2.    Human beings assert exclusive use of land by the very fact of their being on land. 

“When we use common land we indeed have an exclusive use of it merely because we live in the physical dimension and gravity keeps us on the Earth.    Wherever I stand or move, no-one else can simultaneously occupy …” (5,13, writer’s emphasis).

Thus it is that the first act of life is to exclude others from land.   It is also implied that an individual using common land, say, to park a car, is also claiming virtual ownership or possession of that land.

Derived from this basis is a third proposition.

3. Land is held from the public in a “spectrum” of uses from very long-term to very short-term, that require reimbursement to the public.   

“Any exclusive occupancy of the Global Commons requires us, by rights, to reimburse the rest of society” (5,14).

In other words, use equates with a lease.  However, to that a proviso is added..  

4. Many ordinary uses of land constitute ‘basic usage’ and will be costless.   Costs are only set for some ‘unequal’ use of land.

“all humans – for reasons of convenience and practicality – are entitled to a cost-free ‘base usage’ of land not subject to private use or lease, such as footpaths, gardens, roads, parking lots, shopping areas etc.   However, once a person’s use of such basic rights becomes a commercial ‘abuse’ or a significantly more valuable personal use of common land, we must account for how other people have been disadvantaged.   We do this by effectively compensating the excluded, through a variation of LVT”. (5,14)   And

“… LVT should be used where the value of land use is unequally allocated among users” (5,13, writer’s emphasis).

Charges on Common Land

What constitutes unequal or disproportionate use of common land?    And how might it be measured?     Charges it is said will take several factors into account.

1. The location of the common land being used.
2. The cost of public infrastructure being used.
3. The duration of time the location is used.
4. The type of pre-emptive capital (see below) using the common land.           
5. The time of day (e.g. peak-hour or off-peak) (see 5,14)

Together these variables set land value upon common land.  One example given of unequal land use, where an entity “utilises a disproportionate quantum of land value” (5,12), is where a large number of persons wander around a shopping centre wearing sandwich or advertising boards.     This group are

“hogging extremely valuable public land to the detriment of the rest of the public” (5,11) and “they should pay some charge, just like al fresco restaurants do when they take over part of the footpath”. (ibid.)

Another example where charges are made is for the use of expensive public infrastructure such as museums or art galleries, especially for a special exhibition.   Other examples include fees for the use of community golf courses and tennis courts.

And then there are parking fees.

“Parking fees only apply where parking space is scarce and highly in demand, and represent a form of LVT for the exclusive use of valuable land” (5,11).   

The motor car is an example of pre-emptive capital – though we have already noted that, at birth, we all pre-empt space.   Pre-emptive capital is that capital which occupies land so as to displace other users.    Such capital also includes all kinds of motor vehicles, surf-boards, trail bikes, and motor boats (2,19-20).        

Then there are fees for commercial activities upon public land – though it is unclear whether a commercial activity per se is chargeable.    An example is given of a group of tourists eager to learn to surf who disgorge upon a beach with their instructors.   

“It’s a hot day and the beach is packed, but there’s still enough room to splash around … (then) suddenly the beach is overcrowded with novices and their instructors.   The manager dismisses objections by claiming the beach is public land” (5,11).   

Congestion Charges

That example suggests beach fees.  Beach fees are one form of a congestion charge.  A congestion charge applies to “over-demanded” space and its primary purpose is to dissuade some people from using it.  It has been called both a land tax (since it is paid to gain access to the beach) and a user pays charge (since the revenue could be used to maintain the beach).  However, beach fees do not apply in Australia, we are told
 
“as there does not exist the necessary scarcity to ration over-demanded space and, in any case, the cost of  collecting any beach fees would make these impractical” (5,11).

Road tolls are applicable.

“Road tolls in congested peak hours on highly expensive infrastructure are simply another variation of LVT” (5,11).

It appears that road tolls are limited to motorways.  The charge will vary according to the criteria set out above.  And, of course, will be highest at peak times which will promote the efficient use of the motorway.

“If charges are levied, the land would be put to its optimum use by those prepared to pay the LVT, resulting in an efficient use of scarce resources.  In fact, with less road congestion on motorways, some new drivers might then use it and be prepared to pay an even higher fee as it’s even more desirable because less congested.” (5,13).

The LVT collected serves to compensate those displaced by others who “hog” land, or it compensates those who choose not to pay the LVT and thus forfeit some land use.  Also

“anyone who is negatively affected would be perfectly compensated because their rental dues to society would be correspondingly reduced” (5,13).

Summary

So there it is.  The basic propositions of geoism are:

1. All land is publicly owned and held from the public.
2. All land use is an exclusive use and requires that the public be remunerated.
3. LVT will only be applied to those who assert a more than basic usage of land.
4. When LVT is charged it will vary according to the value of the location, the cost of  the public infrastructure, the type of pre-emptive capital, and the duration and time of use.

5. Such charges promote efficient use of public space as well as compensating others.

Such a theory of land use makes sense.   It is also a theory that claims to ensure equal rights in land by taxing every ‘disproportionate’ use of land.   The issue is whether it is Georgist and whether we can live with it.

True Cost Economics

This has been the first attempt that I know of to give a systematic account of all aspects of charges for using common land.   If it is inaccurate then it may well be because geoism itself is still somewhat unformed.        

Added to this is what is called True Cost Economics: the view that all natural resources are scarce and should be priced high enough to cause them to be used sparsely.   This important component of geoism is elaborated a little below.   

Marginal Cost Pricing

Alternatively there is the view called marginal cost pricing or the price of the last to arrive that works something like this.   A road or bridge when built has space for everyone but, in time it becomes congested.   In that case each marginal (that is, each additional) user progressively reduces its usefulness to everyone else.

Here we have building up what is called marginal social cost.   This is the cost to society of taking up or pre-empting space, and the cost increases with congestion.     At first, the bridge has a ‘negative rent’ because of its excess capacity; congestion turns it into a ‘positive rent’ that the public can collect with a toll.   It gathers revenue; it de-congests the bridge or road; and, we hear, the toll by its size gives a signal when to widen the road or build a new bridge.    It must ‘remain’ publicly owned.   Geoists condemn privatisation.

The Theory Of Charges On Common Land

Part Two: Geoism Investigated

There are two main ways to investigate a theory.   The first approach is by tracing its internal consistency and the consequences of adopting it.  The second approach is by examining its fundamental principles.   In this Part we look at how well the components of the theory fit together, and at the effects of adopting charges upon common land.

Is Geoism Inconsistent?

LVT and Marginal Social Cost

If one surveys the terms used to describe charges on common land one finds four. These charges are sometimes described as congestion charges, sometimes as forms of land values taxation, sometimes as marginal cost pricing, and sometimes as instances of True Cost Economics. A legitimate question to ask is, assuming that common land can have a charge, are these the same charge?

Land values taxation measures the value of a piece of land against the ‘extensive’ margin.    Marginal cost pricing measures the value of a piece of land against its ‘intensive’ margin.    Its chief proponent, John Bates Clark, criticised Henry George’s ‘extensive’ margin as absurd since it was too far away to influence values.   Now, if that means anything, it means that Bates Clark conceived of his ‘intensive’ margin as different from the ‘extensive’ margin of Henry George.

Marginal cost pricing equates the charge needed to ‘clear’ a bridge of congestion with its ‘rent’.    But is a charge that reduces congestion to some acceptable level of traffic on a particular bridge the same as a measure of its land value set by a comparison of the advantages of the bridge with those of some marginal bridge?   In any case, why should land value be identified with one particular use of land?  

