Power and Market: Government and the Economy

We have refuted elsewhere the various arguments that form part of the Henry Georgist edifice: the idea that “society” owns the land originally and that every new baby has a “right” to an aliquot part; the moral argument that an increase in the value of ground land is an “unearned increment” due to external causes; and the doctrine that “speculation” in sites wickedly withholds productive land from use. Here we shall analyze the famous Georgist proposal itself: the “single tax,” or the 100-percent expropriation of ground rent.41

One of the first things to be said about the Georgist theory is that it calls attention to an important problem—the land question. Current economics tends to treat land as part of capital and to deny the existence of a separate land category at all. In such an environment, the Georgist thesis serves to call attention to a neglected problem, even though every one of its doctrines is fallacious.

Much of the discussion of ground-rent taxation has been confused by the undoubted stimulus to production that would result, not from this tax, but from the elimination of all other forms of taxation.

George waxed eloquent over the harmful effect taxation has upon production and exchange. However, these effects can as easily be removed by eliminating taxation altogether as by shifting all taxes onto ground rent.42 In fact, it will here be demonstrated that taxation of ground rent also hampers and distorts production. Whatever beneficial effects the single tax might have on production would flow only from the elimination of other taxes, not from the imposition of this one. The two acts must be kept conceptually distinct.

A tax on ground rent would have the effect of a property tax as described above, i.e., it could not be shifted, and it would be “capitalized,” with the initial burden falling on the original owner, and later owners escaping any burden because of the fall in the capital value of the ground land. The Georgists propose to place a 100-percent annual tax on ground rents alone.

One critical problem that the single tax could not meet is the difficulty of estimating ground rents. The essence of the single tax scheme is to tax ground rent only and to leave all capital goods free from tax. But it is impossible to make this division. Georgists have dismissed this difficulty as merely a practical one; but it is a theoretical flaw as well. As is true of any property tax, it is impossible accurately to assess value, because the property has not been actually sold on the market during the period.

Ground-land taxation faces a further problem that cannot be solved: how to distinguish quantitatively between that portion of the gross rent of a land area which goes to ground land and that portion which goes to interest and to wages. Since land in use is often amalgamated with capital investment and the two are bought and sold together, this distinction between them cannot be made.

But the Georgist theory faces even graver difficulties. For its proponents contend that the positive virtue of the tax consists in spurring production. They point out to hostile critics that the single tax (if it could be accurately levied) would not discourage capital improvements and maintenance of landed property; but then they proceed to argue that the single tax would force idle land into use. This is supposed to be one of the great merits of the tax. Yet if land is idle, it earns no gross rent whatever; if it earns no gross rent, then obviously it earns no net rent as ground land. Idle land earns no rent, and therefore earns no ground rent that could be taxed. It would bear no taxes under a consistent operation of the Georgist scheme! Since it would not be taxed, it could not be forced into use.

The only logical explanation for this error by the Georgists is that they concentrate on the fact that much idle land has a capital value, that it sells for a price on the market, even though it earns no rents in current use. From the fact that idle land has a capital value, the Georgists apparently deduce that it must have some sort of “true” annual ground rent. This assumption is incorrect, however, and rests on one of the weakest parts of the Georgists’ system: its deficient attention to the role of time.43 The fact that currently idle land has a capital value means simply that the market expects it to earn rent in the future. The capital value of ground land, as of anything else, is equal to and determined by the sum of expected future rents, discounted by the rate of interest. But these are not presently earned rents! Therefore, any taxation of idle land violates the Georgists’ own principle of a single tax on ground rent; it goes beyond this limit to penalize land ownership further and to tax accumulated capital, which has to be drawn down in order to pay the tax.

