Old Errors Never Die
Glenn E. Hoover
[An address delivered at the Seventh Annual Henry
George School Conference, Los Angeles, California, July 21, 1951.
Reprinted from the Henry George News, August, 1951]
Tradition calls for a banquet to be concluded by either a humorous
address or a purely inspirational one. Both types are designed to aid
the digestive process while the mind of the listener lies fallow. By
eating much and thinking little any man may come to believe that this
is the best of all possible worlds. However, your committee on
arrangements has defied tradition by inviting me to elaborate on the
depressing subject of human folly.
Any discussion of intellectual errors may well begin with their
origins. While most of us have little difficulty in creating our own
errors, our mental laziness leads us to draw pretty largely from the
supply accumulated by those who have preceded us. Most of our ideas,
whether true or false, are passed on from one generation to another by
the process known as social inheritance. As Montaigne observed, his
contemporaries were Christian for the same reason that they were
French, English or German, that is, they were born in countries where
Christianity was the prevailing religion.
If we inquire into the origin of erroneous notions we cannot but
conclude that many of them are the fruit of the twin glories of our
Genus Homo, our imagination and our reasoning power. It is depressing
to realize that the ability to reason is only a mixed blessing, but
such is the sobering fact.
It is not only our ability to reason which gets us into trouble. Our
ability to speak, read and write enables others to make us victims of
their self-serving propaganda. Many of the errors with which our heads
are filled, are deliberately put there by designing men who know how
to profit from them. Adam Smith explained the acceptance of
protectionist fallacies as follows:
"In every country it always is and must be the
interest of the great body of the people to buy whatever they want
of those who sell it cheapest. The proposition is so manifest, that
it seems ridiculous to take any pains to prove it; nor could it ever
have been called in question, had not the interested sophistry of
merchants and manufacturers confounded the common sense of mankind."
(The Wealth of Nations, Book IV, Ch. III.)
The Vitality of Errors
The amazing vitality of errors is due in part to the fact that they
are almost immune to the advance of scientific knowledge. The number
of those who still believe that the earth is flat must run into the
millions. Moreover, the spread of scientific knowledge has given rise
to a prolific growth of errors of a kind that might never develop
among pre-literate peoples. It may do us good to recall for example
that it was in this land of science that an enterprising New Yorker
convinced his followers that while the earth was indeed a sphere, we
lived not on the outside of it, but on the inside. Books and
periodicals have spread this novel doctrine and it may yet win many
converts, especially if its emissaries should concentrate on
California!
Types of Economic Errors
Much of our loose thinking in economics derives from the ease with
which we succumb to the wizardry of meaningless words and phrases. For
example, now that we are confronted with the burden of rearmament,
there is insistent demand for a program that calls for "equality
of sacrifice." Now, for most of us the word "equality"
is an enchanting word. "Liberty, Equality, Fraternity" was
the slogan which inspired the French people to complete their Great
Revolution, and the word "equality" still works magic.
The only objection to the phrase "equality of sacrifice" is
that no one has the slightest idea of what it means. Or to put it in
another way, when we attempt to apply it to specific issues each of us
has a different idea of what it means. Now, any phrase that has a
different meaning for each man who uses it can only be described as a
nonsense phrase. Nevertheless, I predict that we shall go on using the
phrase "equality of sacrifice" and loving it.
One error which has expanded with the rise of national states is a
belief in the omnipotence of governments. For example, it is commonly
believed that the real wages of workers could be raised to almost any
level if only the government would pass a law which would increase the
minimum wage rate. We forget that we can consume only what we produce,
and that total production cannot be increased by any governmental
legerdemain. Laws which raise the wages of a given grade of workers
above the level which would be established in free markets can only
reduce the demand for that kind of labor and raise the price of the
products affected. Such laws, based on good will rather than on
economic realities, are but examples of the pernicious meddling which
we can expect from governments for so long as we believe in their
omnipotence.
In the matter of inflation we show the same blind faith in the
ability of the government to accomplish the impossible. From 1939 to
1951 our government permitted our banking system to increase our money
supply, which now consists almost entirely of Federal Reserve notes
and bank deposits, by approximately 100 billion dollars. This is an
increase of about 148 per cent and during the same period wholesale
prices rose by about 140 per cent. That the increase in prices was a
result of the increase in bank-created deposits should be apparent to
all. It should be equally evident that nothing can keep prices from
rising for so long as the banks continue to expand their deposits.
