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]]>Jason Hickel: Every student learns about Magna Carta, the ancient scroll that enshrined the rights of barons against the arbitrary authority of England’s monarchs. But most have never heard of its arguably more important twin, the Charter of the Forest, issued two years later in 1217. This short but powerful document guaranteed the rights of commoners to common lands, which they could use for farming, grazing, water and wood. It gave official recognition to a right that humans nearly everywhere had long just presupposed: that no one should be debarred from the resources necessary for livelihood.
But this right – the right of habitation – came under brutal attack beginning in the 15th century, when wealthy nobles began fencing off common lands for their own profit. Over the next few centuries, the enclosure movement, as it came to be known, shifted tens of millions of acres into private hands, displacing much of the country’s population. Excluded from the basic means of survival, most were left with no choice but to sell themselves for wages for the first time.
And it wasn’t only England. The same process unfolded across Asia and Africa and most of the global south as European colonisers staked private claim to lands and forests and waterways that were previously held in common, leaving millions dispossessed. In much of the colonial world the goal, or at least the effect, was to drive people into the capitalist labour market, where, in exchange for low wages and poor conditions, they and their descendants would power the mines, plantations and sweatshops for export to the west.
As the era of colonialism came to an end, the governments of many newly independent nations sought to reverse these patterns of historical dispossession with land reform programmes. But they were quickly forced to abandon this approach by big foreign landowners and international creditors. Instead, the new plan for eradicating poverty – the dream of development – came to hinge on drawing people ever deeper into the labour market. Jobs came to be hailed as the salvation of the poor: as the World Bank puts it, “jobs are the surest pathway out of poverty”.
But now this promise is beginning to look hollow. With the rise of robots, robust employment is no longer a realistic hope. We know that automation is a real threat to jobs in the global north, but the threat is much worse in the south. The main industries there, such as small electronics and textile manufacturing, are some of the easiest to automate. According to a United Nations report, up to two-thirds of jobs in developing countries could disappear in the near future.
This is all bitterly painful, particularly for the postcolonial world. First they were dispossessed of their land and promised jobs instead. Now they will be dispossessed of their jobs, and many will be left with literally no way to survive. Their dispossession will be absolute. Technological unemployment will almost certainly reverse the modest gains against poverty that have been made over the past few decades, and hunger will likely rise.
Governments are scrambling to respond, and they don’t have many options. But one stands out as by far the most promising: a universal basic income.
Once a fringe idea, basic income is now speeding its way into the public imagination. Finland is running a two-year experiment in basic income. Utrecht in the Netherlands is conducting a trial, too. Y Combinator is trying it out in Oakland in the US. Scotland looks likely to follow suit. And cash transfer programmes have already proven to be successful in Namibia, India and dozens of other developing countries, sparking what some scholars have billed as “a development revolution from the global south”. In Brazil, to cite just one example, cash transfers helped to cut poverty rates in half in less than a decade.
But the success of basic income – in both the north and the south – all depends on how we frame it. Will it be cast as a form of charity by the rich? Or will it be cast as a right for all?
Thomas Paine was among the first to argue that a basic income should be introduced as a kind of compensation for dispossession. In his brilliant 1797 pamphlet Agrarian Justice, he pointed out that “the earth, in its natural, uncultivated state was, and ever would have continued to be, the common property of the human race”. It was unfair that a few should enclose it for their own benefit, leaving the vast majority without their rightful inheritance. As far as Paine was concerned, this violated the most basic principles of justice.
Knowing that land reform would be politically impossible (for it would “derange any present possessors”), Paine proposed that those with property should pay a “ground rent” – a small tax on the yields of their land – into a fund that would then be distributed to everyone as unconditional basic income. For Paine, this would be a right: “justice, not charity”. It was a powerful idea, and it gained traction in the 19th century when American philosopher Henry George proposed a “land value tax” that would fund an annual dividend for every citizen.
The beauty of this approach is that it functions as a kind of de-enclosure. It’s like bringing back the ancient Charter of the Forest and the right of access to the commons. It restores the right to livelihood – the right of habitation.
