For 70 years, trailblazing economist Mason Gaffney ’48 has championed land over capital.
By Mamie Stevenson ’12 | December 7, 2018
Photo by Kendrick Brinson
Mason Gaffney ’48 is a cowboy. Known for his weathered Stetson, genteel swagger, and comprehensive understanding of American terrain, he has ridden outside the herd of mainstream economists for the better part of the last century, arguing that the discipline’s traditional emphasis on capital and commerce is a tragic mistake.
California, among many other places, is now in the grips of a scarily intense drought. Yet, California still uses an awful lot of water. Golf courses and car-washes are obvious wasters, but agriculture is the thing that really sucks California dry.
California as a whole diverts or pumps 43 million acre-feet of water each year to supplement its meager rainfall. In total, agriculture consumes 34 million acre-feet of that.
The economics of this can get a little bizarre. Water in California is heavily subsidized — a big reason why so many water-intensive crops are grown there. Fruit and nut trees need more water, but they also bring in much more revenue per acre than vegetables or other crops — and, they represent a long-term investment. That means that if water is scarce, farmers will tend to use it on just those crops that are use it least efficiently. For example, almonds in California use a stunning 1.1 trillion gallons of water each year, enough for every person in the state to take a luxurious 22-minute shower every day. California produced 82% of the world’s almond crop in 2013.
Increasing the efficiency of irrigation is something that people have long known how to do. According to Big Picture Agriculture, “Many of the methods known to conserve water and use it efficiently have been practiced for thousands of years in some very arid regions of the world with great success. The best systems require little maintenance while yielding maximum results.” The site goes on to list 35 methods, viable at a range of scales, for conserving irrigation water. Why is it not done, then, in California? Why, essentially it’s because farmers are paid to waste water.
Of course water wastage is compounded when water is wasted on products that are deeply wasteful in themselves. Producing a gallon of ethanol, for example, requires 193 gallons of water (see Food, below, and Energy). The US plans to pare down ethanol production to a mere 15 billion gallons in 2015.
Food
We feel guilty when we forget a container of leftovers in the fridge, it grows fuzz and we have to toss it, and I shudder to think how many tons of the nation’s french fries (not to mention our lettuce!) get tossed into the trash. But to get a handle on the immense amount of nutrients today’s food system wastes, we have to go to the top of the food chain: we have to look at meat.
A lot has been written about all this; Fast Food Nation by Eric Schlosser, for example, lays it out in gruesome detail. But for introduction, a well-documented New York Times article from January, 2008 does the job nicely. Here are some of the facts it presents:
The world’s total meat supply was 71 million tons in 1961. By 2013 it rose to 308 million tons.
2.2 pounds of beef is responsible for the equivalent amount of carbon dioxide emitted by the average European car every 155 miles.
Though some 800 million people on the planet now suffer from hunger or malnutrition, the majority of corn and soy grown in the world feeds cattle, pigs and chickens.
About ten times more grain is required to produce the same amount of calories through grain-fed beef as through direct grain consumption.
Iowa alone produces 137,000 tons of pig excrement every day.
There can be no doubt that a system that subsidizes meat, by subsidizing grain, is detrimental both to the planet and to the health of all those meat-eaters. To put it bluntly: it’s a waste of a heck of a lot of good food.
And it goes beyond mere eating! We’ve already mentioned the global poster child for insanely wasteful resource use: ethanol. A third of the US corn crop is used to produce the stuff. The world’s #3 producer of corn is Brazil (China is #2), but Brazil produces only a third of the amount of corn that US drivers burn in their cars.
Energy
There are so many ways to talk about our society’s waste of energy. We could discuss the sheer wattage of solar radiation that hits the earth each day, and the falling price of photovoltaics, or the untapped potential of wind and tidal power sources, or the astounding savings that could be found in ramping up public transportation, and using energy-efficient vehicles. A 2009 cover story in Scientific American showed how the entire world could get all of its energy — for transportation as well as electricity — from wind, water and solar sources by 2030, using tweaks to existing technology.