This latter point may be made clearer by an actual example. Bankstown Airport in Sydney was privatised.   One might imagine charges being used to bring it to some ‘optimal use’ consistent with safety.  The new owners of Bankstown Airport however clearly have a different concept of the land they acquired.    To them it is simply real estate.   Its value is not determined by the users of the hangars and runways.  However, necessary to Sydney the airport is that use to them is clearly not the ‘optimal use’.  Without government intervention its owners would abandon the airport entirely for more valuable use of the land.   Here are LVT and marginal cost pricing the same?   The same might be said of a parking lot (see also p.8).

Another question concerns our ability to quantify marginal cost when that term means marginal social cost.    By this concept each additional car that lowers the ‘optimal use’ of a bridge adds to the social cost of using it until, let us imagine, the last user comes along and produces ‘gridlock’. 

But is not reduced average speed of vehicles a rather simplistic view of quantifying social cost?    It overlooks the limitless externalities of a bridge or road.      The question of these imponderable externalities (positive as well as negative) is broached in another context later (pp. 10-11) when we examine the effects of these restrictions on land use.

This brings us to a seeming inconsistency.   At least two bases exist for charges on common land.   One is the ad hoc flat charge needed to de-congest ‘scarce space’.   These charges are limited to rather small areas.     Another base for these charges is a theory.   Land value taxation is applicable to all valuable common land.   Here we must note that not only does this second view of charges on common land imply a more general application of charges, it postulates a more rigorous formula for their calculation (see p. 3).     These charges are intended not so much to de-congest or ‘clear’ space as to measure and collect the value of that space.

Congestion is not now the basis for the charge; it is now mere physical occupation of valuable space whether crowded or not.    These two bases are certainly not co-extensive.  And the suggestion to remit some LVT “for reasons of convenience and practicality” (p.2) does not overcome their incompatibility.

In fact the suggestion that a ‘rent’ is “inconvenient” or “impractical” to collect strongly implies that this form of land values taxation universally applied fails Smith’s canons of taxation.

The Basic Usage Proviso

The concept of cost free basic usage rights is said to make the application of LVT to common land a more practical proposition.  But if basic usage rights are given “for reasons of convenience and practicality” will those basic usage rights disappear if it does become practical and convenient to collect this LVT?

We are urged to think of basic usage as the same everywhere.  A stroll in the park or shopping area, it seems, is the same everywhere – just like the basic usage of so many kilolitres of water is the same everywhere.

But it is otherwise.   If geoists are right roads and other common lands have a market value.   But this means that the worth of roads varies – not like water.   Basic usage rights in the main street of an outback town like Bourke (NSW) is not the same as basic usage rights in the Bourke Street Mall in Melbourne.   The worth of footpaths will vary with the worth of the private land adjoining them.   Is it fair for owners of properties in Bourke Street Mall to pay enormous rents while metres away pedestrians exercise “cost free” basic usage rights?

But if we are serious about applying LVT to roads, what of the intensive margin within each street?     Footpaths on the sunny side of the street will ordinarily be more valuable that footpaths on the shady side.  One end of a street will normally be more valuable than another end.  How does geoism measure the intensive margin of a road or a beach expecially when nothing like marketable production is occurring?

Yet the same difficulties confront the calculation of the worth of parks (not all park benches are equal!), shopping malls*, and other common land.       Basic usage rights cannot paper over these difficulties of measurement as they are outlined above (on p.3) because those charges are implied by the very theory that geoism holds.

But before we leave this subject it may be useful to examine the term value as it is attributed to roads and other common land.       It is said that roads have value.   But surely the word value here means use value?   Where is the market value?    Roads are not apples.   To make a perfectly competitive market in the use of roads would be have all roads privatised by different owners and all run to the same destination.    That is unimaginable.    Use value is further considered below (p. 16).

Congestion Charges Vs LVT

With parking lots the reasoning seems to be that the market price for a parking lot is that price which sees it full for as long as possible.   But is the outcome the land value of a parking lot?   Most I see would fetch far, far higher prices auctioned off for commercial or residential use!    That is, most parking lots would be worth more alienated to users other than motorists.   Under this LVT test would we have many parking lots?    Then again, given equal demand, a small and inadequate parking lot could yield higher charges than a larger one in the very same place.   Yet the actual land value of the larger lot may well be considerably higher.

*  Geoists speak of shopping areas as “extremely valuable public land”, see p.3.

Geoists dislike private motorways:

“geoists insist that no natural monopoly should ever be privatised, so roads and railways should never be privatised” (5,11, my emphasis).  

It is said that private motorways lead to “rack-renting” (ibid.).    Yet True Cost Economics demands rack-renting!   Space is a ‘natural resource’ and all natural resources must be used sparsely – especially when it is pre-empted by “polluting motorists”.

One geoist writes

“Privatisation, per se, isn’t the problem – its privatisation without paying the LVT that’s the problem” (5,11).   

That is true.    There is no essential difference between a motorist taking ‘exclusive use’ of a parking spot and a tollway operator leasing a busy street.    All that matters is that the LVT is paid.   

Geoism seems consistent with privatisation – even the privatisation of natural monopolies.  

Does Geoism Lead to Absurd Conclusions?

Geoists assert that mere physical occupation of land is an assertion of exclusive use (p.2).    If that is the case then it is hard to see that common land exists at all.   What this statement says is that, to all intents and purposes, common land is privatised land!  
Added to this, there does not seem to be any reason at all why all ‘natural resources’ cannot be privatised.    The presumption of the public ownership of land implies that it is alienated.     This is because the use of land held from the public is conditional upon terms set by the public.  If the public sets a congestion charge on common land and a citizen uses this land without paying he is trespassing on common land!

Now, Henry George in A Perplexed Philosopher (Bk I, Ch. IV) shows that this is an absurd view.    We will return to this point in the last Part.   .

Now let us look at the logic of an ‘optimal’ price.  A charge sufficient to effect a clearance of some from common land will make the road, beach, park of shopping mall more desirable than it was before.    It has added the advantage of spaciousness.  It has now the advantage of greater rapidity of movement and other advantages unnecessary to explore.   For the point is that the outcome of the charge is that the road, beach, park or shopping mall is more desirable than it was before.   The motorway for example is now a better “product”.    That means its price should be increased to reflect its increased land value.    Doubtless that increased price will make a further clearance of motorists, those unwilling or unable to pay the increased toll.    That further enhances the value of the beach or motorway.  That will summon forth even higher charges …    

Not only is there an inconsistency between congestion charges and LVT applied to common land, the logic of LVT to common land seems to lead ultimately to very few people using it.   We might also then say that the application of LVT to common land maximises ‘marginal social cost’!

The Consequences of Geoism

Such absurdity seems to follow from applying LVT to common land.    But it is time to turn to the more prosaic consequences of a scheme that its supporters want applied now, that is, before there is a ‘single tax’.

Externalities Ignored

The argument was given previously (p. 7) that, in measuring ‘optimal use’ or ‘marginal social cost’ quite inadequate consideration was given to the externalities.   A congestion charge did not accurately measure either ‘optimal use’ or ‘marginal social cost’.   But what are the externalities?

An article (10.4.06) in the Geelong Advertiser reported a London Chamber of Commerce and Industry Study that quantified the externalities for business of the London Congestion Charge.   Without quoting the statistics here the Study of its members reported a reduction in turnover and profits (large enough in more than half the cases to worry any business), a fall in customer numbers, and staff laid off.  More than a quarter of the businesses surveyed were thinking of moving elsewhere..   

Some businesses suffered more than others.   Restaurants and the retail trade, those  businesses most dependent upon population, generally felt the effects most.    The article came from the Victorian Employers’ Chamber of Commerce and Industry.   It urged the Victorian Government not to use congestion charges but to build infrastructure.

