The Trouble with Land, written in September 2018 but not published

Although I am a fan of Jordan Peterson, I agree with Matt McManus' assessment that, "his lack of substantial engagement in political economy and theories of distributive justice is perhaps the biggest gap in Peterson's oeuvre." In preparing this article I found myself focusing on an exchange that Peterson had with Bret Weinstein and Joe Rogan on a podcast that McManus also highlights. Peterson provides an excellent description of the underlying problem:

The lefties say, "Oh, oh...too much inequality." And they need to be listened to because the evidence is quite clear. If you let the inequality ramp up enough, the whole system destabilizes because the people at the bottom think, "Fuck it...we'll just...we'll just flip the entire system upside down."

He argues that we need to have an intelligent discussion between the left and the right that would go something like this:

You need innovation. You pay for innovation with inequality. But you need to bind inequality because if it's too intense then things destabilize.

The clip is worth viewing in its entirety because Peterson has a keen grasp of the basic issues and the fact that the discussion needs to center on choosing an appropriate mechanism of redistribution.

Unfortunately Peterson leaves us with more questions than answers. Are the people at the bottom victims? Doesn't this prove that capitalism is flawed? If it's okay to do some redistribution, then why not do a lot? Why not listen to Alexandria Ocasio-Cortez who defeated a powerful incumbent Democratic Congressman by offering free college tuition, Medicare for all, and a guaranteed job for all Americans? Those of us who would rather not see America turn toward socialists like Ocasio-Cortez need to provide answers to these questions.

Dave Rubin, who tours with Peterson, explores these questions on his podcast, The Rubin Report. He has been waging a campaign to revive the label "classical liberal" as the philosophy that he and Peterson advocate. In a short video on his site he explains that, "Classical liberalism is the idea that individual freedom and limited government are the best way for humans to form a free society."

Rubin is spot on with his emphasis on individualism and a rejection of victimhood narratives that focus on group identity, but his description leaves out an important thread of classical liberal thought. Many classical liberals were deeply moved by what can only be described as victims of the economic system. Thomas Jefferson, Thomas Paine, John Stuart Mill, and Herbert Spencer all wrote about extreme poverty and what they saw as the source of injustice that led to it.

No classical liberal commentator has had more influence on this subject than Henry George whose book Progress and Poverty sold an astonishing two million copies in the nineteenth century. Most of the classical liberals who wrote about this topic ended up with the same basic conclusions as George and this variation of laissez faire has come to be called "Georgism." It has to do with how you view property. George wrote that there are two self-evident principles of property:

There are many nuances to this subject and we will barely scratch the surface in this article, but George said that the core sentiment of his philosophy is nicely summarized in the motto of a group of Russian reformers: "Land and Liberty!"

Two Thought Experiments

John Locke provided an intellectual framework for property rights in his Two Treatises of Government. He begins by considering what rights individuals have in a state of nature, before any government has been formed. He gives the example of a man who gathers apples to eat and says that by performing the labor of gathering them, they have become his property ("Nobody can deny but that the nourishment is his").

He also presents a thought experiment involving land. He admits that in a state of nature, all land is jointly owned in common. But suppose that a man puts in the effort to grow a crop like corn on an acre of land. By Locke's first principle, the corn that the man harvests belongs to him. But what about the land itself? Does he end up owning the acre of land because of his act of converting it to useful production? Locke seemed to think so—sort of.

"As much land as a man tills, plants, improves, cultivates, and can use the product of, so much is his property," Locke wrote. "He by his labour does, as it were, inclose it from the common." This idea of gaining ownership by making productive use of land is known as the homestead principle and has often been invoked by libertarians and anarcho-capitalists as a justification for land ownership.

But Locke had an important proviso. He said that allowing someone to take possession of land did not injure anyone else, "since there was still enough, and as good left." Why complain, he argues, if someone takes a drink of water from a river when there is plenty of water left for the rest of us? Thus, homesteading is defensible as long as there is still untamed wilderness for people to conquer. Locke says nothing about what happens when population increases and land becomes scarce.