Of course, we can’t discuss the waste of good energy resources without mentioning the squandering of both human and material resources in wars, and preparation for wars, over the control of fossil fuel resources. Our immense military establishment is, of course inherently wasteful — because military assets are designed to be consumed in the task of destruction. Not only that, military operations themselves use staggering amounts of energy. Here are some astounding examples:
The US military consumes more energy than Nigeria.
In 2006 alone, the Air Force consumed the same amount of fuel US airplanes consumed during WWII (between December 1941 and August 1945): 2.6 billion gallons.
F-15 fighter jets burn 1,580 gallons of fuel per hour.
Over 70 percent of the tonnage required to position today’s US Army into battle is fuel.
Why do we squander our energy resources so outrageously, when we know darned good and well that continuing to burn fossil fuels will bring disastrous, irreversible consequences? It’s because the alternatives are, basically, unthinkable. I’m not saying our energy alternatives are unworkable, impracticable or even present too hard an adjustment. The problem is that in terms of our political economy, our international relations, our sense of who’s on top and in control, they’re unthinkable. Imagine! They’re saying we need international cooperation to protect the global climate. Up to now, international relations has always been about self-interest: individual and corporate, mostly, though occasionaly people pull together for the sake of national self-interest. But to deal with climate change, we must appeal to global self-interest. That’s still self-interest, mind you, but it’s a whole new thing.
By 1600 the British Isles were pretty much cleared of timber, save the inviolate estates of nobles. One of the pressing concerns that led to the earliest North American settlements was the prodigious supply of wood to be found there. Wood was the first cargo that the failed Virginia settlement of 1608 tried to send back. The pattern was repeated in the United States. Prior to the civil war, wood provided over 90% of fuel for homes and industries in the US. The coal was there — it was already being used very extensively in Britain — but the States had a very well-developed and influential timber industry. The bottom line is that we persistently wasted wood in the United States until we truly had no other alternative.
The Vote
We US citizens are justifiably proud of our democratic, constitutional political system — yet one wonders why we make so little use of it. I live in the little town of Jackson, Maine, pop. 548 in the 2010 census. People in Maine are proud of their democratic traditions and protective of their suffrage; recently Maine resoundingly defeated a ballot issue to do away with same-day registration, and we’re one of only 14 states that allows convicted felons to vote. But — our most recent election was an off year: no national, state or even local offices to be decided; it turned out that the only thing on the ballot was the school district’s budget. Now, the school budget is an issue about which a lot of people in our little town have loud complaints and strong opinions. I went in to vote at about four in the afternoon. “Slow day?” I asked the dutiful poll-watcher lady. She sighed and consulted her clipboard. “You’re number six.”
Average voter turnout in the United States in the 28 national elections since 1945, in terms of the portion of the voting-age population, is 47.7%. That’s 138th in the world. The top ten in voter turnout are emerging democracies that had only had a few elections during that period. But Australia has had 22 elections since 1945; their turnout rate has averaged 84.2%.
It could be that we’re jaded about voting because there seems to be so little to vote for; American politics is mired in partisan gridlock and big-money influence. The current US Congress has single-digit approval ratings, but guess what! Because of the magic of gerrymandering, the number of incumbent congresspersons who will lose their bids for reelection will most likely be in the single digits! Thus, the most expensive election in world history (under current rules, every US election will almost certainly cost more than the previous one) will yield the absolute minimum amount of actual legislative or policy change.
There are commonsense reasons why citizens really ought to use their voting power. The most basic one is that when fewer people vote, the groups who are more likely to vote gain more power over the overall outcome. This basic fact is powerfully used by politicians and their strategists. The 2000 presidential election in the US was very close; much was made over a few thousand contested votes in Florida, and the 2.7% of the popular vote that Ralph Nader managed to get. Nevertheless, George W. Bush was “elected” by 47.9% of the popular vote, which amounted to 27.4% of the voting-age population. Think voting matters?
Infrastructure
In 1904, New Yorkers thought their brand-new subway system was the swellest thing ever. And it was! It expanded rapidly, growing into world’s largest railway system, efficiently moving millions upon millions of people to work, to play at Coney Island, to cheer at Yankee Stadium. The New York subway stuck to its five cent fare until 1948. By that time, of course, there were lots of automobiles in the city; in 1904 there were only horses.
