalism, economical of the
human resources, as well as of the farms, that he should be
advanced until he finds his level. If he cannot make a suc-
cess in any one of these stages, it is a sign that he has reached
or passed his level, that he has risen as far as, or farther than,
it is economical that he should rise. It would be a waste of
both human and material resources to advance him farther. If,
for example, he can succeed as a farm manager, it would be
wasting a good manager to leave him in the position of a farm
hand. In the interests of the community he should advance.
But if he would make a poor manager, it would be wasting other
labor, as well as material equipment, to have them placed under
his management. Under the system of free contract each man
tends to find the place in the industrial system in which he
can best fit. This is the method of trial and error. Each indi-
vidual tries himself out and does not have to wait for the
consent of someone else. Under the system of universal gov-
ernment operation the would-be farmer would have no better
chance to test himself, or to advance on his own initiative, than
he now has in the army or in the civil service.

The liberalist believes that, in general, the volunteer plan
is better than the compulsory one. There are, of course, occa-
sions when compulsion becomes necessary. These are usually
occasions of acute and instant necessity, when there is not time
for the market to adjust itself and to organize a volunteer

In time of war compulsion takes the place of freedom. So-
cialists are in the habit of saying that in time of war nations
turn to socialism. It is true that in time of war compulsion


is generally, or at least to a considerable degree, substituted
for freedom ; but the whole business of war is compulsion. Our
dealing with foreign enemies is necessarily on a compulsory
rather than on a voluntary and contractual basis, and the whole
organization of society may have to be changed from freedom to
compulsion in order to carry on the compulsory business of war.

There are a multitude of minor forms of compulsion besides
war itself. Taxation is a compulsory payment of money to
the government. Conscription is compulsory military service.
Forced loans are compulsory in a high degree. The censorship
of the press is merely compulsory regulation of the business of
selling talk for private profit. It may be necessary, in order to
prosecute a war successfully, to resort to compulsion in recruit-
ing munition factories and even farms. Rationing the popula-
tion in time of food scarcity may be necessary.

In a regime of universal compulsion some must necessarily
be treated better than others. Even though conscription be
carried out without personal favor, the result works to the dis-
advantage of those drawn by conscription as compared with
those not drawn. Those on whom the lot falls act as shock-
absorbers for the rest of the community. There is nothing
particularly democratic about this, though it may be the best
possible way of meeting a national crisis. Under such condi-
tions, when the life of a nation is at stake, it does not stop for
the niceties of social justice. Necessity knows no law. It is
probable, however, that as a result of several years of this
compulsion there will be so much dissatisfaction and sense of
unfairness as to provoke a strong reaction against compulsion
and in favor of the volunteer system, not only in the work of
fighting but in business and industrial pursuits as well. We
may consider ourselves fortunate if this reaction does not carry
us too far in the direction of license and impatience with
all restraint.

Dangers of freedom. Freedom of trade freedom to buy and
sell, to offer and accept rewards is a part of the program of


liberalism. There are, however, some very serious results
which accompany freedom of bargaining. We saw in the last
chapter that the advantage in bargaining is always on the side
of those who are trying to sell something which is undersupplied
or of those who are trying to buy something which is over-
supplied. Conversely, the disadvantage is, of course, on the
side of those trying to sell something which is oversupplied
and of those trying to buy something which is undersupplied.
When there is a long-continued oversupply of certain com-
modities or of certain kinds of labor, those who are under the
disadvantage of trying to sell them feel, naturally enough, that
the advantages of free contract are not so very great, since
they are playing a losing game. They are frequently willing to
take their chances under some form of compulsion, feeling
that they could not be much worse off than they are under the
system of free contract.

The situation of those trying to sell something that is over-
supplied, especially if it happens to be labor, is summarized in
the statement that " liberty is frequently the liberty to starve."
It must be confessed that liberty is dangerous, even though it
is very precious. Severe conditions are imposed on free men.
Liberty to be on the street may mean liberty to get run over
by an automobile. Liberty to go swimming may mean liberty
to drown. Liberty to sail the seas may mean liberty to get
shipwrecked. Children who are restrained in their liberty and
are forbidden to be on the street are in less danger of being
run over, and those who are prevented from going in swim-
ming are in less danger of being drowned. Liberty is a terrible
thing, but at the same time it is, for grown men, beyond price.

Online LibraryThomas Nixon CarverPrinciples of political economy → online text (page 46 of 48)