DLT: Henry George 1839-97

Duncan Brack and Ed Randall, authors of the Dictionary of Liberal Thought, have kindly agreed to let us publish extracts on Lib Dem Voice. Before the summer, Conrad Russell; this month Henry George. The entire book is available on Amazon here and can also be bought at the Westminster Bookshop.

Henry George 1839–97

Nineteenth-century America’s most influential radical theorist, his claim that the God-given land, the source of all wealth, had been unjustly usurped by landlords, and that the situation could be remedied by a tax on the unimproved value of land, inspired a generation of radical and socialist politicians in the English-speaking world and Europe.

Key ideas

• Land is the source of all wealth.

• God gave the land to the people, so its appropriation as private property was theft.
• This can be remedied by taxing away the value of rents paid on land and minerals.
• This ‘single tax’ would eliminate the monopoly power of landowners to exploit wage-earners and allow for the abolition of other taxes.

Biography

Henry George was born in Philadelphia on 2 September 1839, the second of ten children in a devout Episcopalian family. At sixteen, he went to sea and spent ten years drifting from job to job until, with a wife and young family, he settled in San Francisco, where he discovered a talent for journalism and, by 1871, became the editor and co-owner of the San Francisco Daily Evening Post.

An active Democrat, he attacked railroad and land speculators and their corrupt political allies, and in an 1868 article, ‘What the Railroad Will Bring Us’, he first suggested that, far from reducing poverty, industrialisation and urbanisation were increasing impoverishment despite the rapid creation of wealth. He explained this paradox in Our Land and Land Policy (1871) as due to the monopolistic exactions of landlords, which could be remedied by a tax on the rent of land and minerals. He further elaborated his ideas in Progress and Poverty (1879), which, with its evocative, almost religious, language and its tone of moral outrage, was an unexpected and sensational success, selling millions of copies world-wide.

George moved to New York in 1880, where he took an interest in Irish-American affairs. He wrote a pamphlet, The Irish Land Question, and was commissioned to tour Ireland as a correspondent for the Irish World. During the trip, in 1881–82, he spoke on radical platforms – often with the Irish Land League’s Michael Davitt, or with the English socialist H. M. Hyndman. George’s notoriety was assured when he was arrested by an over-zealous policeman, who thought him a ‘suspicious character’.

With his radical credentials burnished by the tour, and two further British trips in 1883–84 and 1885, George ran as the United Labor Party candidate for mayor of New York in 1886. He came second to the Democrat Abram S. Hewitt, beating the Republican hopeful, Theodore Roosevelt, into third place.

Such was the success of Progress and Poverty that by the late 1880s a network of Single Tax associations had spread throughout America, the British Empire and Europe. George toured Britain again in 1888 and 1889, and visited Australia and New Zealand in 1890. The following winter he suffered a stroke, yet ran again for the mayoralty of New York in 1897, this time as an independent Democrat. A further stroke killed him just before the election, on 29 October. His death prompted tributes from around the world, and his supporters claimed that over 100,000 attended his funeral procession.

Ideas

Late nineteenth-century radicalism (q.v.) was underpinned by an anti-aristocratic tradition dating back to the seventeenth century, which held that the land was the property of the people. Henry George gave a moral and intellectual justification for this claim. His idea, based partly on Ricardo (q.v.), Cobden (q.v.), and J. S. Mill (q.v.), was that land, which God had created for the whole community, was the essential prerequisite to the creation of all other forms of wealth. For those who owned no land, rent was a tax on their production. As the population grew, competitive pressure bid up rents and so tended to suppress wages to subsistence levels. Landlords further exploited their power by withholding land from the market in anticipation of higher prices, so further increasing over-crowding and destitution.

George’s remedy was to take as tax the rental value of the underlying land and minerals, but not any rent due to ‘productive’ improvements made to the land, such as buildings. Rises in land value due to growth in the community would thus be reclaimed for the community; land speculation would become pointless; and the under-use of land would be discouraged. George argued that the ending of the ‘land monopoly’ would give every man the option of setting up as a smallholder, so breaking the power of employers to set unfairly low wages, while capital would not suffer because the tax on land would produce enough revenue to allow for the abolition of all taxes on productive enterprise (hence ‘single tax’).

This would have more than economic consequences, as George argued that once the evil of the land monopoly was removed social harmony and economic well-being would prevail without the necessity for collectivism or other socialist palliatives. Rather, and following Herbert Spencer (q.v.), he thought that the end of both economic monopoly and state interference would allow for the full development of the moral potential of the individual.