Any increase in the capital value of idle land, then, does not reflect a current rent; it merely reflects an upgrading of people’s expectations about future rents. Suppose, for example, that future rents from an idle site are such that, if known to all, the present capital value of the site would be $10,000. Suppose further that these facts are not generally known and, therefore, that the ruling price is $8,000. Jones, being a farsighted entrepreneur, correctly judges the situation and purchases the site for $8,000. If everyone soon realizes what Jones has foreseen, the market price will now rise to $10,000. Jones’ capital gain of $2,000 is the profit to his superior judgment, not earnings from current rent.

The Georgist bogey is idle land. The fact that land is idle, they assert, is caused by “land speculation,” and to this land speculation they attribute almost all the ills of civilization, including business-cycle depressions. The Georgists do not realize that, since labor is scarce in relation to land, submarginal land must remain idle. The sight of idle land enrages the Georgist, who sees productive capacity being wasted and living standards reduced. Idle land should, however, be recognized as beneficial, for, if land were ever fully used this would mean that labor had become abundant in relation to land and that the world had at last entered on the terrible overpopulation stage in which some labor has to remain idle because no employment is available.

The present writer used to wonder about the curious Georgist preoccupation with idle, or “withheld,” ground land as the cause of most economic ills until he found a clue in a revealing passage of a Georgist work:

“Poor” Countries Do Not Lack Capital.

Most of us have learned to believe that the people of India, China, Mexico, and other so-called backward nations are poor because they lack capital. Since, as we have seen, capital is nothing more than wealth, and wealth nothing more than human energy combined with land in one form or another, the absence of capital too often suggests that there is a shortage of land or of labor in backward countries like India and China. But that isn’t true. For these “poor” countries have many times more land and labor than they use. ... Undeniably, they have everything it takes—both land and labor—to produce as much capital as people anywhere.44

And so, since these poor countries have plenty of land and labor, it follows that landlords must be withholding land from use. Only this could explain the low living standards.

Here a crucial Georgist fallacy is exposed clearly: ignorance of the true role of time in production. It takes time to save and invest and build up capital goods, and these capital goods embody a shortening of the ultimate time period needed to acquire consumers’ goods. India and China are short of capital because they are short of time. They start from a low level of capital, and therefore it would take them a long time to reach a high capital level through their own savings. Once again, the Georgist difficulty stems from the fact that their theory was formulated before the rise of “Austrian” economics and that the Georgists have never reevaluated their doctrine in the light of this development.45

As we have indicated earlier, land speculation performs a useful social function. It puts land into the hands of the most knowledgeable and develops land at the rate desired by the consumers. And good sites will not be kept idle—thus incurring a loss of ground rent to the site owner—unless the owner expects a better use to be imminently available. The allocation of sites to their most value-productive uses, therefore, requires all the virtues of any type of entrepreneurship on the market.46

One of the most surprising deficiencies in the literature of economics is the lack of effective criticism of the Georgist theory. Economists have either temporized, misconceived the problem, or, in many cases, granted the economic merit of the theory but cavilled at its political implications or its practical difficulties. Such gentle treatment has contributed greatly to the persistent longevity of the Georgist movement. One reason for this weakness in the criticism of the doctrine is that most economists have conceded a crucial point of the Georgists, namely, that a tax on ground rent would not discourage production and would have no harmful or distorting economic effects. Granting the economic merits of the tax, criticism of it must fall back on other political or practical considerations. Many writers, while balking at the difficulties in the full single-tax program, have advocated the 100-percent taxation of future increments in ground rent. Georgists have properly treated such halfway measures with scorn. Once the opposition concedes the economic harmlessness of a ground-rent tax, its other doubts must seem relatively minor.

The crucial economic problem of the single tax, then, is this: Will a tax on ground rent have distortive and hampering effects? Is it true that the owner of ground land performs no productive service and, therefore, that a tax upon him does not hamper and distort production? Ground rent has been called “economic surplus,” which would be taxed up to any amount with no side effects. Many economists have tacitly agreed with this conclusion and have agreed that a landowner can perform a productive service only as an improver, i.e., as a producer of capital goods on land.

