Economic Professors and the Law of Rent

George White

[ Reprinted from the Single Tax Review, September-October 1916]

In a recent book, written by a college teacher of economics, one finds sundry apologies or defensive suggestions in favor of economic professors, often charged with being uncandid if not untruthful in their attitude toward radical economic reform propositions. The writer places emphasis on the difficulty of obtaining agreement between all minds on the ethics involved. What seems naturally right to one man does not seem right to another man.

However true this may be on the line of ethics, it must be remembered that ethical questions are not the ones primarily raised. The first and main thing to be understood and settled is the scientific economic foundation of a subject of controversy. It would appear to be entirely fair to expect economic professors to make a full and frank examination of any claim that a natural law concerning which there is and has long been a substantially universal agreement, leads to certain results, and to demand that such college teachers encourage rather than discourage widespread attention to the tremendous importance of these results, if they are of importance.

It may not be the particular province of college teachers of economics to study or discuss the ethics of social institutions. Where they are led to refer to proposals to modify or change social or governmental practices, involving serious possible loss to the well-to-do, it may be reasonable to expect them to be very conservative, but full acknowledgment of this situation should not lead anyone to ignore the fact that the main thing may not be whether a definite proposal is just or not, but rather what scientific truth there is in the foundation of the demand for a change. On this point economic professors should not try to dodge, and should not be allowed to dodge if they do try. On this point economic professors should not fall down because of want of understanding. The case should be made so plain to them that they can not any longer fail to understand. Where a scientific basis can be shown to exist for the claim that certain economic results, immensely important to the community, are produced by natural law, and that law is not disputed, it should be possible to get from economic professors either a full and frank acknowledgement of the existence of the results or a clear statement as to how and where reform reasoning has gone astray.

A plain deduction from the orthodox statement of the law of economic rent is that, at any given time and place, there is an inevitable tendency, even under free conditions, for rent to absorb all the results of labor and the use of capital except what labor and capital are able to gain on the best locations to be had for nothing or for a nominal price.

Another deduction is that speculative withholding of land from use and speculative demanding of abnormally high prices for available locations must lead to an abnormal lowering of the margin of cultivation and a consequent automatic reduction of the net return to all producers. Those located above the normal margin, as well as those forced to poorer locations than would otherwise be the case, have their possible income reduced by every cause for inadequate use of natural opportunities.

A third claim for which there is scientific foundation is that economic rent can be appropriated by taxation and such taxation must be considered as direct and unshiftable.

Here are three scientific claims the full and frank consideration of which does not involve any question of ethics. If they are sound claims professors of economics can fulfill their responsibility by candidly acknowledging them. If they are not sound claims economic teachers can point out the reasons.

It is safe to say, however, that if economic professors will in no uncertain way teach that all the prosperity labor and capital can expect is only as much as they would gain on the best locations that have no value at all; that labor and capital would both gain by the abolition of speculation in land; that speculation in land would be practically impossible if economic rent should even approximately be appropriated by taxation; and that land value taxation would take economic rent and economic rent only for public use -- if these things should be impressed upon students of economics the question of ethics would not long bar the way for radical changes in our system of taxation.