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SCI LIBRARY

Are You A Real Libertarian?
Or, a ROYAL Libertarian?

Dan Sullivan



[July 1998]



Dan Sullivan is Vice Chair, Libertarian Party of Allegheny County, Pennsylvania


We describe ourselves as the party of principle, and the principle upon which we base property rights is that everyone is entitled to the fruits of his labor. Land, however, is not the fruits of anyone's labor, and our system of land tenure is based not on labor, but on decrees of privilege issued from the state, called titles.

In fact, the term "real estate" is Middle English (originally French) for "royal state." The "title" to land is the essence of the title of nobility, and the root of noble privilege.


The royal free lunch

"The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent." --Carlyle

When the state granted land titles to a fraction of the population, it gave that fraction devices with which to levy tolls on the fruits of the labor of others. Those who have no land privileges must either buy or rent those privileges from the people who received the grants or from their assignees.


Tortured rationalizations

According to royal libertarians, land becomes private property when one mixes one's labor with it. And mixing what is yours with what is not yours in order to own the whole thing is considered great sport. But the notion is filled with problems. How much labor does it take to lay a claim on land, and how much land can one claim for that labor? And for how long can one make that claim?

According to the classic liberals, land belonged to the user for as long as the land was being used, and no longer. But according to the royal libertarians, land belongs to the first user, forever. So, do the oceans belong to the heirs of the first person to take a fish out or put a boat in? Does someone who plows the same field each year own only one field, while someone who plows a different field each year owns dozens of fields? Should the builder of the first transcontinental railroad own the continent? Shouldn't we at least have to pay a toll to cross the tracks? Are there no common rights to the earth at all? To the royal libertarians there are not. But the classical liberals recognized that unlimited ownership of land never flowed from use, but from the state:

"That the lands within the limits assumed by a nation belong to the nation as a body has probably been the law of every people on earth at some period in their history. A right of property in moveable things is admitted before the establishment of government. A separate property in lands not till after that establishment.... He who plants a field keeps possession of it till he has gathered the produce, after which one has as good a right as another to occupy it. Government must be established and laws provided, before lands can be separately appropriated and their owner protected in his possession. Till then the property is in the body of the nation." --Thomas Jefferson

Indeed, the current land tenure system virtually nothing to do with use, but is a product of the state's selling of our common heritage. Less than 2% of the privately held land traces to homestead grants.


Phony Laissez Faire

"AFTER conquest and confiscation have been effected, and the State set up, its first concern is with the land.... In its capacity as ultimate landlord, the State distributes the land among its beneficiaries on its own terms." --Albert J. Nock, Our Enemy the State

The English free-trader Cobden remarked that "you who free the land will do more for the people than we who have freed trade." Indeed, how can anyone speak of free trade when the trader has to pay tribute to some favored land entitlement holder in order to do business?

"This imperfect policy of non-intervention, or laissez-faire, led straight to a most hideous and dreadful economic exploitation; starvation wages, slum dwelling, killing hours, pauperism, coffin-ships, child-labour--nothing like it had ever been seen in modern times...People began to say, if this is what State abstention comes to, let us have some State intervention.

"But the state had intervened; that was the whole trouble. The State had established one monopoly--the landlord's monopoly of economic rent--thereby shutting off great hordes of people from free access to the only source of human subsistence, and driving them into factories to work for whatever Mr. Gradgrind and Mr. Bottles chose to give them.

"The land of England, while by no means nearly all *actually* occupied, was all *legally* occupied; and this State-created monopoly enabled landlords to satisfy their needs and desires with little exertion or none, but it also removed the land from competition with industry in the labor market, thus creating a huge, constant and exigent labour-surplus." --Albert J. Nock, "The God's Lookout" February 1934

State land vs. common land

One of the distinctions that is lost on royal libertarians is between common property and state property. Common property is that to which we all have inalienable rights. State property is that which the state actually owns, and can dispose of as it sees fit. For example, a public right of way is literally a *right* of way. Under principles of common law, nobody, not even the king, could close a travelled road and make it private property. A state maintenance truck, on the other hand, is state property, which can be sold if it no longer suits state purposes.