Critics of basic income often get hung up on how to fund it. But once we come to see it as linked to the commons, that problem becomes more tractable. In the US state of Alaska natural resources are considered a commons, owned collectively by the people, so every resident receives an annual dividend from the state’s oil revenues.
The Alaska model is popular and effective, and scholars have pointed out that the same approach could be applied to other natural resources, such as forests and fisheries. It could even be applied to the air, with a carbon tax whose yields would be distributed as a dividend to all. And the upshot is that this approach helps protect commons against overuse, giving our planet some room to regenerate.
Implementing this idea will require political will – but it is far from impossible. In fact, some research indicates that it might be politically easier to implement than other social policies. Even in the US, leading policymakers – including former treasury secretary Henry Paulson and two former Republican secretaries of state – have just put forward a carbon tax and dividend proposal. The idea of a basic income also has broad and growing support from high-profile figures including Elon Musk and Bernie Sanders.
There are risks, of course. Some worry that a basic income will only increase the nativism that is spreading across the world right now. Who will qualify for the transfers? People won’t want to share with immigrants.
It’s a valid concern. But one way to address it is to think in more universal terms. The earth’s natural bounty belongs to all, as Paine pointed out. If the commons know no borders, why should a commons-linked income? Indeed, why should people in resource-rich nations get more than their neighbours in resource-poor ones? A tax on resources and carbon around the world could go into a global fund, in trust for every human. Dividends could be set at $5 per day – the minimum necessary for basic nutrition – corrected for each nation’s purchasing power. Or we could set it at each nation’s poverty line, or some ratio thereof. Scholars are already thinking about how such a system could be designed.
We already know, from existing experiments, that a basic income can yield impressive results – reducing extreme poverty and inequality, stimulating local economies, and freeing people from having to accept slave-like working conditions simply in order to stay alive. If implemented more broadly, it might help eliminate “bullshit jobs” and slash unnecessary production, granting much-needed relief to the planet. We would still work, of course, but our work would be more likely to be useful and meaningful, while any miserable but necessary jobs, like cleaning the streets, would pay more to attract willing workers, making menial work more dignified.
But perhaps most importantly of all, a basic income might defeat the scarcity mindset that has seeped so deep into our culture, freeing us from the imperatives of competition and allowing us to be more open and generous people. If extended universally, across borders, it might help instil a sense of solidarity – that we’re all in this together, and all have an equal right to the planet. It might ease the anxieties that gave us Brexit and Trump, and take the wind out of the fascist tendencies rising elsewhere in nativism that is spreading across much of the world.
We’ll never know until we try. And try we must, or brace ourselves for a 21st century of almost certain misery.
Cross-posted from the Guardian.
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Additional image by Mr Higgs
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]]>“What if I told you there was a solution which transcends political divisions? Which is consistent with the ideals of our Founding Fathers? Which can be implemented anywhere on the local, state, or federal level? Which can increase our overall prosperity, reduce inequality, promote peace, and improve the environment all at the same time? Which can do all this without any major restructuring of our institutions?
Assuming such a remedy even exists, surely it would be controversial, right? Something which all the various political ideologies could never agree on? Well the remedy does exist, and it has been supported by principled people of nearly every political persuasion, including some of the greatest minds in history.
Remedy you say? That’s preposterous!
It goes by the unassuming moniker of the Land Value Tax (LVT), which was most famously promoted by the American political economist Henry George. It is based on the notion that people ought to own what they produce, but since land is not a fruit of labor, private land ownership has no basis in natural rights and is thus the ideal source of government revenue. The Land Value Tax preserves the land title system, but simply makes it expensive to hoard land in unproductive ways.
Unlike common property taxes, the LVT does not count improvements to the land, such as buildings. Buildings are man-made, but land isn’t. When you tax buildings, you discourage people from building. Yet, when you tax land, the amount of land doesn’t decrease. The supply is fixed.
The Land Value Tax is an idea that has united in support people who would generally be considered political rivals: William F Buckley and Ralph Nader, Joseph Stiglitz and Milton Friedman, Aldous Huxley and Henry Ford, Clarence Darrow and William Jennings Bryan, Winston Churchill and David Lloyd George, the list goes on.
