Misplaced Pages

#374625

129-608: The Single Tax League was a Georgist Australian political party that flourished throughout the 1920s and 1930s based on support for single tax . Based upon the ideas of Henry George , who argued that all taxes should be abolished, save for a single tax on unimproved land values, the Single Tax League was founded shortly after World War I , and a newspaper, the People's Advocate was published. The League had pockets of support throughout Australia but none more than on

258-651: A land value tax (LVT). Some modern proponents are dissatisfied with the name Georgist . While Henry George was well known throughout his life, he has been largely forgotten by the public and the idea of a single tax of land predates him. Some now prefer the term geoism , with geo (from Greek γῆ gē "earth, land") being the first compound of the name George < (Gr.) Geōrgios < geōrgos "farmer" or geōrgia "agriculture, farming" < gē + ergon "work" deliberately ambiguous. The terms Earth Sharing , geonomics and geolibertarianism are also used by some Georgists. These terms represent

387-451: A 100% Georgist tax would destroy the incentive to search for natural resources and discover optimal locations for businesses, as the additional profits that would result from such discoveries would lead to a corresponding increase in the unimproved value of the land, and so be taxed away. David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist , politician, and member of Parliament . He

516-417: A Georgist club in that city established in 1890. Years later, in his capacity as a city alderman, he was selected to serve as Houston Tax Commissioner, and promulgated a "Houston Plan of Taxation" in 1912. Improvements to land and merchants' inventories were taxed at 25 percent of the appraised value, unimproved land was taxed at 70 percent of appraisal, and personal property was exempt. This was calculated using

645-572: A capitalist economy involving workers and landlords generating and consuming incomes and capital accumulations that depended entirely on capitalists’ profits, and these key economic elements were under perpetual pressure during the eighteenth and early nineteenth centuries. Political reform was needed as agricultural output was struggling to keep pace with population growth. The Corn Laws imposed barriers to imports that increased subsistence/consumption costs and triggered demand for higher wages. Higher wages reduced profits for agricultural producers, and had

774-419: A conservation strategy, but they emphasize different aspects. Conservation is the central issue of ecology, whereas economic rent is the central issue of geoism. Ecological economists might price pollution fines more conservatively to prevent inherently unquantifiable damage to the environment, whereas Georgists might emphasize mediation between conflicting interests and human rights . Geolibertarianism ,

903-460: A country where land titles have already been granted. Georgists have observed that privately created wealth is socialized via the tax system (e.g., through income and sales tax ), while socially created wealth in land values are privatized in the price of land titles and bank mortgages. The opposite would be the case if land rents replaced taxes on labor as the main source of public revenue ; socially created wealth would become available for use by

1032-586: A difference of emphasis and sometimes real differences about how land rent should be spent ( citizen's dividend or just replacing other taxes), but they all agree that land rent should be recovered from its private recipients. Compulsory fines and fees related to land rents are the most common Georgist policies, but some geoists prefer voluntary value capture systems that rely on methods such as non-compulsory or self-assessed location value fees, community land trusts and purchasing land value covenants . Some geoists believe that partially compensating landowners

1161-525: A few decades later, Ricardo argued for a central bank, a cause that was taken up by his students, including John Stuart Mill , who was known to favour the laissez-faire policies in every place but banking. Ricardo wrote the Plan for the Establishment of a National Bank (published posthumously in 1824), which argued for the autonomy of the central bank as the issuer of money. Ricardo proposed that

1290-406: A high land value tax would cause people "to contribute to the public, not in proportion to what they produce ... but in proportion to the value of natural [common] opportunities that they hold [monopolize]". He went on to explain that "by taking for public use that value which attaches to land by reason of the growth and improvement of the community", it would, "make the holding of land unprofitable to

1419-747: A huge sum at the time, and this was later popularised by the economist Paul Samuelson ; in reality Ricardo was already very rich and in June 1815 sold his latest government stock before the result of the battle was known in London, so missing half of the rise. He subsequently purchased Gatcombe Park , an estate in Gloucestershire and retired to the country. He was appointed High Sheriff of Gloucestershire for 1818–19. In August 1818 he bought Lord Portarlingtons' seat in Parliament for £4,000, as part of

SECTION 10

#1732787864375

1548-428: A land value tax would cause the purchase price of land to decrease. George did not believe landowners should be compensated and described the issue as being analogous to compensation for former slave owners. Other geoists disagree on the question of compensation; some advocate complete compensation while others endorse only enough compensation required to achieve Georgist reforms. Some geoists advocate compensation only for

1677-573: A land-value tax, although Georgists endorsed multiple forms of rent capture (e.g. seigniorage ) as legitimate. The term Georgism was invented later, and some prefer the term geoism as more generic. Henry George is best known for popularizing the argument that government should be funded by a tax on land rent rather than taxes on labor . George believed that although scientific experiments could not be performed in political economy, theories could be tested by comparing different societies with different conditions and by thought experiments about

1806-559: A land-value tax. Following the 2008 Recession and city's 2013 bankruptcy , speculators bought cheap property, expecting to profit from the city's recovery. This plan to shift the cost of municipal services to owners of empty land, while exempting community gardens and parks, will require approval from the Michigan Legislature and Detroit City Council before being added as a ballot measure for Detroit residents. Various organizations still exist that continue to promote

1935-566: A lasting legacy, with his free trade views eventually becoming public policy in Britain. Ricardo wrote his first economics article at age 37, advocating for a reduction in the note-issuing of the Bank of England. He was also an abolitionist and believed in the autonomy of a central bank as the issuer of money. Ricardo worked on fixing issues in Adam Smith's Labour Theory of Value, stating that