As we know, land eventually does become scarce and then it can be rented out. Locke respected hard work and felt that people should be rewarded for it, but land ownership allows a fixed amount of labor to produce an infinite return on investment. The corn surely belongs to the farmer, but by taking possession of the land, the farmer can become a landlord who rents the land year after year to others who labor to make productive use of it. How can someone putting in no effort deserve to be rewarded financially for the rest of time just because he produced a harvest of corn once?

Consider a second thought experiment. Suppose that a group of disgruntled people become so disillusioned with modern society that they decide to leave it behind and make a new society. Perhaps they have been listening to the Rubin Report or Jordan Peterson's lectures and they have decided to take responsibility for their lives. Several hundred of them get together and purchase two boats and they sail out in search of a new home. Unfortunately, they encounter a violent storm that separates them. One of the boats eventually lands on an uninhabited island that seems capable of supporting them. As they settle into their new home, they decide to divide up the island so that everyone knows what parcel of land belongs to each of them.

A week later the second boat arrives on the island. They explain how difficult it was after the storm but they are glad to be reunited with the group. They ask whether perhaps they should divide up the island and are told that it has already been worked out. Furthermore, they are told, it was difficult enough the first time to settle the arguments and there had been several coin tosses when disputes couldn't be settled any other way, so they don't want to do that all over again. But the people from the first boat offer to let the second boat occupants stay as long as they are willing to work to pay their rent. Is that a fair way for the occupants of the first boat to treat the people from the second boat? Why should an accident of weather leave one group without any land to call their own?

This second thought experiment is simplistic on purpose, but it captures a fundamental conundrum that classical liberals have struggled with. Any system of land ownership necessarily divides humanity into a group of landowners and a group of dispossessed people. This gives landowners a monopoly power to force those who don't own land to work for them just for the right to exist on the planet.

Thomas Paine's "Agrarian Justice"

When Thomas Jefferson was sent as an ambassador to France he was deeply disturbed by the poverty he encountered. In 1785 he wrote to James Madison about an encounter with a woman that led him "into a train of reflections on that unequal division of property which occasions the numberless instances of wretchedness which I had observed in this country and is to be observed all over Europe... I asked myself what could be the reason that so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands?"

That led him to the Georgist conclusion that, "The earth is given as a common stock for man to labour and live on," and that, "Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right." Jefferson favored having as many individuals as possible own "a little portion of land," and he concluded his letter with the observation that, "The small landholders are the most precious part of a state."

Thomas Paine was also deeply disturbed by the poverty he encountered in Europe. In 1797 he published a pamphlet called "Agrarian Justice" describing the Georgist view of land and providing a suggested government program meant to redress the injustice. He said that the program could be implemented in any country, although he used England and France as primary examples.

He states the Georgist principle without any attempt to prove it, saying, "It is a position not to be controverted that the earth, in its natural uncultivated state was, and ever would have continued to be, the common property of the human race" (emphasis in the original).

Paine like Locke appreciated the value of cultivation and understood the competing property claims it generates, saying that we adopted a system of landed property "from the impossibility of separating the improvement made by cultivation from the earth itself." But unlike Locke, Paine identified in this a basic injustice.

Cultivation is at least one of the greatest natural improvements ever made by human invention. It has given to created earth a tenfold value. But the landed monopoly that began with it has produced the greatest evil. It has dispossessed more than half the inhabitants of every nation of their natural inheritance, without providing for them, as ought to have been done, an indemnification for that loss, and has thereby created a species of poverty and wretchedness that did not exist before.

Paine's ideas are easily inserted into Peterson's outline of the conversation we need to have. But Paine makes a stronger statement than Peterson. It may be advisable to avoid social destabilization, as Peterson suggests, but Paine felt it was also the moral thing to do: "In advocating the case of the persons thus dispossessed, it is a right, not a charity, that I am pleading for." Applying these ideas to Peterson's outline, we end up with:

You need cultivation and other forms of civilization. You pay for civilization with some poverty. But you need to bind poverty because if it's too intense then things destabilize. Plus it's the moral thing to do.

