The Just Distribution of Wealth
Glenn E. Hoover
[Reprinted from the Henry George News,
If each of us lived quite alone there would he no sharing of
goods-justly or otherwise. However, goods have to be shared among
those who collectively produce them, and in families some shares must
go to the young, the old and the incapicitated, even if they produce
nothing at all. There is no generally accepted formula for the
distribution of the family income, and disagreements are all too
common. From the complaints of children I gather that trouble develops
because of the stony hearts of parents -- most often the father; from
parents I learn that children are selfish and unreasonable in their
Once we escape from the arbitrary rule of the pater familias
we live largely by contracts, and the law will compel us to honor
them. An economy based on agreement as opposed to authority is called
a market economy, and if monopoly power is excluded from it, it is
called a free market economy.
Most people want commodities to be sold in free markets, but many
doubt if such markets are suitable for the determination of wage
rates. They insist that workers should be permitted, or even
encouraged, to organize and bargain collectively with their employers.
They believe that just wages can be had only if workers are permitted
to collectively decide the minimum price at which they will sell their
services, and if agreement cannot be reached with their employers, to
enforce their demands by the use of strikes and boycotts.
In short the price-fixing practices which are forbidden to the
sellers of commodities are accepted as proper for those who sell their
services. Would the public interest be served if wage rates, as well
as commodity prices were to be determined by demand and supply rather
than the power and endurance of the unionized workers?
Because of the general reluctance to discuss this controversial issue
in public, the uninhibited should make a special effort to understand
the issues involved. Our schools would he unworthy of public
confidence if we timidly swept the tougher economic problems under the
By definition, a free market for labor is one in which no monopoly
power is exercised by either employers or workers. In such markets,
how much will a prospective worker receive? The amount of the offer
cannot be predicted, but this much is evident: (1) the employer will
not offer more than his estimate of the value to him of the worker's
services, and (2) the worker will not accept any offer that is less
attractive than he can get from some other firm. Within these limits,
if he is to work for the firm in question, a wage must be agreed upon.
If there is a more just method of determining wages, I have yet to
hear of it.
The free market method of determining wage rates is not something
imagined by ivory tower economists. It is the method actually in use
for more than two-thirds of the workers now gainfully employed in our
country. Complaints about "unjust" wages are made often by
unionized workers rather than by those whose wages are determined in
free markets. It is true that the unorganized workers have few means
of publicizing their grievances, but if their resentment were wide and
deep it seems that they would either demand governmental wage-fixing
or would organize themselves into unions. The fact that about
two-thirds of our wage workers do neither of these things indicates
that they are reasonably satisfied with the "justice" of the
free market method by which their wages are determined.
The Just Sharing Of Non-Producing Goods
Thus far we have considered how the value of produced goods may he
fairly shared between the labor and management which produce them. But
how can the earth, a free gift of nature, be justly shared? We believe
that the earth is a part of our common heritage to which all of us
have equal claim. This is not a belief that is confined to those who
call themselves "Georgists," nor did it originate with them.
But advanced societies cannot rely on the primitive device of "dividing
up" the land, that device is suitable only for rural areas
occupied by small-scale, peasant farmers. Fortunately, we already have
in operation a taxing system which enables us to justly divide the
value of land, rather than the land itself. Equality can be attained
by taking for public purposes all of the socially created value of
land, as distinct from the improvements made upon it. In this way the
value of the land can be distributed with as much equality and justice
as we can expect in human affairs.
To take the socially created values of land for public purposes would
also lessen the burden which other taxes impose on the production and
distribution of goods. All economists, however orthodox, are agreed
that taxes on land values obviously cannot reduce the supply of land.
They are also agreed that taxes on produced goods are part of the cost
of producing them, and must normally be passed on to the ultimate
consumer, whereas taxes on site values, because they do not alter
either the supply of land or the demand for it, cannot be passed on to
anyone. They rest on the landowner, hut they do not discourage the
work and the savings on which our prosperity depends.
The equal sharing of the earth is often condemned as a revolutionary
goal, and so it is, in the sense of being fundamental and
far-reaching. However, it is a goal that can be reached gradually and
Peacefully. Peaceful revolutions are often more profound and produce
more permanent results than d0 the violent ones. For example, within
about one generation the people of Britain have probably led the world
in the equalization of wealth and income, and this without any tumult
or disorder. In the same way our goal can be reached by gradually
shifting the tax burden from improvements to site values, until all of
the socially created value of land is used for public purposes.
Such a program appeals not only to idealists hut also to those who
pride themselves on their down-to-earth practicality. Many of these,
including most of our prominent business leaders, are now actively
supporting the slum-clearance and urban renewal programs of our
various cities. I am glad to report that many of these practical
citizens are incensed because our system of taxing improvements
contributes to the slums and urban blight they are determined to
remove. With their support the land value taxation movement may go
forward, not at its traditional snail's pace, but by leaps and bounds.
