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THE SOCIALIST VIEW OF ECONOMIC RENT

Sometimes it is difficult to discriminate between what socialists have to say and what Georgists have to say.   Nowhere is this more difficult than in what is said about the concept of economic rent.

When asked what economic rent is in an interview one socialist-cum geoist responded this way.  If oil is produced for $30 but is sold for $70 the difference of $40 is economic rent.  Another put it as a principle: “the excess of market price over intrinsic cost-value”.   These concepts are not economic rent in the Georgist sense but economic rent in the socialist sense.   This difference is discussed at length in the April issue Rent: a Surplus Product or a Surplus Profit. This article quotes the same writer as saying that rent is “the profit one earns simply by owning something”.

Besides the fact that rent is a natural law that has nothing to do with ownership, we notice from the above that socialists wish to focus, not on rent, but on rent-takers.   This is consistent with the  encouragement of class consciousness and class conflict.   We notice, too, that the definition is applied to far more objects than land.  To the socialist economic rent is a surplus profit that should be tackled by taxation.  The difficulties of doing this, and the quite different way in which George himself deals with surplus profit is dealt with in the above article in the April issue of Good Government.

This difference of view between socialists and Georgists is by no means a new thing.  It can be seen equally well in the Progressive Era both among those many American economists who had learned their trade in Germany and in the debate in 1889 between Henry George and the “revolutionary” socialist, H.M. Hyndman.

GOING THE FRIENDLY WAY INTO OBLIVION

Looking at current Georgist literature here and overseas a question springs to mind Do Georgists want taxes or not?

One writer calls taxation “a system from hell”.  But another wants “fees collected from those who add pollutants to air and water” and “a fee from those who use carbon or methane” and, of course, a ‘congestion fee’ for using roads.  And he is glad to tell us that a report showed that “green taxes were more than sufficient for the purpose [of financing state and local government]”.

That might well be true.   Because another writes of the need to place “natural resource charges on pesticides, acidifying fertilisers and other polluting petro-chemicals in food production”.  Moreover, in a world whose finite resources are threatened by rising population what should happen he writes is that “we should rent [natural resources] according to their value”.  Laid end to end we can be assured that this many taxes will more than consume most incomes.

Taxing ‘Bads’

Another writer, apparently aware of the contradictory opinions about tax, and anxious to be a friend to both sides, writes about the alco-pop tax that “Ideally Georgists would prefer the removal of all taxes on commodities.  However, it can be argued that, in view of the social harm caused by excessive alcohol consumption, a levy on its consumption is justified to help pay for the social costs generated thereby”.

Yes, why stop at “green taxes”?   In a failing society there is certainly plenty of room to “tax bads” as one Georgist organisation proposes.

If taxing “bad” behaviours works in a marvellous way to gather revenue and inhibit harmful behaviour at the same time then let us have them.  Or will this multitude of taxes do what a multitude of taxes have always done, rupture and demoralise society and so produce even more ‘bads’?

But let us come back to the writer that would have a little of both, the elimination of taxes and the taxation of what produces “social harm”.  He says that, ideally, Georgists would want no taxes but “it can be argued [by Georgists that is]” that an alco-pop tax is “justified” [by Georgist principles that is].

There is a confusion here, for it cannot be argued from Georgist principles that any tax is justified.   For Georgism promises a far better way of dealing with social problems than taxing incomes out of existence!

Henry George held a union ticket for the most part of his working life.   But his writings attack trade unions.  He did not hold a union ticket as a Georgist.   He held a union ticket for personal reasons he did not justify from Georgist principles.    And we all are in the same position of Henry George.  We have lots of personal preferences or things we do from necessity, but they should not enter into Georgist propagation.

If we prefer trade unions let us say so, but not as Georgists.  If we favour one political party more than another, say so, but not as a Georgist.  If we want “green taxes” let us say so but not as a way to propagate Georgism.    For, to do so, simply shows we have never appreciated what Georgism is about in the first place.

Reading this literature one is struck by one obvious fact.    No writer actually ‘crosses swords’ with another.  They keep it friendly.   But as Virgil wrote “Smooth the descent, and easy is the way/The Gates of Hell stand open night and day.”

 


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