The Cure for Poverty
Huge tracts of useful, arable land lie idle, while hordes of willing workers struggle to find some way to support themselves. It takes no special training to know that something is terribly wrong. A tiny portion of the world’s people own the vast majority of its wealth. And while we know that land isn’t the only kind of economic asset, we also know that land has always been the foundation of the world’s greatest fortunes. People cannot live without access to land. If they are compelled to pay land “owners” for that access, then they are, in effect, forced to pay for their right to exist. This truth is undeniable — yet, “Land Reform” is often seen as a discredited, leftist, anti-market ideology.
When we talk about concentration in land ownership, it is crucial to distinguish between land area and land value. Oil and timber companies often hold millions of acres. However, land in major cities is often worth millions of times as much per acre. Indeed, in terms of market value — and of economic power — the world’s most valuable natural resource is not oil, water or strategic minerals, but urban locations.
The Lure of “Landownership”
“First-world” nations have a large number of individual landholders; some two-thirds of all American families have title to some land. Of course, many have long-term mortgages — and therefore they actually own only a small portion of their land’s value. Nevertheless, many people are accustomed to seeing themselves as “landowners” — and resent any threat to their “property.”
In “less developed” countries, especially in Africa and Latin America, land ownership is often extraordinarily concentrated. In these societies the land problem is not masked and diffused as it is in wealthier nations. A small group controls nearly all the land in a nation, and the need for land reform is keenly felt.
This reform — which has often engendered bitter controversy — usually substitutes many small owners for a few large ones. Even if it does overcome its many obstacles, this measure does not take into account the changes in society, such as fluctuating populations, changes from generation to generation or the tendency of rural workers to move into urban areas. Eventually the tendency to monopolization reasserts itself and smaller holdings are taken over and absorbed into large estates.
The traditional concept of “agrarian reform” concentrates on land as a physical resource — but ignores its all-important economic role.
The Alternative: Land Rent for Public Revenue
Henry George’s brand of land reform, on the other hand, establishes equal economic rights for all. It gives people the freedom to take as much or as little land as they can productively use — provided the obligation to society is paid. Thus, it enables the economy to progress under free conditions.
Henry George proposes to “abolish all taxation save that upon land values.” (This has been called the “Single Tax.”) Many nations already take some rent in taxation — directly, in the form of the real property tax. They would only have to make some changes in our modes of taxation to take it all. Many less-developed nations, however, lack systems for registering land ownership and assessing values. Establishing these procedures is often touted as the first necessary step to joining the modern world economy. A nation could modernize, while avoiding the modern world’s chronic economic problems, by retaining the rent of land for public revenue.
Simply removing the tax burden on buildings and on capital goods would be an instrument of growth in both urban and rural economies — but George’s remedy would not stop there. Its ultimate goal would be to remove all taxation on the production of wealth, substituting the collection of the full rental value of land for public revenue.