Unearned Increment

Robert M. LaFollette

[Originally published in Progressive. Reprinted from Land and Freedom, May-June, 1935]

AS the new dealers deal and the nation wrestles with economic problems of unprecedented magnitude, there arises occasionally one of those who still cherish the idea of "the single tax" or are otherwise disciples of the late Henry George.

Every so often an example is cited where the "unearned increment" of a piece of property reaches a staggering sum, and someone, a Georgist or a potential one, arises to protest.

And, indeed, the "unearned increment" argument has never been convincingly refuted. Today in our colleges and universities professors in economic class rooms discuss the ideas of Henry George with their students and the injustice of a land owner or his heirs profiting enormously as a result of population pressure and other factors is pointed out.

Typical of such discussions is an article contained in the current issue of Unity by James G. Blauvelt, from which the following is taken:

There was a vacant block of land in New York owned by a subsidiary of the N. Y. Central Railroad which leased it to the Waldorf-Astoria hotel at an annual rent, to begin with, of $300,000, increased to $600,000 in 1932, and increased $50,000 every five years until 1956, when the yearly rent would be $800,000, when a new lease is to be made. Who made that value? Not the railroad, though it contributed, as did all other activities of everybody else, fire and police protection, great waterworks, sewers, streets, parks, bridges, tunnels, airports, streets and highways, hospitals, schools, colleges, churches, art, literature, commerce, the greatest stores in the world, great newspapers and the presence of millions of people providing activities of every kind.

Why should the railroads have what millions of people have made? The rental of that land should go to the public treasury. The land belongs to the people and so does the income of it.

The Astors bought the property where the Empire State building now stands, for a few thousand dollars. They sold it to Al Smith and his associates for $15,000,000, and William Waldorf Astor trotted off to England with his half, seven and one-half millions, on the interest of which he and his children, to the end of their time, can ride on the backs of the people. Such a system is a curse. It so distributes wealth that it is a public menace. No graft ever disclosed in public life compares with this enormous gift to the Astors of a value all of the people had created and morally owned.

The recovery administration is so busy with codes and crops that never a minute has been spared to look at a picture which a good many Americans believe is eminently unfair. Henry George's "Single Tax" as a remedy no longer has much liberal support, but perhaps before the present phase in our economic life is passed, a page or two may be taken from the Georgist philosophy and modernized to fit the new deal.