Introduction: A Most Harmonious Disagreement
by Lindy Davies
The relationship between the academic establishment and advocates of Henry George's ideas has not, let us say, been one of admiration. It's probably true that each side has been weakened by its disdain for the other. This course, whatever its flaws, pays more attention to the terms and concepts of "Econ 101" than anything the "Georgist education" community has ever offered before. Over the years, many thousands of students have been introduced to political economy by a course based on Progress and Poverty that had very little to say about "that rot they spew in the colleges." Consequently, many of them ended up wanting to know what "modern-day economics" had to say about all this.
In this course, we'll go over a number of points of convergence -- and conflict. But it might be mentioning at the outset that there is one point about which modern-day economics completely agrees with Henry George. And, the more closely we examine that point, the less it seems to be merely one happy convergence between two essentially different analyses. In fact, it begins to look like modern-day economics doesn't disagree with Henry George at all.
"That taxes levied upon land values," George wrote, "...do not fall upon the user of land, and cannot be transferred by the landlord to the tenant, is conceded by all economists of reputation. However much they may dispute as to other things, there is no dispute upon this point." The public collection of land rent "cannot add to prices, nor check production." That was true then, and it is true now; the fixed quantity of land (its inelastic supply, in other words) is a natural fact.
This fact has far-reaching implications. Henry George did not stress the general agreement on this point to court mainstream approval; he meant to show that the logic of the mainstream would lead to the very conclusions that academic economists were so busily denouncing! If, as generally agreed, the public collection of land rent does not add to prices or costs, then collecting land rent for public revenue would lead to lower prices -- for producers and consumers would be unburdened by taxation. That would lead to non-inflationary growth in employment (unhindered by advancing speculative rents, producers move to meet increased demand; increases in money supply are balanced by increases in production).
Is that not every politician's dream?
Grandiose, utopian claims -- but mainstream economics textbooks make no attempts to refute them. Samuelson & Nordhaus' Economics (17th edition) goes so far as to endorse the single tax movement for the unquestioned efficiency of its proposal. However, there is immediate and, indeed, rather frantic backpedaling from that position. Samuelson reminds us that "an economy cannot run on efficiency alone," and that land value taxation "may also be perceived as unfair." He never says it would be unfair -- for it is not the business of mainstream economists to make such value-loaded judgements -- only that it might be perceived that way. (He omits the fact that fairness was Henry George's primary argument; when George contended that "justice is the highest and truest expediency" his point was not mystical but practical.)
Samuelson's discussion of rent, and the single tax, comes in a chapter devoted to income distribution. But "this theoretical section," he instructs the teacher, "may be skipped in brief courses." Furthermore, although he lauds the efficiency of the public collection of rent in this optional section, he refers to it not at all, not even in a cross-reference, in later chapters on taxation policy and alternative economic systems. It is as though Samuelson, having lectured for three hours on the dismal science, waited until his students were packing up and heading for the door, and then whispered an unqualified endorsement of Henry George's economic remedy.