An Exchange of Ideas with John Burkhart

Edward J. Dodson

[In January of 1984, I initiated a correspondence with the then Chairman of The Philadelphia Business Journal, John Burkhart. My letter to Mr. Burkhart that January (reprinted below) responded to an editorial he had written. He responded shortly thereafter, and I continued to write to him in an effort to influence his thinking on important societal issues.]

John Burkhart was born in 1909, the son of a minister. He graduated from DePauw University in 1928, where he was a Rector Scholar. While at DePauw he majored in political science and history. Upon graduating at the age of 19, Burkhart returned to the farm he grew up on to help his grandfather. In 1945, along with a few other investors, he started the College Life Insurance Company of America (1946-1958) and later the University Life Insurance companies which operated in 49 states at the time of their sale in 1979. He then co-founded the Indianapolis Business Journal. The success of the journal prompted the start of other business weeklies in St. Louis, Philadelphia, Pittsburgh, Cincinnati and Baltimore. He was a former Republican State Finance chairman and member of the GOP Platform Committee at the 1964 Republican Convention. In 1990, Burkhart became chairman of CEO Magazine. He died in 1999.

13 January 1984

Dear Mr. Burkhart:

I gather from the perspectives expressed in your writing in the "Journal" that you might agree with the following statement written by the English economist Max Hirsch in 1908:

"Democracies have produced men of great ability and of conspicuous honour to deal with great questions of State. But where democratic governments have undertaken the conduct of industrial functions, the task has generally fallen into unreliable and incompetent hands. Universal experience proves that the more detailed governmental functions become, the more they deal with industrial matters, the less lofty is the type of politician. Abuse of power, neglect of duty, favouritism and jobbery have been the almost universal accompaniment of industrial politics."

Hirsch is little known in this country but his writing presents what I have come to believe to be the basis for lasting harmony between individual and societal rights. The above quote comes from his book Democracy versus Socialism, a study of remarkable depth and clarity of reason. Hirsh's influence on turn-of-the-century British intellectual thought surfaced in the political battle fought by socialists against private property. In its defense, Winston Churchill borrowed from Max Hirsch, writing in his "The People's Rights" that "The best way to make private property secure and respected is to bring the processes by which it is gained into harmony with the general interests of the public".

What Churchill alluded to is also at the bottom of Hirsch's analysis - a society whose laws sanction monopolies and special privileges (as does our own with increasing consequences) institutionalizes inequities and gives rise to unrest in a political economy drawn ever closer to socialism and away from the competitive market. Unfortunately, the "Welfare State" is only superfluous under conditions of the greatest possible distribution of wealth, a result achievable (according to Hirsch) only when monopoly and special privilege are eliminated.

Sincerely, Edward J. Dodson

26 January 1984

Dear Mr. Dodson:

Thanks very much for sending along your recent letter.

The quotation from Max Hirsch was most appropriate and reflects his acute perception.

Expanding upon your own comments, in recent years the explosive growth of the so-called special interest groups has led to double standards and contradictory demands.

Business men profess to belief in the free market but love to have their own business or industry protected from foreign competition and favored by revenue bonds or bailouts or urban grants and all the rest.

I enjoyed your letter very much.

Sincerely, John Burkhart

1 February 1984

Dear Mr. Burkhart:

I am delighted to learn that we share a mutual appreciation for the principles of political economy as examined so well by Max Hirsch, You may appreciate the nature of my intellectual journey, which began with a formal schooling in Keynesian theory and a financial career in banking.

Four years ago I "discovered" the works of Henry George and, through George, Max Hirsch, For awhile I thought I was alone as I slowly developed great respect for the capacity of these two unheralded political economists. Somewhere between the statism of Galbraith and the unbridled individualism of Milton Friedman they stand. I have since learned that their ideas were carried into the modern era by people like Harry Gunnison Brown and Arthur Becker and are being advocated quietly at Columbia (by Lowell Harriss) and the University of California (by Mason Gaffney).

Believe it or not there is a "Henry George School of Social Science" in existence, functioning since the 1930s from New York City. I learned of a branch operating in Philadelphia and in 1981 offered my services to its faculty. The experience of teaching classical economic theory based on George's "Progress and Poverty" has been a tremendous learning experience, I thought you might enjoy my elucidation of the plight of American (and other) urban centers, as they fight to survive under "zero sum" constraints.

