The Single Tax

Thomas Nixon Carver

[Chapter XI from Essays in Social Justice, published by Harvard University Press, 1915]

As to wealth which accrues from a rise in the site value of land, there can scarcely be any two opinions. From Adam Smith down, economists have recognized the fact that the fortunate owner of a piece of land whose mere site value, irrespective of all improvements, has increased on his hands, is simply a recipient of good fortune, and that this part of his wealth does not represent his own earnings in any way, shape, or manner. There may be a good deal of difference of opinion as to the proper inference to draw from this fact. The single taxers certainly go too far, first in assuming that the wealth which goes to one individual in this way is necessarily taken from somebody else, or that it in some way deprives somebody else of what he has earned, and in the belief that by taxing away land values we should eliminate poverty and many other social ills. If my neighbor's land has increased in value on his hands, it would doubtless be a fine thing for me if I could share in that good fortune; but I could not with a straight face claim that his increment of wealth had in any way impoverished me or deprived me of what I had earned. My earnings are entirely independent of the value of his land. His income as a landowner (not as an improver of land) may not be due in any proper sense to his own contribution to the product of the community. It is, however, a measure of the contribution which that piece of land makes to the productivity of the community, and is not due in any sense to the contribution which I make.

The assertion that the owner of land who profits through a rise in the value of his land has necessarily subtracted something from the earnings of others is based on the assumption that all wealth has been "earned" by some one. If the owner has not earned it he must necessarily have robbed some one else, either in a legal or an illegal manner. But this assumption is incorrect. Some wealth is found. If I stumble upon a gold nugget, or a rich vein of valuable mineral, I cannot truly say that I have earned it, nor can any one else. Until some one could be found who could prove that he had produced or otherwise earned it, I could not be accused of depriving any one else of his earnings.

In the opinion of the present writer, the site value of land belongs in the class of findings, rather than in that of earnings or stealings. Even in the case of the gold nugget, a pretty good argument could be made in favor of my dividing it with my fellows, but that argument could scarcely be based on the ground that they had earned it. Unless some one wished to resort to cheap political claptrap he would have to base his argument on two propositions. I. The others need it. 2. I can't show a very good or positive reason why I should be allowed to keep all of it.

There is a disposition on the part of certain reformers to deny that land is productive. This follows as a corollary of the proposition that all wealth is produced by labor. If that were true, it would follow, as a matter of course, that none of it is produced by land. Whatever may be one's opinion on that subject, no one is likely to deny that land is useful. When asked, for what is it useful ? he would be compelled to say, at least so far as it concerns land which is used in production, that it is useful in production. To say that a piece of land is useful in production can only mean that when it is used the community gets more product than when it is not. If that cannot be said of a given piece of land, that piece of land is not useful, and will not as a matter of fact be used in production. If we can agree upon this, we need not stop to quarrel over the meanings of the word " productive," that is, whether that is the proper word to describe the land which is useful in production.

One of the arguments by which the single taxer supports his contention that land is unproductive is to the effect that if it were not for the community around it, together with the roads, police protection, churches, schools, - in short if it were not for civilization in general, the piece of land in question would not be worth anything. Since its productive value is due to the presence of the community, it follows, they say, that the community and not the land is the producer. In the first place, this proves too much. All that is said respecting land could be said of any other factor of production. If it were not for the community round about, neither the buildings on the land nor the labor of the lawyer, the doctor, the merchant and the manufacturer would be of any great value. In the second place, if we begin at another link in the chain and follow the same method of reasoning, we could prove that land produces everything. If it were not for the land there would be no productivity, or any community either; therefore, since all productivity is due to land - would be impossible without land - land produces everything.

But this method of reasoning is so palpably fallacious that it is useless to pursue it further. The fault with it is that it fails to distinguish between the community in general and the individuals of whom it is composed, or between land in general and the particular parcels of land which are being rented, bought and sold.

