The Essential Reform:
Land Value Taxation
In Theory and Practice
C. H. Chomley and R. L. Outhwaite
[Part 13 of 15]
No one who gives the matter a moment's thought will deny that
civilisation is confronted with numerous social problems the solution
of which demands not only a larger revenue, but also an alteration of
conditions, which could not be effected by any mere expenditure of
public money. In these circumstances land values taxation has peculiar
claims to consideration, for it is more than a great fiscal reform. It
is an economic revolution striking at the root of poverty and
unemployment, which are the menacing social problem, one in essence
though its phases are many, and at the same time providing the
revenues absolutely necessary for immediate alleviation of conditions
that can be truly cured only by the healing power of justice operating
for a considerable length of time. Poverty in old age, to take one
example, has become so common that, until the Old Age Pensions Law was
passed, the great majority of the working classes had no prospect
before them but the alternatives of starvation or the workhouse.
Public opinion has revolted against this state of affairs, and it has
been mcdi-fled by the Act of the present Government, which, arbitrary
and insufficient as it is, has proved an immense boon to hundred~ of
thousands by freeing their old eyes from the haunting vision of a
pauper's grave. It is good that old age pensions are granted, and
there can be little doubt that the pressure of humane public opinion
will demand their increase and the widening of the pensionable class,
Unless land values are taxed, however, it will be impossible to find
the money required without imposing a tariff which would fall with
terrible weight on the poorer classes, and thus aggravate the poverty
which it is the design of old age pensions in part to relieve.
Unless land values are taxed the pension can never be more than an
insufficient dole to the most needy, given as a matter of charity,
however kindly feeling may seek to disguise the fact. In current
thought -- miscalled individualistic -- the granting of a pension must
remain an act of charity and nothing else; need, and not right, is
frankly acknowledged as the basis of the pensioner's claim, and indeed
it could not be otherwise To those who do not understand the meaning
of land values the simple facts appear to be that all men and women
are paid for any work they do; that some are unwilling, and that some,
through fault or misfortune, are unable to make provision for their
old age In these circumstances the logical say, "Let the aged
poor go to the workhouse or starve;" others, less logical and
more benevolent, say, "Let us pension a chosen few of them, and
soothe their feelings by telling them that they are drawing the
pension, not as charity but as a right attaching to their years."
To point out whence the right originates is a puzzle beyond the man
who believes that labourers, during their working life, receive all
they are entitled to. If this were the case they should either make
provision for their declining years, or, having failed to do so, make
appeal to charity to save them from the just consequences of this
failure.
The fact is, however, that the worker does not receive all he is
entitled to during the period of his activity. His wages are reduced
and his opportunities are curtailed by land monopoly, and even were he
fairly paid for his actual labour, it would still be the case that, as
a unit of the population, he has done something else for which he has
received no return-he has borne his part in creating the immense land
values of the country, which owe their existence solely to the demand
of the people for land. This being so, what could be more fair than
that, when his working days are done, a portion of that value which he
has helped to create should be returned to him to keep him from want
in the decline of life? Old age pensions derived from a tax on land
values would have no taint of charity about them; they would be paid
from a fund into which the average pensioner has put far more than he
would receive in the years remaining to him when he has passed the age
of seventy. Not that seventy would remain the lowest pensionable age
were the pension fund obtained from land values; they would provide
enough to reduce it Ly several years, and also to pension the victims
of ill-health and accident. Further, a tax on land values would permit
of pensions on a much wider basis than the present, with its cruel and
arbitrary exclusion of those who have ever been obliged to seek parish
relief, being increased from 5s. to 10s. per week. The latter amount,
which is that granted to persons over sixty-five years of age in the
Commonwealth of Australia and the Dominion of New Zealand, would be
sufficient in England to keep a pensioner with-out other sources of
income. Therefore such a grant would relieve the rates of the expense
of supporting in the workhouses thousands of old people who could not
live upon 5s. a week, but who, if assured of the larger sum, would
have no difficulty in finding comfortable homes in private houses.
