Georgism, Part Five: The Key to His Political Philosophy

According to Henry George’s compelling economic philosophy, as set forth in Progress and Poverty, our society’s insistence on the private ownership of land is the root cause of poverty.

I know, I know. It sounds like George is just another communist. But his analysis seems rock solid at this point (I haven’t finished the book yet), and the editor of the modern edition keeps assuring me that George winds up in a very different place from Marx.

Here’s my (overly simplistic) summary of what I’ve read so far:

According to George, there are three requirements for production in any economy–labor, capital, and land. The fruits of that production are then divvied out three ways: wages go to labor, interest (his word) goes to capital, and rent goes to the landowner.  In his view, we continue to see poverty in even the most productive economies because unproductive rent sucks away money that ought to be going to labor and capital.  In fact, he demonstrates that labor can never expect to move beyond mere subsistence, because increasing rent keeps taking a bigger share. He even states–somewhat prophetically–that recessions and depressions are almost always caused by land speculation.

Although his book was written near the end of the 19th Century, it’s easy to observe, right here on the west coast of 21st Century America, that the highest rates of homelessness appear to occur in those cities (San Francisco, Portland, and Seattle) where property values are rising the highest. This would not surprise Henry George, who wrote that rent always rises to the highest possible level, thereby allowing landowners to deprive labor and capital of the just fruits of their production.

I can already hear the voices of the dissenters. “Landowners have every right to raise their rents. If laborers want to prevent this from happening, all they have to do is take the plunge into home ownership, even if that means taking the initial step of buying a condo or a share in a co-op.” And I’m right there with them. George still needs to convince me that home ownership is not the answer to the problem of rising rent. And, as a writer of electronic articles and books, I need to figure out how George would label intellectual property. (Would he view it as creative labor or a form of land?)

What his book has done for me, at least so far, is to open my eyes to the importance of real property in the analysis of our economy. Is it really fair for those individuals and corporations who can trace their property rights back to an initial (undemocratic) grant from the king of England to continue extracting rent from those of us whose only crime was to be born in the USA to a family of renters?

We’ll see where this goes. Even though I’m still reading, I’m ready to recommend this book to anyone interested in a unique take on social and economic justice.