Paine provides an intriguing answer to the question of how much inequality we should tolerate: "The first principle of civilization ought to have been, and ought to still be, that the condition of every person born into the world, after a state of civilization commences, ought not to be worse than if he had been born before that period." This fits well with Locke's idea of government deriving its just power from the consent of the governed. If we're going to have a system of landed property that will produce winners and losers, who would consent to participate if they were going to end up in a worse state than if they hadn't agreed to be part of the society? Paine used Native American tribes as an example of something approximating a state of nature and claimed that millions in Europe are worse off than the Native Americans he observed and, therefore, deserve some compensation.

Which leads us to the central question Peterson identified. What should we use as the mechanism of redistribution? The rest of Paine's pamphlet provides the first detailed Georgist answer to that question.

All of these Georgist approaches can be thought of as addressing three basic components: why, what, and how? The first question is why we owe something to others and the answers are remarkably consistent across all of these thinkers. Land is owned in common by all living humans, so if for practical reasons we want to adopt a system of landed property, then we owe something to every living human as their share of the value of the land.

The second question is what we owe to others and the answers are again fairly consistent. As Paine wrote, "Every proprietor, therefore, of cultivated land, owes to the community a ground-rent (for I know of no better term to express the idea)." The simplest way to think of this is to imagine that all landowners are charged rent for their use of land and every citizen of the country deserves an equal share of the resulting funds. All of the Georgists are careful to specify that rent is owed just for land and not for improvements on land such as buildings. As William F. Buckley—a committed Georgist—liked to describe it, "If you have a parking lot and the Empire State Building next to it, the tax on the parking lot should be the same as the tax on the Empire State Building."

As for how to redistribute, Paine argues that the most logical tweak to make to the current system is to extract some portion of the inheritance when a person dies and land transfers to another owner. He proposed a ten percent inheritance tax on land. As for the actual redistribution, he suggested two components. First, every young person would be given a grant of money (15 pounds sterling) upon turning twenty-one to get them started in life. Second, every person would be given 10 pounds sterling each year starting at age fifty. Thus, Paine sought to give everyone a leg up to get started in a career and to have support similar to social security for old age when people would struggle to support themselves through work. His plan called for both men and women to receive these payments.

He provided detailed computations to show that the plan was workable including such practical advice as encouraging people who didn't need the payments to decline them and to be listed on an honor roll of good citizens. And in typical Paine fashion, he offered to contribute one hundred pounds of his own money to France and to England if they would implement his plan.

Henry George's Progress and Poverty

Henry George's fascinating life and economic philosophy deserve book-length exploration, but one can gain a glimpse of the complexity in the incongruous fact that Albert Jay Nock, forerunner of the modern libertarian and conservative movements, wrote a 200-page essay in praise of a man who ran for mayor of New York City in 1886 as the United Labor Party candidate on a platform of workers' rights, railing against "industrial slavery." The Democrat backed by Tammany Hall won (some say stole) the election, but George received a remarkable 31% of the vote, far outpacing the Republican candidate Teddy Roosevelt. Frederick Engels took notice and wrote glowingly to Karl Marx about "the Henry George boom."

Nock considered George one of the most important philosophers of the nineteenth century but also a somewhat naïve man who had too much faith in practical politics. Nock wasn't surprised that George's compelling rhetoric was used to justify political reform, but not the reforms that George advocated. As Engels hoped, George's concern for the poor was eventually co-opted to support socialist and Marxist agendas.

Henry George came from a modest background and had little formal education. He struggled most of his life to support himself and his family, working as a typesetter, a seaman, a journalist, and a public speaker for liberal causes. He initially accepted the Marxist idea that history is about class conflict and the struggle of labor versus capital. But over time as he explored and wrote about the economic hardships that he witnessed, he came to develop his own view that labor and capital are not opposed and that the true culprit is rent.

In 1877 George set about writing down his thoughts about economics. He found it paradoxical that the greatest advances in society are always paired with the deepest poverty. "It is as though an immense wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down." He wrote that, "This association of poverty with progress is the great enigma of our times." He spent eighteen months thinking through his answer to this puzzle. The result was Progress and Poverty.

George begins with the idea of common land ownership: "The equal right of all men to the use of land is as clear as their equal right to breathe the air." He claims that rent is the major source of income inequality: "The reason why, in spite of the increase of productive power, wages constantly tend to a minimum which will give but a bare living, is that, with increase in productive power, rent tends to even greater increase, thus producing a constant tendency to the forcing down of wages."