Since it is not labor in the abstract but individual laborers who are hired, the test of the productivity of labor is to find out how much more the community could produce with than without the individual in question. The difference is the measure of his value or worth as a productive agent. The same method is applicable to a given piece of land. Find out how much more the community can produce when that piece of land is in use than it could if it were not in use. The difference gives you the measure of its value or worth as a productive agent. From this point of view, land is as clearly an agent of production as is labor, and the productive value of each is to be tested by precisely the same method. Assume a given piece of land to be withdrawn from use. The labor and capital now employed in cultivating that land would have to be employed elsewhere. Being employed elsewhere would mean that it would have to be added to the labor and capital employed on other land. This would require somewhat more intensive cultivation of the other land, which would increase somewhat its total product, but would not increase it sufficiently to balance the amount formerly produced on the piece of land in question. Or to put it another way, suppose that the piece of land is now being held out of use for speculative purposes. Its potential rent is the amount which its use would add to the total productivity. If it were brought into use, labor and capital would have to be expended upon it. This labor and capital does not come out of air. It would have to be withdrawn from other land. Being withdrawn from other land, the product from that other land is diminished. But if the piece of land is of any value, this diminution of the amount produced on other land would not be equal to the amount which could be produced on this particular piece of land. The difference between the diminution in the amount produced on the other land and the increase of the amount produced on this land is the measure of the productive value of this land.

There are two distinct dangers, however, lurking in this argument. While land is undoubtedly a productive agent, as productivity is thus defined, it does not follow by any means that the landowner is a productive agent. In one important respect he differs from the owner of a productive agent which has been made by human labor and ingenuity. The owner of the latter either made it himself or bought it from some one who did. If he made it himself he may be said to be the real producer of the apparent product of the material agent. If he bought it he may be assumed to have paid the producer what it was worth. The producer having transferred his rights to the buyer, the latter may be assumed to be standing in the place of the producer. In the case of land, however, since no one made it, no one can be called the real producer of the apparent product of the land. The land is, in other words, an original or primary factor of production, and no person can claim to be the producer of land as he can in the case of a machine. The landowner's rent, therefore, while payment for the productive value of land, cannot be said to be payment for the productive value of the landlord himself - it being understood that we are now speaking of the land itself and not the improvements which the owner may have placed upon the land.

On the other hand, it is not to be assumed that the landowner is a parasite, or a useless member of society. While he is not in any sense the producer of the land, he is, in a very important sense, the conserver of its productive powers and other valuable qualities. Property in land there must be, either private or public. Throwing land open to use is so unthinkable that not even a single taxer in his sane moments would advocate it. Its effective use requires definite control, fencing the public off, and devoting it to specific purposes which require the exclusion of trespassers. Either under public ownership or under private ownership subject to the single tax, this would be precisely as necessary as under the present form of private ownership. If the land is worked by private individuals who either do not own it, or nominally own it under the obligation to pay its full rental value to the public in the form of a single tax, it is worked by men who are actually or virtually tenants. Under the single tax the nominal owner is virtually a tenant of the public because he pays economic rent to the public, and does not gain or lose by a future increase or decrease in the value of the land - (as distinct from improvements) . His rent will go up or down accordingly. Every one knows what a tenant does to land if he is not controlled by the owner. Having no interest in the future increase or decrease in its value, his interest is concentrated in the present. If he is not prevented by the control of the landowner, he will speedily exhaust the soil and leave it when he is through with it. In its own interest as the virtual owner of the land, the state would be compelled to safeguard its future value by very close and detailed regulation and inspection. This would require an army of officials who would have to be paid salaries. It would not be pretended that these officials were not earning their salaries if they were doing their work reasonably well. That precise work is now done by landowners, the only difference being that they receive rent instead of salaries. It may be that they are not doing it as well as they ought, and it may be that they receive more in the way of rent than that body of officials would receive in the form of salaries; but in any event, it could not be denied that they are earning something, whether they are earning all they are getting or not. Possibly a refined form of the single tax could be devised which would tax only site value and not soil or anything else which could possibly be exhausted or destroyed. In that case the public would be the virtual owner of the site alone, and the private owner would be the real as well as the nominal owner of everything else, including the soil. He would then have the same motive as now for conserving the value of everything which might be exhausted and which therefore needs conserving, leaving to the state the virtual ownership of the site, the only thing which cannot be exhausted and therefore needs no conservation.