2064-409: A logical fallacy. Ricardo assumed that in both countries two goods are producible and actually are produced, but developed and underdeveloped countries often trade those goods which are not producible in their own country. In these cases, one cannot define which country has comparative advantage. Critics also argue that Ricardo's theory of comparative advantage is flawed in that it assumes production

2193-425: A low rate of profits in their own country, rather than seek[ing] a more advantageous employment for their wealth in foreign nations", and (ii) capital was functionally immobile. Ricardo's argument in favour of free trade has also been attacked by those who believe trade restriction can be necessary for the economic development of a nation. Utsa Patnaik claims that Ricardian theory of international trade contains

2322-505: A market-oriented branch of Geoism, tends to take a direct stance against what it perceives as burdensome regulation and would like to see auctioned pollution quotas or taxes replace most command and control regulation . Since ecologists are primarily concerned with conservation, they tend to emphasize less the issue of equitably distributing scarcity/pollution rents , whereas Georgists insist that unearned income not accrue to those who hold title to natural assets and pollution privilege. To

2451-419: A means of raising public revenue is also a progressive tax tending to reduce economic inequality , since it applies entirely to ownership of valuable land, which is correlated with income, and there is generally no means by which landlords can shift the tax burden onto tenants or laborers. Landlords are unable to pass the tax on to tenants because the supply and demand of rented land is unchanged. Because

2580-635: A member of the King of Clubs . He was one of the original members of The Geological Society . His youngest sister was author Sarah Ricardo-Porter (e.g., Conversations in Arithmetic ). As MP for Portarlington , Ricardo voted with the opposition in support of liberal political movements in Naples and Sicily , and for inquiry into the administration of justice in Tobago . He divided for (voted for) repeal of

2709-527: A mind made up, and opinions in the nature of mathematical truths. He spoke of parliamentary reform and ballot as a man who would bring such things about, and destroy the existing system tomorrow, if it were in his power, and without the slightest doubt on the result … It is this very quality of the man’s mind, his entire disregard of experience and practice, which makes me doubtful of his opinions on political economy." Ten years after retiring and four years after entering Parliament, Ricardo died from an infection of

SECTION 20

#1732787864375

2838-430: A modern Georgist severance tax . Other contemporaries such as Austrian economist Frank Fetter and neoclassical economist John Bates Clark argued that it was impractical to maintain the traditional distinction between land and capital and used this as a basis to attack Georgism. Mark Blaug , a specialist in the history of economic thought, credits Fetter and Clark with influencing mainstream economists to abandon

2967-520: A negative dead-weight loss that boosts productivity. Because land value tax would apply to foreign land speculators, the Australian Treasury estimated that land value tax was unique in having a negative marginal excess burden, meaning that it would increase long-run living standards. It was Adam Smith who first noted the efficiency and distributional properties of a land value tax in his book The Wealth of Nations . Ground-rents are

3096-515: A net loss due to a shift of taxation to land value; most taxpayers would gain from the replacement of other taxes with a tax on land value. Historically, those who advocated for taxes on rent tax only great enough to replace other taxes were known as endorsers of single tax limited . Most early advocacy groups described themselves as single taxers and George reluctantly accepted the single tax as an accurate name for his main political goal—the repeal of all unjust or inefficient taxes, to be replaced with

3225-442: A part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry. The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before. Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have

3354-405: A particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax

3483-481: A peculiar tax imposed upon them. ... Nothing can be more reasonable than that a fund which owes its existence to the good government of the state should be taxed peculiarly, or should contribute something more than the greater part of other funds, towards the support of that government. Benjamin Franklin and Winston Churchill made similar distributional and efficiency arguments for taxing land rents. They noted that

3612-561: A proper social function, which should be controlled and managed by and for the whole people concerned." Georgists were divided by this question of natural monopolies and often favored public ownership only of the rents from common rights-of-way , rather than public ownership of utility companies themselves. The early conservationism of the Progressive Era was inspired partly by Henry George , and his influence extended for decades afterward. Some ecological economists still support

3741-682: A public levy on land value does not cause economic inefficiency , unlike other taxes. A land value tax also has progressive tax effects. Advocates of land value taxes argue that they reduce economic inequality , increase economic efficiency, remove incentives to under-utilize urban land, and reduce property speculation . Georgist ideas were popular and influential during the late 19th and early 20th centuries. Political parties, institutions, and communities were founded on Georgist principles during that time. Early devotees of George's economic philosophy were often termed Single Taxers for their political goal of raising public revenue mainly or only from

3870-596: A ratio of gold and Treasury bills, and a fixed claim (asset) against the government, would secure the central bank's liquidity: The public, or the Government on behalf of the public, is indebted to the Bank in a sum of money larger than the whole amount of Bank notes in circulation; for the Government not only owes the Bank fifteen million, its original capital, which is lent at 3 per cent. interest, but also many more millions which are advanced on Exchequer bills, on half-pay and pension annuities, and on other securities. It

3999-519: A respectable Sephardic Jewish family that had been settled in England for three generations as "small but prosperous" tobacco and snuff merchants, and had obtained British citizenship. Abigail's sister, Rebecca, was wife of the engraver Wilson Lowry , and mother of the engraver Joseph Wilson Lowry and the geologist, mineralogist, and author Delvalle Lowry . The Ricardo family were Sephardic Jews of Portuguese origin who had recently relocated from