Yours very truly, Edward J. Dodson

28 February 1984

Dear Mr. Dodson:

I wish I could conjure up an excuse with an aura of credibility for being to late in responding to your recent letter. But I don't seem to be able to do so!

Your travels through the various worlds of economists has been, I am sure, both exciting and instructive. I was especially pleased to learn that a "Henry George School" is still operating.

Thanks very much for sending along a copy of your article appearing in Focus. I have enjoyed it very much.

Maybe one of these days we will have the good fortune to spend some time together.

Sincerely, John Burkhart

31 May 1984

Dear Mr. Burkhart:

Your article in the latest Philadelphia Business Journal focused in on the most serious political problem with the tax rate reduction scheme to economic growth: "Nobody wants to give up benefits, and nobody wants to pay more taxes".

There may not be a real answer, at least not within grasp during our lifetime. When Henry George searched for a characteristic consistent to all in our species, he observed that man seeks to satisfy desires with the least amount of effort. That bit of analysis still seems valid across and within all societies that I know of. Rather than try to change the nature of man, what we might attempt is to modify our environment in ways that promote the two maxims of a market-oriented economy: individualism and cooperation.

As a modest step in that direction, I have attempted to step outside my area of specialization and into the realm of the philosopher and historian. You have asked for answers. Perhaps the enclosed essay will offer something to help you reach your own answers. The process of putting these thoughts to paper has benefited me immensely.

Very truly yours, Edward J. Dodson

18 June 1984

Dear Mr. Dodson:

I deeply appreciate - probably more than you can easily understand - your sending along your essay on "Poverty: Its Challenge to the Laws of Political Economy."

It is a stimulating, challenging, exciting paper that reflects scholarship, analysis and perception so that the reader's mind is correspondingly stretched and activated.

Thus though I disagree with many of your conclusions, I admire your wrestling with such a major problem. Your unorthodoxy compels readers who may have thought they had the answers to re-examine the premises on which their own thinking is based.

Most of the rest of what I have to say will appear to be negative, or critical, or argumentative. But I do hope I will not make you question how very much I have enjoyed reading your message.

First off, I do agree that poverty exists!

Second off, I likewise agree that "each of our societies suffers by the presence of some degree of poverty."

Before going further, I would comment that poverty is, to some extent, a product of definition. I am at a somewhat advanced age. When I was growing up probably two-thirds of the American people were living in poverty if judged by the current government definition of the poverty level.

Thus, in this sense, we will never conquer poverty. As incomes rise, so does the poverty line. In simplistic terms, the bottom third or fourth or fifth is consigned to the poverty classification no matter what their income level may be.

When you say that the "incidence of poverty is an escalating problem throughout the world" I think that is true only in the sense of perception. I find it hard to believe that if we had a uniform definition of poverty we would be able to classify more people below the poverty level now than, say, 500 years ago.

As for Carl Sagan's commentaries, I find them filled more with fantasy than fact.

We live in an age of dreamers. Strangely enough, our most highly educated seem the most oblivious to the lessons of history.

It is great to fashion on paper the kind of a world in which you would like to live. but it is even greater to face up to what the real world is like.

The idea of ending conflict, substituting cooperation, wrapping it all up in a bundle of love, is exhilerating but its likelihood of accomplishment is as near zero as can be imagined.

You make the statement that "Today, something less than five percent of the American population controls nearly all of the country's privately owned land and natural resources."

I do not know what is the source of this conclusion. For example, if we were talking about dollar values, the lots on which homes are located would represent an enormous sum.

You ask the question, 'What objects of material wealth can be produced without access to nature?" and answer, "There are none."

I guess I don't know what you mean by "access to nature." Insurance, professional athletics, book writers and publishers would seem to be examples of wealth creating activities that have very little to do with nature or natural resources.

When you state that "all citizens of a society … must be guaranteed either equal access to the source of wealth - the economic factor land - or at least benefit equally from the use of these resources" you are in a practical sense recommending Marxism although you earlier decried it because of its limitations on liberty.