There is another and far broader aspect of the question of landownership than any we have yet considered, an aspect, by the way, which is almost universally ignored in modern discussions of this important subject. It is obvious that this becomes a social problem only where there is a considerable landless class, on the one hand, and where, on the other hand, land has become very scarce and valuable. These two conditions necessarily go together. Land becomes very valuable only when there is a dense population. A dense population means a large landless class. In other words, without a large landless class, no land would be very valuable, and no landowner would be able to get a large rent. We may well ask the question in all seriousness why there should be a dense population and a large landless class at any particular spot. We too frequently assume that the density of Boston Neck or Manhattan Island is a part of the providential ordering of the universe, that it must be taken for granted as divinely ordained, and, being so, it is very wrong that so many should own no land while the little land that there is in such places should be owned by so few. To a person who looks at the matter in this way, it is useless to point out that there is plenty of land elsewhere where all those people might become landowners. To him it is so unnatural that men should spread out and live on the land, and so natural that they should flock together in these vast rookeries called cities, that he simply cannot take you seriously. The writer's hope is that there may be a few readers who have enough of the scientific imagination to see that there is no necessity why men should herd together in this way, that it is quite conceivable that they might continue to spread out, as every colonizing race has spread, and that they may have enough historical knowledge to realize that every great race has been a colonizing race. To such a reader it may be worth while to present the following argument.

The fact that men congregate in cities instead of going on the land is because they prefer the pleasures and hardships of the cities to the hardships and pleasures of landownership where land may be had. The reason that men prefer to work in the employ of landowners is because they prefer the wages and the lack of responsibility, to the hard work, the danger, and the other hardships of pioneering. This condition is made easy for them because an older and sturdier race of pioneers has preceded them, has subdued the land and brought it under control. If you compare the hired man, as thus understood, with the pioneer, it would be so difficult to determine where to bestow the term "parasite," that we should do well to omit it altogether from our economic vocabulary. When we come to compare not the hired man with the pioneer for whom he works, but the later hired man with the descendants of the pioneer, the question becomes mixed up with the question of inherited wealth and is not a question of landownership pure and simple.

The cry for a share in the value of the land which a certain aggressive type of single taxer is so busily engaged in stirring up, is quite different from the desire to own and use land. They who desire land know where they can get it; what the aggressive single taxer wants is not land, but a share in the value of the land which somebody else has. He can get land in Canada, but he prefers it in New York, Boston, or some other large city where it is very scarce and valuable. The single tax movement, therefore, differs fundamentally from the agrarian laws for which the Gracchi sacrificed their lives. They proposed to give the people land - to make them owners of land - where it was to be found; the modern movement is to give them, through taxation and public expenditure, a share in the value of the land already occupied by other people. Moreover, it must be said, this modern movement is promoted, not by appealing to the pioneering, colonizing, spirit of a sturdy, conquering race, but too often by appealing to jealousy, covetousness, and other of the less commendable motives which actuate mankind. However, no pity need be wasted upon the landowners in our large cities. They find it profitable to encourage the coming of masses of mankind who prefer to sweat and stew in cities rather than to pioneer the way for civilization. If this mass of people should vote to confiscate the value of the land on which they are now living, the landowners need not complain of being badly treated. They have gambled with economic and political forces, and must stand to lose.

However, while no sympathy need be wasted either upon landless men who refuse to go where there is land to be had, or upon the landowner if the landless masses should decide to take his land, or its value, away from him, still, this is not a matter of sympathy. It is a matter of constructive statesmanship. From this point of view we must consider fairly and patiently whether priority of occupation is or is not a sufficient ground upon which to base a legal right to land, and if so, what are the reasonable limitations of that right. It is so universally agreed, in civilized societies, that the man who first occupies a piece of land has a somewhat better right to it than they who come later, that it would seem that the burden of proof should lie upon those who deny it. In actual practice, however, there are several recognized qualifications to this agreement. In the first place, it is customary to give a preference to the members of our own civilization, over others. These considerations are sometimes allowed to take precedence over mere priority of occupation, as illustrated by our treatment of the American Indian. Nevertheless, as between citizens of our own state, we allow some precedence to the first occupier. In the second place, for the proper recording of titles, and the proper safeguarding of the public interest, the occupier is generally required to go through certain legal formalities. If he neglects these, his mere priority of occupation may not avail to secure his superior right to the land. With these and a few minor qualifications, there is no doubt that civilized nations do, as a matter of practice, allow priority of occupation to count as a factor in giving a legal right to landownership. Couple with this factor the right of transfer, under which the original occupier may transfer the rights which he has acquired to others, either to his heirs by bequest, or to others by bargain and sale, and you have every essential feature of the modern right of property in land.