The city of Austin, Texas is known as the state’s least scary city to non-Texans. It had the U. of Texas Longhorns, nice museums and music scene, interesting historical spots — all in all, a nice place to visit. But it’s rough on unfamiliar drivers. It’s encircled by ring upon ring of elevated, limited-access highways with endlessly sweeping ramps; it can literally take you twenty minutes to reach a destination that is visible from where you’re standing. “You think this is bad,” say Austin people, “Wait til you see Houston.”
People in Austin wonder whether its already Texas-sized highway system will be able handle the traffic load in a few years. Things get pretty backed-up during rush hours — and, all those new flyways will need to be maintained. That’s not a trivial issue. I have been traveling in and out of New York City on I-95 for many years, and I don’t recall ever not seeing construction on the stretch between New Haven, Connecticut and the New York State line. That means that at existing levels of traffic, using existing road-maintenance techniques, this stretch of highway simply cannot be fixed before it wears out.
There are a zillion examples of mind-bendingly egregious waste of the public infrastructure that your tax dollars have bought. I’ll just make one more observation before moving on. Infrastructure capacity is the most important consideration in how cities arrange zoning requirements. If zoning allows, say, twelve-story buildings with a certain footprint in a neighborhood, you can bet that the city figures it has sufficient water, transportation, education and public-safety facilities to handle buildings of that size. Would you care to hazard a guess at how much of the zoned-for, buildable space in New York City is actually built, as of this year? Fifty-one percent. Other major cities are even less densely built. Our cities could hold a whole lot more people than they do, and these people could significantly lower their environmental footprint by moving into cities — and even more so if cities embraced green building techniques. Yet we keep pumping out the parking lots, the beltways, the big-box superstores…
Borrowed Money
There is, by many accounts, a debt crisis in modern society. The national debt of the United States stands at about $17 trillion, or some $55.9K per citizen, which is a bit more than the US’s personal debt per citizen, which stands at $52.2K. The US Debt Clock website shows many interesting facts; its numbers adjust in real time, which lets us see that our national deficit is currently decreasing by about two thousand dollars per second. Also, US debt held by foreign countries, which stands at around $5.9 trillion, is currently decreasing by some $4K per second. So the trend lines seem to be positive — but any way you slice it, it’s still a lot of money to be owing.
As wages and household incomes have declined, people have taken on more and more personal debt. As of 2012, the average US household with at least one credit card owed $15.9K in credit card debt, much of it at high-teens interest rates. But, of course, not every family can get a credit card. Payday and car-title lenders lie in wait for the vulnerable. Some states, such as Texas, do not place any limits on the rates such lenders can charge.
But, you might ask, why is “borrowed money” placed in the category of things that are wasted? Well, it’s wasted, by definition, if new loans are taken out just to pay back old ones. Consumers who do this often find themselves in a spiral of debt, leading to bankruptcy, and permanent economic hardship. “Deficit Hawks” warn that our nation faces this predicament too. There are significant differences between the finances of a nation and those of a family: the nation can, within limits, print its own money. However, money can’t just be inflated or borrowed forever without consequences.
Not everyone borrows out of desperation; businesses often borrow money because they can make more profitable use of the cash they have on hand. Nations, similarly, can choose to borrow during economic downturns, times when raising taxes would further depress the economy. Such borrowing can be seen as sensible and sustainable.
However, if one is borrowing more than one would prefer to borrow, then one will most likely not be borrowing on the most advantageous terms. Problem borrowing comes when one just doesn’t have enough income to pay the bills. That’s the borrowed money that gets wasted, and its amount increases when the economy turns downward, and when there are more poor people.
Human Potential
And yet, modern society perpetrates one waste that is bigger — much bigger — than all of these.