Yet this central Georgist contention overlooks the realities. The owner of ground land performs a very important productive service. He brings sites into use and allocates them to the most value-productive bidders. We must not be misled by the fact that the physical stock of land is fixed at any given time. In the case of land, as of other goods, it is not just the physical good that is sold, but a whole bundle of services along with it—among which is the service of transferring ownership from seller to buyer. Ground land does not simply exist; it must be served to the user by the owner. (One man can perform both functions when the land is “vertically integrated.”)47

The landowner earns the highest ground rents by allocating land sites to their most value-productive uses, i.e., to those uses most desired by consumers. In particular, we must not overlook the importance of location and the productive service of the site owner in insuring the most productive locations for each particular use.

The view that bringing sites into use and deciding on their location is not really “productive” is a vestige of the old classical view that a service which does not tangibly “create” something physical is not “really” productive.48 Actually, this function is just as productive as any other, and a particularly vital function it is. To hamper and destroy this function would have grave effects on the economy.

Suppose that the government did in fact levy a 100-percent tax on ground rent. What would be the economic effects? The current owners of ground land would be expropriated, and the capital value of ground land would fall to zero. Since site owners could not obtain rents, the sites would become valueless on the market. From then on, sites would be free, and the site owner would have to pay his annual ground rent into the Treasury.

But since all ground rent is siphoned off to the government, there is no reason for owners to charge any rent. Ground rent will fall to zero as well, and rentals will thus be free. So, one economic effect of the single tax is that, far from supplying all the revenue of government, it would yield no revenue at all!

The single tax, then, makes sites free when they are actually not free and unlimited, but scarce. Any good is always scarce and therefore must always command a price in accordance with the demand for it and the supply available. The only “free goods” on the market are not goods at all, but abundant conditions of human welfare that are not the subject of human action.

The effect of this tax, then, is to fool the market into believing that sites are free when they are decidedly not. The result will be the same as any case of maximum price control. Instead of commanding a high price and therefore being allocated to the highest bidders, the most value-productive sites will be grabbed by first comers and wasted, since there will be no pressure for the best sites to go into their most efficient uses. People will rush in to demand and use the best sites, while no one will wish to use the less productive ones. On the free market, the less productive sites cost less to the tenant; if they cost no less than the best sites (i.e., if they are free), then no one will want to use them. Thus, in a city, the best, or most potentially value-productive, sites are in the “downtown” areas, and these consequently earn and charge higher rents than the less productive but still useful sites in the outlying areas. If the Henry George scheme went into effect, there would not only be complete misallocation of sites to less productive uses, but there would also be great overcrowding in the downtown areas, as well as underpopulation and underuse of the outlying areas. If Georgists believe that the single tax would end overcrowding of the downtown areas, they are gravely mistaken, for the reverse would occur.

Furthermore, suppose the government imposed a tax of more than 100 percent on ground rents, as the Georgists really envision, so as to force “idle” land into use. The result would be aggravated wasteful misapplication of labor and capital. Since labor is scarce relative to land, the compulsory use of idle land would wastefully misallocate labor and capital and force more work on poorer land, and therefore less on better land.

At any rate, the result of the single tax would be locational chaos, with waste and misallocation everywhere; overcrowding would prevail; and poorer sites would either be overused or underused and abandoned altogether. The general tendency would be toward underuse of the poorer sites because of the tax-induced rush to the better ones. As under conditions of price control, the use of the better sites would be decided by favoritism, queuing, etc., instead of economic ability. Since location enters into the production of every good, locational chaos would introduce an element of chaos into every area of production and perhaps ruin economic calculation as well, for an important element to be calculated—location—would be removed from the sphere of the market.