"The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the Creator." --William Blackstone

It is the royal libertarian notion, and not the classic liberal ideal, that recognizes land as state property. For if land did not rightfully belong to the state, how could the state grant it to favored citizens? And, for that matter, how could there be favored citizens in a democratic republic?

It is the classic liberals, and not the royal libertarians, who deny that the state has a power to appropriate our common rights to the earth and allocate those rights to privileged individuals on favored terms. It is also the classic liberals who hold the key to abolishing taxation, by suggesting that the community (not the state) charge a user fee to landholders based on the value of the land.


The ultimate user's fee

The classic liberals recognized that exclusive access to land, and especially to more than a citizen's share of land, was a privilege that should be paid for, thereby eliminating the need for taxes. It is not a fee for using land, but a fee for the state privilege of denying use of that land to everyone else.

"Men did not make the earth.... It is the value of the improvement only, and not the earth itself, that is individual property.... Every proprietor owes to the community a ground rent for the land which he holds." --Tom Paine

"Another means of silently lessening the inequality of [landed] property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise." --Thomas Jefferson

Today's land value tax advocates consider graduating the tax to be unnecessary and problematic, leading to artificial subdivision (and phony subdivision) of land. The point is that Jefferson, to whom libertarians pay homage, considered land monopoly a great evil and land value tax a remedy, as did many other classic liberals.

"Ground rents are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own. Ground rents are, therefore, perhaps a species of revenue which can best bear to have a peculiar tax imposed upon them." --Adam Smith

"Landlords grow richer in their sleep, without working, risking, or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title." --John Stewart Mill


Two different kinds of indirect taxation

One of the most perverted twisting of concepts is reflected in what Hamilton called "indirect taxation." To him and to many royal libertarians, indirect taxation is "hidden" taxation, as a value-added tax or sales tax that is buried in the price of purchased goods. This kind of indirectness is hardly admirable, and is similar to the kind of indirectness involved in chicanery and duplicity. Small wonder Jefferson called Hamilton a monarchist.

The Articles of Confederation embodied an entirely different concept of indirect taxation. The United States was to levy a tax, not on individual property holders, but on each state, based on its aggregate land value. The assumption was that each state would levy a similar tax on each county, and so on down to the individual. In this way, the individual would never have to face a federal tax agent directly, and if the federal government did not have the full support of the states, it could not bully them as easily as it could bully individuals.

Unfortunately, states did not support the federal government to its satisfaction from the beginning (being strapped from the war). Rather than working things out patiently, Hamilton introduced power-centralizing measures into the new Constitution. One was the other kind of indirect taxation, the mosquito-bite kind that you don't see happening. Royal libertarians trumpet this covert taxation as a virtue over direct real estate taxation, even when it means that "free trade" is being taxed.


Socialist Confusions

The classic liberal distinctions between land, labor and capital were greatly confused by socialists, and particularly Marxists, who substituted the fuzzy abstract term, "means of production," for all three factors. They also blurred the distinction between common property and state property, for socialists believed, as royalty also believed, that they *were* the people.

Today, the confusions between land and capital and between state property and common property are shared by socialists and royal libertarians, and only classic liberals keep these distinctions clearly defined. Yet royal libertarians frequently duck the land issue by suggesting that it is the classic liberals, not the royal libertarians, who have embraced socialist ideas.


Blocking Locke

John Locke is often misrepresented by royal libertarians, who quote him very selectively. For example, Locke did say that:

"Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property."

But Locke condemned anyone who took more than he needed as a "spoiler of the commons."

"If the fruits rotted, or the venison putrified, before he could spend it, he offended against the common law of nature, and was liable to be punished; he invaded his neighbour's share, for he had no right, farther than his use called for any of them, and they might serve to afford him conveniencies of life.

"The same measures governed the possession of land too: whatsoever he tilled and reaped, laid up and made use of, before it spoiled, that was his peculiar right; whatsoever he enclosed, and could feed, and make use of, the cattle and product was also his. But if either the grass of his enclosure rotted on the ground, or the fruit of his planting perished without gathering, and laying up, this part of the earth, notwithstanding his enclosure, was still to be looked on as waste, and might be the possession of any other."