Single Tax League - Misplaced Pages Continue

4128-468: A seat in Parliament as an earnest reformer. He was friends with prominent figures like James Mill , Jeremy Bentham , and Thomas Malthus , engaging in debates over various topics. Ricardo was also a member of The Geological Society , and his youngest sister was an author. As MP for Portarlington, Ricardo advocated for liberal political movements and reforms, including free trade, parliamentary reform, and criminal law reform. He believed free trade increased

4257-423: A still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for

4386-416: A tendency toward boom-and-bust cycles. According to George, people justly own what they create, but natural opportunities and land belong equally to all. The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for

4515-493: A three or four percent tax on land values would fit this condition. After implementing land taxes, governments would purchase future land values at discounted prices and take ownership after 100 years. Marshall asserted that this plan, which he strongly supported, would end the need for a tax collection department of government. For newly formed countries where land was not already private, Marshall advocated implementing George's economic proposal immediately. Karl Marx considered

4644-440: A trade surplus with other countries. Ricardo challenged the idea that the purpose of trade was merely to accumulate gold or silver. With " comparative advantage " Ricardo argued in favour of industry specialisation and free trade . He suggested that industry specialization combined with free international trade always produces positive results. This theory expanded on the concept of absolute advantage . Ricardo suggested that there

4773-460: Is a part of my doctrine, that the cost and value of a thing be the same;—it is, if he means by cost, "cost of production" including profit. Ricardo contributed to the development of theories of rent, wages, and profits. He defined rent as "the difference between the produce obtained by the employment of two equal quantities of capital and labour." Ricardo believed that the process of economic development, which increased land use and eventually led to

4902-427: Is a politically expedient compromise necessary for achieving reform. For similar reasons, others propose capturing only future land value increases, instead of all land rent. Some libertarians and minarchists take the position that limited social spending should be financed using Georgist concepts of rent value capture , but that not all land rent should be captured. Today, this relatively conservative adaptation

5031-427: Is concerned with the distribution of economic rent caused by land ownership, natural monopolies , pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges (e.g., intellectual property ). Any natural resource that is inherently limited in supply can generate economic rent, but the classical and most significant example of land monopoly involves

5160-401: Is continuous and absolute. In the real world, events outside the realm of human control (e.g. natural disasters) can disrupt production. In this case, specialisation could cripple a country that depends on imports from foreign, naturally disrupted countries. For example, if an industrially based country trades its manufactured goods with an agrarian country in exchange for agricultural products,

5289-404: Is cultivated and is very productive as measured through the abundant surplus. Over time this abundant surplus becomes diminished as the result of an increase in population, which subsequently creates an increased demand for food. The less desired land, No.2, must now be cultivated and eventually so must land No.3 and so on and so forth. For Ricardo each new cultivated results in diminished surplus as

Single Tax League - Misplaced Pages Continue

5418-424: Is due to those investments classed as land values and natural monopolies and to competitive industries aided by such monopolies", and that "tax reform should seek to remove all burdens from capital and labour and impose them on monopolies." However, he criticized Georgists for failing to see that Henry George's anti-monopoly ideas must be implemented with a variety of policy tools. Commons wrote, "Trees do not grow into

5547-411: Is everything that exists in nature independent of human activity. George explicitly included climate, soil, waterways, mineral deposits, laws/forces of nature, public ways, forests, oceans, air, and solar energy in the category of land. While the philosophy of Georgism does not say anything definitive about specific policy interventions needed to address problems posed by various sources of economic rent,

5676-459: Is evident, therefore, that if the Government itself were to be the sole issuer of paper money instead of borrowing it of the Bank, the only difference would be with respect to the interest: the Bank would no longer receive interest and the Government would no longer pay it; but all other classes in the community would be exactly in the same position in which they now stand. Ricardo was a man of many trades, economically and financially speaking. Ricardo

5805-427: Is his Principles of Political Economy and Taxation (1817). He advanced a labour theory of value : The value of a commodity, or the quantity of any other commodity for which it will exchange, depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour. Ricardo's note to Section VI: Mr. Malthus appears to think that it

5934-618: Is immobile. Regarding his famous example, he wrote: it would undoubtedly be advantageous to the capitalists [and consumers] of England... [that] the wine and cloth should both be made in Portugal [and that] the capital and labour of England employed in making cloth should be removed to Portugal for that purpose. Ricardo recognized that applying his theory in situations where capital was mobile would result in offshoring , and thereby economic decline and job loss. To correct for this, he argued that (i) "most men of property [will be] satisfied with

6063-502: Is impossible for only one of them to determine value on its own. Ricardo illustrates his point by adapting Smith's deer beaver analogy to show that even when labour is the only factor of production the hardship and tools of the labour will drive a wedge in the relative value of the good. Due to his criticisms of the Labour Theory of Value George Stigler called his theory a "93% labor theory of value". Ricardo's most famous work

6192-414: Is more competitive in every area than its trading counterpart. Ricardo opposed protectionism for national economies and was concerned about the short-term impact of technological change on labour. Born in London, England, Ricardo was the third surviving of the 17 children of successful stockbroker Abraham Israel Ricardo (1733?–1812) and Abigail (1753–1801), daughter of Abraham Delvalle (also "del Valle"), of

6321-603: Is mutual national benefit from trade even if one country is more competitive in every area than its trading counterpart and that a nation should concentrate resources only in industries where it has a comparative advantage , that is in those industries in which it has the greatest efficiency of production relative to its own alternative uses of resources, rather than industries where it holds a competitive edge compared to rival nations. Ricardo suggested that national industries which were, in fact, mildly profitable and marginally internationally competitive should be jettisoned in favour of