To this contention, the Georgists would reply that the owners would not be allowed to charge no rents, because the government’s army of assessors would set the proper rents. But this would hardly alleviate the problem; in fact, it would aggravate matters in many ways. It might bring in revenue and check some of the excess demand of land users, but it would still provide no reason and no incentive for the landowners to perform their proper function of allocating land sites efficiently. In addition, if assessment is difficult and arbitrary at any time, how very much more chaotic would it be when the government must blindly estimate, in the absence of any rent market, the rent for every piece of ground land! This would be a hopeless and impossible task, and the resulting deviations from free-market rents would compound the chaos, with over- and underuse, and wrong locations. With no vestige of market left, not only would the landowners be deprived of any incentive for efficient allocation of sites; they would have no way of finding out whether their allocations were efficient or not.

Finally, this all-around fixing of rents by the government would be tantamount to virtual nationalization of the land, with all the enormous wastes and chaos that afflict any government ownership of business—all the greater in a business that would permeate every nook and cranny of the economy. The Georgists contend that they do not advocate the nationalization of land, since ownership would remain de jure in the hands of private individuals. The returns from this ownership, however, would all accrue to the State. George himself admitted that the single tax would “accomplish the same thing [as the land nationalization] in a simpler, easier, and quieter way.”49 George’s method, however, would, as we have seen, be neither simple, easy, nor quiet. The single tax would leave de jure ownership in private hands while completely destroying its point, so that the single tax is hardly an improvement upon, or differs much from, outright nationalization.50 Of course, as we shall see further below, the State has no incentive or means for efficient allocation either. At any rate, land sites, like any other resources, must be owned and controlled by someone, either a private owner or the government. Sites can be allocated either by voluntary contract or by governmental coercion, and the latter is what is attempted by the single tax or by land nationalization.51 ,52

The Georgists believe that ownership or control by the State means that “society” will own or command the land or its rent. But this is fallacious. Society or the public cannot own anything; only an individual or a set of individuals can do so. (This will be discussed below.) At any rate, in the Georgist scheme, it would not be society, but the State that would own the land. Caught in an inescapable dilemma are a group of antistatist Georgists, who wish to statize ground rent yet abolish taxation at the same time. Frank Chodorov, a leader of this group, could offer only the lame suggestion that ground land be municipalized rather than nationalized—to avoid the prospect that all of a nation’s land might be owned by a central government monopoly. Yet the difference is one of degree, not of kind; the effects of government ownership and regional land monopoly still appear, albeit in a number of small regions instead of one big region.53

Every element in the Georgist system is thus seen to be fallacious. Yet the Georgist doctrines hold a considerable attraction even now, and, surprisingly, for many economists and social philosophers otherwise devoted to the free market. There is a good reason for this attraction, for the Georgists, though in a completely topsy-turvy manner, do call attention to a neglected problem: the land question. There is a land question, and no attempt to ignore it can meet the issue. Contrary to Georgist doctrine, however, the land problem does not stem from free-market ownership of ground land. It stems from failure to live up to a prime condition of free-market property rights, namely, that new, unowned land be first owned by its first user, and that from then on, it become the full private property of the first user or those who receive or buy the land from him. This is the free-market method; any other method of allocating new, unused land to ownership employs statist coercion.

Under a “first-user, first-owner” regime, the Georgists would be wrong in asserting that no labor had been mixed with nature-given land to justify private ownership of sites. For then, land could not be owned unless it were first used and could be originally appropriated for ownership only to the extent that it was so used. The “mixing” of labor with nature may take the form of draining, filling, clearing, paving, or otherwise preparing the site for use. Tilling the soil is only one possible type of use.54 The use-claim to the land could be certified by courts if any dispute over its ownership arose.

Certainly the claim of the pioneer as first finder and first user is no more disputable than any other claim to a product of labor. Knight does not overdraw the picture when he charges that

the allegation that our pioneers got the land for nothing, robbing future generations of their rightful heritage, should not have to be met by argument. The whole doctrine was invented by city men living in comfort, not by men in contact with the facts as owners or renters. ... If society were later to confiscate the land value, allowing retention only of improvements or their value, it would ignore the costs in bitter sacrifice and would arbitrarily discriminate between one set of property owners and another set.55