By untaxing labor and shifting as much taxation as possible onto land values, we enhance the incentives for production as desired by fiscal conservatives. Yet, it provides a huge source of natural and community-generated wealth to tap into, which is the ideal funding mechanism for virtually any infrastructure project or social program desired by those on the Left.
Those of a more “geo-libertarian” bent would prefer that revenue be distributed as a Citizen’s Dividend, rather than used to fund bureaucracy. Yet, if the funding of bureaucracy is to come from somewhere, they would strongly prefer it come from land values. Milton Friedman called it the “least bad tax” for this reason, but really it is far more profound than that.
The LVT strikes at the heart of the land monopoly. In a powerful speech, Winston Churchill said, “Land monopoly is not the only monopoly, but it is by far the greatest of monopolies — it is a perpetual monopoly, and it is the mother of all other forms of monopoly.” It is the essence of feudalism and for all of our supposed social progress we’ve yet to be free from it. Unless and until the land monopoly is destroyed, the positive effects of virtually all economic reforms and even philanthropy is largely nullified.
MonopolyProfits that are above those necessary for the production process are called economic rents. One of the primary sources of rents is monopolization, and one of the greatest tools for achieving monopolization is actually government intervention on behalf of the monopolists. Historically, every major monopoly has been the beneficiary of enormous state-granted privilege. Whether it’s AT&T, Microsoft, or Standard Oil, the root of their power can invariably be traced to particular political privileges.
Taxing such privilege causes no disincentive for production because rents have nothing to do with production, they are a result of imbalances in power and imperfections in the market. Land, and the fruits of nature generally, is necessary for all production and even life itself. Therefore, when access to it is concentrated into the hands of a few, the rest have essentially no bargaining power.
If you owned all the money in the world, and I owned all the land, how much could I charge you for your first night’s rent? Think about that for a second.
If all land on Earth is owned by a subset of the population, then the landless attain a status akin to that of trespassers on the Earth. If – as our moral instincts inform us – we all have a birthright to access the Earth, then this realization must be reflected in our political institutions. A Land Value Tax system recognizes that land titles are a practical way of allocating land use rights, but that the proceeds from such monopolization over locations on the Earth must be returned to their rightful owners, the community as a whole.
Really it isn’t a tax at all, in the usual sense of confiscating that which one produces. On the contrary, by allowing eternal sovereignties over our common inheritance without any repayment to society, one has essentially granted a subsidy to the landlords. Whenever anyone in the community does anything to improve the region, the land values rise. This occurs no matter what the intentions were. If a do-gooder builds a community center in an impoverished area, the land values and rents increase. Instead of helping the poor tenants in the region, the do-gooder may have just helped them right out of a home. Whilst the landlord could have been sleeping through the whole thing, and in the end see his land values rise.
The same is true of government infrastructure projects, welfare programs, and anything else which makes the region attractive. If activists fight hard and turn the region into a bastion of civil liberty which attracts people from all around, it doesn’t matter if the landlords were sleeping or actively opposing the activists, they will see their land values rise, and the tenants will see their rents go up.
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While not everyone bases their political views on principles, I am confident that most do. In the case of LVT, it isn’t Right vs Left, but the principled vs the corrupt. Any serious political view, short of misanthropy, has every reason to support it.
– If you are an environmentalist, you should support Land Value Taxation in order to spark more efficient use of land. We’d still require all the usual mechanisms to internalize externalities, but the LVT alone would encourage all the more sensible agricultural practices promoted by environmentalists, such as permaculture and vertical farming. Industrial monoculture and factory farming is highly land-intensive. If holding land becomes expensive, then the markets would more accurately reflect the social costs of such massive landholding.
– If you are a humanitarian, you should support Land Value Taxation you should support it primarily because until the land monopoly has been defeated, no amount of philanthropy can possibly stop the trend of wages tending towards subsistence.
