Which Predator?

Ole Lefmann

[Reprinted from Progress, March-April 2005]

Thank you to Gavin Putland for his article Which Robber? in Progress number 1061, May-June 2004. In that he points to the fact that land-monopoly is the ultimate robber who takes from production what is left by all other monopolies. The author also reminds the readers that Henry George discussed this question in Chapter 25 of Protection or Free Trade.

The article gave me a clear view on two essential points that many people, even Georgists, seem to ignore:

1. A monopoly is a Right -- protected by the government's physical force -- for somebody to take out from the market results of production without giving anything in return to the producers.

2. Non-land-monopolists take their proceeds before the land-monopolists (the ultimate robbers) take what is left for them to take, which is the same as saying that non-land-monopolists reduce the rent of land.

In everyday language an exclusive right for one, or a few, to do something that is prohibited for people in general is called a "privilege", and that is the word I prefer to use in the following. Thus I say:

Non-land-privilege holders reduce the rent of land

The assertion, that rent of land is currently reduced by non-privilege holders, as described by Henry George and emphasized by Gavin Putland, is supported by the figures published by Denmark's statistic office, Statistic Denmark (accessible in English and Danish on the Internet website www.statbank.dk):

These statistic figures enable the reader to understand, that nowadays the Danish rent of land ("taxes on land" PLUS about 10% of "taxable land- values") is only a fraction (about 4%) of the Danish Gross Domestic Product and (about 8%) of the "total of taxes and duties" collected in Denmark.

Unfortunately very few nations have a reliable statistic about the size of rent of land like the Danish, but you may believe that everywhere in the "civilised world" a still growing horde of non-land privilege holders incessantly capture huge amounts from the quantity that the classical economists (in 18th-19th centuries) called Rent of Land. That capturing has accelerated gradually through the past century without much awareness paid by Georgists who all the time have aimed only on public collection of the residual rent of land left by the non-land privilege holders for the landowners to pick up.

The privilege-profits (the extra profits on top of the prices the privilege holders would have charged had they not had their privileges) morally belong to the public in the same way, as does the rent of land; both are created by successful solutions of public tasks, by the synergy caused by the citizens' cooperative activities, and by the protection of the privileges enforced by the society's physical forces.

Unfortunately no nations register the size of privilege-profits taken away from the market by monopolists and privilege-holders. The only way you may understand something about the size of it is by looking at the size of the residual rent of land, the increase of which should have followed the breathtaking increase in productivity caused by the technological progress. That increase of the rent of land has not happened, it has been sucked up by non-land privilege holders, regular criminals and tax-collectors.

How to Reclaim the Proceeds Taken by Holders of Monopolies/Privileges?

George did not tolerate private monopolies/privileges! Against them he proposed abolition, or -- concerning those privileges that had to be tolerated -- socialization.

At the time of Henry George (the last part of the 19th century) monopolies/privileges were few, and those of them that the society would decide to tolerate could easily be managed by the public without conflicting Henry George's recommendation of a public administration as small as possible that he proposed in order to avoid or minimize the risk of corruption, ineffectiveness and waste of resources.

Today 118 years after the publication of George's Protection or Free Trade (1886) we have to realise that the number and the extend of monopolies/privileges have increased enormously and today they suck up huge parts of what the classical economists and Henry George called "Rent of Land". About the size of the "Rent of land" Henry George wrote (page 406 in Progress and Poverty reprinted 1990 by Robert Schalkenbach Foundation):

"... as society develops by the increase of population and the advance of the arts, it becomes greater and greater. In every civilized country, even the newest, the value of the land taken as a whole is sufficient to bear the entire expenses of government. In better developed countries it is much more than sufficient."

Today's Georgists have to face the fact that the legislators will tolerate a great number of privileges, and therefore Georgists have to decide whether they want to expand the public administration by socialization of all these tolerable privileges (which will conflict with Henry George's recommendation of a public administration as small as possible), or use Henry George's means against the landholders unearned profit (public collection of the annual rent of land) also on the privilege-holders' unearned extra profit (public collection of the annual rent of privileges, which is public collection of the unearned privilege profits).

In his article in Progress No. 1061, May- June 2004, Gavin Putland named non-land monopoly/privileges "the lesser robbers" and land monopoly "the great robber".

That choice of wording might give the reader the impression that "the lesser robbers" are inferior and almost innocent; but that is far from the reality. In fact, holders of monopolies and privileges form a steadily growing crowd of predators who wildly take their proceeds from what the classical economists called Rent of Land (the third part of the three in which the results of production is divided: Wages, Rewards to investors, and Rent of land to the landowners and other power brokers).

This is the real challenge that Georgists have to face in the beginning of the third millennium -- the sooner they do so the better.