There were of course many other negative externalities.  The question is by how much had these externalities or diffused economic costs exceeded in value the revenues generated.   As far as government revenue is concerned we must also take into account  any loss of government revenue from the reduction in turnover and incomes.

Inconvenience is now one factor discouraging people from using central London.   Police and ambulances are exempt from congestion charges since they have to be to deal with emergencies.   Yet there are other private emergencies: mothers with sick children and other sudden family emergencies.  To answer these emergencies now means being photographed and fined.  

But then there are visitors who, without wanting to or even knowing, find themselves on toll roads in a strange city.    Without a ‘day pass’ they too are immediately photographed and fined.    That is not the way to welcome visitors!

Then there are defective e-tags or lost ones …  Already some motorists have become aware that toll companies have debited their accounts for trips they did not take, or at rates reserved for heavier vehicles.      

When the congestion charge was established 247 cameras were installed in central London.   Set up to track vehicles they can as easily track the movements of citizens.  In 1948 no one would have believed George Orwell’s reference to a ‘democratic socialist’ State in which cameras track the movements of its citizens.    Yet, there they are now in the very capital of Oceania! 

Charges Regressive

Geoists seem also to have failed to see the regressive nature of such charges on common land.   Geoists apply charges especially heavily to motorways at peak hour.   So: who is travelling at peak times?         Is it the wealthy investor or property developer?       Is he enduring the congestion or is it workers going to or from work?  

It is going to and from work that normally creates congestion.   We saw congestion charges did not increase productivity in London.   Those who will pay the most tolls are likely to be those who come from poorer outlying parts.    They have longer journeys and thus even more additional cost.   But they are trying to get to work.      They already pay higher fares than others.   And it is they who will now most suffer the burden of increased tolls or ‘rents’ for water and electricity set by True Cost Economists.    Is not such LVT regressive and likely to increase inequality?

Richer motorists will have the tolls paid by their companies.    The poor may well have to suffer the inconvenience of travelling at times when the toll is less.   To avoid the toll they may well disrupt their own lives and those of their family in ways which economists never seem to quantify.    Economists simply consider the use of the motorway.    They are not sociologists. 

Of course, it is always possible that poorer motorists will resort to suburban streets to avoid tolls.   They do already.    Evidence of this came with the opening of the M7 motorway in Sydney.   It was free for three weeks.    During that time the average use of the motorway was 139,000 vehicles per day (without reports of congestion).   As soon as the toll was introduced use fell to 79,000!    Freeways divert traffic from suburban roads.    Motorways put them back.    Tolls discourage the use of roads even when there is no congestion.   That is really rather silly   

As we have seen, if there are admission charges to common land there are also fines for avoiding them.    But, again, if we take fare evasion as an indication, those avoiding tolls will almost always be the poor.    And the more widespread the ‘rents’ the more poorer people will be caught in their net.    One last note is that under this system of ‘rents’ LVT from those in the outer suburbs may well exceed what is collected from those closer to the city centre!

Administrative Difficulties

As already alluded to above (pp.7-8), by inventing a basic usage charge and exempting much common land and pre-emptive capital geoists have already gone some way to admitting the monumental difficulties of applying LVT to common land. 

There are difficulties not only in measuring and collecting tolls but also in enforcing them.    These administrative problems are admitted to exist.    One geoist gives as a reason not to collect beach fees that

“the costs of collecting any beach fees would make these impractical” (5.11).   

Another concedes
 
“The problems are formidable of designing optimal taxes on and controls over moving vehicles; and even more so when we see them in holistic terms, as part of recasting our whole approach to mass transportation, and integrating it with massive reforms of land settlement patterns” (2,20).

One of the factors that will make collecting tolls on beaches, roads and parks difficult is that many people will believe that they have a right to be there.   They will find it hard to understand that, without the payment of the toll or ‘rent’ that they are trespassing.

Let us take surfboards   Will the surfboard rider who is displaced by the fee be content when he is aware that those who continue to surf are paying fees that go into public revenue?    He may rather think he had a right to surf.        Believing he had an ancient  right to surf he may be so anti-social as to refuse to pay the toll.    What extra expenditure of public money will be necessary to convince him that he has no automatic right to surf?   Or that, if he does not pay, he is not “serious” about surfing?

The difficulty is similar to that of income taxation.   It seems to run contrary to what are perceived rights.  

Making “Dividends”

It is well known that monopolists (and government is one) do not like to expand supply when scarcity is the secret of profitability.  They like monopoly prices.   So, why should a government department hungry for “dividends” to feed to Treasury want to reduce congestion by building a new bridge or widening a road?

Believing that their ‘corporate’ duty is to make profits from ‘investments’ they, like other monopolists, are much more likely to let infrastructure run down.   We remember that congestion may be equated with scarcity.   Privatisers love scarcity.   Governments will love congestion.  Without ‘the single tax’ why build a new bridge when the only financial effect is going to be an enormous expenditure that virtually wipes out a large ongoing revenue?          At this stage we now have a congestion charge that encourages congestion!

One might add parenthetically that the belief by geoists that closing off and charging for certain lanes on major highways (“Lexus lanes”) reduces congestion is quite misplaced.   Patently, it adds to congestion by forcing poorer motorists onto fewer lanes and preventing changing lanes to avoid congestion.   The same thing has happened with tolled road tunnels in Sydney.   Existing lanes at ingress points have been closed producing both congestion and total confusion.   The main reason is that the logic of tollways cannot allow for more road space!

We may note in passing that charging for using a surfboard at a beach actually does little or nothing to relieve any problems that their use creates for other surfers.   It simply raises revenue.   Sensing that the investment in surfboard tolls is more  “productive” (that is, profitable) than body surfing (which may be just ‘basic usage’) government may give preference to surfboard riders.    We note that what started out as an aim to discourage ‘pre-emptive capital’ (see p. 3) has become, thanks to the profit motive, an activity actually preferred by government.   To say that is an absurdity seems to ignore the strange things already being done as governmentdepartments act under the belief that they are like companies whose first responsibility is to invest in the pursuit of larger “dividends”.

Congestion charges it is said are to make people catch public transport.  But too often buses and trains are rarities in the outer suburbs.    There large distances have to be travelled and that is why motorways exist.   Motorway operators – whether private operators or government departments like the RTA in New South Wales, would not appreciate it if buses suddenly began to empty motorways of their paying clientele.    Geoists have accepted ‘economic instruments’ as the solution.   They must also accept the basic premise of this economics, corporate selfishness, and what it brings.  Public corporations collecting LVT from roads cannot be assumed to pursue anything other than the ‘bottom line’.   Despite assurances bus services to outer suburbs may fail to expand.    For cars rather than buses will produce the ‘optimal’ amount of LVT on common land!

Parking Fees

Parking fees appear to be supported by strong arguments.    After all, motorists do park sometimes for long periods.  Fees for parking it is said must stop ‘hogging” of parking space and ensure equal rights by requiring motorists who take temporary possession of land to compensate others for it.
   
“A valuable metered space might be on public land but, when the car has been sitting over it for a few hours, it has temporarily acquired the status of private land by virtue of (sic) metered fee” (see p.3).  And

“By plonking his car over a parking spot or driving along a road, a driver has effectively claimed temporary possession of that road and might as well own it!” (5,13)

This argument is more fully answered below in the last Part.  However, let us examine the claim that parking fees like LVT in general will guarantee the optimal use of land.  If that is so why is it common knowledge that businesses resist parking meters outside their shops?   Why do large shopping centres offer free parking?    While there may be no empirical studies to demonstrate that business people are right to assess parking fees as harmful to business, the study of congestion charges in central London (pp. 10-11) goes some way to confirm it. 