As a matter of fact, it would probably be actually cheaper to pension
aged indoor paupers at 10s. per week than it is to keep them in the
workhouses. The capital cost of each workhouse bed, the late Royal
Commission found, was £222, l0s. during the years 1900-1904,
exclusive of the value of the sites of the workhouses. Reckoning
interest on this sum at 4 per cent. we find that the actual cost of
each pauper for the rent of his bed was about 35. 6d. per week. When
the cost of food, fuel, clothes, attendance and management are added,
the total expenditure incurred in respect of an indoor pauper must be
over l0s. per week.
In England and Wales on July 1, 1906, the in. door paupers numbered
215,713 and outdoor paupers 523,883, the former being thus between
one-third and one-fourth of the total number relieved. In the year
1905-1906 the cost of indoor paupers was £3,229,122 and of
outdoor paupers £3,374,427, these sums being exclusive of
salaries, loans, and interest and "other expenses," which
amounted to £3,180,000, and exclusive also of the cost of
lunatics. If we assume that half this expenditure is due to indoor
paupers, which, though they do not number half the total, is a
reasonable assumption, because it is the indoor paupers who
necessitate vast expenditure on land and buildings-and beds which cost
£222, l0s. per head -- it follows that in the year 1906 each
inmate of the workhouses cost nearly £30 a year. A pension of
l0s, per week would cost only £26 a year. Of 817,000 paupers
relieved on March 31, 1906, 318,436 were over sixty-five years of age.
Of paupers over sixty-fiye about half are in receipt of in-door
relief. To pension half the above number at l0s. per week would cost £4,140,000,
whereas they cost £4,776,000 now, and the saving of £636,000
would go part of the way towards assisting the other aged
unfortunates. At very little added cost the whole of the respectable
poor over sixty-five years of age could be taken off the rates and put
upon the pension list.
So far we have mentioned only the direct effect of the land values
tax in making it possible to provide old age pensions from the only
fund upon which they can be legitimately charged, and on a scale
sufficiently high to relieve the workhouses of a great number of
inmates. Its indirect effect in this direction would be greater still.
A large proportion of the 11,000 adult able-bodied paupers now in
receipt of relief would obtain work without delay if land-owners in
town and country were induced by the tax to put their land to its best
use There remain some 500,000 people on the rates. Apart from the
aged; for whom a pension of l0s. would provide, there are very many
others-women, children, and the more or less helpless-who, while
incapable of keeping themselves by their labour, have relatives with
all the will but without the means to assist them. Under present
conditions, when occupation is precarious and work ill paid, many a
man must suffer the pain and humiliation of allowing his wife and
children to go upon the parish while he tramps the country looking for
work. More distant kin he cannot help, even when he is more fortunate
and able to make a living of a kind for his wife and family. Were
their wages higher and work secure men would sacrifice something to
prevent any of those connected with them from becoming paupers.
When the land tax is raised to the point which makes land values
public property and removes the need of all other taxes, it is
difficult to imagine the existence of paupers, or the need of any poor
law, as we know it. Unhappily the fullest opportunity to work, if
existent to-day, would remain unavailed of by a too considerable
number of the unemployable -- the wreckage of our cruel social system,
which inevitably submerges the morally and physically weak -- and
these, though in gradually decreasing numbers, must remain a public
burden during the evolution of economic justice.
When justice is complete, the idle who will not work can be compelled
to work or left to starve, while the few who may be helpless and
friendless will be pensioned like the aged. In the meantime a
practicable measure of land values taxation will be of immense
assistance in the proposed reform of the poor law, by increasing
opportunities of employment and giving those administering the act a
better chance of deciding whether idleness is the result of choice or
of misfortune. It is true, no doubt, that the loafer and the drunkard
are themselves unfortunate, more to be pitied than blamed, and less
responsible than is society for their economic uselessness.
Nevertheless in administering public assistance, which is not to be
degrading to all who accept it, there must be the discrimination
proposed by the Poor Law Commission between the temporarily unemployed
and those unfitted for work, either by blameless misfortune or by
drunkenness or distaste for labour. In dealing with every case on its
merits the authorities would have their course made much easier by a
law which reduced unemployment for the willing and capable to a
minimum, and rendered it possible, with slight risk of injustice, to
apply salutary discipline to the loafer by choice. He is hard to
identify at present, when the most industriously inclined may suffer
enforced idleness for months at a time.