Problems and difficulties arise whenever the “first-user, first-owner” principle is not met. In almost all countries, governments have laid claim to ownership of new, unused land. Governments could never own original land on the free market. This act of appropriation by the government already sows the seeds for distortion of market allocations when the land goes into use. Thus, suppose that the government disposes of its unused public lands by selling them at auction to the highest bidder. Since the government has no valid property claim to ownership, neither does the buyer from the government. If the buyer, as often happens, “owns” but does not use or settle the land, then he becomes a land speculator in a pejorative sense. For the true user, when he comes along, is forced either to rent or buy the land from this speculator, who does not have valid title to the area. He cannot have valid title because his title derives from the State, which also did not have valid title in the free-market sense. Therefore, some of the charges that the Georgists have leveled against land speculation are true, not because land speculation is bad per se, but because the speculator came to own the land, not by valid title, but via the government, which originally arrogated title to itself. So now the purchase price (or, alternatively, the rent) paid by the would-be user really does become the payment of a tax for permission to use the land. Governmental sale of unused land becomes similar to the old practice of tax farming, where an individual would pay the State for the privilege of himself collecting taxes. The price of payment, if freely fluctuating, tends to be set at the value that this privilege confers.

Government sale of “its” unused land to speculators, therefore, restricts the use of new land, distorts the allocation of resources, and keeps land out of use that would be employed were it not for the “tax” penalty of paying a purchase price or rent to the speculator. Keeping land out of use raises the marginal value product and the rents of remaining land and lowers the marginal value product of labor, thereby lowering wage rates.

The affinity of rent and taxation is even closer in the case of “feudal” land grants. Let us postulate a typical case of feudal beginnings: a conquering tribe invades a territory of peasants and sets up a State to rule them. It could levy taxes and support its retinue out of the proceeds. But it could also do something else, and it is important to see that there is no essential difference between the two. It could parcel out all of the land as individual grants of “ownership” to each member of the conquering band. Then, instead of or in addition to one central taxing agency, there would be a series of regional rent collecting agencies. But the consequences would be exactly the same. This is clearly seen in Middle Eastern countries, where rulers have been considered to own their territories personally and have therefore collected taxes in the form of “rent” charged for that ownership.

The subtle gradations linking taxation and feudal rent have been lucidly portrayed by Franz Oppenheimer:

The peasant surrenders a portion of the product of his labor, without any equivalent service in return. “In the beginning was the ground rent.”

The forms under which the ground rent is collected or consumed vary. In some cases, the lords, as a closed union or community, are settled in some fortified camp and consume as communists the tribute of their peasantry. ... In some cases, each individual warrior-noble has a definite strip of land assigned to him: but generally the produce of this is still, as in Sparta, consumed in the “syssitia,” by class associates and companions in arms. In some cases, the landed nobility scatters over the entire territory, each man housed with his following in his fortified castle, and consuming, each for himself, the produce of his dominion or lands. As yet, these nobles have not become landlords, in the sense that they administer their property. Each of them receives tribute from the labor of his dependents, whom he neither guides nor supervises. This is the type of medieval dominion in the lands of the Germanic nobility. Finally, the knight becomes the owner and administrator of the knight’s fee.56

Of course, there are considerable differences between land speculation by the original buyer from the government and a feudal land grant. In the former case, the user eventually purchases the land from the original buyer, and, once he does so, the tax has been fully paid and disappears. From that point on, free-market allocations prevail. Once land gets into the hands of the user, he has, as it were, “bought out” the permission tax, and, from then on, everything proceeds on a free-market basis.57 In contrast, the feudal lord passes the land on to his heirs. The true owners now have to pay rent where they did not have to pay before. This rent-tax continues indefinitely. Because of the generally vast extent of the grant, as well as various prohibitory laws, it is most unusual for the feudal lord to be bought out by his tenant-subjects. When they do buy out their own plots, however, their land is from then on freed from the permission-tax incubus.

