Toward A Financially Stable Future: What Russia Must Examine in
the U.S. Experience
Edward J. Dodson
[A paper delivered to the Congress on Land Relations and the Rational
Use of Natural Resources, Moscow, April, 1996]
I have spent nearly all of my life engaged in an effort to mitigate
the destructive consequences of public policy designed by and for the
landed interests in my country. Democracy, progressive income taxation
and fifty years of expanding government intervention have all failed
to strip these individuals, families and business entitles of their
privilege and economic power. if you, at this crucial point in your
history, open the door to latent landed Interests, all that you have
endured in your struggles to help your people will have been in vain.
At the dawn of the American System, the framers of our constitutional
democracy compromised principIe in order to forge a national
government with the powers sufficient to raise revenue and give the
Old World powers pause in any decision to attempt the reconquest of
North America. Two forms of license, both devastating, were
incorporated into the system of law and sanctioned by those who
governed. The first, slavery, was to many already recognized for its
criminality; greater poverty among Americans of African heritage
remains as a legacy of a people systematically denied access to land
-- and even then having what they produced automatically considered
the property of those who enslaved them. The second, the private
appropriation of the rental value of land, had already become part of
the great land grab mentality that destroyed the indigenous tribal
societies of the Americas. Thomas Jefferson, who understood that the
slavery and land questions were the Achilles heels of the American
System, put his faith in the essential goodness of his fellow
citizens, in democracy and in future generations to resolve these
problems.
Jefferson could look out over the North American continent to a
seemingly endless and bountiful frontier. Perhaps, he thought,
African-Americans could one day have a homeland set aside for them to
start their own new civilization. Instead, in less than a century,
tremendous internal population growth combined with massive
immigration to reduce and finally eliminate the frontier. Beginning in
the 1870s, immigrants and newly-freed African-Americans increasingly
found there was no room left for them unless they had sufficient money
to buy or lease land from others. Tens of millions of landless people
surged into urban slums and company-owned mining towns to toil at the
bottom of the economic pile. With each passing generation, control
over the land and the country's natural resources has become
increasingly concentrated. Poverty, always there, and unemployment,
always threatening, are now the Iife-Iong experience of tens of
millions of people. Crime is rampant some would say out of control.
Home ownership reached a peak of roughly two-thirds of Americans in
the 1970, has fallen slightly. Hidden in the statistics is the fact
that more housing units become uninhabitable each year than are
constructed or rehabilitated. In the inner cities and rural areas,
homelessness continues to climb because the mismatch between declining
household incomes and rising costs for apartments and houses.
For us, the land question remains unresolved. Our society is now
extremely stressed because so much land is controlled by so few who
return to society only a fraction of the full ground rent. People who
must work harder and harder for less and less are demanding change.
They are rejecting the leaders of the two political parties that have
made public policy for the last one hundred fifty years. My message to
the Russian people is the same message I have struggled to bring to my
own fellow citizens. Unless the land question is resolved, until all
the people and not a few -- or even many -- individuals share equally
the rental value of land, the Russian Republic will not prosper. Your
national debt will continue to escalate, and external bankers and
creditors will impose programs of austerity and the production of cash
crops for export. Some will prosper, even become rich, but only at the
expense of the majority.
Champions of the American System want everyone to believe we are
practitioners of free enterprise capitalism, that any person can rise
above his or her condition at birth to achieve whatever they out to
do. If this ever was the case, and I must tell you it was not,
opportunity for many has absolutely disappeared. Poverty is
generational in America for many. And, only a small portion can be
explained away by individual weakness and laziness. The American
System is at fault. What has emerged in the U.S. -- and what is
certain to emerge in the Russian Republic unless you act deliberately
and soon -- is what I describe as agrarian and industrial landlordism.
A smaller and smaller number of people will gain control over the land
and natural resources of Russia and charge everyone else for access
and use. Those who now earn their incomes by providing goods and
services will divert financial resources into acquiring control over
land; and, the wealthiest among you (and foreign investors) will begin
to accumulate land, buildings, stocks, gold and currency. The Russian
economy will have become a full partner in the group of economies
dominated by speculations, and cyclical periods of boom and bust.
This is the Russian spring, your window of opportunity to establish
public poIicies that will pull you toward a financially stable future.
Reaching that goal requires, I believe, embracing a
labor theory of property, which means simply that just law is
law that protects the right of people to keep what they produce with
their own labor. And, if they own tools or equipment or industrial
plants or building things they either produced themselves or purchased
from others (including the government), then the incomes they earn by
using this property ought to be treated similarly. Ideally, this means
dramatic reductions in income and property taxation. Notice that land
does not fit into this definition of property. No person can claim to
have produced land, nor is the rental value of any particuIar parcel
of land the result of any person's efforts. A leasehold or title deed
to land is a form of license, a grant of a monopoly over the use that
land. Common sense suggests to me -- and I trust to you -- that the
recipient of such a monopoly license ought to compensate his or her
fellow citizens for the privileges granted.
Although by definition a market system for land is one that operates
without subsidy, with access going to the highest bidder, the American
System sanctions the private appropriation of this fund, capitalized
into higher and higher sales prices as the demand for land increases
(and those who hold titles without cost are free to hoard land for
speculative purpose). Russia will avoid these destructive consequences
by making sure that: (a) publicly-held lands offered for private use
are leased to the highest bidders, with the ground rents adjusted
periodically based on market data; (b) privately-held lands are taxed
an amount equivalent to what the annual ground rent would be; (c) that
houses and other structures are taxed as lightly as possible,
including at the time such structures are sold from one party to
another; (d) that other forms of licenses, such as radio and
television frequencies, are offered for lease to the highest bidders
in the same way as leases to land are awarded; and (e) that revenue
earned from the sale of goods or income derived from services be taxed
at low as possible. Combine these measures with sound monetary
controls and balanced budgets and the Russian Republic will, indeed,
realize its full potential as a leader among the world's
nation-states.
|