One could say that parking regulations already limit the time a vehicle can remain in a valuable parking spot.    Why have fees?     Economists and geoists believe such regulations to be “clumsy”.    But why?     If fees regulate parking it surely does not matter how long someone occupies a parking spot just so long as he pays the ‘rent’; that is taken to be full compensation.   If that is so the payment of LVT instead of time limits will not stop “hogging”; it will encourage it.

Declining Land Values?

The consequence of greatest moment to Georgism is the effect of these user pays charges or ‘rents’ upon ‘the single tax’.  If the above discussion is useful we may ask   whether the extension of land values taxation to common land is actually at the cost of land values taxation on privately held land.

We must find out whether charges upon common land are likely to add to or subtract from the value of private land.   George took the view that street transportation should be free.    Speaking in Sydney in March, 1890, George approvingly refers to his friend and disciple Tom Johnson, then Mayor of Cleveland. 

Henry George said that Tom Johnson

“argued that not merely should the municipality own the tramways, but that it should run them free, because, he said, if the state ran the tramways free, the value of land would increase just as the value of the rooms in a building increased where the owner ran an elevator; and thus the municipality could recoup itself by levying a tax upon the value of the land” (7.39).

The audience cheered but geoists are not so enthusiastic.   Hearing this one writes

“Putting aside (the) resort to the authority of (Henry George) … it’s a rather unrefined view of public transport pricing.   While off-peak travel should in many cases be free, peak-hour travel should always attract some charge (albeit much less than charged today in Australia)” (5,13).

The fact that Henry George supported free public transport does not make that view correct.   But its very partial application during the 2006 Commonwealth Games in Melbourne appears to have substantially reduced the use of cars in peak hour.

The statements that “peak hour travel should always attract some charge” or that  Henry George held “a rather unrefined view of public transport” are unsubstantiated assertions.    George’s “unrefined” view will be clearer when, later, we examine  basic principles.

George could and did explain why costless public transport was good public policy.  Costless public transport made private land along the road more valuable.   Its cost was met from enhanced site rents along the way.    In other words, according to Henry George, the “value” of common land is already factored into the ‘single tax’!   

Plainly, that is the beauty of the ‘single tax’.  The advantages to private land of the activities on public and common lands are collected from the site rents of privately held land.  Their use value becomes the market value of privately held land.  Geoism substitutes for this elegance a very large number of taxes and a very much larger number of taxpayers.

Thus, if congestion charges are a form of LVT why have them when they are already factored into ‘the single tax’?

But in the elevator analogy the converse is true: charges for the use of the elevator deplete the rents of offices.   Similarly, charges to use streets would be at the expense of surrounding (private) land values.   In addition they would shift responsibility for public revenue away from private landowners and onto the general public.     That does not sound like a remedy for poverty! 

Tolls make goods and services dearer.   Is not this contrary to Adam Smith’s preference for arterial roads to be as cheap and convenient as possible?

The most common reason tolls are used is not to discourage use but to make money. So in 2006 one western Sydney suburb is already ‘pricing’ its streets and parks in the expectation that it can make money out of them, just as the toll companies are doing.    The possibilities are endless.

THE THEORY OF CHARGES ON COMMON LAND

PART THREE:  GEORGISM

What is Georgist?   First in importance are the fundamental principles of what Henry George taught.   Next in importance is what George deduced from those principles, their applications.   Less important are diverse opinions that George gave in his earlier journalistic writings.   If we doubt the internal consistency in George’s thought it can be tested by his own precept: revert to principle.  

LVT and True Cost Economics

Before citing those fundamental principles which will finally determine whether geoism is Georgism we might examine theoretically some of the elements of geoism.

We are told that

“natural resource rentals that ensure that natural resources are used sparingly (True Cost Economics) also provide the natural source of public finance” (5,14)

True Cost Economics is based upon eliminating the consumer surplus (the difference between what a consumer pays and what he is prepared to pay).           In Georgist terminology LVT is linked to exchange values while True Cost Economics is linked to use value.   George rejected use value as a part of economics.   

“Of the two meanings of the word value, the first, that of value in use, is not called for, or called for only incidentally in political economy; while the second, that of value in exchange, is called for continually, for that is the value with which political economy deals” (4, 224-225).

There is thus an intractable difference between True Cost Economics and the political economy of Henry George.  In the former ‘scarcity rents’ are not so much rents that reflect scarcity as ‘rents’ that introduce scarcity, what is called ‘demand management’.

Instead of the Georgist assumption of abundance the tendency of geoism, like neo-classical economics, is to assume general scarcity.   Congestion means that a ‘natural resource’, space, is scarce.     True Cost Economics does not deal with what is, it deals with what some think desirable, the sparse use of ‘natural resources’.   What makes this economics attractive is that it has never been put into practice.     When it is we will have added just one more element of 1984 to our lives: general scarcity..

Those who support geoism often reject ‘the single tax’ because, they say, Henry George proposed to tax only one ‘natural resource’, “land”.     Circumstances today they say make that view “anachronistic”.   What is needed is to tax what ‘the single tax’ omits, all ‘natural resources’, frequency waves, satellite orbits, flight paths etc.

“The ‘Single Tax’ (charging rents only for the use of land, and not for any other natural resources) is a selective and illogical muddle.” (5,14)

But, clearly, Henry George did say that land included all natural resources and he did say the cost of land was nothing – in fact, he said both things very often.     There is a deep inconsistency between land values taxation set upon market rents and scarcity rents on ‘natural resources’ (based upon a very selective set of vague ‘externality values’).  True Cost Economics may be geoist; it is not Georgist.

Partial Principles

In a speech in his mayoralty campaign in 1886 George said that there were two ways of looking at any subject, a practical or inductive way or as a moral question.   From long experience, he said, the shortest way to the wise thing was to find out the right thing.    Nonetheless, in deference to what his audience wanted to hear, George goes on to talk tax (6,73).

It is easy to see why.    Many who come upon George’s fiscal policy are entranced with its possibilities for improving society.       Many call that ‘seeing the cat’ and, henceforth, they are satisfied to promote that fiscal policy.    Nothing more is needed.   It is land values taxation all the way.    Equity is there but it is now merely the equity of taxation.    As one critic complained Georgists today lack a coherent and systematic account of the moral basis of their beliefs.   The fact is, being a theory of taxation, geoists do not think any such thing is needed.

The underlying principle of Shearmanist Georgism is ‘the single tax’ itself.     Just enough ethics is introduced as needed to justify this fiscal policy.    It remains unelaborated.   Yet the personal tragedy of geoists and the tragedy for the movement is that now the means has become the end.    Geoists have taken what is a partial principle (a principle when certain conditions exist) and applied it universally.   A principle (LVT) that Henry George intended to be applied partially (to privately held land) has been applied to all land (see pp.15-16; 23-24).

Public Ownership not a Georgist Principle

In A Perplexed Philosopher George, now in semi-retirement and more a philosopher than a social reformer, did not have to talk up a tax.  He reverted to principle to attack a concept that he regarded as wrong: the public ownership of land.    

“Men must have rights before they can have equal rights.   Each man has a right to use the world because he is here and wants to use the world.   The equality of this right is merely a limitation arising from the presence of others with like rights” (3,30, my emphasis).   