Locke also limited appropriation of land with the *proviso,* ignored by royal libertarians, that there must be

"still enough, and as good left; and more than the yet unprovided could use. So that, in effect, there was never the less left for others because of his enclosure for himself: for he that leaves as much as another can make use of, does as good as take nothing at all."

Now if the situation is that there is enough free land, and as good, left after you took and cultivated your land, than your land has no market value. For who would pay you for land that is not better than land that can be had for free? So besides the fact that Locke's justification of privatizing land is far more limited than royal libertarians portray it to be, it is irrelevant to the question of land value tax, as it applies only when land has no value.

Furthermore, Locke based this scenario on pre-monetary societies, where a landholder would find that "it was useless, as well as dishonest, to carve himself too much, or take more than he needed."

With the introduction of money, Locke noted, all land quickly became appropriated. Why? Because with money, those who can do so suddenly have reason to take more land than they can personally use, for between them they will have taken all the land, and others will have to pay rent to them. So, with the introduction of money, the Lockean rationale falls apart, even according to Locke. And while Locke did not propose a specific remedy to this problem, he repeatedly stated that all taxes should be on real estate.


The tragedy of the common misunderstanding

In their search for excuses to deny any common right to land, royal libertarians are fond of citing Garrett Hardin's work, "Tragedy of the Commons." Or at least they cite the title, which is all most royal libertarians are familiar with. Hardin is himself an advocate of land value taxation, and has criticized misinterpretations of his work with the lament that "The title of my 1968 paper should have been 'The Tragedy of the *Unmanaged* Commons.'" [Emphasis Hardin's]


Thoughtful Libertarian Party leadership

Fortunately, the bias toward royal libertarianism has been shaken off by many of the philosophical leaders of the party. Founder David Nolan supports land value tax as the only funding mechanism that does not fall on productivity, and the late Karl Hess often described land value tax as the one tax to levy until the state could be abolished entirely. It is mostly the Austrians, the Objectivists, and the wishful thinkers who adopt the royal rationalization that they can hoard all the land to themselves with impugnity.


The red, red herring

Royal libertarians are fond of confusing the classical liberal concept of common land ownership, particularly as espoused by land value tax advocate Henry George, with socialism. However, Frank Chodorov and Albert J. Nock (the original editors of The Freeman) were both advocates of George's economic remedies as well as lovers of individual liberty.

"The only reformer abroad in the world in my time who interested me in the least was Henry George, because his project did not contemplate prescription, but, on the contrary, would reduce it to almost zero. He was the only one of the lot who believed in freedom, or (as far as I could see) had any approximation to an intelligent idea of what freedom is, and of the economic prerequisites to attaining it....One is immensely tickled to see how things are coming out nowadays with reference to his doctrine, for George was in fact the best friend the capitalist ever had. He built up the most complete and most impregnable defense of the rights of capital that was ever constructed, and if the capitalists of his day had had sense enough to dig in behind it, their successors would not now be squirming under the merciless exactions which collectivism is laying on them, and which George would have no scruples whatever about describing as sheer highwaymanry." --Albert J. Nock "Thoughts on Utopia"


Ayn Rand comes sooo close!

Several times Ayn Rand sees the distinction between land and capital, and sees it in terms of common vs. private property, but then falls back into confusion at other times. She rightly chastises the Encyclopaedia Brittanica's definition of capitalism that confuses land and capital, which she quotes as follows:

"Fundamental to any system called capitalist are the relations between private owners of nonpersonal means of production (land, mines, *industrial plants*, etc., collectively known as capital)" [emphasis Rand's]

Then she quotes a John Galt speech in Atlas Shrugged in which Galt states sarcastically, "A factory is a 'natural resource', like a tree, a rock or a mud puddle. By Jove, I think she's...

But are the heroes of Atlas Shrugged real capitalists? The inventor John Galt is, and perhaps Hank Reordin of Reordin Metals is, too, although one wonders where he got his ore and fuel. But Taggart Railways enjoys extremely valuable right-of-way privileges from the state. (Once land is parcelled out, it is virtually impossible to build a railroad without either land value tax or eminent domain.)

