THE RELATIONSHIP BETWEEN RENT AND RICHES
Wilbur L. Ross, Jr., a billionaire who lives in New York City where creature comforts have been refined to exceed the tastes of preferred angels, owns a substantial interest in land with a coal mine near Tallmansville, WV, a place he hardly knew until 12 miners who dug coal for his company suffocated two miles inside it, resulting from what may have been inadequate compliance, for profit’s sake, with safety requirements designed to prevent just what happened at the Sago mine. One wonders how does one individual that has yet to grow old acquire a billion or more wealth. He must inherit a billion and add to it or he must figure some way to buy cheap and sell dear or he must expropriate to himself part of the value that the miners of the coal create as profit.
I never see a palatial dwelling in coal country that I don’t say to myself: “There is a monument to coal miners’ sweat.” Ross and those who build palaces have only 24 hours a day and 365 days a year to work just as does everyone. How can Ross and those feudal lords acquire such wealth? There is only one way and that is to acquire the value that others create by some method; for it would take them a century of obscene wages for their work to have and build what they have and have built. One method that brings more money to the rich with little or no effort at all is rent.
Fifty years ago I read a book that illuminated my mind with regard to the injustices of this nation’s land laws: “Progress and Poverty” by Henry George (1839-1897). In it George brings to the readers’ attention what most people have noted: that where there are extremes of wealth there are extremes of poverty. Why? Asked George. Rent, said he. As a city—where the extremes are most evident—prospers by the investment of capital, the work of labor and the influx of people seeking shelter land and employment, land values and the improvements thereon increase and thus rent increases, at least, proportionately, and often disproportionately in that it increases unconscionably. The rake-off by rent from the value produced by capital and labor leaves laborers just where they were no matter how much value they help to create. They realize little progress because rent takes from their pockets a large portion of their wages. The more they produce, the higher the value of land increases and the higher is the rent, ad infinitum. It’s a no win situation for workers.
George proposed a solution. He said that “the only remedy for the unjust distribution of wealth is in making land common property.” But he said such a solution is not practicable. His solution was a Single-tax. Never was created a fairer tax and a tax that would suffice to keep a government solvent. But it is a tax speculators find abhorrent.
George proposed that all increments in the value of land that were not attributable to the improvements by the owners should be confiscated as a tax and be credited to the State for the benefit of all its citizens. Such a tax would prevent owners of land, who have a monopoly with respect to every acre they own, from raising rent on land on which they have made no improvements and would prevent speculators from buying cheap and selling dear, the dear being often the difference added by nothing the owner has done but by what labor and chance have added.
I have been reading Leo Tolstoy’s “Resurrection.” It is a story whose origin is Tolstoy’s own conversion. Nekhluyudov, the protagonist of his novel, is a member of Russian aristocracy, just as was Tolstoy, and he had just read, as Tolstoy had read, George’s ”Progress and Poverty.” In “Resurrection,” Nekhluydov seduced a maid that worked on one of the vast estates of which he was to inherit. Subsequently, he became a juror in a case in which the maid, who had had his child that died for lack of care and who was now a prostitute, had been charged and convicted of poisoning one of her clients, of which charge and conviction she was innocent. She had been naïve in working with others who actually poisoned the client in a way that pointed to her. Nekhlyudov was conscious-stricken. He began to see that his seduction of the maid was the cause of her descent into prostitution and poverty and to the legal problems that ensnared her. He decided that to make matters right with her and his conscience, he must do two things: one he must use every legal means to get the maid’s sentence set aside; and two he must marry her. And upon a personal and on the site look at what were the conditions of the serfs on the land that was his, he determined he must follow Henry George’s solution to undo the injustices suffered by the peasants who worked his land, on which he did nothing, but from which he enjoyed the income produced by the peasants.
Nekhlyudov called a meeting of the peasants and proposed his Henry George solution to their poverty: “So you see it is not as simple as you imagine. And not only we alone, but other people also are thinking about it. There is an American George, who has reasoned it out like this and I agree with him.”
Then, he explained George’s theory of a Single-tax. “All the land is a common possession. Everybody has an equal right to it. But there is better and worse land, and everybody wants the good land. What is to be done to equalize things? Let him who owns a good piece of land pay the price of it to those who have none. And it is hard to determine who is to pay, and to whom he is to pay, and as money has to be collected for common purposes, it ought to be arranged in such a manner that he who owns a piece of land should pay the value of his land to the Commune for all public purposes. Then all will have equal chances.”
George proposed that there need be only one tax: a confiscatory tax on the unearned increment of land values. No man could buy cheap and sell dear, since the dear would accrue to the state for the purpose of providing for the welfare of all the state’s citizens. An acre one bought for a dollar on which the owner made no improvements and which increased in value to a thousand dollars owing to the investment of capital and the work of labor in adjoining lands or the coming of people needing a place to stand, he under George’s plan would realize no profit from the sale of it. The difference between what he paid and what he sold it for would go to the state for the general welfare. The owner of the acre should not benefit from an increase he did not produce. .
The ownership of an acre or a thousand acres or ten thousand acres of land is a monopoly. The owner, if he is a Wilber Ross, can set the rent for his land or set the wages and determine the conditions of those who mine the coal on it. If one is a landlord in New York, whose ancestors acquired land there even before these states became a nation and it descended to him through ten generations, the heir can still collect the rent and can increase rent as factors, he has nothing to do with, cause an increase in the value of his land. And the peasants of the world pay to someone an unfair share of what they produce and that someone often lives in a villa on the sunny Riviera overlooking the sensuous sands and the bleached crests of waves of the blue Mediterranean’s seas.
It is fruitless to write such stuff as this. Most people want a system whereby they can, or at least dream that they can, buy cheap and sell dear, own land and jack up rent as land values increase or own plantations and have serfs or slaves or underpaid peasants or businesses in which the work is done by low paid employees, all providing profits for the owners to spend or to bank or to invest. Landlords in America or anywhere can become rich and richer while they sleep, by the expropriating device of rent.