We immediately notice how divergent that view is to geoism.   According to Henry George all land is not held from the public and its use is not by its consent.    In the same Chapter George reduces that idea to an absurdity by pointing out that it really means that, to use land, requires the agreement of everyone else.  There is no doubt that is just what this theory does require, even if it is by government acting democratically for the public

What is interesting is that in Progress and Poverty Henry George makes the same mistake himself.   In a critical Chapter (Bk VIII, Ch 2) How Equal Rights to the Land May be Asserted and Secured,he writes

“We should satisfy the law of justice, we should meet all economic requirements, by at one stroke abolishing all private titles, declaring all land public property  …” ( p. 403)

The term “public property” in land might be interpreted to mean joint rights in land.  But as he wrote in A Perplexed Philosopher

“For joint rights may be and often are unequal rights” (3,27, my emphasis)

In this book Henry George discerns the simple truth that what socialists really desire by the nationalisation of land is equal rights in land and that it is achieved very simply by ‘the single tax’ (see 3, 31-2).    Ownership does not enter into it.    It is simply a question of obtaining equal rights in land of different value, and ‘the single tax’ does it.  

Pope Leo XIII got close to describing how Henry George regarded land when he wrote of an “obsolete” opinion that 

“it is right for private persons to have the use of the soil and the fruits of their land, but that it is unjust for anyone to possess as owner the land on which he has built or the estate which he has cultivated” ( p. 114, The Land Question).

That of course is usufruct and reminds us of Jefferson’s adage often used by Henry George that “the land belongs in usufruct to the living”.

Henry George sought support from other ‘radicals’.  Did he hedge on this question or did he only gradually come to understand that public ownership was not the way to equal rights in land and, in fact, contradicted the principle he already held that, being unproduced, land could not be owned?

Indeed, if individuals cannot own land how is it that some vaguely identified number of people called “the public” can own land?

Wrong Emphasis

Being alive to geoists is to assert an exclusive use of land.   This brings everyone’s movements under the watchful eye of government, the de facto owner of all land and the body that levies the ‘rent’ before land can be used, and sets other limitations upon the use of land.    Henry George on the other hand writes

“The right of each to the use of land is still a direct, original right, which he holds of himself, and not by the gift or consent of the others …” (3,28).

Henry George returns the emphasis to where it should be.   The use of land is a natural right*.      It is an inalienable right beyond the power of government (or any individual) to revoke.    The basic tenet of Georgism is liberty; the basic tenet of geoism is restriction.   Its basic tenet is public ownership, the ability of the public to set any conditions it chooses upon the use of land.    As Herbert Spencer said many years ago, land ownership can cause unjust exclusion from land.  The history of the Soviet Union demonstrated this.   Is there any reason why a democratically elected government may not cause unjust exclusion from land?  

* See Appendix B for a short note on natural rights.

Like John Locke Henry George assumed that all land was in common.   He did concede that his own society saw advantages in the alienation of common land (that is, alienation of common rights) by private title.

Some Georgists say that the ‘rent’ compensates others for the loss of the common right.    However, if all land may be alienated provided that LVT is paid, cannot a situation arise where some for all intents and purposes lose their ‘inalienable’ right to use land.   What use is compensation then?

What ‘the single tax’ does is merely to make the exclusive right to land that is legally alienated an equal right*.      The exaction of this rent is not because the public owns the land and exacts a ‘rent’ for its use.    The exaction of this rent is an adjustment, as Henry George often said, an administrative act of government, to guarantee that the access to land held exclusively is equal.     Henry George wrote no more important statement than this:

“The right to use land remains fundamental. If we keep this idea of equal rights in mind – the idea, namely, that the rights are the first thing, and the equality merely their limitation – we shall have no difficulty.   It is through forgetting this that Mr Spencer has been led into confusion.” (3,28 my emphasis)

Land not tenured under private title is not alienated to government; it remains common.    The view that mere physical existence constitutes exclusive use of land gives this legal term a new and misleading meaning.       To exclude means to shut out, no one using common land imagines he is shutting other users out.   As Henry George argued about the term land, confusion ensues when terms begin to take on multiple meanings.    

“The right to use land remains fundamental”.    This is where the true emphasis lies.   The limitations are secondary, needed only as an adjustment to ensure that each has an equal right to use land.    Geoism fails on two counts here.      Common ownership immediately places the emphasis upon limitations to the use of land since its use must be by permission of the public.     Moreover, the application of ‘rents’ to common land does not achieve the equal right to use it.     It alienates or privatises common land to those who bid more for it.

* The surf-board rider for example is right to feel that a charge to use a surfboard at the beach that are fed into Treasury do not compensate him.   He has been denied a natural right.   He has been separated from a right that is inseparable from the person: the right to use common land.

The principle of natural rights, including the right to use the earth is contradicted by the fundamental proposition of geoism, public ownership of land.  The natural right to use the earth is not a right by permission.

“What on earth do these claims of natural rights amount to, except for some attempt to appeal on an emotive level?  The issue is not that there should be a right to use land, but that any user of valuable land reimburse society … for their exclusive use of the Common Wealth” (5,12) *         

Let Henry George provide the answer.

“Here the primary right – the right by which ‘each of them is free to use the earth for the satisfaction of his wants’ – has been dropped out of sight, and the mere proviso has been swelled into the importance of the primary right, and has taken its place” (3,29)

That ‘proviso’ is the constant need to abide by conditions for using it in order to receive permission to use it.    That is socialism not Georgism.

Fundamental Objections to Geoism

Henry George’s treatment of land is consistent with what he considered the two fundamental Jeffersonian principles of political philosophy.

1. That all men are created equal in natural rights and
2. That the purpose of government is to secure those natural rights for individuals.

Democratic government according to Henry George may only make majority decisions upon matters that do not involve our inalienable rights.   Here government has only a right to administer or limit those rights to the extent necessary to give everyone equal access to them.

The right to use land is a fundamental or inalienable right.    If it does not exist on common land like roads, parks, beaches and forests where does the right exist? If that (equal) right does not exist in this land where is the commons?

Government may not deny this right to use common land.   It may only limit that right while we are using it.    Geoism introduces a false limitation, a condition to be met before we use this land: a rent or toll.    How can we have a ‘rent’ on common land when the very intention of a rent is to ration its use to those able and willing to pay it?

* The “Common Wealth”, as we see it in geoist writings, is not rent but land.  

But geoism also fails from a second problem.   This is that the whole legitimacy of a charge for the use of common land depends upon the premise that it is publicly owned.   

Privatisers argue that ‘resources’ are better protected if they were priced.   That of course means they must be owned.   Ownership is what privatisers aim at.  Geoists prefer public ownership.    But they agree with the principle.  They say “land surface needs to be tenured and allocated by price”.   For nothing can be priced that is not first owned.     Public ownership legitimises this pricing of common land.     But if common land is not tenured, not owned, it may not be priced.    It may only be administered to preserve everyone’s right of access to it.      

In the case of rent what is owned is not land.    It is the labour (including the results of labour) of the community as a whole.   It does not yield equal rights on common land.

Not Starting at the Beginning

Two important points made by Henry George in The Science of Political Economy are, first, that the fundamental error of theorists of the practical or inductive kind is starting in the middle instead of at the beginning and, second, that they then work toward a theory rather in the same way as a body accommodates itself to the presence of some foreign object like a bullet.     

Here, beginning by accepting congestion charges (and the premise of scarcity) geoists have worked their way toward a theory.   These charges are accommodated to Georgism by calling them forms of land values taxation.   At the same time (and perhaps inconsistently) these charges are accommodated to neo-classical theory by postulating that this common land comes under public ownership*.   And, because it owns common land, the public may do with it whatever it wants.    (As George wrote joint rights in land do not necessarily mean equal rights in land.)  

Thus Georgism appears to be accommodated to both neo-classical economics and the ‘green’ movement - but not to public opinion which everywhere detests tolls.   At one stroke Georgism has overtaken modern developments.   Georgism has suddenly gone to the top of the class!

