How I Came to Embrace the Principles
Embraced by Henry George

Gavin Putland

[Reprinted from Progress, 2000 (estimated)]

Science tells us that we are genetically programmed to maximize our chances of passing on our genes. Rigid observance of the Ten Commandments is not a likely output of this program. Neither is loving one's neighbour as oneself. But selfishness, possessiveness, jealousy, hatred, xenophobia, territorialism, treachery, homicide, genocide, adultery, larceny, slander, deceit and dissimulation are all likely outputs; and this prediction is confirmed by history and current events.

Like science and history, Christianity teaches that we all have an inherited inclination toward evil. And as reason tells us that an inclination to sin does not become an evolutionary advantage until one actually commits the sin, so Christianity teaches that man's descent into evil began with a single act.

In this Darwinian struggle, the strongest and most unscrupulous individuals build social systems that make them still stronger, hence better able to build systems, and so on. Consequently some of our most cherished institutions are, in the terminology of the liberation theologians of Latin America, merely ``structures of sin''. These structures cause difficulties which are sources of individual temptation, completing a vicious cycle: individual sin and institutional sin are inseparable.

The foregoing logic is almost universally ignored. Political radicals emphasize institutional sin but don't seem to believe in the universality of individual sin; for them, structures of sin are the work of a particular socio-economic class (e.g. capitalists or landowners) while the rest of us are innocent victims. Christians, to the contrary, are wary of individual sin but seem oblivious to the sinfulness of socio-economic institutions; in particular, the criteria by which seemingly devout Christians choose their careers and their marriage partners are almost identical to those of society at large. Hence this writer, who is a political radical AND a Christian, finds himself an outcast among outcasts twice over: an outcast among Christians for his anti-Establishment views, and an outcast among political radicals for believing that old superstition about Original Sin.

I was born in Home Hill (north Queensland) in 1963, the eldest son of a non-smoking teetotalling Methodist schoolteacher. I was just like the old man only more so: Dux of Ipswich Grammar for 1980, a Medallist of the University of Queensland for 1984, and a PhD (electrical engineering) in 1996. But my professional life, both before and after my postgraduate years, was singularly undistinguished. So what went "wrong"?

From 1985 to 1988 the major distraction was religion. I was troubled by the claims of Roman Catholicism and might have fallen for them had I not discovered the counter-claims of Eastern Orthodoxy, which I found so convincing that I was received into the Orthodox Church in 1988. This of course is not the usual mode of conversion. The usual mode is to marry a Greek, and is much to be preferred. To convert purely out of conviction is to be a renegade to the old flock and an odd-ball to the new.

The other distraction was political economy. In about 1983, while still an undergraduate, I formed the opinion that land speculation was immoral because if some people got something for nothing, others must get nothing for something. Moreover the winners were those who could buy and sell when it suited them while the losers were those who could not; and the ability to buy and sell when it was profitable, rather than when it was unavoidable, came from being better off in the first place.

So my initial view of the land problem was based solely on equity, and the only remedy I could suggest was the usual social-democratic blunt instrument: a capital gains tax. But equity was a two-way street: if it was unfair to pocket unearned increases in land values, it was also unfair to suffer uncompensated losses. Therefore, I concluded, landowners should be compensated for devaluations caused by planning decisions. That was the remedy for NIMBYism.

In 1997, when I was an academic spending too much time on administration, I formed my first independent idea on unemployment: "Making work destroys jobs." That is, compliance costs divert resources from productive uses to unproductive uses, reducing the national capacity to pay wages.

Later that year I realized that income tests and assets tests on welfare are equivalent to income taxes and wealth taxes payable by welfare recipients. Means tests don't reduce the tax burden, because they ARE TAXES. It is therefore perfectly inane to ask whether we can "afford" to abolish means tests, because any resulting "tax increase" merely substitutes an honest tax for a dishonest one. Moreover, when we count means tests as taxes, we see that the heaviest tax burden is placed on the transition from welfare to work. To the extent that the burden is shifted onto employers by the wage-fixing process, it discourages hiring.

On the strength of these insights, I quit my precarious academic job and wrote the book SIX MONTHS TO FULL EMPLOYMENT (November 1998), in which I reinvented the "basic income" approach to full employment policy. (Georgists may prefer the term "citizen's dividend" to "basic income".) My basic income was perfectly Dry, without means tests or activity tests. For want of interest from publishers, I eventually placed the book in the public domain. (It is still available on my WWW site, but should not always be taken as an expression of my current views. For example, I no longer object to activity tests per se, but I caution against narrow definitions of "activity".)

My entry in the Tax Reform Challenge of March 1998, as suggested by its title "Fourteen Steps to Full Employment", was a short preview of the book. The "Challenge" was to rebut a submission which argued for 100 percent site rental collection implemented in stages. In response, I reinvented a form of the (John Stuart) Mill tax, which appropriated FUTURE increments in land values. I didn't know it was Mill's idea. Instead I took my hint from Phil Day's book, LAND (Brisbane: Australian Academic Press, 1995). Whereas Day [p.69, n.1] said that taxes should be adjusted in response to non-zero sale prices, I said they should be adjusted in response to deviations in sale prices from the base-date valuations. (Note the implication: the administrative machinery for a Mill tax is identical to that for full site rental collection.) The main advantages of this system, as I saw it, were that speculation would end and that landowners would be automatically compensated for devaluations.