However, the old bad error persists that even though our reserve
banks issue more notes and our commercial banks create additional
deposits, we still can avoid the inevitable. The rise in prices is
attributed to everything except its true cause. Those who believe in
what may be called the Devil theory of history, insist that high
prices result from the "profiteering" of merchants and
manufacturers, or the rapacity of labor unions. Others are sure that
prices rise only because an inept government permits them to rise.
They believe the rising tide of inflation could be held back if only
some modern Canute, breathing fire and brimstone, would hurl forth the
necessary threats, imprecations, objurgations and decrees. So long as
these errors persist, no effective measures will be taken to halt
inflation.
What governments can do and what they cannot do is perhaps one of the
most useful lessons we can learn. Everyone will admit the capacity of
governments for evil. I believe it was the late Lord Balfour who said
that he had never doubted the efficacy of Bolshevism as a system for
making the rich poorer. What he doubted was its ability to make the
poor richer. Adam Smith, John Bright, Henry George and other leaders
in the movement to free the world's trade were well aware of the power
of governments to impoverish their peoples while pretending to
'protect'' them from foreign imports. But these free traders were as
one in believing that, by and large governmental interference with our
national economies makes for scarcity, and that only economic freedom
makes for abundance.
Not all of those who clamor for federal subsidies, price supports,
non-contributory "pensions' et cetera are naive enough to believe
that the government can create wealth. What they would give to others
they would take from the rich. Now, as one who has always belonged to
the lowest paid profession in the world, the prospect of improving the
lot of the poor by forcing the rich to stand and deliver has always
made a powerful appeal to my emotions. In fact, any doubts I might
have had about the justice of such a program would probably have been
overcome by my envy and the other vestiges of original sin that are
inherent in all of us. But the Robin Hood scheme of taking from the
rich to give to the poor can make no lasting appeal to our reason for
the simple reason that, except within narrow limits, it would injure
the poor rather than help them.
There is no longer any excuse for believing that despoiling the "rich,"
however that term is defined, will much improve the lot of the rest of
us. The experiment has been tried too often. Whether the rich are
liquidated as they were in Russia, or their wealth and income is
largely taxed away as it has been in Britain, the results have been
disappointing. Perhaps we too will have to learn the hard way that a
steady increase in production will improve our lot more than any
leveling program, whether of the Russian or the British model.
One of the hardiest of economic errors is the belief that abundance
is an evil. To guard against it, governments are urged to restrict the
importation of goods from abroad so that producers in our high cost
industries will not be faced with declining prices. The protectionist
error is supported by arguments so fallacious that economists can
seldom discuss them without choking on their own impotent rage. I
shall not insult your intelligence by dwelling on them. I shall say
only that the friends of the Henry George Schools throughout the world
should be proud of the fact that the protectionist error was the first
that the mind of young Henry George rejected, and against it he
levelled some of his most cogent reasoning and stirring eloquence.
However, our fear of abundance leads to more than restrictions on
imports. Particularly in recent years we have been frightened by the
possibility of having too many of the useful things grown and produced
at home. Oddly enough, it was during the depression when our
production was at its lowest level, that men talked most of "surpluses,"
although no one to this day has ever defined the term or told us how
the alleged "surplus" could be measured.
Another error which should be of special interest to this audience is
the failure to distinguish between land, the free gift of nature, and
those things produced by labor and capital. Although the site value of
land is obviously created by the growth of population, the notion
still lingers that individuals have the same "right" to
economic rent that they have to the products of their labor. This we
cannot admit. We insist that all socially created values should be
taken for public purposes by the society which creates them, and that
the incomes earned by individuals should be taxed on either their
wealth or their income.
The failure to distinguish between land and the products of labor is
not, as many believe an ancient error, but is a relatively recent one.
Primitive peoples who live by collecting, hunting, fishing or grazing
use their land in common and consider it their collective property.
They may try to hold it to the exclusion of foreign tribes, but if any
individual tried to appropriate a portion of it to the perpetual use
of himself, and his "heirs, successors and assigns," as the
lawyers put it, he would be treated as a madman. It took a lot of
sophistry and obfuscation to make men believe that a free gift of
nature should be treated in the same way as are the products of their
own labor.
As see it, the role of the Henry George Schools is not to
indoctrinate their students, but to give them a broad understanding of
economic principles and problems. It is, of course, true that the
thousands of people who support these schools hope that students who
attend them will come to see the world somewhat as Henry George saw
it. However, the schools re not designed to create "followers"
of George or anybody or anything, save only the truth as students may
come to see it. George himself never asked for more.
You already know how wrong they are who think of George as just
another radical crackpot who believed that if we taxed land values
only, all our problems would be solved. George peddled no panaceas.