6450-417: Is not founded on prejudice and error, but is conformable to the correct principles of political economy." Ricardo's idea of technological change is now formulated in a modern form. Ricardo himself was the first to recognize that comparative advantage is a domain-specific theory, meaning that it applies only when certain conditions are met. Ricardo noted that the theory applies only in situations where capital

6579-586: Is now considered as overly simplistic by modern economists. The point was rediscovered by Roy J. Ruffin in 2002 and re-examined and explained in detail in Andrea Maneschi in 2004. The more flexible approach is now known as the new interpretation , despite having been previously mentioned by Piero Sraffa in 1930 and by Kenzo Yukizawa in 1974. The new interpretation affords a totally new reading of Ricardo's Principles of Political Economy and Taxation with regards to trade theory, although it does not change

SECTION 50

#1732787864375

6708-464: Is plausible but was more likely to be true during George's time than now. An early criticism of Georgism was that it would generate too much public revenue and result in unwanted growth of government, but later critics argued that it would not generate enough income to cover government spending. Joseph Schumpeter concluded his analysis of Georgism by stating that, "It is not economically unsound, except that it involves an unwarranted optimism concerning

6837-579: Is recognized as one of the most influential classical economists , alongside figures such as Thomas Malthus , Adam Smith and James Mill . Ricardo was born in London as the third surviving child of a successful stockbroker and his wife. He came from a Sephardic Jewish family of Portuguese origin. At 21, he eloped with a Quaker and converted to Unitarianism , causing estrangement from his family. He made his fortune financing government borrowing and later retired to an estate in Gloucestershire . Ricardo served as High Sheriff of Gloucestershire and bought

6966-465: Is seen by some, including other opponents of Georgism, as relying on false assumptions and flawed reasoning. Austrian economist Friedrich Hayek credited early enthusiasm for Henry George with developing his interest in economics. Later, Hayek said that the theory of Georgism would be very strong if assessment challenges did not result in unfair outcomes, but he believed that they would. Economists Bryan Caplan and Zachary Gochenour have argued that

7095-402: Is that everything would be all right if ground rent were paid to the state." Richard T. Ely agreed with the economic arguments for Georgism but believed that correcting the problem the way Henry George wanted, without compensation, was unjust to existing landowners. In explaining his position, Ely wrote, "If we have all made a mistake, should one party to the transaction alone bear the cost of

7224-461: Is usually considered incompatible with true geolibertarianism , which requires that excess rents be gathered and then distributed back to residents. During Henry George's time, this restrained Georgist philosophy was known as "single tax limited", as opposed to "single tax unlimited." George disagreed with the limited interpretation, but he accepted its adherents (e.g., Thomas Shearman ) as legitimate "single-taxers." Georgist ideas heavily influenced

7353-697: The 1930 state election . Though the party first contested the 1918 state election , the onset of the Great Depression in Australia had led people to seek radical solutions and the manifesto of the League seemed as likely to solve their woes as any government devised plan. Craigie worked tirelessly to have a single tax system instituted in South Australia but faced stiff opposition from the conservative Liberal Federation (and their successors,

7482-553: The Blasphemous and Seditious Libels Act ; then for inquiry into the Peterloo massacre ; and, in 1821, for abolition of the death penalty for forgery. He adamantly supported free trade . In 1821 he voted against renewal of the sugar duties, and objected to the higher duty on East Indian as opposed to West Indian produce. He opposed the timber duties. He voted silently for parliamentary reform and in 1822 spoke in its favour at

7611-547: The Dutch Republic . Ricardo began working with his father at the age of 14. At the age of 21, Ricardo eloped with a Quaker , Priscilla Anne Wilkinson, and against his father's wishes, converted to Unitarianism . This religious difference resulted in estrangement from his family, and he was led to adopt a position of independence. His father disowned him and his mother apparently never spoke to him again. Following this estrangement he went into business for himself with

7740-537: The European Parliament 1978–1979. The influence of Henry George has waned over time, but Georgist ideas still occasionally emerge in politics. For the United States 2004 presidential election , third-party presidential candidate Ralph Nader mentioned George in his policy statements. Economists still generally favor a land value tax. Monetarist economist Milton Friedman publicly endorsed

7869-523: The Fabian Society , which would each go on to help form the modern-day Labour Party . The Liberal government included a land tax as part of several taxes in the 1909 People's Budget intended to redistribute wealth (including a progressively graded income tax and an increase of inheritance tax ). This caused a political crisis that resulted indirectly in reform of the House of Lords . The budget

SECTION 60

#1732787864375

7998-576: The Liberal and Country League ), which despised the idea of a single tax, and the Labor Party , which was opposed to the League's free trade stance. Craigie was re-elected at the 1933 and 1938 state elections before being defeated at the 1941 state election , when the ideas of the Single Tax League already seemed an anachronism to most people. The League did not field any further candidates and drifted into obscurity. Georgism Georgism

8127-881: The Lincoln Institute of Land Policy was established in 1974 based on the writings of Henry George. It "seeks to improve the dialogue about urban development, the built environment, and tax policy in the United States and abroad". The Henry George Foundation continues to promote the ideas of Henry George in the United Kingdom. The IU is an international umbrella organisation that brings together organizations worldwide that seek land-value tax reform. The economist Alfred Marshall believed that George's views in Progress and Poverty were dangerous, even predicting wars, terror, and economic destruction from