– If you are a Very Serious technocrat, you should support LVT in order to reduce unemployment, increase wages, and promote peace. On a local scale there is evidence of all of this, including reduced crime rates. I have no doubt that if countries follow this model, we will see many former enemies become prosperous interdependent trading partners.
– If you believe in natural rights, you should support Land Value Taxation in order to end the confiscation of honest income and interest, and return that which belongs in the commons. The concept of the LVT really has its roots in the writings of people like Adam Smith, Thomas Paine, and others who passionately believed that labor is the sovereign property of the individual, but that the Earth is our common inheritance.
…
It hardly seems possible that a concept which was supported by many of the original free market capitalist ideologues could be a progressive one. Yet, if you are a progressive, you absolutely should support Land Value Taxation, not as a small footnote of a larger platform, but as a central tenet.
The ideas of Henry George and the Single Tax Movement were one of the original inspirations of the Progressive Movement in the early 20th Century. Progressives like John Dewey were awestruck by the power of the arguments of Henry George in his masterpiece Progress and Poverty.
Of Henry George, Dewey wrote, “No man, no graduate of a higher educational institution, has a right to regard himself as an educated man in social thought unless he has some first-hand acquaintance with the theoretical contribution of this great American thinker.” To this day, some of the most principled progressives like Dennis Kucinich and Ralph Nader have drawn inspiration from him.
When you look at any vast fortune, you will virtually always find the heavy hand of government as part of the essential underpinning. Whether it is through regulatory capture, patents, state-sponsored licensing cartels, corporate personhood, or any other sort of state-sponsored privilege. Yet, as long as the mother of all monopolies remains, it would make no difference how many of those other privileges were struck down. The land monopoly would absorb all the of the difference that the elimination of privilege might otherwise have made.
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Land, however, cannot be hidden. It would therefore be much harder for individuals to evade. Thus, compared to many other economic reforms, it is fair, efficient, and straightforward. Our current system of real estate assessment would not even need to change drastically, and it could obsolete certain agencies like the IRS.
Income taxes cannot be truly progressive, by their nature, no matter what sorts of brackets are in place. Taxing income does not change the fundamental market power of individuals, and as such the burden of taxes are just passed around until the income distribution reflects market power. Again, it wasn’t income taxes that created the modicum of equality after WW2, it was merely labor scarcities, and those can only do so much.
Additionally, we are suffering under the volatility of speculative land bubbles, like the recent mortgage crisis, which are a byproduct of the land monopoly. People like to point to all sorts of things like CDOs, derivatives, credit default swaps, and so on, yet they ignore that each of these are predicated on the ability to speculate on land. The LVT would change all that in a truly progressive manner, and end the volatile land bubbles. It would reshuffle market power in favor of productive activity and away from unproductive hoarding of land. Most importantly, it would allow us to actually benefit from other sorts of reforms, and as such must be the top priority. Until then we’re merely reshuffling deckchairs on the Titanic.
…
The LVT has been experimented with in many times and places, and it has always succeeded to the extent that it was tried. It holds the potential for uniting principled minds of every persuasion, if only we can break free of ignorance espoused by the talking heads who tell us that the only remedies available are painful and complex.”
Here are some examples of successful implementations:
“* The “Four Tigers”, 1940s.
Apologists for state planning and state partnership with big business point enthusiastically to Pacific Rim Asia but overlook the fact that all these success stories began on a firm footing of land reform. The city-state Singapore, founded on Georgist tax principles, reached a tax rate on land of 16%. Hong Kong existed only on crown land, funding 4/5 of their budget with 2/5 of site Rent (Yu-Hung Hong, Landlines, 1999 March, Lincoln Inst., Cambridge, MA). The city uses land rent, not subsidy, to fund their new metro and in its suburbs grows much of its own food. Hong Kong enjoys low taxes, low prices, high investment, and often the highest per capita salaries. The city is often voted the world’s best city for business and the freest for residents.