Co-operation is one of the social movements which must be enormously
affected and developed by land values taxation. In its ultimate stage,
when land is equally open to all, since all who occupy it must pay the
full rental value in tax to the State, working men will find it easy
to become their own employers, and co-operation will in all
probability become the commonest method of production. Jt was a true
instinct which impelled the early pioneers of cooperation to faith in
its ultimate triumph over industrial injustice, and its power to give
the worker a full return for his work. They were doomed to
disappointment of their immediate expectations, because other
developments were necessary before co-operation could play its proper
part in the world, much as the designers of the Great Eastern,
who were right in their conception of the ultimate value of enormous
ships, suffered disappointment and immediate failure, partly because
their leviathan was imperfectly planned, but still more because it was
in advance of its time. Under existing conditions wages leave little
margin to the average artisan for combining with his fellows to
subscribe the vast capital necessary to embark in manufacture and
trade, but nevertheless in the face of difficulty some fine results
have been attained. The membership of 131 productive co-operative
societies in 1907 amounted to nearly 33,000. They had a capital of £4,092,000
and profits of £348,000, while two wholesale co-operative
societies with sales amounting to £29,650,000 made a profit of £777,000.
In the co-operation of the future there will, one imagines, be no
profits, for the sums which appear under that head in the
balance-sheets of existing co-operative concerns, and go in part to
others than workers in the business, will be used to increase the pay
of those who do the work and be allotted to them solely. No money but
that of the workers will be required to finance co-operative
enterprise. A tax which substantially adds to employment and wages
will render any reliance upon non-workers quite unnecessary. A
thousand men in a position to save 5s. a week each would be in
possession of a joint capital of £30,000 in a couple of years.
Better pay will immediately make it easy for them to become
capitalists, to appoint their own salaried managers, and to add to
their own wages that large share of the employer's profit which
results from paying his workmen less than the value of their work.
Successful co-operative enterprise requires judgment, self-control,
and education, which will be among the first-fruits of higher wages in
the case of the best artisans. Eventually there is reason to expect
that co-operation will be the rule and the so-called capitalistic
enterprise the rare exception.
Under prevailing economic conditions any person with money) though
with no capacity whatever for business, is enabled to become an
employer of labour and to gain profits as such. That the magnitude and
success of a business bear no necessary relation to the knowledge and
business ability of those who provide the money and receive the
returns is shown by the fact, that some of the largest and. most
flourishing concerns are owned by companies whose shareholders, with a
few exceptions, may be ignorant of the A B C of the enterprise into
which they have put their capital. Its conduct is in the hands of
skilled managers, more or less influenced by directors, and the utmost
that the body of shareholders can do to earn their profits is to
appoint capable men to the directorate; and capacity under present
conditions consists almost as much in knowing how to drive the worker
to the uttermost extent and how to crush competitors, as in power to
render useful social service. But while those who control the
directorate and manage the bu8iness do put forth effort, the part of
the share-holders is only to appropriate a profit, consisting of the
difference between the value of the work which is done by their
managers and workpeople and the salaries and wages which competition
for employment obliges the latter to accept. When land-owners are
obliged by taxation to compete among themselves for labour to develop
the land, wages and salaries will gradually rise to the full measure
of the value of the work done in return for them. Then will disappear
those profits which are in fact a theft from labour, only rendered
possible by land monopoly. No one will be an employer of labour,
unless by his own knowledge and skill he can add something to the
productiveness of the men under his direction. If he can do this and
will share the profit which lie thus truly earns with his workmen, to
the extent of raising their wages a trifle beyond what they could earn
by employing their own capital in co-operation and paying their own
manager, they will no doubt consent to work for him. But such cases
will probably be few. Even an approach to adequate remuneration will
give the working classes such a vast command of capital, that they
will be far better able than any individual to embark on large
enterprise, and most of the true captains of industry will be offered
and accept command on labour ships. They will become servants or
partners of labour instead of its masters. As for the capitalistic
non-expert employers of to-day, whether individual or corporate, their
control over labour and their ability to pocket its earnings under the
name of profits will be gone. They will have no advantages over
co-operative labour in access to land; they will have no monopoly of
capital; and the utmost they can hope for when land monopoly is gone
is a reasonable rate of interest on such as labour may be disposed to
borrow of them, if it offered on sufficiently advantageous terms.
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