George’s emphasis on the special nature of landed property, his lack of formal education and his cavalier attitude to statistics meant that his ideas were accepted by few economists in his own day or since, while land-owners saw him as the ‘apostle of plunder’. Yet for a generation after his death his theories had a significant influence on progressive politics in the English-speaking world and beyond (see also entry on the Henry George Foundation).

Key works

• Progress and Poverty (1879)

Further reading

• Charles A. Barker, Henry George (Oxford University Press, 1955)

• Elwood P. Lawrence, Henry George in the British Isles (Michigan State University Press, 1957)

• Antony Taylor, Lords of Misrule (Palgrave Macmillan, 2004)

Paul Mulvey

The Dictionary of Liberal Thought is one of the many titles available from the Liberal Democrat History Group. Find out more about them on their website.

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33 Comments

  • I don’t think I’m uniquely stupid, but in over 40 years in the Party I have never managed to grasp the principles of site value rating (as it was called in Liberal Party days). I realise that Henry George’s ideas must have great appeal because of the tenacity with which they, or variants thereof, are still propounded, but it is a relief to see that few economists accept his ideas. This IS a cue, by the way, for members of ALTER to explain why I am wrong, preferably in words of one syllable.

  • Andrew Duffield 13th Oct '08 - 6:53pm

    I’ll bite (in ones!):

    “…it is a relief to see that few economists accept his ideas.” (your words)

    How so? Your mind is made up it seems!

    We are where we are with the crunch ‘cos we tax work, not wealth. Cash flows to land while jobs are taxed. House price growth leads to more bank loans: debt (and risk) booms – too far – then bust.

    Lib Dem’s would shift tax off work, on to the non-earned “pay” from land.

    H.G.’s the man; get with the plan – Tone!

  • Andrew Duffield 13th Oct '08 - 6:55pm

    P.S. Vince and Nick are both V.P.s of ALTER. At least one of them is an e-con-o-mist!

  • Paul Griffiths 13th Oct '08 - 7:35pm

    Mr Hill has my sympathies. I too have long been similarly frustrated with ALTER’s hopelessly jargon-laden pamphlets and 19th century vocabulary. Recently I have even been toying with the idea of offering a cash prize to the person who can intelligibly and concisely explain (a) why LVT is a good idea and (b) the practical steps needed to implement it (locally or nationally). Needless to say, Mr Duffield’s enigmatic haiku-like attempt above would stand no chance of winning.

  • Paul Griffiths 13th Oct '08 - 8:30pm

    Your post crossed mine in the ether, Mr Graham, so it would be unfair for me to judge what you have written against criteria of which you were unaware and which I have not elaborated.

    So, under the terms and conditions of my (as yet entirely hypothetical) competition, I would stipulate that the winning entry would be written in everyday, conversational English, require no prior specialist knowledge, and be intelligible to someone of average intelligence. I wouldn’t necessarily set a maximum word count, but brevity would garner extra points, as would helpful diagrams and illustrations. To avoid argument, I’d also point out that the judge’s decision would be final. I’d be the judge. 🙂

  • I wouldn’t say that “few economists accept” the merits of land value tax; in fact, many economists from different schools (who disagree on many other economic issues) think it’s a good idea in theory and many advocate some form of it.

    (Notable free-market advocates include Milton Friedman, Sam Brittan…and the young Winston Churchill when he was a member of the Liberal party.)

    However, it is true that it’s not part of the conventional discourse among economic – and especially political – commentators.

    I suspect this is partly due to a lack of intellectual curiosity and a limited frame of reference – debates on tax reform tend to start from our existing slate of taxes and not some hypothetical new tax, which is harder to grasp than (say) a switch from council tax to income tax.

    It’s not on the political agenda, so it unsurprisingly gets ignored by political commentators – a circular argument, admittedly, but these are simple souls we’re talking about!

    But there are several real-world examples of land value tax that show the idea’s potential, notably Hong Kong where I believe it accounts for something like a third of total tax revenue.

  • Hywel Morgan 13th Oct '08 - 11:29pm

    Tony.

    Land. Value. Tax.

    The land has a value, which is then subject to a tax. The value of the land goes up and down depending on external factors – most obviously planning permission.

    There are arguments about how you both value and collect the money but I don’t think the concept is particularly complex

    Where I have disagreements with the “LVT brigade” is when some people suggest that this is the solution to everything, that smacks of utopianism which doesn’t sit well with liberalism IMO.

    Given that “George argued that once the evil of the land monopoly was removed social harmony and economic well-being would prevail without the necessity for collectivism or other socialist palliatives” this might be an historic problem!

