Greece To Return Classical Masterpiece

By: Raul_I_Meijer

An Automatic Earth afficionado who goes by the moniker GeoLib posted something in the comments section for yesterday’s Debt In The Time Of Wall Street that I think deserves a better fate than to be stuck there. He makes a gracious connection between 19th century American writer, politician and political economist Henry George, in particular his book Progress and Poverty, which in its day was a huge bestseller, and Greek finance minister Yanis Varoufakis, who, in GeoLib’s words, “is graciously returning the book to us”.

Consider it economics 101 for those who look at the field from the outside, or consider it that which could have been, but is not. And then think about why that is. George’s words show us that we could do much better than we do, but we don’t want to. That is not only true in economics, of course, we’re making an awful mess of things in just about every field we try our hand at. Try the earth, or our relationships with others. That says quite a lot about not only our character, but also about our future.

I’ll give you GeoLib’s piece first, followed by an article he cites by professor Mason Gaffney on George’s work. I think it’s interesting to note that Gaffney posits George was so successful at presenting his argument for ‘socializing land rents through taxation’ that this very success became the root of its failure.

GeoLib: In 1879 Henry George published Progress and Poverty. The book was an international sensation, at the time outsold only by the Bible. It remains economics’ No. 1 best seller.

Mason Gaffney: “George came out of a raw, naive new colony, California, as a scrappy marginal journalist. Yet his ideas exploded through the sophisticated metropolitan world as though into a vacuum. His book sales were in the millions. Seven short years after publishing Progress and Poverty in remote California he nearly took over as Mayor of New York City, the financial and intellectual capital of the nation.

Three more years and he was a major influence in sophisticated Britain. In 1889, incredibly, he became “adviser and field-general in land reform strategy” to the Radical wing of the Liberal Party in Britain. It adopted a land-tax plank after 1891 (The “famous Newcastle Programme”), and came to carry George’s (muted) policies forward under successive Liberal Governments of Campbell-Bannerman, Asquith, and Lloyd George.“

The book, you see, explained poverty. It answered why progress does not and cannot eradicate poverty. Disconcertingly for many, it also provided the solution – the Single Tax on land value aka Land Value Taxation (LVT). “The “single tax” is so simple, so fundamental, and so easy to carry into effect that I have no doubt that it will be about the last land reform the world will ever get. People in this world are not often logical.” – Clarence Darrow

The land reform/single tax movement in Britain was strong enough to bend the Liberal govt to its will having delivered it a landslide in 1906. By 1910 there was a constitutional crisis over LVT. Gaffney argues that Henry George was deliberately written out of economics because he was too dangerous to the rentier state, the feudal core of capitalism. Maybe, and WW1 killed a generation of land reformers – this perhaps explains the absence of collective memory.

The very language of George’s economics – classical economics – was changed – neoclassical economics deletes the concept of land – we talk of real estate because we can’t understand that land itself is priced. We can’t see that real estate booms and busts are actually land value booms and busts and thus can never stray into the territory where the rentier makes so much money. Land is just another form of capital – a costly intellectual regression.

Greek Finance Minister Varoufakis meets Schäuble in Berlin Thu 5 Feb: “Our government will stop at nothing to combat not only corruption, tax evasion, tax immunity, inefficiency and waste but also a whole political economy underpinning the ethos and the conventions of crippling rent seeking.” The rentier is an obscure, quaint character but he is the key character for Varoufakis. Progress and Poverty is all about the rentier and Varoufakis is graciously returning the book to us.

In a democratic setting, playing a Georgist card can be a powerful move. Neither Right nor Left can criticise a Georgist position because Georgist reform gives them both what they want. George, as Mason Gaffney writes “had a way of taking two problems and composing them into one solution. He took two polar philosophies, collectivism and individualism, and synthesized a plan to combine the better features, and discard the worse features, of each.”

“Thus, George would cut the Gordian knot of modern dilemma-bound economics by raising demand, raising supply, raising incentives, improving equity, freeing up the market, supporting government, fostering capital formation, and paying public debts, all in one simple stroke. It’s quite a stroke, enough to leave one breathless.“ “George’s proposal lets us lower taxes on labour without raising taxes on capital. Indeed, it lets us lower taxes on both labour and capital at once, and without lowering public revenues.“ “Ultimately, Georgist policy saves the cost of civil disturbances and insurrections, and/or the cost of putting them down.”

By Raul Ilargi Meijer
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