But it is not necessary to rest the case in favor of priority of occupation as a basis of property rights on the mere fact of the universality of the practice, or upon the fact that the burden of proof is thrown, by this universality, upon those who attack it. It is even less necessary to base the argument upon any absurd or metaphysical doctrine of human rights in general. An excellent example of this class of argument is as follows:

I. Every man must be assumed to have a right to him- self. 2. When a man has worked upon a thing he has put a part of himself into it. Therefore he has a right to that upon which he has worked. If the premises were true, the conclusion would follow as a matter of course. Unfortunately neither premise is necessary. The first may or may not be true, it does not matter. The second is absurd and meaningless, and that is sufficient to spoil the argument. What does it mean to say that one puts a part of oneself into anything ? When one has worked upon a thing, has he diminished himself - i.e., the part of himself which is left outside the thing - or has he not? If, after he has parted with the thing he has as much of himself left as he had before, can he be said to have put a part of himself into it?

But such arguments are as unnecessary as they are futile. All sound and genuine rights are based upon social utility. Is it useful in the long run, i.e., does it work well, to allow the first occupant of a piece of land some rights in it which we deny to those who come later and want a part of it or of its value? Of two communities otherwise equally favored, one of which recognizes this right while the other does not, which is likely to become the more comfortable, prosperous, and powerful? These are the considerations which must guide the law-maker or the nation-builder in his quest for social justice, rather than the mere sentimental notions of equality and fair play. These notions are important factors, to be sure, and when they are not too short-sighted, are fairly safe guides. But when short-sighted they are the most destructive factors in any civilization. Justice is mercy writ large. It is benevolence with a long look ahead, a look which takes in the most distant generations of the future and places them on an exact equality with the present generations; which has as much regard for an as yet voiceless individual to be born a thousand years hence as for any individual now alive and clamoring for his rights.

As an illustration of the way in which a sentiment of fair play and justice may prove to be short-sighted, let us take the law of primogeniture under which only the eldest son can inherit land, as compared with the modern system under which all the children share equally in the inheritance. Primogeniture seems obviously unfair to the younger children, and therefore unjust, while the other system seems obviously fair to all, and therefore just. But if it should happen that, under primogeniture, the younger sons, realizing that there is nothing to be gained by staying on the ancestral estate, should go out into the world to conquer little kingdoms for themselves, by pioneering and bringing new lands under cultivation, by starting new business enterprises and expanding the nation's productivity, or by exploring in the fields of science, that would produce a growing, expanding and prospering civilization. If, on the other hand, under the other system, the sons should decide to hang around home waiting for the old folks to die in order that each might get his little share of the estate, that would tend to produce a narrow, contracting, decaying civilization. Of two nations, the one reacting in the former and the other in the latter manner, there is not much doubt as to which would grow more prosperous and powerful, and play the larger role in the civilization of the future. This is a large consideration which should make us pause before we decide to follow a sentiment of fair play and justice which does not look beyond the present generation and its immediate successor.

This should lead us to give careful consideration to several questions. First, to what extent is pioneering stimulated by the desire to get the future "unearned increment" of land value? Second, to what extent would a sharing in the enormously inflated value of land in overcrowded urban centers induce the landless classes to stay in these centers rather than to spread out where land is more abundant and cheaper?

If the later comers to a growing community are made to feel like the younger sons of the English nobility, that the land is all taken and they are to have no share in its rent, they are then thrown upon their own resources and are forced to make good in some other way, that is, to find some other source of income, or to go somewhere else where there is land to be had. If, added to this, they are given to understand that if they do face the hardships of pioneer life and take up vacant land they shall be allowed to profit by it, not only in the present, but in the distant future when that land increases in value, you will have a double stimulus to pioneering and a double discouragement to hanging around old and overcrowded centers in the hope of sharing in the prosperity of the earlier comers. You may not think it desirable to encourage pioneering, you may think that it is better not to pioneer, but to encourage men to stay in the older centers and get a share of the land values accruing there, but here again is a situation in which it is difficult to know where to bestow the word parasite.