  • I need to find time to settle down with my copy of ‘Poverty and Progress’ for a couple of hours and maybe all will come clear. But I’m pretty sure that it won’t happen, and that’s the problem: whereas Liberal policies such as fair votes, workers’ representation in management, negative income tax, and internationalism were complex in their implementation, it was not complicated to grasp their essence. Maybe, as I suggested, it’s just me, but there’s something about site value rating that I just don’t get. In a former incarnation as a geographer I looked on cities as models with central business districts surrounded by successive rings of housing and lesser economic and commercial activity. SVR, in my murky comprehension of it, would, I think, make these models manifest – the citation of Hong Kong tends to confirm that – so that more and more activity would be crammed into a smaller and smaller area, with high rise development being the consequence. That sort of urban utopianism has somewhat gone out of fashion for good reasons – but, Andrew, my mind is not closed and my original post was in order to solicit persuasion.

  • Andrew Duffield 14th Oct '08 - 8:41am

    Tony

    “more and more activity would be crammed into a smaller and smaller area”

    No. While Hong Kong’s economic success is a measure of LVT’s potential, planning controls are not automatically ditched with its implementation. High rise development will only result if local people elect that it should be so.

  • My apologies James, I’d been working most of the evening and was grabbing a few minutes before I went to sleep – you obviously keep later hours than I do! I have always tried to use this site to engage with the discussion rather than to score points or contribute to feuds, and my argument in this case is that if I, as a committed Liberal for decades, hasn’t grasped SVR as part of their ideological equipment then perhaps it’s my laziness, or perhaps there’s a problem with the presentation of the idea. I will re-read and comprehend your post at the end of the day and see how it changes my mind.

  • Not yet an LVTer 14th Oct '08 - 9:15am

    James says “your refusal to engage with it does I’m afraid rather confirm my suspicions, which is that in reality you aren’t interested in actually engaging with the argument.”

    I’m somewhat meanly picking on James here, but it’s this kind of attitude that seems common amongst the LVT brigade that puts me off finding out more.

  • Not yet an LVTer 14th Oct '08 - 9:58am

    No James, I was making a general point, and using your response/attitude as the example of it. I wasn’t saying you can’t object to people not reading your post – I was saying that I find LVTers’ attitudes off-putting.

    There’s a certain amount of intellectual snobbery, that people just don’t/won’t get it because they’re not trying to rather than because there are problems with the ways that the LVTers are trying to get their message across.

  • Paul Griffiths 14th Oct '08 - 12:06pm

    Graham, this form of communication is notoriously prone to misunderstandings, shorn as it is of the visual cues that in normal face-to-face conversation help to convey nuance and sentiment. So, like Tony, I must apologise if I have inadvertently irritated you. Sincerely, it was not my intention.

  • James, I have read through the thread again and I am most grateful to you for what you have written because, as I said in my first post, I was soliciting explanations of LVT having always been a bit puzzled by my failure to grasp the idea. Obviously the taxation of an increase in the value of land caused by, say, the granting of planning permission for housing is a no-brainer, but despite the eloquence of James and the other advocates of LVT here I am unpersuaded that it should form a major part of our taxation system. Jock and Alix hit a number of nails on the head, and I have had no epiphany.

    I am sure that any detailed objections I raise can be knocked down by ALTER members, but here goes anyway!

    1. It is unsellable to the public: if it helps to be familiar with Ricardo on rents in order to support the policy enthusiastically then it’s probably demanding a bit much of the ‘Big Brother’ generation.
    2. Income tax, and local income tax, may suppress economic activity to a limited degree, but taxing people according income is widely (not universally) seen as just and sensible, and is totally comprehensible.
    3. Taxes on social negatives, such as alcohol, tobacco and carbon emissions are also comprehensible and generally accepted as fair.
    4. In contrast, the idea that the land on which my house stands will increase in value if a sports centre is built on the derelict army camp nearby and that I should therefore pay more tax is neither fair nor easily graspable. I don’t want a sports centre built on that land; it wasn’t planned when I moved here; I won’t benefit from it; I didn’t vote for it (OK, my LibDem councillor supports it!) In contrast, if I decide to improve the value of my house by building a bigger kitchen (I wish) then there is a clear logic to being taxed on that improvement: with LVT my situation is determined by others, with rates it is determined by my own actions. Which is more liberal?

    I get very emotional when singing ‘The Land Song’, but it is an emotion born of anger at historical injustice. LVT must have resonated in the early years of the last century because of the temporal proximity to the theft of the land and the political awareness that Henry George and others were able to instill in those whose ancestors had suffered as a result. I just can’t see that ardour being rekindled in the 21st century though. And I’m sorry.