8256-792: The Somers System . This Georgist tax continued until 1915, when two courts struck it down as violating the Texas Constitution in 1915. This quashed efforts in several other Texas cities towards implementing the Houston Plan: Beaumont , Corpus Christi , Galveston , San Antonio , and Waco . The German protectorate of the Kiautschou Bay concession in Jiaozhou Bay , China , fully implemented Georgist policy. Its sole source of government revenue

8385-411: The "least bad tax", since unlike other taxes, it would not impose an excess burden on economic activity (leading to zero or even negative " deadweight loss "); hence, a replacement of other more "distortionary" taxes with a land value tax would improve economic welfare. As land value tax can improve the use of land and redirect investment toward productive, non- rent-seeking activities, it could even have

8514-481: The Corn Laws in 1846. Ricardo was concerned about the impact of technological change on labour in the short-term. In 1821, he wrote that he had become "convinced that the substitution of machinery for human labour, is often very injurious to the interests of the class of labourers," and that "the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests,

8643-550: The Georgist land value tax as the "least bad tax". Economist Joseph Stiglitz stated that: "Not only was Henry George correct that a tax on land is non-distortionary, but in an equilibrium society … tax on land raises just enough revenue to finance the (optimally chosen) level of government expenditure." He dubbed this proposition the Henry George theorem . Several communities were initiated with Georgist principles during

8772-421: The Georgist policy of land value tax as a means of freeing or rewilding unused land and conserving nature by reducing urban sprawl . Pollution degrades the value of what Georgists consider to be commons . Because pollution is a negative contribution, a taking from the commons or a cost imposed on others, its value is economic rent , even when the polluter is not receiving an explicit income. Therefore, to

8901-534: The State, or any individual. Ricardo argued for the most even distribution possible with the highest control readily available. David Ricardo worked to fix the issues he felt were most concerning with Adam Smith ’s Labour Theory of Value. Both men worked with the assumption that land, labour, and capital were the three basic factors of production. However, Smith narrowed in on labour as the determinant of value. Ricardo believes that with production having three factors it

9030-480: The United States, the United Kingdom and Australia are more than sufficient to fund all levels of government. Anarcho-capitalist political philosopher and economist Murray Rothbard criticized Georgism in Man, Economy, and State as being philosophically incongruent with subjective value theory , and further stating that land is irrelevant in the factors of production, trade, and price systems, but this critique

9159-469: The Westminster anniversary reform dinner; and again voted for criminal law reform. Ricardo believed that increasing imports by free trade boosted the wellbeing of mankind by increasing the amount of goods cheaply available for subsistence and consumption. He was said to have "possessed an extraordinary quickness in perceiving in the turns of the market any accidental difference which might arise between

9288-668: The churchyard of Saint Nicholas in Hardenhuish, now a suburb of Chippenham , Wiltshire. At the time of his death his assets were estimated at £675,000–£775,000. Ricardo wrote his first economics article at 37, firstly in The Morning Chronicle advocating reduction in the note-issuing of the Bank of England and then publishing The High Price of Bullion, a Proof of the Depreciation of Bank Notes in 1810. He

9417-424: The circulation in any degree they may think proper: a power which should neither be entrusted to the State itself, nor to anybody in it; as there can be no security for the uniformity in the value of the currency, when its augmentation or diminution depends solely on the will of the issuers.” Ricardo felt the circulation of money and the decision behind how much is available at any time should not be entrusted to either

9546-418: The common blunder?" John R. Commons supported Georgist economics but opposed what he perceived as an environmentally and politically reckless tendency for advocates to rely on a one-size-fits-all approach to tax reform, specifically, the "single tax" framing. Commons concluded The Distribution of Wealth , with an estimate that "perhaps 95% of the total values represented by these millionaire [ sic ] fortunes

9675-597: The common goal among modern Georgists is to capture and share (or reduce) rent from all sources of natural monopoly and legal privilege. Henry George shared the goal of modern Georgists to socialize or dismantle rent from all forms of land monopoly and legal privilege. However, George emphasized mainly his preferred policy known as land value tax , which targeted a particular form of unearned income known as ground rent . George emphasized ground-rent because basic locations were more valuable than other monopolies and everybody needed locations to survive, which he contrasted with

9804-478: The community, while the fruits of labor would remain private. According to Georgists, a land value tax can be considered a user fee instead of a tax, since it is related to the market value of socially created locational advantage, the privilege to exclude others from locations. Assets consisting of commodified privilege can be considered as wealth since they have exchange value, similar to taxi medallions . A land value tax, charging fees for exclusive use of land, as

9933-429: The costs of taxes and the benefits of public spending always eventually apply to and enrich the owners of land. Therefore, they believed it would be best to defray public costs and recapture value of public spending by applying public charges directly to owners of land titles, rather than harming public welfare with taxes assessed against beneficial activities such as trade and labor. Henry George wrote that his plan for

10062-720: The cultivation of poorer land, principally benefited landowners. According to Ricardo, such premium over "real social value" that is reaped due to ownership constitutes value to an individual but is at best a paper monetary return to "society". The portion of such purely individual benefit that accrues to scarce resources Ricardo labels "rent". In particular, Ricardo postulates that rent is a result of increased populations which results in assets growing scarce and in some cases diminished returns of which were once abundant. Ricardo breaks down this premise by first supposing there are three fields of land - No. 1, 2, 3, - to yield corn, with an equal employment of capital and labour. Initially land No.1

10191-478: The effects of various factors. Applying this method, he concluded that many of the problems that beset society, such as poverty, inequality, and economic booms and busts, could be attributed to the private ownership of the necessary resource: land rent. In his most celebrated book, Progress and Poverty , George argues that the appropriation of land rent for private use contributes to persistent poverty in spite of technological progress, and causes economies to exhibit