Inasmuch as men are not created equal, the only way they can be made economically equal is by the device of the state redistributing income.

What do you mean when you state that "the constitutional laws of the states also permit individuals to hoard vast quantities of land … and the threat to survival of the landless intensifies."? I am not aware of any vast acreages of privately owned land that are not being cultivated. Nor that ownership of land is the sole means for survival. If that were true, being a mortgage officer would be a useless task.

I am fascinated by your conclusion that government takeover of land rents, using them to support public expenditures rather than taxing wages and interests, is not in itself a tax. Actually, it would simply be a property tax, something we already have.

Again I would request that you provide some specific examples of agricultural land being held unused, simply awaiting an increase in land value.

Finally, I would like examples of what you mean by "industrial landlordism."

Perhaps I am completely missing the mark in my interpretations of what you are saying. In any event I have found your discourse delightful and again let me express my thanks for sending me your essay.

Sincerely, John Burkhart

22 June 1984

Dear John:

Thank you for taking the time from what I know must be a hectic schedule to entertain my essay on poverty. Your critical comments are appreciated and have given me reason to consider further refinement of the writing. I accept that challenge, knowing full well that what can be accomplished by such an undertaking is limited to stimulating the reader's own desire to pursue the discussion further. Your comment that "the reader's mind is correspondingly stretched and activated" is, therefore, very gratifying.

You are quite correct in the observation that poverty is a state of existence which is difficult to define. Those who must live in squalor each day, without sufficient food or clothing, unable to obtain basic medical treatments or without access to basic schooling are without the most fundamental "goods" that raise mere existence to a quality recognizable as distinctly human. By this definition, the numbers of people living in poverty grow with every day. The limiting factors are today primarily political rather than nature's allocation of scarce resources (the modern economist's statement of the "economic problem"). Poverty, therefore, is relative to the standards of what constitutes a good life within a particular society at a given moment in history.

Unfortunately, the strong correlation between life at subsistence levels of material well-being and uncontrolled population growth is evident throughout the less developed societies. Since the earth is divided into hundreds of separate political entities, then, to the extent that each society is politically independent, distribution of well-being is a characteristic or measurement by which the repressiveness of a given society can be judged. Thus, in my mind, there is no single "poverty level". What should concern us most is something identified by Justice Oliver Wendell Holmes: "The greatest thing in this world is not so much where we stand as in what direction we are going."

And, despite our tremendous advances in science and technology, the numbers of people who in many societies clearly exist in a state of poverty is increasing. My essay attempts to explain why this is so.

You and I are in basic agreement with regard to the activism of Carl Sagan and others in the anti-nuclear movement. The dream is that war can somehow be avoided by eliminating the most destructive weapons. I am not sure there is sufficient time to achieve the kind of evolutionary changes I have described. As Henry George wrote, basic human nature is much of the problem:

" ... in civilized man still lurks the savage. The men who, in past times, oppressed or revolted, who fought to the death in petty quarrels and drunk fury with blood, who burned cities and rent empires, were men essentially such as those we daily meet. Social progress has accumulated knowledge, softened manners, refined tastes and extended sympathies, but man is yet capable of as blind a rage as when, clothed in skins, he fought wild beasts with a flint."

All we can do, and this is a great deal, is to create within our own society the political framework that will produce even greater well-being for all of our citizens. Progress in this direction may generate jealousy and animosity among the politically elite of other societies. However, those who believe in individualism and democracy have a major stake in showing the world that the success of our nation is not dependent upon taking from them or that inherent in "capitalism" is the continued existence of an impoverished underclass.

The issue of land reform has been central to the negotiation of political and social problems in much of the world. Last year, in response to proposals in the U.S. Senate that our assistance to El Salvador be tied to land redistribution, Jesse Helmes brought up statistics that showed the concentration of land ownership in the private sector was greater in the United States than in El Salvador. The State of Hawaii has become such an extreme case that the U.S. Supreme Court has now voted in favor of using eminent domain powers to break the land monopoly. A Royal Commission chartered to determine the concentration of land ownership in Britain reported that in 1979 the top 1 percent of the population owned 52 percent of all land. A 1981 study by the Appalachian Land Ownership Task Force reported that "only 1 percent of the local population, along with absentee holders, corporations, and government agencies, control at least 53 percent of the total land surface in the 80 counties (in Appalachia). Forty-one percent of the 20 million acres of land and minerals owned by 30,000 owners ... are held by only 50 private owners and 10 government agencies."

