Why the Henry George Idea Does Not Prevail

Spencer Heath

[Reprinted from Society and its Services, published in Baltimore, Maryland
by the Science of Society Foundation, Inc., 1954]

Society is the general, voluntary association of men performing and exchanging services among themselves.

A society can exist only in a community-a place where its members have something in common, (1) the public portions of the place set apart for the purposes of communication and for the common use of all upon equal terms and conditions, and (2) the private or proprietary portions held in separate and exclusive possession and affording the use of the public parts with their public facilities.

When these private portions are owned, when they have proprietors, accepted and acknowledged as such, then and then only their use and possession can be held or distributed socially and democratically by contract and consent of the market, by a merchandising process and, therefore, to all upon equal terms. Any alternative to this democratic possession and transfer by contract and consent is possession by force, private or public, involving in some degree either anarchy or tyranny, barbarism or slavery.

The society, therefore, creates and maintains itself, its very life from its inception, by establishing and recognizing proprietors to perform the vital service of making a social and democratic, instead of an arbitrary and compulsive, distribution among its members of all its sites and resources for which there is any present or prospective rivalry or economic demand. The recompense which the society spontaneously awards, by all its members' consent, to its proprietary officers in return for this vital service of social distribution is called economic or ground rent.

Because this distributive service is performed socially by proprietors (however unknowingly), it is possible for land users to produce and exchange wealth, and services with each other and out of this production to recompense the proprietors for their distributive services. According, where production is high, rent is high, where it is low, rent is low, and where there is no production, the land being out of use, there is no rent. This failure to produce is also why an idle site or resource yields no rent and, therefore has no present if, indeed, any value.

This service of social distribution by ownership and proprietary administration is not any cause of land lying out of use; it is the only means whereby it can be peaceably apportioned and securely possessed and, thereby, come into productive use. What causes land and resources to lie idle is the "schemes of taxation which drain the wages of labor and the earnings of capital as the vampire bat is said to suck the life blood of its victims."*

Land ownership protects the land user against the arbitrary allocation of land by political (coercive) authority and, thereby, prevents monopolization of the sites and resources by political persons or by their special privileges. Land ownership keeps an open market for land and thus prevents its arbitrary monopolization. But although land owners lost long ago their historic political authority and power, they have not as yet extended to their tenants and purchasers any protection against expropriation by taxation of their productive wealth and capital values. This rapidly increasing blight on the use and employment of capital destroys the demand for land and its resources and thus renders it idle and sets all its values ultimately or immediately into progressive decline.

When the land owning interest has become sufficiently organized and enlightened, it will extend its present merely distributive services to the protection of its communities against the ravages of political government and eventually put into practice that noble prescription of Henry George: "To abolish all taxation save that on land value." To carry out this program will be seen as the peculiar and distinctive function of the land owning interest as such. For this interest has no other business wherewith to concern or profit itself but the interest and welfare of the community that it serves and upon the productivity and prosperity of which all its values depend.

Every land-using interest or business, of whatever kind, has its own private capital to administer and its special clients, customers and patrons to serve. It is in business to purchase the services of others and to administer and sell those services to its own clients and customers.

But individual users of land with their several and diverse interests must have public services performed for them. They cannot perform private services for others (their customers) and also public services for themselves at the same time. Only the general land-owning interest, depending as it does on public value for its recompense, can properly perform the public services. This interest, as such, conducts no private enterprise or business. Its has none but public services to perform, none but public revenue to receive. It is, by its very nature, specialized and set apart for the social (non-political) distribution of sites and resources. It must serve and protect its source of revenue-the community inhabitants-by administering the public properties and facilities-the public capital-as authentic public services.

Land owners, as such, do not own any of the private capital or improvements on land. But they are, in effect, owners of the public capital and improvements by which the private sites and resources are served. For if and when the public capital affords any income, it can flow only to them-since public benefits attach not to persons but to the sites and are reflected in ground rents.