This difference in the point of view of the old timer and the new comer is one of the oldest and most persistent causes of class antagonism. Fundamentally there are only two kinds of aristocracy in the world. One is a military aristocracy, under which a race of military conquerors set them- selves over a more or less subject population. The other is the aristocracy of old timers, or old families who have attached themselves to the soil, built up the community, and attracted new comers. At first the new comers are the plebeians and accept a distinctly lower social position than that of the patricians. But as their numbers increase, and their sense of power and solidarity grows, they resent the exclusiveness of the upper classes, that is, of the old timers, and gain greater and greater control over the affairs of the city and state. Naturally the old timers resent this, and much bitterness ensues. This kind of social distinction and its attendant bitterness of feeling will probably persist as long as populations shift, and as long as, through this shifting, they can be divided into the two classes, the ins and the outs, the attached and the unattached, those in established positions of economic independence, and those new arrivals who are as yet unestablished. In the case of a military conquest, of course, it is the new comers who form the aristocratic class. In other cases, they form the plebeian class.

If we are at all to consider pioneering, and the conditions of industry which prevail in a pioneering community, there will not appear to be so very much difference between property in land and property in other things. But if we ignore the possibility of pioneering several distinctions occur. One is that land is a free gift of nature. Another is that other products are made by human labor.

To the first distinction it may be objected that other goods are, in their original form, free gifts of nature as truly as land. The only basis of a man's claim to them is that he appropriated them and changed their form to suit his own or some one else's purpose, - that is, he put them into a form which was valuable. The same is true of land, and it is this aspect of the case which would naturally appeal, and did as a matter of fact appeal, to the first settlers in a new community. If one settler saw a tree which seemed to contain possibilities, and chopped it down and made it into a table, it would be in accordance with social utility that the table should be his. If another settler saw a piece of land which seemed to contain possibilities, and cleared it and ploughed it and reduced it to cultivation, on the same reasoning the land would be his. Each settler would have found a free gift of nature, each would have worked upon it, each would have changed its form from the raw state in which he found it to a form which would serve his purpose. The mere fact that the result of one's labor happened to be a farm, and that of the other's labor a table, would not have appeared at the time to be a real difference. This aspect of the case is recommended to the consideration of those who believe that the private ownership of land is forbidden by a moral law ordained from the foundation of the world.

If, however, the community should grow in population, a real difference between the table and the land would begin to appear. In the first place, it would be found that the owners of the land held control of the original raw material for the manufacture of tables and all other produced goods. When the maker of the first table wished to make a new one to replace the old one when it was worn out, he would have to pay the landowner for the privilege of cutting a tree from which to make it. In the second place, the value of the land would increase in proportion to the number of persons wishing to make use of its products either for purposes of consumption or for the purpose of producing other goods. The fortunate owners of the limited supply of land would find themselves in possession of a growing income far in excess of anything which the land might have cost them, whereas the owners of the tables and other such goods would find themselves always compelled to expend approximately as much in the making of them as they were worth. As time goes on this difference increases, especially in a growing city, until small areas of land come to have fabulous prices, while the value of tables continues to bear a fairly close relation to their cost of production.

To the second distinction it may be objected that land is sometimes "made" in the sense of being reclaimed from the sea or the desert, whereas there are other goods, such as antique furniture and rare works of art, which cannot now be reproduced. But the fact remains that by far the greater part of the present land supply is not "made." In fact, there is not enough "made" to have any appreciable effect on the value of land in general, and it certainly does not prevent certain choice situations from rising to stupendous prices. On the other hand, with few exceptions, other goods are capable of reproduction, and are actually reproduced so long as they have a value high enough to repay the cost of production. Whereas non-reproducible land is the rule and reproducible land the exception, reproducible goods of other kinds than land are the rule and non-reproducible ones the exception. This may be called a difference of degree only, but the difference of degree is so great as to constitute, for scientific and practical purposes, a difference of kind. As a matter of fact, nearly all scientific differences are differences of degree. It is not denied, however, that there are many resemblances between land and other goods. There are also certain resemblances between a man and a clothes-pin, but the differences are sufficiently important to warrant our placing them in different classes. [Note: T. N. Carver, Distribution of Wealth, pp. 108-111]

In view of all these considerations it will be difficult for any reasonable man to lash himself into a state of moral indignation against the private ownership of land. If a pioneer settler were brought face to face with a certain type of radical single taxer who makes a moral issue of the ownership of land values, and makes free use of certain formulae, such as the equal right of all to access to God's earth, the moral indignation would not all be on the side of the single taxer. To the demand for access to God's earth, the pioneer would reply, " You do not seem to want access to the earth, you want access at this particular spot, which is mine. You may have all the access you want elsewhere, but I have access here and shall defend my position." He would naturally feel that his priority of possession gave him a right superior to that of the later comer.

