Georgism: A Reality Check
Fred Harrison
[Reprinted from the International Union
Newsletter, March, 2006]
What's your reaction to my claim that an intellectual screening
process exists that monitors and sanitizes talk involving georgist
fiscal reform? If I said the screening is like the virus checker on
your computer, would you recoil in disbelief?
How, otherwise, do we explain the fact that, since 1914, the world
has passed georgism by? It is as if Henry George never existed, as if
land taxation was not enshrined in law in the UK in 1910 or adopted by
Denmark, Australia, New Zealand and South Africa.
The time has come to pose tough questions. Could the surreal history
that banished georgism have been otherwise? Could georgists have made
a difference? What should be done now? This paper is a contribution to
the International Union's deliberations on how best to promote
georgism on the global scale.
My experiences have led me to some potentially unpopular conclusions.
In 1968 I embarked on a systematic study of history that continues to
this day. I burrowed deep into anthropology while straining at the
political coalface for most of this time, including 10 years of
continuous campaigning in Russia. In 2002,1 stepped back and began to
reflect on this accumulated knowledge and experience.
My conclusion is that our society is programmed to eviscerate any
direct charge on the value of land. Georgists are on to a hiding for
nothing unless we adopt new strategies that can smash the intellectual
screening process that separates us from the collective consciousness
of the majority.
Henry George ducked under the screen. How did he do it? Between 1879
and 1914 Europe was undergoing profound economic and political change.
Civil discontent was expressed in the vocal demands for an extension
of the franchise. And the British colonies had the practical problem
of funding infrastructure. Progress and Poverty came at the
right time. Its arguments resonated with the mass of people. Alas, in
the US, the project barely got off the ground (a few Single Tax
colonies put the virus in quarantine).
Since 1918, it has been downhill all the way. In Britain, landowners
used the law courts to thwart the Finance Act 1910. In the
Commonwealth countries, the wisdom of using land rents was
systematically demoted.
Outcome: according to the OECD, between 1965 and 2003 the share of
taxes on property and wealth was reduced from 8% to 6% of total tax
revenue. Governments legitimised the privileges of land by arguing
that taxes should be levied on a broad base. Georgist advocacy of a
narrow tax base flew in the face of conventional wisdom, one reason
why georgist policy is disparaged as unrealistic; and why
presentations of our case are received, by and large, with
incomprehension.
Put bluntly, 'they' just don't know what we are talking about, and
they couldn't care less.
The screening process reached every corner of the world. Some random
examples --
In the 21st century (2004), South Africa's local authorities
abandoned the land tax in response to advice from Western agencies.
In the 20th century (1961), Brazil's state of Sao Paolo
enacted a rural land tax to encourage owners to bring their idle acres
into cultivation. The Federal Congress intervened with a
constitutional amendment. Jurisdiction over rural property taxes was
transferred to municipalities. The law was not implemented: local
governments could be relied upon to avoid land taxation.
In the 19th century (1824), Argentina introduced a land policy
to settle vast territories, requiring the users to pay rent to the
State. The land grants turned a few people into barons - and they
refused to pay more than paltry sums into the public purse.
Society is hostage to a philosophy -buttressed by institutions
tailored to guard it -- that is driving the world to social and
ecological crises of epic proportions, and georgists have contributed
little to the under-standing of how this has happened Past strategies
failed. We need to chart a new course.
K history is to be reversed, we need a realistic appreciation of both
the scale of the problem and the timescales for effective action.
The starting point is the realisation that the Western mind has been
locked into a set of values and beliefs that is designed to exclude
the acceptance of land rents as the community's income. This is the
result of the social contract school of philosophy beginning with John
Locke and consolidated by the Enlightenment thinkers who are
celebrated as the founders of reason-based civilisation.
The legacy is a collective amnesia about the traditional values and
practices that shaped property rights into their private and common
spheres. One awesome challenge is to indict the forces that abuse our
collective consciousness. But time is short. We face
- Migration: as the industrial epicentre shifts to China,
jobs are becoming scarce and in-migration is brewing a lethal
cocktail of urban discontent;
- Fiscal exhaustion: taxes take up to 5Q% of GDP, yet
governments are still short of funds.
The crisis of the environment is symptomatic of the poverty of
conventional philosophy. Global warming is near to being irreversible.