Neither his life nor his works can be understood until we realize that
he was dominated by a love of freedom and of justice. The torrent of
eloquence, both oral and written, which he unloosed on his generation
was designed to free the world's trade and to give to each man his
equal share of the site value of the earth, which is nature's free and
inexhaustible gift to the living.
If it had been possible to determine each citizen's share of the
economic rent of land, and present it to him in the form of cash, such
a plan might well have been adopted long ago. This, however, was
impracticable. The logic~ procedure was to turn oyer to the government
the economic rent of land, so that the state could use it for public
purposes, and thereby eliminate in whole or in part, the taxes which
otherwise must be imposed. But it has proved difficult to win
acceptance of the plan because it is too logical to be appreciated by
our illogical minds. Men who will work like demons for a ten-dollar
raise in pay, or a treasury hand-out of ten dollars, are indifferent
to a plan which would reduce their taxes by the same amount. It is
against that kind of economic illiteracy that the advocates of site
value taxation must struggle.
We can, however, take comfort from the fact that proposals to
socialize the site value of land have attained a degree of
respectability that seemed unlikely when George was conducting his
memorable crusade. Henry George, as a selfeducate4 man with no formal
training in economics, was at a disadvantage in influencing the
economists of his day.
The hostility which George aroused among the economists of his time
has pretty largely disappeared. If in some academic circles he is not
yet given what we consider his due, it is because they neglect him
rather than that they differ with his analysis and oppose his program.
As previously indicated, George's advocacy of free trade is now
carried on by every economist worthy of his salt-and some who may
deserve only a half ration of it. On the ancient error of
protectionism, and the fallacies by which it is supported, the
professional economists now see eye-to-eye with those who carry on the
Henry George tradition.
Nor is there as much disagreement on his land policies as is commonly
supposed. The great majority of economists are quite aware of the
essential difference between land as a free gift of nature, and those
things which are produced by labor and capital. Most of them too agree
that this difference justifies a real difference in our treatment of
the income which derives from them. Nearly all of them recognize that
the site value of land is a socially created value. If they oppose its
appropriation for public purposes, it is usually for the reason that
they question if this can rightfully be done without compensating
those who have rights which they have acquired under existing law. Not
many economists would oppose the socialization of rent if we accepted
what the Fabians call "the inevitability of gradualness.
I have emphasized the agreement which now exists between economists
and Georgists because I belong~ to both groups and I want them to work
together rather than to engage in mutual recrimination. To a
considerable extent both groups speak the same language. For example,
although you will find many economists who do not agree with George's
criticism of Malthus, you will not find any who believe that an
increase in the tax on the site value of land will raise the price of
farm crops, or result in an increase in urban rents. Some economists
may not be very good at their craft, but they are never that bad!
The older I grow the more I am convinced that significant and
permanent reforms can come only from a movement in which clear
thinking is supplemented by a vital enthusiasm. Our species is not yet
so rational that it can be much moved by a dispassionate appeal to
reason. On the other hand, mere emotionalism may lead to such crusades
as were carried on by Hitler, Mussolini or more recently, by Peron.
In this connection it is well to recall the British radicals of the
nineteenth century. They supported the reform bills which transformed
Britain into a real democracy; they converted the British people to
free trade and repealed the Corn Laws; they humanized their criminal
laws and penal system; they sought to destroy the last vestige of
monopoly and privilege; without attempting to despoil the rich they
pressed for every reform which would increase the opportunities of the
poor. These radicals have been picturesquely described as men with
heads on their shoulders and "fire in their bellies."
It is my belief that henceforth any major reform in this country can
succeed only if its tenets are accepted by those we loosely-and
sometimes disparagingly call "intellectuals." Whatever their
limitations, they seldom have any selfish interests to serve. Moreover
they occupy a strategic position, in that they dominate the schools
and colleges which shape the minds of each rising generation. I have
had few personal contacts with public school teachers, but I can
assure you that my colleagues at the college level have pretty good
heads on their shoulders. Both as scholars and as teachers they can
serve any good cause and serve it well. However, I must add that few
of them have any fire in their bellies." The emotional drive, the
passion for freedom and justice which is an essential attribute of any
major reform must come pretty largely from those outside the teaching
profession.
Those of you who are young, whether in years or in spirit, should be
stirred by the opportunities you have to regenerate our sceptical and
tired old world. My generation and those which preceded it are passing
on to you enough of injustice, oppression, apathy and plain ignorance,
to give you full scope for whatever talents you may develop. Do not
ever make the mistake of believing that your private business
ventures, or even your private amours, can ever afford you the
permanent satisfactions which you will receive from your efforts to
make this world a more fit place for a more rational breed of men.
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