Monopolies and Privileges

Ole Lefmann

[Reprinted from Progress, January-February 2003]


During the past century in technically developing countries the economic progress lifted the vast majority of people out of dire poverty and kept them in reasonable circumstances. They are still low paid and poverty a recognisable ghost that in several countries is veiled by a web of social security benefits and other public support.

The economic uplifting of people and their staying on the "high level" of economy happened only because of the technical development's ongoing demand for skilled labourers and service providers. They will probably continue to experience economic progress as long as the technical development continues; but the gap of wealth between the privilege holders and the non-privilege holders is currently expanding.

125 years ago Henry George asked why progress did not abolish poverty. He found the answer and started the fight for Free Trade - against monopolies, privileges and public protection of trade and industry. That fight went on in the technically developed countries for over a century. It became victorious, but though Protection as an idea was officially rejected, public protection of trade and industry was ended, and most of the monopolies were brought under control, publicly protected privileges grew in number, and it has been growing ever since.



  • introduce and keep increased prices or inferior qualities of commodities and service,
  • expand the gap of wealth between privileged people and non-privileged people.
  • oppress poor people's influence on their own life, and oppress their self-confidence.
  • concentrate abundance of richness into the hands of a minority of citizens who are served by a well-paid middleclass, but leave poverty to the majority; who in technically developed countries is kept in happy ignorance of the injustice by publicly administered support and obscure explanations. The worst effects appear in the technically less developed countries with a tradition for corruption.


Henry George in the end of the 19th century proposed that the government should collect the rent of land, abolish monopolies and privileges and stop public protection of trade and industry. This, together with the minimising of public administration as described later, was what he meant by proposing FREE TRADE that should put an end to the oppression of non-privileged citizens.

However, he agreed that some monopolies/privileges would have to remain because it would be impossible to abolish them, or because abolition would be inappropriate. He proposed that those monopolies/privileges that would have to be tolerated (so-called "natural monopolies") should be run by the public administration. This was common sense as long as only few monopolies should remain.

Since then, however, the range of privileges that we have to accept has expanded enormously, and that has put George's recommendation of public administration of all the monopolies and privileges we tolerate in conflict with his strong recommendation that the public sector should be kept as small as possible.

Henry George did not describe a solution to this contradiction that did not exist in his time. Today it is up to his followers to decide what to do with those monopolies/privileges that we cannot abolish.

Before we are able to make that important decision we have to consider which privileges we would have to tolerate and which tasks should be run by the public administration.


In the beginning of the 21st century it is reasonable to assume that some citizens should or might have exclusive rights to:


  • Land (for any purpose: production, residence, leisure, etc.);
  • The sea, surface and sub-surface (fishing, farming and hunting places, and resource extraction areas);
  • Still or flowing water (for power and irrigation, and for transport of people and goods);
  • Orbital space positions (for research, and for collection and/or transmission of information);
  • Electro magnetic spectra (for transmission of information);
  • Scarce natural resources on or from soil and underground;

Use of UNIQUE CONSTRUCTIONS, the exclusive rights of which function like exclusive rights to use of natural resources, such as:

  • Cables, wires and tubes passing public land or sea, or officially registered on private land or sea (for transport of energy, information, fuel and water);
  • Rails, roads, bridges, tunnels, cables, and canals over public land, or officially registered on private land (for transport of people and goods);
  • Air lanes and sea lanes (for transport of people and goods);
  • Watermills, locks, dams, and water storages;
  • Major power plants, (hydro, nuclear, or otherwise fuelled);
  • Airports, harbours, rail stations and terminals;
  • Satellites in orbits, and research rockets in interplanetary space.

Provide of UNIQUE SERVICES, such as:

  • Emission of money, and putting money into circulation
  • Lotteries, casinos, betting;
  • Police and security forces;
  • Emergency preparedness for catastrophes such as fire, storm, earthquakes, flooding;
  • Cremating and burying corpses;

Trade in DANGEROUS PRODUCTS such as:

  • Nuclear products;
  • Drugs, medicine, narcotics;
  • Poison, pesticides and fertilizers;
  • Explosives and weapons.

Trade in DANGEROUS SERVICE such as:

  • Commercial transport of persons;
  • Medical, chiropractic, dental, etc. treatment of human beings;
  • Commercial serving of intoxicating drinks and/or drugs;
  • Exhaustion, out letting, discharging, storing, destruction and burying polluting materials;
  • Disposal of refuse and waste.


  • Gas, electricity, water;
  • Erection of and taking down huge scaffoldings;

(This list is by no means exhaustive)

The list of privileges is growing longer every year and the quantities of privileges in each category of the list are growing as well. That means that the privilege holders constantly increase the volume of privilege-profit they take from their customers without giving anything in return.