Justice In The Market Place
Ever since the use of money supplanted the barter system, there have
been complaints that prices were either too high or too low, and often
they are charged with being both at the same time. The pesky things
seem never to be right. For long it was believed that a price was
just, if it was the customary price-a formula obviously inapplicable
to new products. There are only three ways by which prices can be
established. They can be fixed (a) by public authority (b) by private
monopoly or (c) by free markets.
Governmental price-fixing on a comprehensive scale has been so
discredited by experience, particularly during the last war, that it
now has few defenders. The government, as employer, must of course fix
the wages of its own employees, but no one wants it to fix the wages
in private industry. On this, management, labor and the public are
unanimous. The single exception is to be found in the practice of
establishing minimum wage rates for certain classes of workers. If the
rates established are below prevailing market rates, they are
ineffective, and if above the market rates they will make it difficult
for the less efficient workers to get jobs. The worst feature of the
device is that politicians may use it to get votes even if the poorest
paid workers are hurt in the process.
The major restrictions on the freedom of our markets are imposed by
those who make our laws, especially those at the national level. This
is not because there is more wisdom in our state capitals than at
Washington; it results from the fact that our Constitution prevents
our states from interfering with domestic trade, while authorizing the
Congress to impose restrictions on our foreign trade.
Our high-cost producers who profit from these tariff walls know that
lawmakers must at least pretend to act in the public interest. They
therefore argue that the restriction of imports will increase
employment, raise wages, insure prosperity, etc. But they are not
naive in economic matters. Adam Smith said of those who first advanced
such arguments that they were by no means such fools as those who
believed them, and the same is true today.
There are, of course, some who honestly believe that our national
prosperity depends on the maintenance of our protective tariffs.
However, it is not these innocents who put the pressures on the
Congress. The pressures are applied by those industries that would
encounter vigorous competition if our consumers were allowed to buy
freely from abroad. The clamor for governmental intervention comes
from management, but their workers provide an effective claque. Both
groups understand how tariffs work better than do the consumers. If
this were not so, there would be no tariff walls.
Men in high places in industry, government, radio, press etc., can
often spread enough error in a day to keep the forces of enlightenment
busy for a year. A commentator on one of our national networks who
fancies himself a champion of free enterprise, recently conducted a
nation-wide campaign for higher tariffs. The arguments he used were
what you might expect from a "slow learner" in a third rate
high school, but he reached millions with his contribution to economic
It is sometimes difficult to tell whether a muddler of, public
opinion is naive, or smart and selfish. For instance, the Public
Relations Director of one of our leading chemical firms, took part in
a recent panel discussion held by the United States Chamber of
Commerce. He spoke on "The Free Market Economy" and his
address was widely distributed. He offered some sound criticism of
price controls, tent controls, public power, "socialized medicine"
(without defining it), public housing, etc. But he was eloquently
silent about the import duties which our government levies on products
which compete with those his company produces.
These duties range up to 25 per cent, and even more for some items,
thereby making it impossible for our customers to benefit from lower
prices charged abroad. Our corporate giants in the manufacturing field
are the chief beneficiaries of tariffs -- the first, worst and most
persistent form of governmental controls. Until they renounce this
kind of governmental interference their spokesmen might at least
refrain from lecturing us on the virtues of "free markets"
and the evil of governmental meddling in economic affairs.
It is particularly appropriate for us here to recall that Henry
George was an unrelenting opponent of controls which deprive us of our
right to trade freely with the citizens of friendly countries. This
right George defended with a zeal which modern libertarians might well
emulate. In the presidential campaign of 1880, certain Democratic
leaders, then as now little more than "tariff reformers,"
asked George to make a series of talks to industrial workers about the
tariff. In his first talk he said that he had heard of high-tariff
Democrats and revenue-tariff Democrats, but that he was a no-tariff
Democrat who wanted to sweep away the customs houses and customs
officers and have free trade." His forthrightness delighted his
audience but scared the wits out of the committee that had engaged him
and he was not asked to speak again. Practical politicians have always
believed that electoral victories go to the mealymouthed.
The tariff question is now described -- quite accurately, alas! -- as
a "local issue." Members of the Congress try to secure
tariff favors for local firms, whatever the effect on our economy as a
whole, or on our role in international affairs. It was not always so.
Our early libertarians did not think in terms of special, local
interests. They solemnly declared that to employ the tariff device to
take money from consumers and give it to producers was an abuse of
governmental power and a violation of the rights of free men. How the
Great Debate has degenerated since the days of Adam Smith, Bright,
Cobden, Sumner and Henry George! We must see their like again.
Citizens who can judge how public policies affect our liberties and
our rights are the great need of our time, and to increase their
number is the goal of the Henry George School. We could have no higher
goal, for, as we may ultimately learn, it is "righteousness that
exalteth a nation." Nor can life offer greater rewards than come
to those who labor together in a good cause. Ours is a growing band of
"happy warriors," and if mad men in high places do not
destroy the earth prematurely, we shall some day make our land as
famed for its freedom and its justice as it now is for its wealth and