Regarding this last, biggest and most important of all the things our society squanders, I can’t imagine saying it better than Henry George did in Progress and Poverty:
[The] greatest of all the enormous wastes which the present constitution of society involves is that of mental power. How infinitesimal are the forces that concur to the advance of civilization, as compared to the forces that lie latent! How few are the thinkers, the discoverers, the inventors, the organizers, as compared with the great mass of the people! Yet such men are born in plenty; it is the conditions that permit so few to develop…. Turn to the lives of great men, and see how easily they might never have been heard of. Had Caesar come of a proletarian family; had Napoleon entered the world a few years earlier; had Columbus gone into the Church instead of going to sea; had Shakespeare been apprenticed to a cobbler or chimney sweep; had Sir Isaac Newton been assigned by fate the education and the toil of an agricultural laborer… what would their talents have availed? But there would have been, it will be said, other Caesars or Napoleons, Columbuses or Shakespeares…. This is true. And it shows bow prolific is our human nature. As the common worker is on need transformed into queen bee, so, when circumstances favor his development, what might otherwise pass for a common man rises into a hero or leader, discoverer or teacher, sage or saint. So widely has the sower scattered the seed, so strong is the germinative force that bids it bud and blossom. But, alas, for the stony ground, and the birds and the tares! For one who attains his full stature, how many are stunted and deformed.
It has been generally assumed, for many years, that “the free market isn’t good at providing affordable housing.” If the free market can’t satisfy that basic, universal human need, then we can’t afford to trust the free market, can we?
Oddly, the free market doesn’t seem to have a problem with providing other things we want to buy. There are sensible cars that working people can afford. You can go into Walmart and buy your kids a full set of school clothes for less than $100 (though you might pay a bit more if you’re concerned about abusing and killing textile workers). Do-it-yourselfers know that there’s healthy competition in the markets for lumber, nails, paint, wallboard and power tools. Why, there are even out-of-work carpenters eager to work for reasonable rates — it’s not the actual construction of the housing that’s unaffordable.
“It’s Not That Simple”
When water was the preeminent source of industrial power, towns grew up along the Appalachian fall line. In recent years, the globalization of various manufacturing industries has led to a decline in population — and real estate values — in many cities, especially in the Midwest.
Lumber mill in Bangor, Maine, ca. 1890
The state I live in, Maine, has lost flagship industries in successive waves. In the 18th and 19th centuries, demand for Maine’s prodigious timber resources kept billions of board feet floating down the Penobscot river, and shipyards humming up and down the coast. (Today, one last shipyard, Bath Iron Works, struggles to keep its US Navy contracts.) Then, for many years, Maine was a leading producer of chickens. The cold winters helped to keep the large numbers of birds free of infection. But, when antibiotics were discovered to do the same thing, chicken farming quickly shifted southward, to avoid Maine’s high fuel costs. People — especially educated young people — moved away, and the state’s economy suffered. But, for those few who could afford a down payment, Maine homes were bargain-priced.
So, one thing we can say about “affordable housing” is that it tends to come along with economic decline. But, sometimes, in some communities, that process can have a silver lining. To return to the Maine example, old farms have been repurposed to make high-end wool products (sheep and alpacas like it there), or organic crops for a growing local-food market. Often, when land prices fall far enough, new, creative place-uses start becoming feasible.
Sometimes the process turns communities entirely around. In Maine, an example is the community of Belfast, a town of some 6,000. In the 1980s, Belfast was a gritty, working-class community that smelled like its two biggest employers: fish-canning and chicken-processing. When the chicken industry left the area, and the struggling sardine plant closed, the town faced hard times. Housing was cheap, all right — who wanted to live there? However, the town had a usable harbor, and some charming old architecture, and it willed itself into becoming an artistic community. Galleries and bistros sprouted like fungi. Tourism boomed. Rents and house prices soared.
Urban Blight & Flight
Throughout the 20th century, US cities declined, while suburban communities boomed. This was a national phenomenon. It preceded widespread globalization, and cannot be linked with industrial decline. And, it was in precisely these blight-afflicted cities where the “affordable housing problem” became most acute.