More specific figures come from a 1978 Harpers Magazine article by Peter Meyer (I am mailing you a copy under separate cover), I will leave you to reach your own conclusions based on the statistics presented in Meyer's article.

Another point of definition arises with the term "wealth", one reason why I identified its use with the word "material". In the field of economics there is unanimity at least on this one principle, that wealth must be material (which is why money is identified not as wealth but as a representation of wealth). Without attempting to inflict value judgments on the economic value of services, I hope you will concur that the labor performed by the athlete, writer or banker, are tertiary in the scheme of things. Those who actually apply their labor to land or natural resources to produce (or reshape) wealth, are - for whatever reason- willing to exchange the monetary representation of the value of what they produce for services. The banker, insurance broker or stock broker expend their energies to grease the wheels of the economy, thereby improving the ability of others to concentrate on production.

The important point is that everything produced by man of a material nature, all that is necessary to support life, comes from the earth. Given enough time all returns to the earth (ourselves included). Without an almost constant application of labor and the utilization of new production, that form of wealth we call "capital" would eventually disappear. Not really knowing how original I am, I have forged in my own mind an economic principle: That, capital is in a constant state of depreciation. Close off access to land and natural resources (or set the price too high) and production stops. The stock of capital begins to shrink and labor is left unemployed.

Marx, you might be surprised to learn, started to waiver in some of his anti-capital preachings during his last years because of the successes of American workers in achieving high wages. His views on land/resource monopoly were based on observations by Adam Smith and David Ricardo, and, in that sense, were (again, in my view) essentially correct. Land ownership (even of one acre) is monopoly in the sense that a particular site cannot be duplicated. No matter how widespread is the distribution of land ownership, the equality of opportunity is always going to denied to some members of society once the state declares its position in support of individual claims to both the location and economic value of particular sites. My argument is that the protection of location is essential when human activity has produced capital on the site; however, the concept of private property should not be extended to the site's economic value because that value is created by demand, a function of the presence of other human beings. Unlike Marx and the socialists, I conclude that the only proper and reasonably efficient role for government in the market is as a tax collector. Since economic rent is a societally created value, collection of rent by government is quite different from taxation. Taxation implies confiscation of private income. Taxation is simply a convenient mechanism and a familiar term.

The end is in sight. I hope this very long response provides adequate clarifications. I now realize the extent to which I must work on the presentation and support of my ideas.

By industrial landlordism, I simply mean that there is tremendous monopoly power in the combination of concentrated resource control with productive capacity. The effect on human civilization becomes most acute when the supply of land and raw materials is controlled by entities (or individuals) and the economic value of the factor land is captured privately by passing on the cost through the production of goods and services. The result is a constant inflationary movement in prices; or, rather a tendency for such a movement. In the United States and some of the other industrialized nations, the race between technologically achieved advances in productivity and advancing land rents is still being fought. The very large number of competitive industries, evolving over time and as population grew at a pace parallel with technology, has put the brakes on the laws of nature to some extent. The story, and the problem, is dramatically different around the world where the ownership of capital and land is concentrated absolutely and those societies experience the worst forms of industrial landlordism.

For us, the consequences of the confusion between industrial landlordism and true free market capitalism have been enormous.

Best personal regards.

Sincerely, Ed Dodson

2 October 1984

Dear John:

Your commentaries always have a way of adding to my dose of intellectual stimulation Monday afternoons, when I generally have an opportunity to read the Philadelphia Business Journal. As you might expect, my views on the Central American policy issues differ from yours because I believe it is a severe mistake to identify opposing groups as our friends or our enemies, Political movements and their leaderships have throughout history proven to be opportunistic, accepting support from wherever it is offered in order to achieve success. Did we not welcome assistance from a French monarchy at least as despotic as that of England in order to shed colonial rule?