10320-417: The elimination of corruption, fraud, and evasion with respect to the collection of taxes; the enablement of true free trade; the destruction of monopolies; the elevation of wages to the full value of labor; the transformation of labor-saving inventions into blessings for all; and the equitable distribution of comfort, leisure, and other advantages that are made possible by an advancing civilization. In this way,

10449-480: The emerging industrial capitalists. Ricardo believed landlords tended to squander their wealth on luxuries, rather than invest. He believed the Corn Laws were leading to the stagnation of the British economy. In 1846, his nephew John Lewis Ricardo , MP for Stoke-upon-Trent , advocated free trade and the repeal of the Corn Laws. Modern empirical analysis of the Corn Laws yields mixed results. Parliament repealed

10578-546: The extent that geoists recognize the effect of pollution or share conservationist values, they will agree with ecological economists about the need to limit pollution, but geoists will also insist that pollution rents generated from those conservation efforts do not accrue to polluters and are instead used for public purposes or to compensate those who suffer the negative effects of pollution. Ecological economists advocate similar pollution restrictions but, emphasizing conservation first, might be willing to grant private polluters

10707-422: The extent that society determines pollution to be harmful, most Georgists propose to limit pollution with taxation or quotas that capture the resulting rents for public use, restoration, or a citizen's dividend . Georgism is related to the school of ecological economics , since both propose market-based restrictions for pollution. The schools are compatible in that they advocate using similar tools as part of

10836-438: The extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient , fair, and equitable . The main Georgist policy recommendation is a tax assessed on land value, arguing that revenues from a land value tax (LVT) can be used to reduce or eliminate existing taxes (such as on income , trade , or purchases ) that are unfair and inefficient. Some Georgists also advocate for

10965-591: The height of the philosophy's popularity. Two such communities that still exist are Arden, Delaware , which was founded in 1900 by Frank Stephens and William Lightfoot Price , and Fairhope, Alabama , which was founded in 1894 under the auspices of the Fairhope Single Tax Corporation . Some established communities in the United States also adopted Georgist tax policies. A Georgist in Houston, Texas , Joseph Jay "J.J." Pastoriza , promoted

11094-630: The idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent" claiming that "this is in fact the basis of all the attacks on Henry George by contemporary economists and certainly the fundamental reason why professional economists increasingly ignored him". Robert Solow endorsed the theory of Georgism, while being wary of the perceived injustice of expropriation . Solow stated that taxing away expected land rents "would have no semblance of fairness"; however, Georgism would be good to introduce where location values were not already privatized or if

11223-580: The ideas of Henry George. According to The American Journal of Economics and Sociology , the periodical Land&Liberty , established in 1894, is "the longest-lived Georgist project in history". Founded during the Great Depression in 1932, the Henry George School of Social Science in New York offers courses, sponsors seminars, and publishes research in the Georgist paradigm. Also in the US,

11352-613: The immediate effects of reducing capital investments and slowing the growth of a nation's economy. Rising rents, attributed by Ricardo to the Corn Laws, came at the expense of the economic profits of nations. For David Ricardo, free trade was ever the answer; he envisioned Britain as importing agriculture products in exchange for exporting manufactured goods. Eventually, after his death, the interventionist laws were repealed, and his free trade views became public policy in Britain. Of David Ricardo, his friend John Louis Mallett commented: " … he meets you upon every subject that he has studied with

11481-503: The immediate implementation of its recommendations. Specifically, Marshall was upset about the idea of rapid change and the unfairness of not compensating existing landowners. In his lectures on Progress and Poverty , Marshall opposed George's position on compensation while fully endorsing his ultimate remedy. So far as land value tax moderately replaced other taxes and did not cause the price of land to fall, Marshall supported land value taxation on economic and moral grounds, suggesting that

11610-409: The industries that made the best use of limited resources—the assumption being that subsequent economic growth due to better resource use would more than offset any short-run economic dislocation which would result from closing mildly profitable and marginally competitive national industries. Ricardo attempted to prove theoretically that international trade is always beneficial. Paul Samuelson called

11739-418: The less significant streetcar and telegraph monopolies, which George also criticized. George likened the problem to a laborer traveling home who is waylaid by a series of highway robbers along the way, each who demand a small portion of the traveler's wages, and finally at the very end of the road waits a robber who demands all that the traveler has left. George reasoned that it made little difference to challenge

11868-447: The mathematics of optimal resource allocation. Like Adam Smith, Ricardo was an opponent of protectionism for national economies, especially for agriculture. He believed that the British " Corn Laws "—imposing tariffs on agricultural products—ensured that less-productive domestic land would be cultivated and rents would be driven up ( Case & Fair 1999 , pp. 812, 813). Thus, profits would be directed toward landlords and away from

11997-423: The mercantilism concept of accumulating gold or silver by promoting industry specialization and free trade. Ricardo introduced the concept of "comparative advantage," suggesting that nations should concentrate resources only in industries where they have the greatest efficiency of production relative to their own alternative uses of resources. He argued that international trade is always beneficial, even if one country

12126-453: The mere owner, and profitable only to the user". A high land value tax would discourage speculators from holding valuable natural opportunities (like urban real estate) unused or only partially used. Henry George claimed this would have many benefits, including the reduction or elimination of tax burdens from poorer neighborhoods and agricultural districts; the elimination of a multiplicity of taxes and expensive obsolete government institutions;