The cause of urban blight & flight had everything to do with the sad racial history of the United States. There were two great waves of rural-to-urban migration of African Americans. The first brought some two million blacks to Northern and Midwestern industrial cities, seeking to take advantage of the shortages of industrial workers brought about by the first World War. The second brought another five million or so after World War II, many of whom settled in cities in the West. Conditions in the agricultural South must have been pretty bad for so many people to pin their hopes on such an unlikely outcome. Once the Great Wars were over, industrial jobs were no longer so easy to get (after WWII, millions of women relinquished factory jobs to returning GIs). Many unions denied membership to African Americans. Furthermore, the process of redlining — denying credit within certain racially-defined areas, was very widespread. These factors, combined with an endemic level of racism in society, ensured that people of color stayed within well-defined neighborhoods.
Within those areas, unemployment was high, and it was essentially impossible for residents to establish businesses or buy homes. Rental housing was in short supply, and there was little incentive for landlords to pay attention to maintenance. This was a recipe for crime, and decline — and many of cities’ white, middle-class residents started to leave — a process that was accelerated by the establishment of the Interstate Highway System, and the booming automobile industry.
This process left behind impoverished, crime-ridden neighborhoods, patrolled by contemptuous and unreliable police. But you couldn’t say they weren’t affordable. At the very least, you could knock your way into the shelter of an abandoned building. A great many working people rented egregious housing, while paying for their own painting, re-glazing, and often heating, in Harlem, North Philadelphia, Watts, St. Louis, South Chicago and many other cities.
This is not to suggest that urban decay is entirely due to racism. It happens in places that lack the USA’s chronic racism, and has much to do with a worldwide shift of manufacturing to the global South and East. But, people often find it easier to handle large-scale social problems if they can identify a scapegoat. In the USA, the identification of Black areas with drugs and crime suited this impulse
At Least It’s Our Neighborhood…
There’s an inherent instability about this process, though. Blighted as these neighborhoods were, people had put down roots in them. They paid their taxes; city governments grudgingly provided them with infrastructure. Each had originally been part of a big city, a place where a great many people wanted to live. But, as land values fell, and more buildings were abandoned, eventually the place would become a real estate bargain. The slum may have lowered the value of the land immediately under it, but the slum as a whole was still centrally located.
A Doonesbury strip from the early 1980s showed a radio interview of the author of a book about making money in real estate. The author said that it was a good idea to distribute spray paint and crowbars to the local youth. “You mean,” asks the shocked interviewer, “you encourage them to vandalize their own homes?” The author replies, “Well, within reason. We ask them not to touch the copper plumbing.”
The history of a place like New York City is characterized by waves of blight and gentrification. Manhattan’s Upper East Side was scrubby farmland, then a rough-and-ready neighborhood of German and Irish immigrants, with a dirty, loud El train running right through it. Now it’s among the priciest real estate in the world.
East River regatta in the 1890s
Similarly, Harlem in the 19th century was a community of fancy country estates. African Americans from the South started arriving in great numbers in the first decade of the 20th century, along with subways to take them back and forth to work. “Urban renewal” policies threw up high-rise housing projects in the 1950s in an attempt to “clear the slums” and address the housing crisis, but the neighborhood’s poverty remained. Now, after all these years, Harlem is becoming gentrified, and there is resentment over losing the old community, rough as it was — as well as the skyrocketing housing costs. Even the South Bronx is starting to sport some pricey new condos.
The Blight & Flight Pattern Reverses
Where do people go, when they get gentrified out of the neighborhoods they’ve lived in for years? One would think that in the vastness of New York, they would move to the Outer Boroughs. Some do — but real estate prices in New York have become so extreme that even cheap Outer-Borough neighborhoods, like Williamsburg, Red Hook or Astoria have become unaffordable. Many have to leave the Big Apple entirely and head for the more affordable “inner-ring” suburban communities such as Jersey City, Yonkers or Nassau County.
This is becoming a nationwide pattern. People who can no longer afford to live in gentrified, former low-income neighborhoods are moving, in large numbers, into “inner-ring” suburbs. Poverty, racial tensions, and other social problems long associated with “the ghetto” are showing up in suburban communities. And housing in such places is becoming — that’s right: more affordable.
Must Affordability be Synonymous with Poverty?