The followers of Henry George agree in public collection of the rent of nature and of the publicly created rent, but they may give different answers to the question: Which tasks should be run by the public administration?

Socialist-minded followers, who do not mind Henry George's recommendation of the public administration kept as small as possible, would probably suggest that the public administration should run all monopolies and control all privileges run by the private sector of the society.

That proposal would recapture for the community the rent captured by privileges, but it implies the risk that also effectively run private privileges would be taken over by the public administration, which would reduce competition unnecessarily, and also implies that the control of remaining private privileges would be either insufficient or make its costs too burdensome for the otherwise effective business.

Libertarian-minded followers, who praise Henry George's recommendation of the public administration kept as small as possible, would probably suggest that the public administration should run only such monopolies/privileges that could not be run as good or better, or as cheap or cheaper by the private sector, and they would probably accept no further public interference into private activities.

That proposal would recapture for the community some of the rent captured by the private holders of monopolies/privileges, but it leaves a considerable part of the privilege-profit with few private privilege holders who do not give anything in return to their victims.

I assume that the preferable proposal should combine:

  • abolition of monopolies and privileges as far as possible;
  • keeping the public sector as small as possible;
  • public collection of the Rent of Nature and Society for the betterment of all citizens.

The following proposal will combine the above-mentioned three items:


Proposed Conditions of Public Activities and of Private Privileges

1. The Public Administration should ONLY run activities IF:

  • the citizens in general WANT the activities in question to be run, and
  • the private sector of the society CANNOT RUN the activity in question as good or better and as cheap or cheaper, either
    - as a private enterprise operating completely on the conditions of the competitive market, or
    - as a private privileged company meeting the conditions mentioned below (2.), and
  • the publicly run activity is currently SUPERVISED by the Monopoly and Merger Commission (or an institution like it) under the responsibility of the democratically elected Members of Parliament. The Parliamentary Commissioner (or the Ombudsman) shall currently impress this responsibility to the Members of the Parliament.

2. A Privilege should ONLY be given to a private entrepreneur IF:

  • the activity COULD NOT BE RUN effectively and in adequate safety without the privilege in question;
  • the privilege shall be SUPERVISED by the Monopoly and Merger Commission or an institution like it;
  • the privilege holder shall ANNUALLY PAY to the public purse a charge of the privilege, the size of which shall be determined frequently by regular, fair and accurate assessments of the highest amount any skilled and capable user would like to pay annually for holding the privilege. The charge of the privilege shall be publicly registered, and be publicly accessible for any citizen at any time;
  • the privilege shall be ABOLISHED if problems occur in determining the size of the annual rent of it, or in collecting the annual rent. Instead of abolition of the private privilege it might be TRANSFORMED into a monopoly operated by public administration, which, however, shall only happen if it meets the above-mentioned conditions (1.). NO COMPENSATION shall be granted if the abolition, or transformation into a privilege or a publicly operated monopoly, is caused by problems occurred in determining the size of the annual rent, or in collecting it for the public purse.

3. Private entrepreneurs shall NOT be allowed to buy a privilege from the public for an amount once for all - they may ONLY rent it under the conditions mentioned above (2).

4. The Exception: The ONLY exception from the rules of payment of rent mentioned above (2.) should be the Intellectual Property Rights of inventors, composers, etc. to the value of their inventions, compositions, etc. The incomes of intellectual property rights are to be looked upon as rewards to the inventors, composers, etc. for their inventions, compositions, etc. and should therefore be free from other charges than the registration fees. In some countries the government finds that the intellectual property rights has to be limited to last for a certain period of years.

5. The revenue of the publicly collected privilege-profits shall be used to the betterment of all citizens.



Henry George proposed that landowners should pay an annual charge for their exclusive right to use the land. He had to leave the details and practical legislation to his followers. He trusted that when the wish for the reform he proposed became strong enough the method would easily be developed.

In several countries around the world systems of assessment of the rent of land have been developed, and where they have been properly used, in Australia, Canada, Denmark and New Zealand, they have worked satisfactorily.

A similar method would be the obvious method to determine and collect the value of all privileges.

  • Use a combination of competent laymen and publicly employed specialists.
  • Determine the annually charge as the highest annual payment that would be offered by competitors who want to keep or take over the privilege in question.
  • Register the size of the annual charge and make it publicly accessible for everybody at any time.
  • Inform the citizens publicly that this value is not created by the privilege holders, but by the society and that it therefore belongs to all citizens on an equal footing.
  • Inform them also that it will damage the economics if the revenue of privilege-profits go to few citizens only, but it will be a blessing to society if it is used to the betterment of all citizens.
  • Use the revenue to the betterment of all citizens or distribute it to them in equal shares.