Geoism legitimises user pays charges – but at a price.  It has abandoned ‘the single tax’.   But another problem arises.    If user pays charges are legitimate because they are ‘natural resource rents’ why do they seem to apply almost exclusively to what environmentalists dislike, things such as motor cars?

Led this far geoists have to consider not just parking fees and road tolls or congestion charges for London but the pricing of footpaths, shopping malls, beaches, and parks?

A special purpose charge turned into a theory and thus universalised has begun to raise some unpleasant questions.  The theory then suddenly becomes more pragmatic than theoretical at this point.   It becomes ‘convenient’ and ‘practical’ to have ‘basic usage charges’ to prevent these charges being extended.   But the fact appears to be that, if ‘the single tax’ applies to all intra-marginal private land, geoism must apply it to all intra-marginal common land.   Talk of these ‘rents’ being “impractical” or “inconvenient” is an admission that the theory does not work.  

How Principle is Confronted

So, out of its difficulties, the theory grows.   But when the theory runs into Georgist principle it can go no further.     When the argument is put that land is not produced, costless and, thus, incapable of being property, this response is made.

“Be extremely wary of impenetrable (confused and confusing) language such as this, dear reader.   If you can’t make head nor tail of these statements, it’s not your fault.” (5,12)

When natural rights are mentioned we have

“What on earth do natural rights amount to, except for some attempt to appeal on an emotive level?” (5,12)   and   “Be careful with such loaded terms such as ‘natural rights’…” (5,14)

What is that response?   It is that natural rights do not exist.   It is a mere feeling!    Yet, as any serious student of Henry George knows, these are fundamental principles.

George said very little about common land from which we can deduce that he saw no problem with it.   The problem lay with private property.  He certainly never thought of applying land values taxation to common land.   What he clearly did think was that, left as free as possible, its ‘value’ was factored into the value of privately held land.    How can we assume any other view?   He directed his attention to privately held land because only it was being held unequally!

To explain the difference between absolute (unconditional) and equal (limited) rights to land George hits upon the analogy of the use of a gentleman’s club.   There everyone has an equal or common right to the use of the club.   Where there is some temporary ‘collision’ of rights a “co-equal” right exists which, George says, necessitates some resolution by convention (3,27).      Here one cannot help thinking of the conventions by which we maintain a high level of freedom of movement on common land, even on crowded roads or footpaths.  

There one’s claim to use roads or footpaths is a co-equal claim.   As we hear of someone who seems thoughtlessly to exceed what is an equal claim.   “What, does he think he owns it?”   Is it necessary to point out that that comment is based upon everyone’s presumption that no one owns the roads?

The geoist response to the analogy of the gentleman’s club is interesting.

“If only the commercial world, where shareholders’ returns must be maximised, resembled this ‘gentlemen’s club’” (5,12)

We see from this that to the writer land is constantly seen from a fiscal perspective, a perspective produced by beginning Georgism from the wrong end, from land values taxation rather than from the inalienable right to use land.    Another writer falls into the same error.

“In a Georgist economy I think the decision of whether a freeway should be tolled or not would be based on where the government can get the most return on investment” (1,14)

In other words, the geoist system will work just as land values taxation works for private land.   Fees will be set that ensure the “optimal use” of common land, fees whose effect denies the full use of common land to those who fail to pay for it.

Gone almost entirely now is the right to use land!

Human Nature ‘Selfish’

A further point emerges.   When it is said that simple observation of the way we use common land confirms that it is governed by conventional courtesies (limitations in fact) that facilitate everyone’s right of way one response was

“(Such a view as this) won’t transform those who will hog the best public land on a first-come, first-grab basis” (5,12).

The presumption here is the neo-classical economic one of endemic selfishness.   Hitting the hip-pocket nerve is the way to make people do the right thing.   People of course do sometimes hog common land.   A person who gets on a train when it is empty and leaves his belongings scattered around on the seat may be slow to remove them when others get in.   Yet, besides conventions to ensure free movement on common land there are conventions to stop people hogging or monopolising common land.   Even in the gentleman’s club there is “If you please”.

Neo-classical economists and geoists argue that the way to manipulate behaviour is by ‘sticks and carrots’.   This they say leaves us “free to choose”!

At this point the serious student of George will know just how far we have now travelled from the ethos of his teaching!   We have adopted Pavlovian methods of manipulating behaviour with all its presumptions about human nature.   Henry George proposed something more human.  Return to people their natural rights, ensure they are equal rights, and expect what seem to be hopeless social problems to disappear.

Manipulation of behaviour ‘from above’ by ingenious economic “instruments” is further from Georgism than might be imagined.   This is because, as Tolstoy could see, George dreamed of a society more governed by spontaneous cooperation than by organised cooperation (see Bk III, Chs IX and X, The Science of Political Economy).   Geoists rely on organised cooperation.  

The geoist pessimism about human nature and about the incapacity of the earth to satisfy man’s wants are very unlike Henry George’s basic outlook.   It is more akin to the views of Thomas Malthus.

Adjusting Equal Rights to Land

Social usage makes a basic dichotomy in land use between land where access is equally possible to everyone, common land, and land where access is not equally possible to everyone.

Society traditionally adjusts equal access among competing interests very well.   Often these adjustments are by partitioning space and time.   The classic case is of a street partitioned between pedestrians and motorists by a footpath and roadway.   A park or swimming pool exhibits a variety of co-existing uses partitioned by either space or time or both.   Rights here may be very extensive.   Motor boats and trail bikes may be treated by space and time partitioning as well.   These conventions fashioned by long experience in living together can be relied upon.

In the case of what one might call community land, with special purposes such as administration, basic services, education, sport, recreation or culture there is an evident intent to preserve the right of the public to use it as far as that is possible.   Until recently schools offered rights of way to pedestrians.   (The need for security has been a pretext to enclose much of this community land to the public.)   Some community land is necessarily very limited to the public (such as gaols, nuclear power plants and waste dumps, police stations, military barracks, railway lines).   It is usual for community land to yield no rent directly.   Why the same logic is not applied to common land is another problem for geoism.

If a public use for land disappears, as it did at North Head in Sydney when the Defence Department ceased to use it to defend Sydney Harbour, it ordinarily reverts to common land, in this case a park.

Access to free public events with limited space is often on a first-come-first-served basis.   But even here we see an attempt being made by government to limit and control this right by making people register prior to coming to such events.   If it succeeds doubtless this form of licensing will generate charges.

Public Infrastructure

Some Georgists disagree with geoists to the extent of wanting only a nominal charge to be made for water, electricity, telecommunications and public transport unless there is scarcity.  Then, they agree, ‘scarcity rents’ should apply.

However, since its infrastructure is built on common land there seems to be good reason for its use to be common or free.     That would be a salutary reminder to government!   Such public infrastructure (like State libraries, museums and art galleries) are in the nature of natural monopolies.   Geoists appear to neglect the almost limitless externalities that these natural monopolies have in raising the value of private land.

Commercial Use of Common Land

The case of al fresco restaurants and other businesses taking up space on pavements is either a case where the use is banned or where they are partially alienated and rent collected from them.   In the latter case public authorities are satisfied that for the times stated in the lease this land may be alienated without lessening the free movement of pedestrians.     