12255-478: The middle ear that spread into his brain and induced septicaemia . He was 51. He and his wife Priscilla had eight children together including Osman Ricardo (1795–1881; MP for Worcester 1847–1865), David Ricardo (1803–1864, MP for Stroud 1832–1833) and Mortimer Ricardo, who served as an officer in the Life Guards and was a deputy lieutenant for Oxfordshire . Ricardo is buried in an ornate grave in

12384-542: The numbers used in Ricardo's example dealing with trade between England and Portugal the "four magic numbers". "In spite of the fact that the Portuguese could produce both cloth and wine with less amount of labour, Ricardo suggested that both countries would benefit from trade with each other". As for recent extensions of Ricardian models, see Ricardian trade theory extensions . Ricardo's theory of international trade

12513-449: The open market when considering banking altercations, stock investments, or other considerable impacting events. Ricardo wanted to establish a firm ground between the bank and the control over monetary policy because there was power within the banking system that Ricardo believed needed to be considered carefully. In 1816, Ricardo said “In the present state of the law, they have the power, without any control whatever, of increasing or reducing

12642-1026: The politics of the early 20th century. Political parties that were formed based on Georgist ideas include the Commonwealth Land Party in the United States , the Henry George Justice Party in Victoria , the Single Tax League in South Australia , and the Justice Party in Denmark . In the United Kingdom , George's writings were praised by emerging socialist groups in 1890s such as the Independent Labour Party and

12771-401: The privilege to capture pollution rents. To the extent that ecological economists share the geoist view of social justice, they would advocate auctioning pollution quotas instead of giving them away for free. This distinction can be seen in the difference between basic cap and trade and the geoist variation, cap and share , a proposal to auction temporary pollution permits, with rents going to

12900-473: The public, instead of giving pollution privilege away for free to existing polluters or selling perpetual permits. The revenue can allow the reduction or elimination of taxes, greater public investment/spending, or the direct distribution of funds to citizens as a pension or basic income / citizen's dividend . In practice, the elimination of all other taxes implies a high land value tax, greater than any currently existing land tax. Introducing or increasing

13029-427: The quality of land fails to yield the equal of that before it. In light of such diminishing surplus landowners see opportunities to charge rent as a means to compensate for the loss of returns on output. According to sociologist of quantification Mary S. Morgan David Ricardo can be considered one of the pioneers in economic modelling . In studying rents, for example, Ricardo experiments numerically to determine

13158-628: The relative price of different stocks". And he grew his wealth dealing in securities during the Revolutionary and Napoleonic wars . As the Napoleonic Wars waged on, Ricardo developed a disdain for the Corn Laws imposed by the British to encourage exports. Notably, government intervention in the grain trade can be traced as far back as the 1400s; and thereafter trade was controlled, regulated, and taxed. Meanwhile, England developed

13287-469: The relative share of profit accruing to land owner, capital holder and laborers through what Morgan calls 'numerical model farming'. In his numerical and verbal accounts Ricardo tests different improvements in capital, technology or labour to increase the yield of a farm, paralleling actual experiments run by his contemporaries such as "Turnip" Townshend . In his Theory of Profit , Ricardo stated that as real wages increase, real profits decrease because

13416-503: The return of surplus public revenue to the people by means of a basic income or citizen's dividend . Henry George popularized the concept of gaining public revenues mainly from land and natural resource privileges with his first book, Progress and Poverty (1879). The philosophical basis of Georgism draws on thinkers such as John Locke , Baruch Spinoza , and Thomas Paine . Economists from Adam Smith and David Ricardo to Milton Friedman and Joseph Stiglitz have observed that

13545-410: The revenue from the sale of manufactured goods is split between profits and wages. He said in his Essay on Profits , "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food." Between 1500 and 1750 most economists advocated mercantilism , which promoted the idea of international trade for the purpose of earning bullion by running

13674-448: The series of small robbers when the final robber remained to demand all that the common laborer had left. George predicted that over time technological advancements would increase the frequency and importance of lesser monopolies, yet he expected that ground rent would remain dominant. George even predicted that ground-rents would rise faster than wages and income to capital, a prediction that modern analysis has shown to be plausible, since

13803-453: The single-tax platform as a regression from the transition to communism and referred to Georgism as "capitalism's last ditch". Marx 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 George's "fundamental dogma

13932-405: The sky—they would perish in a high wind; and a single truth, like a single tax, ends in its own destruction." Commons uses the natural soil fertility and value of forests as an example of this destruction, arguing that a tax on the in-situ value of those depletable natural resources can result in overuse or over-extraction. Instead, Commons recommends an income tax-based approach to forests similar to

14061-468: The supply of land is fixed. Spatial rent is still the primary emphasis of Georgists because of its large value and the known dis-economies of misused land. However, there are other sources of rent that are theoretically analogous to ground-rent and are debated topics of Georgists. The following are some sources of economic rent. Where free competition is impossible, such as telegraphs, water, gas, and transportation, George wrote, "[S]uch business becomes

14190-419: The supply of land is perfectly inelastic , land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so the tax cannot be passed on to tenants. Standard economic theory suggests that a land value tax would be extremely efficient—unlike other taxes, it does not reduce economic productivity. Milton Friedman described Henry George's tax on unimproved value of land as

14319-460: The support of Lubbocks and Forster, an eminent banking house. He made the bulk of his fortune by profitably financing Government borrowing. There is a story that he made his fortune as a result of speculation on the outcome of the Battle of Waterloo : The Sunday Times reported in Ricardo's obituary, published on 14 September 1823, that during the battle Ricardo "netted upwards of a million sterling",

