Progress and Poverty, by Henry George, was incredibly forward thinking for its time, 1879. Pre-car, internet, World War I and World War II, Henry George approached many modern topics in his book on inequality. It's crazy to think that great thinkers like Jose Marti and FDR praised him and even Alfred Russell Wallace ranked Poverty and Progress above his own work, Origin of Species, for best book of the century. He was so popular he beat Teddy Roosevelt in a race for Mayor of New York City. And now, we don't even hear about the guy. During his time, Henry George was remarkably relevant, but his ideas still hold weight today.
Fundamentally, Henry George shifted my perspective on the origin of capital (labor) and how property values actually increase with more neighbors. It took me awhile to understand George's baseline that capital and wages come from labor, not the other way around. Without labor, there is no revenue to pay wages. When simplifying the scenario, a farmer would labor in their fields to produce wages (food) and capital (revenue from selling any extra). This line of logic is actually, ironically, how our country ended up funding farmers in the midwest so many loans in the 80s, they couldn't pay them back when receiving diminishing returns on the soil.
On the point of labor, George asserts that more labor, assuming no exploitation, means higher wages for people. Obviously, in the system as we know it, there are charges for what he calls "rent," using the property. George insists though, that charging money for the value of land without labor is essentially exploitation. Further, the baseline argument of this book is that, without a land value tax, greed will always cause famine, regardless of what the Earth can give us:
"When we reflect upon the great fertility of Hindostan, it is amazing to consider the frequency of famine. It is evidently not owing to any sterility of soil or climate; the evil must be traced to some political cause, and it requires but little penetration to discover it in the avarice and extortion of various governments," (p.96).
With the same line of logic as the wages, George also rips Malthusian theory apart by saying that, for every mouth there are two hands. More people should mean more food, not less. Evidently this has been true, but the limit of environmental resources is real today. Back then, land was never ending.
What I really appreciate about the idea of the land value tax is that it's anti-speculation. As a Floridian, I, at first, thought it could be used to prevent speculation and sprawl. George states "the destruction of speculative land values would tend to diffuse population where it is too dense and to concentrate it where it is too sparse;" (p.361) however, implementing this from a land use perspective sounds like endless suburban sprawl. It seems like the land value tax could be used as a mechanism to say "if you have it, use it!" Again, putting this into the context of time, I hear where he's coming from. But, he has a point that land speculation is a dangerous practice for our entire economy:
"Land speculation is the true cause of industrial depression...In each period of industrial activity land values have steadily risen, culminating in speculation which carried them up in great jumps. This has invariably been followed by a [recession]." (p.217)
On the value of neighbors, George pontificates on the fact that, a single home and lot in the middle of nowhere has little value. Once more people come with their businesses, services, and community, you have built value. This, intrinsically, is why cities are valuable places to live. So valuable he says that: "you may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota to the wealth of the community, in ten years you will be rich! In the new city you may have a luxurious mansion; but among its public buildings will be an almshouse." (p.239).
The land value tax, though it makes sense in theory and for this time period, has one tremendous flaw: it assumes government is an effective service provider that will redistribute wealth properly and fairly. Frankly, George may be astonished at the complex systems we have today just to get people some food.
The book tries to address inequality and injustices in the way wealth is distributed. George goes so far at the end to tie the land value tax heavily to freedom and God. Land value tax says that the current system of property taxes punishes people for improving land, where we should incentivize it by taxing the land underneath two lots next to each other the same. By freeing workers of the burden of creating rent and then paying rent to landowners, the land value tax would redistribute wealth in such a way that poverty could be eliminated, assuming government can correctly implement this, and that true progress only comes the closer we get to equality. "Between democratic ideas and aristocratic adjustments of society there is an irreconcilable conflict," (p.442).
Overall, George was incredible at reframing ideas which I implicitly believed such as wages coming from capital. He treated this book like a mathematical proof, disproving current notions step by step. I really enjoyed reading this book. It challenged me and was kind of fun to read old political economy. Unfortunately, I don't think the land value tax would work here, but I like where he was headed.
Thanks, Jeremy, for this book!