Geoists may say there is no difference between alienating the land this way and alienating the margins of roads to motorists to park their cars.   But there is a difference.   Once part of a footpath is alienated this way pedestrians (and other retailers) are shut out.  If parking metres operated under that rule one motorist could effectively lock up a parking spot turning it virtually into private property.   Those who say this is what happens are identifying exclusive use with occupation of space. But in the case of a parking spot occupying space has not eliminated the rights of others except if you accept that occupying space itself means exclusive use.  When allocating time zones for parking spots government do not eliminate the rights of others.   It recognises them and tries to accommodate as many as possible who want to use these spots.   If in any city one may park in the one spot all day it is only because, as the community sees it, no one else wants to use that land.    One is then using an absolute not a co-equal right.

Persons on business use roads.   They chat, along streets, in parks and on public transport.   They move goods in and out of buildings.   They have in fact as much right to use common land as anyone else and fall under the same rules.   Their activities there are productive and enhance land values on privately held land.  But there is an uncertain attitude in geoism about “the commercial use of public land”. 

Some want to licence and charge groups in parks and beaches.  But why require a choir or band, a fitness or meditational group there to register, get a licence and pay a licence fee?    The question is simply are they interfering with the equal rights of others to use the beach or park?        Usually such groups use areas and times which mean that they do not interfere with others.  Such bans and licensing often have more to do with the anti-commercial and anti-military sentiments of council members than land use.   Again, it illustrates the potential for damage to freedom from ‘public ownership’.   Enforcing such licences of course brings a further interference with privacy until, usually, it is found to be impossible.     Groups only need to remember to preserve the equal rights of others to use facilities.    That may require monitoring.

Case Study

Let us conclude this Part with a sample of reality.   In a certain suburb of Sydney  some streets near a railway station (it does not provide parking) was used by commuters.    Most parked on the residential and not the business side of the station.    Now, with appropriate signage, both commuters and residents and their visitors might use these streets.   As Henry George said, if we hold the right to use land uppermost, everything becomes easy

But here the public authority considers itself the de facto landowner.    It considers that public transport needs to be promoted and it considers it must take a commercial view of the land it owns.    It thus banned commuter parking for kilometres around, and put in parking meters – though, strangely, not in the busiest streets adjacent to shops.      The result is that the residential streets are now practically deserted.     Most parking meters also stand idle.   Yet the council is exercising the joint rights of the community.   It is a democratically elected council.   

However, no additional public transport was provided.    No thought was given to other externalities.   For example, some commuters too old or disabled to walk to buses, or cross busy streets in peak hour to the bus stop have given up going to work.   Many now face crowded buses.   Some mothers with children in child-care centres who work part time have also given up.  The added cost or parking metres has meant it was just not all worthwhile.    Friendships struck up between commuters and old and lonely residents (who wait on them to park their cars and help guard them) have gone. Has it been forgotten that commuters are actually workers trying to get to work?

Summary of Contrasting Perceptions of  Common Land

Some Final Observations

Geoists often talk of The Commons or The Great Commons so it is perhaps a curious observation about geoism that it does not recognise the commons at all.   The common rights are gone; all that is left is the earth.   It is the commons.    What has intruded is land values taxation as a pre-condition to using it.   This pre-condition destroys the very concept of the commons.

This suggests another curious thing about geoism.    A great deal is said about how land values taxation produces equal rights on roads, beaches, and parks when it is obvious that equal rights already exist on common land.    They have been there for centuries. Why repeat the exercise?

Geoism is said to be an extension of Georgism into areas where George himself never ventured.  He and his “fundamentalist” supporters, it is said, know only freehold land.  That is by no means good enough in an era of satellite orbits, flight paths and frequency waves.   But it is geoists themselves who define land so as to exclude these things.    George did not.  George included them in the definition of land.  For land was the whole material universe external to man.   Having defined land that way the principles he enunciated are clearly quite able to deal with satellite orbits, flight paths, frequency waves, and much else.

But what geoists are most enthusiastic about is applying land values taxation to water and electricity, roads, beaches, and parks.   But they were all around in George’s time.    Yet when George mentions them he plainly does not have in mind the intention to use land values taxation.   Geoists say that this is because there was no scarcity or congestion in those days.   Consider this: there was never a drought or congestion in his day?   Maybe they have never seen photos of life at the turn of the C20.   Indeed, there was enough congestion as far back as the time of Julius Caesar for him to ban waggons from Rome during the daylight hours.  Passengers smoking in trains was a burning issue of the 1880s and 1890s!

Entry fees to markets and market towns, and road tolls for waggons, horses and their riders, and pedestrians too have been used throughout much of history.   George was well aware of them because most of them existed when he was alive.   He opposed them, using the term “tolls” as a derogatory general term for unjustifiable imposts.   In fact, these charges were generally discredited towards the end of the C19.      They are now on their way back as ‘user pays charges’ as monopolists and public corporations enclose what is left of the commons and as governments privatise public utilities.  This is the inevitable result of leaving ‘rent’ in the wrong hands.    It has to go somewhere.   

And that brings us to another curious observation: that geoists are assisting in the final enclosure of the commons.   It is not even because this enclosure of the commons always achieves what geoists say it will.   Even economists are beginning to doubt whether charging more for basic services will actually limit their use.   More likely some say, considering that we are talking of things of inelastic demand, charging more will simply add to the profits of the public and private corporations that supply them.

Take the case of congestion charges.   Closing off free lanes on major highways to create pay to use lanes (“Lexus Lanes”) simply increases congestion in the free lanes and prevents motorists in these lanes changing lanes to avoid it.   When companies build toll-tunnels for example they go through a curious exercise.   Toll-tunnels add to road space; they give motorists more choice.   Having built them therefore the task becomes to close down these lanes so as to take the choice away again.   Congestion again.

One observation that comes clearer from all this is that equal rights may be quite consistent with less rights.     This is quite easy to see as a general proposition.   When rights to land are reduced those rights might still be assigned equally.   Even if it were true that land values taxation brought equal rights on the commons it would mean less rights.   Loss of such vital rights cannot be “compensated” by the form of land values taxation.   That should be obvious.

Epilogue

In New Zealand is a house of illusions.   In this carefully contrived house one sees balls that roll uphill; one sees oneself and others grow taller as they move across the room; one even begins to doubt whether one is standing upright.   Here where reality and appearance are deliberately confused, we guess that something is wrong and, when the construction of the house is explained, we know why.

Unfortunately, too few experience this innate feeling of ‘wrongness’ when the same confusion is spawned by a plausible theory.   Henry George said more than once that he did not regard ‘the single tax’ as a way to collect revenue.   He regarded it as a way to give liberty by adjusting private property in land to fit in with the natural order.   Equal rights in land existed on common land.   He was concerned to ensure that they existed as well on land privately owned.  He was content for the advantages of common land to accrue to privately held land where ‘the single tax’, a partial principle (since it was applicable only to land held privately), indirectly captured its market value.  

As he sometimes put it justice was the aim, taxation was the means.   Unfortunately, as he became aware, in ‘the single tax movement’ taxation became the end.   Of course, one justification for it was equity but its fascination for ‘single taxers’ was nonetheless as an “ingenious device” for gathering the revenue needed by government.   As time has gone on this fascination has only increased though the scope and the integrity of the plans have diminished.     Henry George argued that science or reality was the knowledge of principles.    That is ‘the forgotten legacy’ of Henry George.

The effect of turning things round the wrong way, of making the means the end, has seen the advent of a new theory called geoism which, beginning with land values taxation, naturally sees it as a universal principle; that is, as applying to all land. 

But the attempt to make this partial principle into a universal principle brings about the opposite effects to those projected by Henry George.   Instead of the elegant simplicity there is complexity.   Instead of cultivating a sense of freedom it cultivates a culture of  restriction and a sense of scarcity.      Instead of convenience inconvenience; instead of the efficiency and small government the inefficiency of a multitude of new transaction costs on producers and private citizens.    Instead of adding to what is collected by a ‘single tax’ it will take away from it.