  • Andrew Duffield 15th Oct '08 - 12:01am

    Tony

    Your first 3 objections are valid insofar as they point out the problem with selling anything different or new – to most people at least. Taking each of your points in turn…

    1. Focus on the benefits is key to any pitch. To that extent, and particularly for your ‘Big Brother generation’, I agree that it is neither necessary nor helpful to get into operational detail. Simplistic sloganising is possible though: “Tax wealth, not work”, for example.

    2. Income tax supresses economic activity by more than ‘a limited degree’; it is a deadweight tax on productivity, avoided by the rich and passed on to the poor. There is certainly a superficial perception of fairness, not least within this Party, but PAYE has a lot to do with that. I don’t think most people “comprehend” their payroll tax deductions, but they accept them because they never actually see the money. Wages taxes are paid by firms, not workers – and loaded straight onto price.

    Talking up the fairness of allowing people to ‘keep more of their own money’ strikes a comprehensible chord in my experience!

    3. Agreed – they serve a wider beneficial purpose, helping to promote good health and enhancing sustainable productivity. Keep ’em!

    4. I disagree with all your assertions here. The ‘beneficiary pays’ priciple is an entirely fair and long-established concept. If your private wealth increases as a result of public investment it is surely fair that the public purse recovers at least some of that benefit. Stating that you “will not benefit” runs counter to your initial admission that your land will increase in value.

    This is the self-sustaining essence of LVT; publicly created value is recovered and recycled for the public good. Allowing public wealth to seep into your private pockets by virtue of your particular local land monopoly just means people who derive little or no benefit have to be taxed that much more.
    Unfair!

    It is not “clear logic” that the reverse is true at all! That the value you add through private investment to your home with your own money should belong, in part, to the public purse sounds pretty illogical to me. With LVT, your tax situation is determined yourself by the value you remove from society through your choice of location and tenure; with “rates” (on capital improvements), your tax is determined by others accoding to the value you have added to the local economy in your purchase of materials and labour for your kitchen extension. That is a clear disincentive for you to add that value and the local economy suffers as a result. Liberal LVT wins, I say!

    I too would be sorry if, despite your apparent desire to embrace LVT and the persuasive efforts of others in this thread, you felt unable to commit to the cause.
    Still… we’ll keep on singing!

  • Thank you for your reply Andrew. I don’t want to push the thread further than it should go, but it seems more acceptable and comprehensible to me to tax the capital gain in the value of my house if and when it is sold – difficult to get Daily Express readers to vote for, but eminently fair in my view.

  • Painfully Liberal 15th Oct '08 - 10:02am

    Speaking as a relatively impoverished resident of Kensington and Chelsea (part London Borough, part lazy shorthand for extreme wealth) and a local activist who campaigns for more affordable housing in the borough, isn’t there a danger that LVT might lead to further ghettoisation? If the fact that it’s an expensive area leads to increased tax, won’t it become even more inaccessible for anyone other than the ultra-rich?

  • Andrew Duffield 15th Oct '08 - 11:15am

    On the contrary. By collecting unearned land value, LVT eradicates the sort of speculation that has led to the credit / debt-money boom, which is the cause of the current ‘bust’. This reduces land price and therefore housing costs. There is an automatic fiscal incentive to bring empty and underused sites up to optimum use, so rental costs also fall.

    Of course, areas like Kensington & Chelsea will always attract relatively higher rents because of the locational benefits residents enjoy. LVT simply applies a fair charge for those benefits, which those still unable to afford to live there are effectively denied. Ideally, government would use this revenue would replace tax on productive activity, starting with the poorest.

  • This kind of thread is just typical of the sort of naiveity within our party.

    We have an inherent belief in the goodness and intelligence of all humankind, so we go on and on trying to hammer home a message beyond the comprehension and tolerance of a msss audience.

    All this was a good discussion and obviously well meant, but experience tells the public instinctive scepticism is reasonable because it has been proved over and over again that we simply cannot trust the political classes.

    So whenever anybody concerned with the political classes starts talking about ‘tax’ all we hear is ‘TAX’ and we react accordingly.

    Unless we can answer why all tax isn’t theft any mere mention of the word is to advocate more state-sanctioned theft.

    But not all tax is theft; talk of different taxes does not automatically assume that the overall tax burden is to rise and they you will have to pay more.

    So if any of us want to argue the case for land taxes we must show how it actually reduces the burden on individuals by creating a new balance.

    Essentially land taxes are a tax on waste, just as environmental taxes are a form of tax on waste.

    We think waste is a bad thing and we want to reduce the amount of waste we create – therefore a land tax (accompanied by reductions in taxes on capital and labour) is exactly what we want and need.

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