I am under no delusion that our Soviet "friends" will ever be satisfied with a rapprochement toward the Democracies. The lesson we have failed to learn from the rise of Hitler and Mao, for example, is that the survival instinct fosters radicalized nationalism when a people are backed to the wall. Under those circumstances reasoned and cautious leadership falls to the demagogue. The perception of a hostile external world gives such leaders justification for internal repression. I know your intent is not to give the impression that the people of the Soviet Union, Cuba, Nicaragua or any other country are our enemies. What we must stand against are the anti-democratic and anti-humanitarian actions of these and all governments (our own included).

All comes back to the land question, the least understood and most avoided issue in our foreign policy. Land monopoly has strangled attempts at gradual movements toward democracy, leaving countries to fall victim to either continued dictatorships or socialism. What we seem to forget is that the democratic constitutions of Germany and Japan exist because we imposed on them a form of government "fostered" by military presence. Moreover, the continued pressures of what I previously called "industrial-landlordism" have pushed the remaining democracies perilously close to socialism. As Michael Harrington wrote some years ago, the main reason why a socialist party failed to gain widespread support in the United States was because the New Dealers and their successors did all the work under the Democratic Party banner.

As long as the land, natural resources and capital Infrastructure of any country are controlled by the few to the detriment of the many (whether the few is a state bureaucracy or a small number of families protected by a feudalistic government), that system will breed poverty and eventual political upheaval. By the time armed rebellion begins attempts by our country to intervene on behalf of democracy are far too late. Instead of spending hundreds of millions of taxpayer dollars (or incurring greater deficits) on negative militaristic intervention, I suggest we concentrate on Mexico, Costa Rica and other countries where our influence can be felt peacefully and lead to real results.

I may have previously sent you the enclosed essay by economist William Peirce of Case Western Reserve University; however, he has in my view identified the key to achieving the kind of humanitarian improvements in wealth distribution that would end popular support for Marxist activities in Central America and elsewhere.

I thank you for the stimulation. I also hope that you may one day find sufficient reason to alter your approach to include the Georgist land reform as an integral part of a solution.

Best personal regards.

Sincerely, Edward J. Dodson

6 April 1987

Dear Mr. Burkhart:

Several years have passed sinced we last corresponded. From time to time I have wanted to respond to one or more of editorial essays but have been absorbed by research and writing of my own. However, I thought you might appreciate the enclosed chart because of its attempt to attach some specificity competing political philosophies.

You have previously written to me of your "conservative" (as opposed to "liberal") views; yet, the term is not descriptive of a consistent political philosophy. This, to me, is the parodox of Liberalism and why I have concluded that the structure of our society has prevented the securing of justice for all its citizens.

I would be interested in your comments and observations.

Sincerely, Edward J. Dodson

16 April 1987

Dear Mr. Dodson:

Thanks very much for sending along your very fascinating chart on the Poles of Theoretical Political Economy. It provides a stimulating analysis.

To some extent I have been somewhat less enchanted with labels - at least momentarily! - and more concerned and more puzzled by common sense (or the lack of it).

Thus, whether liberal or conservative, why do those so obsessed with nuclear weapons and the possibility of nuclear war fight equally hard against SDI which is purely defensive against such contingencies.

Your chart description of Marxism Communism expresses all the idealism that Karl himself projected. But every communist state that I am aware of falls more properly under your heading Dictatorship Fascism.

Thanks again for sharing your ideas.

Sincerely, John Burkhart

27 April 1987

Dear Mr. Burkhart:

A desire for understanding -- for (perhaps unobtainable) absolute knowledge -- stimulated my study of political philosophy and sent me back to the university for a masters in liberal arts. I am at times frustrated at how few Americans outside the academic environment are even interested in pursuing political issues beyond a surface level. Sadly, even quite a few of the professors I have had are so narrowly educated they :are unable to grasp the dynamics of a classical approach to political economy. The chart I sent you I developed as a tool, hopefully, for greater understanding.

You are exactly correct that there are no theoretical communist (or communitarian) states; the terms are antithetical. Which should tell those who advocate state socialism they are in dangerous territory, headed toward the destruction of liberty and subjugation to totalitarianism. I used this framework in a recent paper on immigration policy and will attempt similar analyses with regard to other issues. Perhaps you will find this of some value as well in analyzing the wisdom of SDI.

Sincerely, Edward J. Dodson