And yet the ecology movement is exhausted. Signs of this include the
new book by Jonathan Porritt, who chairs the UK government's advisory
committee on sustainability. "Capitalism," he now says, is "the
only game in town." If he's right, there is no hope for the
environment, because the present brand of capitalism is rigged to
deliver ecological chaos.
Environmental campaigners generally accept the property rights that
underpin pollution-curbing tradable permits, which turn corporations
into free riders.
The world desperately needed the georgist paradigm, but the georgist
movement failed to rise to the challenge. We could have done much
more, if only to prepare for the day when events would force open
people's minds.
What must we do? A fatal blow has to be struck at the intellectual
superstructure that has our collective consciousness in its grip. None
of the strategies that we have used until now had the remotest chance
of delivering that blow.
Strategies that have not worked need to be honestly evaluated. Since
1945, the only new case of land taxation that is worth citing is
Taiwan; and that was not the product of enlightened wisdom, but the
act of desperation by nationalists who fled the Communists.
What have been those strategies?
Publications: In the past 30 years, I contributed more than
any other person to the writing, editing and publishing of georgist
materials. In terms of volume, especially in books, these three
decades were the peak of production. But our approach was never going
to persuade people of influence to change their minds. I made the
mistake of assuming mat we could negotiate change on the basis of
reasoned argument
Lobbying: Throughout the world, activists engaged politicians,
policy advisors, academics and journalists to explain the wisdom of
the georgist paradigm. This effort did not bring us one step closer to
reducing taxes on people's wages, savings and investments. Politicians
were unwilling to incur the risks of departing from the script into
which their minds were schooled.
Local Taxation: Nowhere has the local approach to fiscal
reform delivered a result that remotely resembles the project
described in Progress and Poverty. Opponents, such as the
Tories who fought the land tax legislation in Britain in 1910 and
1931, declared that one of their tools for resistance was to downgrade
property taxation to the municipal level. What ought to be the best
empirical evidence -- from New Zealand, Australia and South Africa --
is now a gift for those who oppose us. They use the historical record
to demonstrate that land taxation is a trivial instrument in the
fiscal toolbox.
That's why the British Property Federation opposes a national land
tax, which it claims would "slow down development". If there
must be a charge, they prefer a locally administered occasional tariff
linked to the planning system (Financial Times, 3rd December
2005). Landowners do not want a general reform that reduces taxes on
wages and savings.
What's to be done? Lobbying agencies at the global, national and
local levels has not worked.
Fact: in 1976, UN-Habitat endorsed LVT. In the last 30 years it did
not do anything to promote the policy. Until a couple of years ago,
its staff did not even know the policy existed, let alone understand
how it would solve the global housing problem.
That's why I believe that new approaches are needed to shatter the
screen that closes people's minds.
We must take four essential steps.
First, we must relocate the georgist paradigm in a language
that resonates with people's needs and sympathies. This part of the
new project has already begun.
Material must be disseminated widely. The internet is a powerful tool
for us, but beware: do not confuse the medium with the message. There
are no short cuts to rescuing the minds of the masses.
Second, we must offer a vision of the future. We have failed
to offer a compelling prospectus that would encourage people to put at
risk the comfort they feel with the devil they know. Georgism would
deliver an economy of abundance, culturally, materially and
ecologically. That claim would attract supporters, if we can prove it.
Third, we must analyse how we get from here to there. People
not only fear change. They also fear being out of step with the
mainstream -- that's one lesson that we learnt in Russia, (see box)
Fourth, people need to understand why, en masse, they think
and behave in ways that subvert their best interests. Such cathartic
experiences preceded all the great acts of social reform in the past
So to move into the future, we must set new priorities for action
based on
- research into global problems, conducted to scientific
standards, written with lay readers in mind;
- reflection, to plumb new depths of understanding of how
'capitalism' really works - and how it might be evolved to become
part of the solution; and
- redefining georgism in language that persuades social
scientists and civic leaders to try harder for the common good.
The IU is not itself a charity. Intellectually speaking, it is free
to develop the capacity to demolish the escapist ideas and
institutions that underpinned the 20th century's substitutes for
georgism.
To achieve this, however, and to give the tax reform agenda a new
lease of life, we have to constantly remind ourselves of one harsh
fact As georgists, we allowed ourselves to be co-opted into tinkering
at the edges of current ideas and institutions. That doomed our
efforts. If we continue along that course, we will not be able to
forestall the hazards that will wreak havoc with the lives of many
millions of people in the 21st century.
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