Supporters of geoism want it now and not after ‘the single tax’ is achieved.    Applied now its effect is quite regressive, generally impacting more on the working poor than the rich.      Instead of opposing monopoly pricing under True Cost Economics it espouses it.   Since the public detests tolls, and even much of the business community opposes them, the most curious aspect of geoism is its boast that it assists promotion of Georgism.

Instead of preserving the commons it destroys it by privatising it.    Finally and most importantly, the Georgist movement is diverted from its true object, the relief of poverty.  

If Henry George had the last word it might well be

 “Getting rid of the idea of joint rights we see that the task of securing … the equal rights of all to the use of land is much simpler and easier than Mr Spencer and the land nationalizationists suppose; that it is not necessary for society to take land and rent it out (3,31).

From what we have seen would it be too much to replace “Mr Spencer” with “geoism”?

APPENDIX A: ‘RESOURCE RENTS’

In The Condition of Labour Henry George mentions three kinds of rent.    Only one is what he calls economic rent or rent proper.    This is a measure of how much the advantages for production on a piece of land exceed those on the worst land under production.    The other rents are scarcity rents and speculative rents.    These are not natural rents but rather appearances produced by the institution of private property in land.

A scarcity rent originates from the general scarcity of land caused by this institution.
The scarcity does not really exist.    It is an appearance generated by the imposition over natural law of a wrong idea about land viz. that it can be owned for profit.   Speculative rent is a close relative of scarcity rent in that it is an exacerbation of scarcity brought about by periodic frenzies of speculation in land.   Geoists confuse scarcity rent with ‘rent proper’.

Returning then to what is ‘rent proper’.    Rent can be seen to represent the value of saved labour.    It has nothing to do with the natural resource.   While price ideally represents the cost of production at the least advantaged point of production or margin, saved labour constitutes the rent or value of the site.   That is, while price is uniform, rent is a differential.     Geoists on the other hand tend to represent natural resources charges as uniform.  A further point to note is that, here, rent does not enter price.   As we remember rent has to do with saved effort not effort spent in production.

Those who talk about resource rents seem to mean resource prices.    They thus suggest wrongly that rents are uniform.   But since the term seems always to be used without any adequate explanation about what it means, it is possible to deny that there is this confusion.   
Page 32.

There are of course natural resources.    They are bought and sold.    However, their price is set by labour expended in producing them.    Again, the natural resource itself has no price.   As Henry George repeatedly says land is not wealth.    Land is defined in Progress and Poverty as “the whole material universe outside man” (p.38).      Geoists mistakenly assume that Henry George confines the meaning of land to land surface or soil.    That is a strange mistake to make since he points out the same error in The Science of Political Economy; that is, that John Stuart Mill’s argument is flawed by shifting between these two meanings of land (4,464).    Only land has rent.    In Georgism it is quite wrong to talk about “collecting the rental from land and natural resources”

       Henry George states that, in the presence of private property in land, another rent is added to ‘rent proper’.   This is a scarcity rent.     Political decisions for example may exacerbate scarcity.   An example will illustrate this.   In early 2006 it was rumoured that Australia would soon export uranium to China.   The immediate effect was substantially to raise the price of shares in companies mining uranium.    Now, production costs had not changed.  Nothing had changed except that it was perceived that there was to be a greater demand for uranium.    In terms of the then uranium policy (the three mine policy) there was going to be a chronic scarcity.  Uranium mines or uranium deposits now had one added intra-marginal advantage – scarcity.    Since it was possible that the three mines policy might be dropped, uranium deposits may have had a third rent, speculative rent, coming to companies holding uranium deposits outside the three mines.  

It must be noted that the term resource rents disguises a much less attractive proposition, True Cost Economics with its Malthusian obsession that scarcity and thus monopoly pricing are natural and unavoidable facts of life.

APPENDIX B:  NATURAL RIGHTS

The doctrine of natural rights seems abandoned by geoists.    Like the ‘single tax’ the concept is thought to be “anachronistic”, or simply “emotive”.   Geoists have joined many academics in ceasing to base human freedoms on what is seen to be a dogma of the C18.   The idea is dismissed by the argument that there is nothing especially admirable morally about nature.   It is a chaotic and cruel struggle for existence.    Some prefer instead to talk of human values rather than natural rights without realising that they have now liberated Liberty from any theoretical basis.   
 
However, natural rights remain a cornerstone of the teaching of Henry George.    The concept of natural rights stems from the fundamental principles held by Henry George.      Natural rights exist because of natural law.    Man has rights because he is under law.  Man is a being living under laws that govern his body, mind, and spirit.

This natural law manifests to us as desires.    Thomas Jefferson named these desires broadly as the desires for life, liberty, and happiness.   Man is aware of and must be obedient to these basic desires and, hence, Thomas Jefferson spoke of the inalienable and self-evident rights to “life, liberty, and the pursuit of happiness”.    The only condition he laid down in pursuing those rights was that those rights should be enjoyed equally by everyone.    The function of government (in its widest sense) was to guarantee these rights to each person.    There is one thing of which we can be absolutely certain.    That is that Henry George subscribed wholeheartedly to this theoretical basis for human freedom.        To criticise emphasis upon liberty, to imply that reference to natural rights is emotive nonsense, belies a sad ignorance.

For, take away these concepts connected to the natural order and the whole foundation of Georgism no longer exists.    Take them away and there are no first principles at all.    Neither does Georgism have a clear direction.   Take this direction given by principles away and what is left is simple pragmatism: “follow some practice until it turns out to be wrong”.     What then fills the void are “novel, innovative initiatives” that, unknown to those that invent them, lead nowhere.    The test is then, not obedience to the natural order, but expediency, something Henry George accepted as a second best test of ideas. 

MAIN REFERENCES

(1)  Churches, Lloyd, Tollways, Congestion Charges, and Public Transport, Progress Jan.-Feb. 2005.

(2)  Gaffney, Mason, Georgist Analysis: Some Room for Improvement, The Georgist Journal, Fall 2001.

(3)  George, Henry, A Perplexed Philosopher, Schalkenbach, NY, 1965 (1892).

(4)  George, Henry, The Science of Political Economy, Schalkenbach, NY, 1962 (1898).

(5)  (The) Great Debate, Progress, Mar.-Apr. 2005.

(6)  Post, Louis and Leubuscher, Fred, Henry George’s 1886 Campaign, Henry George School, NY, 1961.

Wenzer, Kenneth, Henry George, Collected Journalistic Writings Vol IV, The Australian Experience, M.E. Sharpe, NY, 2002.

In addition to these references isolated reference has been made to the Geelong Advertiser 10.4.06, Progress and Poverty and The Land Question by Henry George and the Papal Encyclical Rerum Novarum.    

GLOSSARY

Externalities: Costs and benefits to persons outside market transactions.
Intensive Margin: Place or time at which productivity is lowest.   The extensive margin is the point of lowest productivity for a number of pieces of land.
Marginal Cost: The extra cost incurred by the addition of an additional or last unit of production. 
Marginal Cost Pricing: Economic decisions based upon marginal cost.
Optimal Use: Best use usually that balance of factors of production yielding most profit.
Pre-emptive Capital:  Capital (motor cars especially) that occupies space without paying.
Single Tax: An inaccurate term for public revenue gathered solely from land rent.
Spontaneous Cooperation: Cooperation that arises in society to meet a perceived need as against cooperation consciously directed and hierarchically organised (as in an army).
Use Value: Level of subjective desire for something as against its Market Price or Value.
Usufruct: Use without ownership.