In my Challenge entry, land speculation was only loosely related to unemployment. "Land speculation is a cumulative and uncompensated impost on the cost of living," I wrote -- the implication being that land prices caused upward pressure on labour costs, whereas my main strategy was to reduce labour costs by turning the dole into a wage subsidy. I understood that land speculation, like red tape, represented a diversion of resources from productive to unproductive uses. But I naively imagined land rents being shifted into prices, failed to relate land speculation to the natural rate of unemployment, and had no notion of "all-devouring rent". So it is not surprising that my book eventually included only one sentence on land value taxation, citing George's PROGRESS AND POVERTY and THE CONDITION OF LABOR in support of its economic advantages, and citing my Challenge entry as a solution to the attendant political difficulties.

Neither is it surprising that I do not clearly remember where I first saw the name of Henry George. Maybe it was in Heilbroner's THE WORLDLY PHILOSOPHERS, where a passage on land speculation from P&P is quoted. I remembered the quote but not the name. And maybe it was on my first reading of Phil Day's LAND that I was pulled up by the endnote accusing Heilbroner of "tabloid journalism" [p.108, n.4]. In any case, the clash between Day and Heilbroner directed my attention to P&P, which says (Bk III, ch.2):

As Produce = Rent + Wages + Interest,
Therefore, Produce - Rent = Wages + Interest.

As competition limits Wages and Interest to their marginal values, Rent takes the rest. Thus, for the first time in history, the laws of Rent, Wages and Interest were brought into harmony: George was to economics as Copernicus was to astronomy. And he had exposed the biggest single "structure of sin".

But I disagreed with George's dismissal of Mill. A Mill tax would remove the speculative component of Rent, causing Wages + Interest to rise. And such is the rate of increase in land values that if a Mill tax had been implemented in George's day, it would now be collecting close to 100 percent of the gross Rent. So I remained a Millist.

Then on Saturday, 20 February 1999, I wrote in an email message:

How does one make a 100% land rental ``tax'' politically acceptable? By dressing it up as a means test... How does one make a non-means-tested Universal Basic Income politically acceptable? By combining it with the said land rental tax in a single statement... [see PROGRESS, May/June 1999, pp.12-13; cf. The Single Means Test.

Thus began an interesting week. On the Wednesday, having given up hope of finding a publisher for my book on the causes and remedies of unemployment, I declared myself unemployed. On the Friday night, as I walked home from the bus stop after a Bible study meeting, it struck me that if all productivity taxes were abolished, the benefit would appear as increased Rent and increased capitalized land values. Hence, if the lost public revenue were replaced by land taxes, the sum of capitalized land values would return to its former value, just as it would under a Mill tax [see PROGRESS, Sep./Oct. 1999, pp.8-9]. In other words, introduction of a Mill tax followed by abolition of productivity taxes would preserve public revenue at its present level. Mill could have been a Single Taxer, George could have been a Millist, and I had seen the cat while walking up Daffodil Crescent in the dark.

After the Liturgy of Saturday, 27 February, I told my story to a fellow parishioner (who presumably didn't understand it) and concluded, "I was an Orthodox Georgist for a week. Now I'm an heretical Georgist!"

My position is "heretical" because it implies that H.G. didn't quite see the cat. In P&P (Bk VI, ch.1), he stated explicitly that the benefit of tax cuts from greater economy in government would accrue to landowners. The words "from greater economy in government" can be omitted without affecting the logic. If productivity taxes were cut in order to clear the way for a heavy land tax, the benefit of those tax cuts would also accrue to landowners as an increase in gross Rent. If that increase were reclaimed by a Mill tax, the after-tax rental value of land (hence its capitalized value) and the total public revenue would be roughly as before ("roughly" because we need to subtract the speculative premium and add the growth dividend).

George didn't draw this conclusion. Nor did he acknowledge that a Mill tax is sufficient to end speculation. In P&P; (Bk VII, ch.3) George wrote "All that can be said of this [Mill's] plan is, that it might be better than nothing." In THE SCIENCE OF POLITICAL ECONOMY (Bk II, ch.7), he hardened his position, saying that Mill's proposition "amounted to nothing whatever, as landlords were ready to sell land for what would give them any unearned increment not yet in sight" -- a response that envisages a buyback scheme rather than an incremental tax scheme, and which fails to allow for the heavy discounting rates applied to capitalization of (uncertain) future increments in Rent.

Geoists are not noted for unity at the best of times. As the undersigned geoist is overtly religious, backs Mill against George, packages geoism as more of a welfare reform than a tax reform, and (most recently) advocates alliances with lesser rent-takers in order to defeat the land power, he is condemned to be more isolated than most.