14448-441: The terms of a loan of £25,000. His record in Parliament was that of an earnest reformer. He held the seat until his death five years later. Ricardo was a close friend of James Mill . Other notable friends included Jeremy Bentham and Thomas Malthus , with whom Ricardo had a considerable debate (in correspondence) over such things as the role of landowners in a society. He also was a member of Malthus' Political Economy Club , and

14577-575: The territory was returned to the Republic of China . Georgist ideas were also adopted to some degree in Australia , Hong Kong , Singapore , South Africa , South Korea , and Taiwan . In these countries, governments still levy some type of land value tax, albeit with exemptions. Many municipal governments of the United States depend on real-property tax as their main source of revenue, although such taxes are not Georgist as they generally include

14706-419: The transition could be phased in slowly. George has also 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. George argued that the rent of land increased faster than wages for labor because the supply of land is fixed. Modern economists, including Ottmar Edenhofer have demonstrated that George's assertion

14835-533: The use of the community, of that value which is the creation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return. George believed there

14964-456: The value of a commodity depends on the labour necessary for its production. He contributed to the development of theories of rent, wages, and profits, defining rent as the difference between the produce obtained by employing equal quantities of capital and labour. Ricardo's Theory of Profit posited that as real wages increase, real profits decrease due to the revenue split between profits and wages. Ricardian theory of international trade challenges

15093-584: The value of buildings and other improvements. One exception is the town of Altoona, Pennsylvania , which for a time in the 21st century only taxed land value, phasing in the tax in 2002, relying on it entirely for tax revenue from 2011, and ending it 2017; the Financial Times noted that "Altoona is using LVT in a city where neither land nor buildings have much value". In 2023, Detroit mayor Mike Duggan and Michigan State Representative Stephanie Young proposed replacing existing property taxes with

15222-439: The vulnerability that market economies have to credit bubbles and property manias would be reduced. Income flow resulting from payments for restricted access to natural opportunities or for contrived privileges over geographic regions is termed economic rent . Georgists argue that economic rent of land, legal privileges , and natural monopolies should accrue to the community, rather than private owners. In economics, " land "

15351-419: The well-being of people by making goods more affordable. Ricardo notably opposed the Corn Laws , which he saw as barriers to economic growth. His friend John Louis Mallett described Ricardo's conviction in his beliefs, though he expressed doubts about Ricardo's disregard for experience and practice. Ricardo died at 51 from an ear infection that led to septicaemia (sepsis). He left behind a considerable fortune and

15480-476: The west coast of South Australia , whose farmers and graziers saw merit in single tax theory . A great proponent of the theory was J. Medway Day via his short-lived weekly newspaper The Voice . The League's sole parliamentary representative was Edward Craigie , who was elected to the South Australian House of Assembly seat of Flinders (covering the League's west coast power base) in

15609-500: The yield of such a tax." Economists who study land conclude that Schumpeter's criticism is unwarranted because the rental yield from land is likely much greater than what modern critics such as Paul Krugman suppose. Krugman agrees that land value taxation is the best means of raising public revenue but asserts that increased spending has rendered land rent insufficient to fully fund government. Georgists have responded by citing studies and analyses implying that land values of nations like

15738-446: Was able to recognize and identify the problem presented through banking within regulations and debauched standards of approval at certain times. Ricardo knew that banks in rural areas as well as the Bank of England had increased note lending and overall lending in 1810. Through this, Ricardo proved subsequent changes in price level through the market was also affected and thus new regulations needed to be made available. Furthermore, Ricardo

15867-503: Was able to understand and distinguish the socioeconomic makeup that created and established parameters around different classes within the economy. Ricardo advocated for the productive powers of labour to be held in high concern as the most influential of devices that played a role in the progression of the American Economy along with others. In addition, Ricardo made notable advancements in the concept build involving reactions in

15996-628: Was also an abolitionist , speaking at a meeting of the Court of the East India Company in March 1823, where he said he regarded slavery as a stain on the character of the nation. Adam Smith argued that free commercial banking, such as the banking system in Scotland which had no central bank when Wealth of Nations was written in 1776, was favourable to economic growth. Writing just

16125-499: Was an important distinction between common and collective property. Although equal rights to land might be achieved by nationalizing land and then leasing it to private users, George preferred taxing unimproved land value and leaving the control of land mostly in private hands. George's reasoning for leaving land in private control and slowly shifting to land value tax was that it would not penalize existing owners who had improved land and would also be less disruptive and controversial in

16254-622: Was passed eventually—but without the land tax. In 1931, the minority Labour government passed a land value tax as part III of the 1931 Finance act. However, this was repealed in 1934 by the National Government before it could be implemented. 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

16383-601: Was reformulated by John Stuart Mill in 1844. The term "comparative advantage" was introduced by J. S. Mill and his contemporaries. John Stuart Mill started a neoclassical turn of international trade theory, i.e. his formulation was inherited by Alfred Marshall and others, and has both contributed to the resurrection of the anti-Ricardian concept of law of supply and demand, and induced the arrival of neoclassical theory of value. Ricardo's four magic numbers have long been interpreted as comparison of two ratios of labour (or other input in fixed supply) coefficients. This interpretation

16512-580: Was the land value tax of six percent which it levied in its territory. The German colonial empire had previously had economic problems with its African colonies caused by land speculation . One of the main reasons for using the land value tax in Jiaozhou Bay was to eliminate such speculation, which the policy achieved. The colony existed as a German protectorate from 1898 until 1914, when seized by Japanese and British troops in World War I . In 1922,

16641-459: Was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent. Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Though

#374625