One charge often made against the market is that “all” property can be traced back to coercive depredations or State privilege, and therefore there is no need to respect current property rights. Waiving the question of the accuracy of the historical contention, we may state that historical tracings generally make little difference. Suppose, for example, that Jones steals money from Smith or that he acquires the money through State expropriation and subsidy. And suppose that there is no redress: Smith and his heirs die, and the money continues in Jones’ family. In that case, the disappearance of Smith and his heirs means the dissolution of claims from the original titleholders at that point, on the “homestead” principle of property right from possession of unowned property. The money therefore accrues to the Jones family as their legitimate and absolute property.58

This process of converting force to service, however, does not work where rent paid for ground land is akin to regional taxation. The effects of speculation in original land disappear as the users purchase the land sites, but dissolution does not take place where feudal land grants are passed on, unbroken, over the generations. As Mises states:

Nowhere and at no time has the large-scale ownership of land come into being through the working of economic forces in the market. It is the result of military and political effort. Founded by violence, it has been upheld by violence and by that alone. As soon as the latifundia are drawn into the sphere of market transactions they begin to crumble, until at last they disappear completely. Neither at their formation nor in their maintenance have economic causes operated. The great landed fortunes did not arise through the economic superiority of large-scale ownership, but through violent annexation outside the area of trade. ... The non-economic origin of landed fortunes is clearly revealed by the fact that, as a rule, the expropriation by which they have been created in no way alters the manner of production. The old owner remains on the soil under a different legal title and continues to carry on production.59

