November 18, 2009

‘Forty acres and a mule’

The promise of forty acres and a mule was made to freed slaves after the American Civil War. It was a grand promise, but the supply of land was not infinite, and the promise was broken.

The land - the thing which by rights should not be owned, the thing which is integral to our existence. The land is our planet, our food, our home, and the greatest natural resource of all. In itself it is not wealth. It is a necessity.

The UN's Universal Declaration of Human Rights states: "Everyone has the right to own property individually as well as in association with others." There is no ambiguity here. It says ‘everyone’. Yet not everyone has the means to exercise that right.

There's no free land. Does that mean the earth has run out of room? It would, if we could show that all the available land was being efficiently used, but that is certainly not the case. The most valuable land in this mad world offers no mineral riches and will yield no crops: the world's most valuable land (in monetary terms) is urban land. In the wealthiest cities, large areas of valuable land lie idle, as their owners wait for higher prices in the future. Meanwhile, millions go hungry. Huge farms grow feed for animals, or crops for export and fuel whilst their neighbours starve. Agribusiness receives payment to hold fields out of use to "stabilize" food prices. Investors discover that producing wealth is far less profitable than simply holding onto valuable real estate and, later, pocketing its increased value.

The supply of land is fixed. There will never be any more of it. And land is needed for all production. As an economy becomes more productive, as technology and trade allow greater yield for the same effort - the demand for land increases, yet the supply stays the same. We cannot create more land. This means that the share of wealth taken by landowners automatically gets bigger whenever the total economy grows. There is, therefore, a built-in incentive in our system to hold land for speculative purposes.

It is the community which gives value to land - the people who live nearby and who travel past it; the public infrastructure that is built to feed it and the huge demand for resources that lie beneath it. As the community grows, so does the value of the land.

Proximity to transportation is a prime determinant of land value. It's a gift to landowners. All public services and infrastructure and the resultant increased value to land is nothing short of a gift from taxpayers to landowners – a rip off, one might say.

Henry George looked at this problem and saw a solution. As society grows more complex, it develops a greater need for public goods and services and the bill is always shouldered by the hapless taxpayer. If the community has created this added value to the land, it makes sense that the value should somehow be returned back to the community.

He looked at the tortured logic of "broad-based taxation" (such as income tax, sales tax and vat, excise taxes, lotteries, import duties, death duties etc) which impacts more heavily on the poorer members of society than those who are wealthy, and found that there is only one fair and efficient source of public revenue: all taxes must be done away with, and the value of land must be taken for public revenue. Yes, tax the value of land.

A reform such as this would improve efficiencies – it would simplify the tax system, remove the burden of taxation from production and individuals and minimise the waste of unused land.

In this way, full use of existing properties would be encouraged, the practice of people speculating on the price of sites whilst keeping the properties empty or derelict thoroughly discouraged.

Such a reform would be fair – the infrastructure which increases the value of land would be paid for by the owners of the land itself and not through penalisation and taxation of the ordinary woman and man. It would not be taking anything away from landowners, but simply asking them to pay their share towards the infrastructure which is directly making them more wealthy. Profits would rightly come from using the land effectively.

The earth is not owned by anyone. It is precious and must be held in trust for all people, and all life, as a means for survival. Lindy Davis at

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