George also developed an idea of socially generated wealth. He has a memorable thought experiment about a settler who builds a house in an empty terrain and he considers what happens as others move to the area and build up first a settlement and then a town and then a city. George felt that landowners owe something to society for the increasing value of their land. He was particularly concerned about land speculators who keep land out of productive use hoping it will go up in value. He thought that work should be rewarded, but he didn't approve of passive landowners benefiting from community efforts.

The core idea of Progress and Poverty simultaneously answered the questions of what we owe to the disposed and how to give it to them. George favored Paine's idea of a ground-rent charged for all land and other natural resources, but to make the system less radical, he proposed a tax on land that would come as close as possible to the rental value of land. That would mean that landlords could make a profit only from the improvements they make to land and the productive use they make of the land. Land speculation would end because it wouldn't be worth paying the taxes to hold on to land that you weren't using, especially when the tax would increase if the land ever became more valuable. If the tax on some parcel of land was so high that nobody wanted to pay it, you could set a new price by auctioning it off to the highest bidder.

George wanted to see all taxes eliminated other than the tax on land and his idea came to be called the "land tax" and the "single tax." If you google "single taxer," you will get a glimpse of the long history of Georgist thinking. George was less clear about how the revenue from the single tax should be used. He waxed poetic about the many services that could be provided for free and said that if there was anything left over, we could distribute it in equal payments or using a scheme like that proposed by Paine.

George's book was not at first successful. Nock claims that George was catapulted to fame by the publication of a pamphlet titled "The Irish Land Question," which provided an abbreviated version of his philosophy. George became an instant celebrity in New York City and was hired by the Irish World newspaper to spend a year touring Ireland and writing about the conditions there. He became one of the most popular speakers in the English-speaking world and Georgist organizations popped up all over the world.

Henry George wasn't the first person to suggest these ideas. Herbert Spencer had written eloquently thirty years earlier in his book Social Statics which had a chapter titled, "The Right to the Use of the Earth" and another chapter titled, "The Right of Property" that challenged Locke's view of property rights. A Scottish philosopher named Patrick Edward Dove had written a book outlining the same ideas decades before George. John Stuart Mill had also discussed the Georgist idea of shared ownership in land:

When the "sacredness of property" is talked of, it should always be remembered, that any such sacredness does not belong in the same degree to landed property. No man made the land. It is the original inheritance of the whole species.

George was ultimately not successful either in politics or in getting his ideas put into action, but he inspired a generation of reformers including Leo Tolstoy, John Dewey, and Clarence Darrow. Albert Jay Nock wrote that, "Never had the world seen such a powerful popular exponent of uncompromising individualism, nor has it seen another like him since his day."

How Much Redistribution?

Socialists like Ocasio-Cortez have no guiding principle to limit how much free stuff they are willing to give away, but Georgism provides a natural limit to the level of redistribution.

Forbes Magazine ran an article in 2015 that presented a rough estimate for a Georgist redistribution. The US government estimates that the total land value of the contiguous states was $23 trillion in 2009. The Forbes article assumes a 5% rent, giving total revenue of $1.15 trillion. The author uses this estimate to argue that a Georgist land tax wouldn't be enough to cover what our government spends, but the real point is that we have an estimate for a Georgist theory of what we owe our fellow citizens.

If you divide $1.15 trillion among the estimated 328 million Americans, each would get $3,500 a year. If you give it just to the estimated 239 million adults, then each would get $4,800 a year. That doesn't sound like much, but it isn't intended to be a lot of money. Theoretically it should allow you to rent a parcel of land that gives you your fair share of all of the land. With $4,800 a year, you could even get an apartment if you're willing to live in a city like Dayton, Ohio where rents are low.

Georgists refer to annual cash payments as a citizen's dividend. Alaska has been making such payments annually since 1982 to distribute oil revenue. In 2018 the payment was $1,600 (reduced by the legislature from the $2,700 that their standard formula recommended).

A Georgist system of redistribution, then, wouldn't shower people with wealth. The primary effect would be to give each person a minimal amount of support. Peterson emphasized the importance of such support in the podcast, saying, "If you don't have any money, it's really hard to get some...You're stuck at zero and you can't get out." But he also mentioned that it doesn't take a lot to avoid this: "Once you get some, it's not so hard to get some more." That's the core of the Georgist case. The greatest injustice occurs when people are stuck at zero and can be exploited. If you give them a little support along with liberty, they can do the rest.