Then there is Francisco D'Anconia, who owned the world's richest copper deposits, and who took delight in blowing up his mines and driving the price of copper through the roof--something only a resource monopolist could get away with.

Could you imagine the laughter from competitors if Bill Gates got into a snit and blew up Microsoft?


The economics of Galt's Gulch

Most revealing of all is the Randian utopia, Galt's Gulch, which was financed entirely from, yes, land rents. Midas Mulligan owned the whole place, and was, in essence, the government. All the common services, from Galt's magic energy machine to Hank Reordin's village railroad, to their defense system (some sort of jammer that made the valley invisible to passing planes) were financed from ground rents collected by Mulligan from the landholders. Although politically Galt's Gulch was a monarchy, economically it was a Georgist Single-Tax community, with all community services paid for from the rent of land.


Who is the community?

Many libertarians struggle with the question of how a governing body achieves rightful jursidiction in a community. However, royal libertarians raise the question selectively and rhetorically in regard to community land rents. They acknowledge that there must be courts to settle, among other things, property disputes. It seems rather obvious that whatever entity has authority to rule on who gets the land also has authority to rule on who gets the land rent.


Fear of a funded government

There is also a well founded libertarian concern that land rent would provide funds enough to support a corrupt and oppressive government. Most libertarian supporters of land value tax therefore fall into two camps. One would give the people power to limit how much money the government can take, but would stipulate that all such money come entirely from ground rents and natural resource severance royalties. The other would take the full rent, but would stipulate that the government can still only spend what the citizens authorize it to spend. The rest would be distributed on a per-capita basis.


Ending excuses for big government

Much of the government spending to which libertarians strenuously object is made necessary by its taxing productivity instead of land values. The property tax falls mostly on improvements, so less housing is built, giving the government an excuse to build public housing. Profits are taxed, leading to less employment and giving government an excuse to spend money on economic stimulus projects. Family income is taxed to the point that they have difficulty buying a house or sending their children to college, so government institutes subsidized mortgages and student loans.

Even the indirect effects are substantial. Land speculations gone sour chew up inner cities, so poor people turn to crime (if drugs and prostitution be crimes) and the government gets an excuse to beef up the police state. Politically connected real estate interests see that they can buy up land in the boondocks for a pittance and then get other taxpayers to build them a superhighway, increasing the value of their holdings by orders of magnitude. With land value tax they would have ultimately paid for their own highway or more likely would not have had it built in the first place.

Even welfare increases do not stay in the hands of welfare recipients, but are quickly greeted by higher rent demands from ghetto landlords. (The War on Poverty did little to end poverty, but it did a lot to enrich absentee owners of poor communities.)

"All goes back to the land, and the land owner is enabled to absorb to himself a share of almost every public and every private benefit, however important or however pitiful those benefits may be." --Winston Churchill


Isn't there some other way?

There are two models that tie land ownership with use. One is replacing all taxes on productivity, that is, on land use, with taxes on the value of land itself. The other is the Lockean pre-monetary system. It would have to rely on a judicial mechanism, whereby you assert your claim to land by demonstrating that you are using it. While the latter method does not provide any community funds (a mixed blessing perhaps), it does subject your landhold to the discretion of that judicial mechanism. It is far less intrusive into your business for the community to assess the market value of land than to assess the validity of what you are doing on that land.


Can't we get away from the government?

There are, in fact, proprietary communities operating on the single tax model. Arden, Delaware, with a population of 4900, has had no local taxes since 1900. The Arden Corporation collects a fair market rent on land, which is reappraised annually. (They actually collect only about a fourth of the rent to which they are entitled.) From that they not only pay for all the municipal services, but rebate all property taxes levied by the county and school district.

There are excellent reasons for libertarians to prefer the land trust route over the political route. Private communities can be built on explicit contracts (leases) with the citizens, can have internal democratic processes that are vastly superior to electoral democracy, can be far more flexible and free of state intervention, and can be downright profitable (even with trust investors pocketing a mere fraction of the rent). Most of all, dealing with investors is far more pleasant and self-affirming than dealing with politicians.