Reduction and ultimate abolition of taxation is a public service to land users that the public owners alone can most profitably perform. It is the one community service that private business and employment most needs and out of its expanding productivity would enormously reward in rising rents and values. Just as it is the business of the owners of a private community such as a hotel, with all its common services similar to those of a town to conduct it in the interest of those who pay rent, so it is the peculiar and exclusive business of the owners of the larger public community not only to make a social distribution of their spaces and resources but also to guard the private occupants against destructive taxation and provide them with all protection and other public services needful for their security and productivity.

When these immunities and services are obtained and performed for the occupants of those larger communities that lie wholly out of doors, the owners of these larger communities will be recompensed in rising rents and values upon a scale proportionate to the productivity thereby released and prosperity enjoyed. Every dollar of unnecessary taxation lifted will not only be restored to its producers, but will release new production doubtless to the amount of several dollars more. The portion of this new exemption and new production that will present itself in the market as new demand for land will eventually exceed all former rent and all former taxes combined.

There will be no destruction of existing values, but only the creation of new. The new rent created by curbing the community servants will be more than ample to pay them, and it will of necessity and by self interest be so employed. Government as depredation and destruction will be transformed into the administration of community property by community owners for the creation of public services, with resulting community values. And none but the public areas and public properties will come under public or community control. Private property and spaces, exempt from taxation, will be inviolate; and if the community owners, through their profitable administration of the public business, shall become the "greatest of all", it will be only as they become the common benefactors of their communities through giving their services to all.

Henry George wrote the briefest, yet perfect prescription for the emancipation of mankind-in three words, "abolish all taxation". He dreamed deeply of abundance, freedom and peace. But in his wrath at wreck and wrong, he dreamed a "dragon in the way"--that mankind must be saved not by the golden rule of service by exchange, but through imagined evil being destroyed. And so, to destroy what he dreamed as dragon namely, property in land, he invoked a real and acknowledged evil to oppose an imagined one. And to "abolish" taxation he invoked the very evil he abhorred. His fair philosophy of freedom was tarnished and dishonored by this false and irrelevant doctrine of force. This it was that raised against his beneficent proposal, "to abolish all taxation", such bitter opposition in his own day and that condemns it to indifference and neglect in ours.

If the taxation of land values should be progressively increased, as Henry George urged, then contractual rent would become degraded into compulsory taxation. Land owners would cease to function, and land users, as wealth producers, instead of being exempt from taxation, would sink into paying taxes compulsorily to politicians as public officers instead of paying rent by contract and consent to land owners as the public benefactors.

That rent instead of taxes is the naturally ordained recompense for community services is the very heart and essence of the Georgian ideal. When it is discovered that rent springs from community service, primarily distributive, for value received, and that new rent responds to new services, it can be seen that the service precedes and induces the recompense. This is the natural law of recompense for service-the same law that George expounds with respect to labor preceding and being the source of the wages it receives.

But his instrument for employing rent in lieu of taxation was taxation itself, the very tool of tyranny. Yet all values are products of services, and from all true services spring the values that recompense them. Social salvation must come through services, and yet more services, to create new values and yet more values, and not through taxation which can only destroy.

Henry George was not wholly unmindful of the services performed by land owners. He approved of their retaining recompense for their services. But when he proposed so great a public boon as to abolish taxation, he proposed no recompense for this great service. It did not penetrate him that land owners alone are in a sole and special place to perform it and that they alone could reap their recompense. He suggested that if millionaires should make free gifts to cities, this would only raise rents, which he deplored. It did not occur to him that should the owners of cities provide great services, such as the abolition of taxation, the new rents and values that would surely arise would be their natural and proportionate reward.

Henry George, dreamer, mystic, poetic herald of the social dawn, yet moralist withal, renewed the languished hope of many of his time. But he burdened his dream of peace and freedom with a moralistic and belligerent spirit against the social institution of private, non-political property in land, and so foreclosed its healing beauty against the sober counsels of mankind.

REFERENCES

*Henry George, Progress & Poverty, Fiftieth Anniversary Edition (1953), p. 427.