• 41See Murray N. Rothbard, The Single Tax: Economic and Moral Implications (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1957); also idem, A Reply to Georgist Criticisms (mimeographed MS., Foundation for Economic Education, 1957).
• 42George virtually admitted as much:
  To abolish the taxation which, acting and reacting now hampers every wheel of exchange and presses upon every form of industry, would be like removing an immense weight from a powerful spring. Imbued with fresh energy, production would start into new life, and trade would receive a stimulus which would be felt to the remotest arteries. The present method of taxation ... operates upon energy, and industry, and skill, and thrift, like a fine upon those qualities. If I have worked harder and built myself a good house while you have been contented to live in a hovel, the tax-gatherer now comes annually to make me pay a penalty for my energy and my industry, by taxing me more than you. If I have saved while you wasted, I am mulct, while you are exempt. ... We say we want capital, but if anyone accumulate it, or bring it among us, we charge him for it as though we were giving a privilege. ... To abolish these taxes would be to lift the enormous weight of taxation from productive industry. ... Instead of saying to the producer, as it does now, “The more you add to the general wealth, the more shall you be taxed!” the state would say to the producer, “Be as industrious, as thrifty, as enterprising as you choose, you shall have your full reward ... you shall not be taxed for adding to the aggregate wealth.” (Henry George, Progress and Poverty [New York: Modern Library, 1929], pp. 434–35)
• 43George himself can hardly be blamed for the weak treatment of time, for he could draw only on the classical economic theories, which had the same defect. In fact, compared with the classical school, George made advances in many areas of economic theory. The Austrian School, with its definitive analysis of time, was barely beginning when George framed his theory. There is less excuse for George’s modern followers, who have largely ignored all advances in economics since 1880. On George’s contributions, see Leland B. Yeager, “The Methodology of George and Menger,” American Journal of Economics and Sociology, April, 1954, pp. 233–39.
• 44Phil Grant, The Wonderful Wealth Machine (New York: Devin-Adair, 1953), pp 105–07.
• 45For a critique of George’s peculiar theory of interest, see Eugen von Böhm-Bawerk, Capital and Interest (New York: Brentano’s, 1922), pp. 413–20, especially p. 418 on the capitalization of idle land.
• 46See Frank Knight:
  Men do hold land “speculatively” for an expected increase in value. This is a social service, tending to put ownership in the hands of those who know best how to handle the land so that the value will increase. . . . They obviously do not need to keep it idle to get the increase, and do not, if there is a clear opening for remunerative use. . . . If land having value for use is not used by an owner, it is because of uncertainty as to how it should be used, and waiting for the situation to clear up or develop. An owner naturally does not wish to make a heavy investment in fitting a plot for use which does not promise amortization before some new situation may require a different plan. (Frank H. Knight, “The Fallacies in the ‘Single Tax,’” The Freeman, August 10, 1953, pp. 810–11)
• 47“Land itself does not service civilized men any more than food itself does. Both are served to them.” Spencer Heath, How Come That We Finance World Communism? (mimeographed MS., New York: Science of Society Foundation, 1953), p. 3. See also Heath, Rejoinder to “Vituperation Well Answered” by Mason Gaffney (New York: Science of Society Foundation, 1953).
• 48See Spencer Heath, Progress and Poverty Reviewed (New York: The Freeman, 1952), pp. 7–10. Commenting on George, Heath states:
  But wherever the services of landowners are concerned he is firm in his dictum that all values are physical. ... In the exchange services performed by [landowners], their social distribution of sites and resources, no physical production is involved; hence he is unable to see that they are entitled to any share in the distribution for their noncoercive distributive or exchange services. ... He rules out all creation of values by the services performed in [land] distribution by free contract and exchange, which is the sole alternative to either a violent and disorderly or an arbitrary and tyrannical distribution of land. (Ibid., pp. 9–10)
• 49George, Progress and Poverty, p. 404.
• 50See Knight:
  To collect such rent, the government would in practice have to compel the owner actually to use the land in the best way, hence to prescribe its use in some detail. Thus, we already see that the advantage of taxation over socialization of management has practically disappeared. (Knight, “The Fallacies in the ‘Single Tax,’” p. 809
• 51See Heath:
  Must we suppose that land ... distributes itself? ... It can be and often is distributed by the government of a prison camp or by the popularly elected denizens of a city hall. ... Alternatively, in any free society its sites and resources must be and chiefly are distributed by the process of free contract in which ... the title-holder is the only possible first party to the contract. From him flows his social service of distribution. The rent is his automatic recompense, set and limited in amount by the free market. (Heath, How Come That We Finance World Communism? p. 5)See also Heath, The Trojan Horse of “Land Reform” (New York: n.d.), pp. 10–12, and Heath, Citadel, Market and Altar (Baltimore: Science of Society Foundation, 1957).
• 52Frank Knight says of the Georgist dream of every man’s unconditional right of access to the soil, that (1) “everyone actually has this right, subject to competitive conditions, i.e., that he pay for it what it is worth,” and that (2) the only viable alternative would be to “get permission from some political agent of government.” For any attempt to give every person an unconditional right to access to the soil would establish anarchy, the war of all against all, and is of course not approximated by a confiscation and distribution of “rent” or its employment for “social ends.” (Knight, “Fallacies in the ‘Single Tax,’” p. 810)
• 53Frank Chodorov, The Economics of Society, Government, and the State (mimeographed MS., New York: Analysis Associates, 1946).
• 54American homestead legislation, while attempting to establish a “first-user, first-owner” principle, erred in believing that a certain type of agriculture was the only legitimate use for land. Actually, any productive activity, including grazing or laying railroad tracks, qualifies as use.
• 55Knight, “Fallacies in the ‘Single Tax,’ “ pp. 809–10.
• 56Oppenheimer, The State, pp. 83–84. On the breakup of feudal domains into separate substates, see ibid., pp. 191–202.
• 57It must be repeated here that direct users would not be the only ones ever permitted to own land in the free market. The only stipulation is that use be the principle that first brings original, unused land into ownership. Once ownership accrues to a user, then the user can sell the land to a speculator, let it be idle again, etc., without distorting market allocations. The problem is the original establishment of valid titles to property. After valid titles are established, the owner can, of course, do what he likes with his property.
• 58Note the assumption that Smith and his heirs die out or cannot be traced. If they can be, then the property rightly reverts to them in a free-market system.
• 59Ludwig von Mises, Socialism (New Haven: Yale University Press, 1951), p. 375.