However, the single taxer disclaims any desire to dislodge the prior possessor from his possession. All he proposes is to require the possessor to pay for the privilege. After the first possessor has settled himself, others come and say to him, "We outnumber you, we can therefore outvote you. We shall, therefore, vote that you pay for the privilege of holding this land. It is we who create the value of your land anyway." The matter might, of course, be presented to him in a more reasonable way. They might say to him, "We will come to your community and live on your land provided you will make an inducement. Our coming will add to the value of your land and, therefore, you can well afford to pay considerable sums for public improvements in order to attract more people. It will really be money in your pocket to do so." This might or might not appeal to him, but it would scarcely stir up moral indignation. However, the single taxer who makes a moral issue of his doctrine would disdain to temporize in this way.

Pioneer conditions, however, have long passed away in those centers where the single tax propaganda is active. The first generation of settlers and their immediate descendants having passed away, this argument, it may be said, no longer applies. But we grant the right of transfer, either by sale, gift, devise, or inheritance, then we grant that each later owner has acquired the rights of the original settler. If we grant the right of the original settler, we cannot deny the rights of any of these later owners without attacking the right of transfer. As a matter of fact, the problem of landownership has, in all old communities, become so mixed up with the problem of inheritance that it is difficult to discuss them separately. It will be found, upon analysis, that every real objection to the laws of property in land is as much an objection to inheritance of land as to property in land as such. In no case can the question, by any process of mental contortion, be made a moral question. It is wholly a question of expediency. The question is, how does landownership work? Are there any modifications of the right of inheritance, which may reasonably be expected to improve economic or social conditions, to stimulate the productive energies of the community, or secure such a distribution of wealth as to develop the productive virtues of the people?

There are, as a matter of fact, three specific advantages which would result to modern society through an increase in the taxation of land values. The first is that under such a system it would become less common than it now is to hold valuable land out of use for speculative purposes. When the owner sees that the taxes on the site value of his land are eating up all possible profits through the annual increase in that site value, and that his only way of making anything out of his land is by using it rather than by holding it to sell at a higher price, he will either begin to use it himself or hastily sell it to some one else who will use it. Thus there would result a certain increase in the amount of land in actual use, or a diminution in the amount held out of use, which amounts to the same thing.

Under the laws of value already outlined, this increase in the available supply of the factor called land would result in an increased demand for the other factors which have to be combined with land in production. In order to use this land which is now held out of use, there must be labor and capital. Where, as in thickly populated parts of the country, land has become a scarce factor, it occupies very much the same position in actual production that saltpetre did in the illustration used above. Bring more land into use, and it will have very much the same effect upon the demand for labor and capital as an increase in the supply of saltpetre had upon the demand for charcoal in the illustration.

A second beneficial effect which may be expected from an increase in the taxation of the site value of land would be the reduction in the taxation on active industry. Assuming that a certain revenue has to be secured for public purposes, it must be secured either by taxation on land or on industry, or on both combined. In proportion as the burden is placed upon the site value of land, it is taken off active industry. The result of reducing taxes on active business, that is on the products of industry, must invariably be to encourage business and industrial activity. If the farmer knows that his land must bear all the taxes, and his buildings, crops, improvements, and live-stock none, that is to say, if his taxes will be as high when his land is unimproved or half improved as when it is highly improved, he will have every encouragement to improvement. But if he knows that every time he adds to the value of his estate by putting improvements on his land his taxes must go up, that must operate, to a certain degree at least, to discourage improvement. And if the owner of a vacant city lot knows that his tax will be as high as it would be if a valuable building stood upon the lot, in other words, that he will not be taxed at all upon the building, that would be, to some degree at least, an encouragement to building. All these improvements upon farm land and buildings upon city lots not only require labor in the first place, but they continue adding to the total productivity of the community thereafter, making goods more abundant for all members of the community, including the laborers.