Modern Political Controversies

Americans have mostly forgotten Henry George, but his philosophy has never been more relevant to addressing today's political problems.

The citizen's dividend is similar to the concept of a universal basic income, which has become popular across the political spectrum with recent books by union organizer Andy Stern (Raising the Floor), tech entrepreneur Andrew Yang (The War on Normal People), and AEI scholar Charles Murray (In Our Hands). Murray's plan deserves particular attention because he has designed it to counteract many of the ills he has documented over the years that come from the current welfare system and because he provides a detailed plan for how to pay for it.

Herbert Spencer anticipated the problem of homeless people who have no patch of ground to call their own, writing, "Should the others think fit to deny them a resting place, these landless men might equitably be expelled by the earth altogether." My hometown of Seattle has struggled to deal with the increasing number of homeless encampments all over town. A Georgist citizen's dividend would give homeless people enough money to rent a corner of the planet to pitch their tent.

Race relations are high on the political agenda in the US and there has been a lot of focus on wealth disparities. The Washington Post ran an article titled, "White families have nearly 10 times the net worth of black families. And the gap is growing." Many have called for reparations for slavery. Henry George felt that by freeing the slaves without giving them land that the country had shifted them from one kind of slavery to another. Perhaps if we had given the freed slaves the forty acres and a mule that we promised, history might have turned out differently. But no matter how we got here, we can all sympathize with the idea that someone who is "close to zero" will struggle. A Georgist citizen's dividend would help all such individuals independent of race.

Peterson mentioned on the podcast that many people have a suspicion that there was something unfair about the 2008 financial crisis. "It seems from the outside that the rich disproportionately benefited from the restabilization of the economic system and people are not happy about that and they shouldn't be happy about that because it indicates that there's something fundamentally rotten about the game." Henry George would agree, writing that, "Wages and interest tend constantly to fall, rent to rise, the rich to become very much richer, the poor to become more helpless and hopeless, and the middle class to be swept away."

Seattle is often ridiculed as a city that has a $15 minimum wage, but that barely makes a dent for renters. I was fortunate enough to buy a home there in 2012 at an interest rate so low that I don't expect to see it again in my lifetime. Since then my home has increased more than 80% in value while rents have gone up 46%. Those like myself who can afford property have done quite well while renters are falling further behind, just as George predicted.

The Moral Dimension

In the podcast Bret Weinstein mentioned that, "Redistribution is wildly unpopular," and he's right. This poses a particularly difficult problem for Dave Rubin and others who want to revive the classical liberal brand. They rightly emphasize sticking to core principles (free markets, free minds, free speech). But many of the original classical liberals were Georgists and their ideas can provide the moral justification for redistribution. As Paine said, this is not charity; it is something that we owe to people.

The notion of land ownership runs deep in the American consciousness. Jefferson wanted us to become a nation of small farmers. The various homestead acts gave real opportunity to generations of Americans. In the 1936 movie "Mr. Deeds Goes To Town," the title character uses a $20 million inheritance to give away small 10-acre farms to unemployed Americans who have been wiped out by the Great Depression. George wrote that, "All that we are proud of in the American character; all that makes our conditions and institutions better than those of older countries, we may trace to the fact that land has been cheap in the United States." Americans have accomplished amazing things from humble beginnings, but not when they are stuck at zero.

Classical liberals have always faced the danger of being perceived as apologists for the rich and socialists often come off as the truly compassionate members of society. Those of us who believe in the power of free markets know that socialism won't work and will only end up making all of us poorer, but that can't be the only message we put out there. Men like Paine, Jefferson, Spencer, Mill, and George truly cared about the plight of the dispossessed and spent considerable time unraveling the mystery of why some suffer in poverty while others enjoy extreme wealth. Modern classical liberals should embrace some form of Georgist thinking not just because it's a practical way to appease the increasingly angry mob but because we owe something to our fellow citizens and many of them are suffering because of our inaction.

Valid HTML Valid CSS
last updated 01/06/2022