Gen. Douglas MacArthur, an admirer of Henry George, forced the Japanese provisional government to write land reform into their new democratic constitution that limited Rent paid by tenants to owners. South Korea adopted a similar Rent reform. Gen. Chiang Kai-shek likewise forced land reform on Taiwan (below). A 1980’s World Bank study credited land reform with creating the basis for their economic miracles. Secure farmers can afford to consume manufactured goods. Soon successful industries can trade with other developed nations. Another World Bank report, in 1998 by Roy Prosterman and Tiom Hanstad, Chapter 10, “Land Taxation” by Jennifer Duncan: “Land tax is an important vehicle for transferring some of the benefits of land privatization to the public sector. Revenues from land tax can fund significant and increasing portions of infrastructure and social services, fostering public and local government support for privatization.” Today, to try to control their skyrocketing location values, both Japan and Korea have tried to tax land, tho’ still minusculely.
* Taiwan, 1940s.
Old Formosa was mired in poverty and fast breeding. Hunger afflicted the majority of people who were landless peasants. Less than 20 families monopolized the entire island. Then the Nationalist Army, led by Chiang Kai-shek, retreated to Taiwan. General Chiang figured he lost mainland China in part by not reforming land-holding. Chiang did not want to risk losing his last refuge – east of that isle lay nothing but open ocean.
A follower of Sun Yat-sen, the father of modern China and an adherent of Henry George, Chiang knew of the Single Tax. Borrowing a page from George via Sun, the new Nationalist Government of Taiwan instituted its “land to the tiller program” which taxed farmland according to its value. Soon the large plantation owners found themselves paying out about as much in taxes as they were getting back as Rent. Being a middleman was no longer worth the bother, so they sold off their excess to farmers at prices the peasants could afford.
Working their own land with newly marketed fertilizers, new owners worked harder. They produced more, and after years of paying taxes to cover the onerous public debt, at last kept more and lived better. From 1950 to 1970 population growth dropped 40%, and hunger was ended. (Altho’ Taiwan did receive a billion dollars from the US, it was mostly military aid, spread out over eight years.) Taiwan began to set world records with growth rates of 10% per annum in their GDP and 20% in their industry. (Fred Harrison, Power in the Land, 1983)
* Denmark
Denmark, 1950s. The Danes built on their land tax heritage. In 1957, the tiny Georgist Justice Party won a few seats and a role in the ruling coalition. Anticipating a higher rate on land, investors switched from real estate to real enterprise. One year later, inflation had gone from 5% to under 1%; bank interest dropped from 6.25% to 5%. By 1960, 100,000 unemployed in a country of just five million had found jobs and at higher wages, the highest widespread pay raise ever in Danish history. (The New York Times editorial, “Big Lesson From A Small Nation”, 1960 October 2)
Tho’ many people were better off, next election landowners spent enough money to convince people otherwise. The Justice Party lost its seats, the land rate lost its boost, and investors again became land speculators. Quickly inflation climbed back up to 5% and by 1964 reached 8%. Land prices began to sky-rocket, from 1960 to 1981 increasing 19-fold while prices of goods and services went up merely fourfold. (Knud Tholstrup, Dansk MP, A Third Way, 1986)
Denmark, 1960s. Before 1970, the annual income tax fell upon the previous year’s income; in 1969, the government taxed 1968 income. Then parliament decided to tax income in the same year it’s earned; in 1970, they taxed 1970 income. Earners realized that 1969 income would not be taxed. Their response, from 1968 to 1969, was to double the increase in production (4% to 8%), halve the inflation rate (8% to 3.5%), quadruple investment increases (5% to 20.5%), raise savings by a quarter (from 2.9 million kroner to 3.8), and employ nearly all workers. (Knud Tholstrup, A Third Way)
* Estonia, 1990s.
After the break up of the Soviet Union, each newly separate republic had to find its own way of raising revenue. Estonia, across the gulf from Finland, found the tax for farmland. Because neither land nor its value can be hidden, it was the most feasible way for the new government to raise funds. Collecting from farmowners was vastly more successful than trying to collect from others, succeeding over 95% of the time. The low rate of 2%, which even governmental owners of public land had to pay, was still enough to spur efficient use of land. (The Economist, 1998 Feb 28)”
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