A third beneficial result of this process, more important perhaps than all the others, is that it would tend to eliminate a certain kind of waste labor. The most serious waste of labor power is not found at the bottom of the social scale in the form of an unemployed class; it is found at or near the top of the social scale, in the form of a voluntarily idle or leisure class. Generally speaking, the leisure class is made up of the most capable members of the community, though this is not necessarily true in every individual case. As a rule, the most successful farmer will lay up a fortune more rapidly and be able to retire from active farming earlier in life than the less capable farmer, whose rate of accumulation is less rapid. So with the capable business man. The more capable business man will acquire a competence earlier in life than the less capable man, and if he is inclined to retire at all the more capable he is the more likely he will be to retire, and the earlier in life he will retire.

Now economic capacity is largely a matter of need and scarcity. A kind of labor power, mental or physical, for which the need is far in excess of the supply, counts as high ability. But no matter how great the need for it, if there is as much of it as is needed, it does not count as high ability. The scarce forms of ability, relatively to the need for them, are the kinds which command the highest salaries, or secure the largest profits in any healthy and well-governed community. But if, as a result of the scarcity of their talent, a certain class of men grow prosperous, and as a result of their prosperity, they retire from business early in life, the active talent is thereby made still scarcer, and a bad situation is made worse. If, in addition, he not only retires from active business himself, but brings up his sons in idleness, they, in turn, expecting to be able to live on their inherited wealth, the scarcity of active business talent is made still scarcer. This, however, will be considered under the discussion of inherited wealth.

Probably the scarcest form of productive power is genuine investing ability; the ability to see just where new industrial enterprises are needed, coupled with the courage to act, and the skill to get the new enterprise started in the right way. A few more men possessing this kind of ability in any community would remake that community by causing an expansion of industries, creating new employment for labor, and increasing the products for the satisfaction of wants. But there are productive and unproductive investments. If I invest in a real productive enterprise, I help to start a new enterprise, and the community is benefited by my action. But if I invest in land, intending merely to hold it for a rise in value, I have done nothing for the benefit of the community. No new land is created by my investment, and the community is in the same condition as though I had never invested. The most that could be said of my investment would be that I had released the capital of the seller and that he might, if he chose to do so, invest the capital thus released in productive work. But this could not be said of land investors as a class. There would, therefore, be this important difference. The more men there are buying tools, machinery, buildings, etc. - for that is virtually what investment means - the greater will be the demand for such things, and the more their production will be stimulated. The normal result of this kind of investment is to increase the world's stock of tools, machinery, buildings, etc. But the more men there are buying land, but not themselves improving it, the higher the price of land goes, and that is the end of the process. No more land is produced, because land cannot be produced, and the world is no better supplied with land than it would be if men did not invest in it. Much of the investing talent of the country is perverted to this unproductive purpose. If this opportunity for unproductive investment were closed, some of this talent would be forced into other and productive channels. Instead of buying land, men would buy other sources of income, that is, other means of production. The increased purchases of these things would stimulate their production and thus the world would be better equipped. By taxing away the selling value of land and thus making it an unprofitable field for the investors, the scarcest and most precious form of industrial talent would be made somewhat less scarce than it now is. If we could prevent its being diverted into the useless channels of land investment, and turn it into useful channels, it will count for something. Because this kind of talent is so scarce and so precious, it is of vastly greater concern to us to save it and utilize it than it is to save and utilize a kind of labor power which is abundant relatively to needs.

If that is virtually what investment means, the more men there are investing in tools, machinery, buildings, etc., the more of such things there will be produced. The result, therefore, of increasing the number of this class of investors, especially the number of wise investors, will be an increase not only in the number of tools, machines, and buildings, but in the quality and value of these instruments of production. But, as pointed out above, if the higher forms of investing ability are absorbed in useless speculation in land, speculation which neither increases nor decreases the supply of anything, there is that much less left for the kind of speculation which really draws the productive forces of the community into the manufacture of other productive agents.

Because a considerable extension of the land tax would tend to force into productive use a certain amount of land which is now held out of use for speculative purposes; because it would tend to relieve active production from the repressive burdens of taxation, and because it would tend to cut off the incomes which now support capable men in idleness thus forcing a certain amount of talent into action, we must conclude that an extension of the land tax would work well for the nation. However, one cannot be called a single taxer who believes also in the inheritance tax.