Back in the mid 2000s, we seemed to be on a path that would make the American dream of owner-occupied housing come true for just about everybody. For a time, it seemed like anyone could secure a home mortgage. Banks were offering mortgages with no down payment, just a pay stub indicating the buyer could make the monthly payments. Just to make sure, Fannie Mae and Freddie Mac offered targeted mortgage programs for minorities. Price was no object, because everyone expected the value of the real estate, which served as collateral for the loans, to keep going up. Suddenly, all these new homeowners could borrow against their home equity to buy a new car or a washer & dryer. It was a magical wealth machine, fueled by historically low interest rates. What a neat solution to the problem of affordable housing! Alas, it was based on a transparent fallacy, and the process made a few people fantastically rich, while deeply hurting just about everyone else.
The dreamer awoke; we realized we couldn’t really create the American dream out of pixie dust. There are currently more empty, foreclosed houses than there are homeless people in the USA. Unfortunately, homeless people don’t have stable jobs or good credit ratings. Which agency is going to deal with the innumerable i-dottings of transferring title to four million empty houses? And are the banks going to give up these assets, just to be nice? Though it might make sense, in many ways, our current political system simply will not allow these empty homes to be given away to people who need them.
Cities are left with the realization that they have to create affordable housing the old-fashioned way: build it. There are, basically, two ways of doing this. They could spend municipal funds to build public housing (which is politically unthinkable today) or somehow give private developers an incentive to build it (which is, as things now stand, economically unfeasible).
Cities Try to Put Deals Together
Nevertheless, a number of cities are trying this sort of thing. In New York a developer is allowed to build 20% more units than zoning allows. By “allows,” I mean the square-foot figure that has been negotiated using transferable development rights, public-space considerations, etc.). This is the case if it agrees to create, or keep from being lost, that same number of affordable units (“affordable” being subject to various official definitions). Two things about this: first, it solves the mystery of how people are able to build thousand-foot towers in areas that are zoned for, like, twelve stories. Second, in terms of meeting the need for affordable housing, it’s an inherently losing proposition. At best, the program will only create 20% as many affordable units as new luxury ones. If the luxury towers succeed, they’ll add to the upward pull on housing prices, causing more affordable units to be done away with. If they fail, luxury housing will be oversupplied, and since new affordable units are based on the creation of new luxury units, it’s self defeating.
We have come full circle to the problem that we started with. Why is it that the market is able to provide working people with cars, cordless drills, blue jeans and smartphones — but not housing?
The difference is really pretty obvious; has the reader caught it? Here is a house. Let’s play real estate appraiser for a moment: is this house worth $50K? Or it is worth $1 million?
You hesitate. You seem to need more information. Wouldn’t it depend on interest rates, and the boom/bust cycle? I mean, heck, you might not be able to get $50K for it, if nobody can get financing. True enough — yet there is another, much more important consideration — something real estate people know very well, but public-policy people always seem to forget. It’s all well and good to figure out where things are in the business cycle — but to answer our question, the thing you really need to know about this house is: where is it? How many people want to live there? How close is it to lots of people to meet, greet and make deals with? How easy is it to get from there to places where all those people gather for business and pleasure? What public services are provided to people who live there, how good are they, and who pays for them? It’s the value of that location — where it is — that accounts for the 20-fold difference in price.
It’s also worth noting that although people struggle to afford housing throughout the economy, and, indeed, the great bulk of foreclosures in the subprime housing crisis were in suburban areas. Nevertheless, it’s in urban centers that we hear the hue and cry for “affordable housing.”
Fans of The Free Market are tempted to ask why urban centers need affordable housing. Aren’t cities supposed to be places that draw the best talents and most nimble operators? Urban taxpayers invest in public transportation systems; why can’t the workers just live outside the pricey (newly gentrified) central cities?
But that doesn’t work, because — as we have seen — areas within commuting distance aren’t affordable either! The “affordable housing problem” of today’s cities isn’t a matter of community spirit, or compassion for the poor commuters. “Affordable housing” becomes a problem when so few people can afford to live in a community that its ability to sustain a local economy starts becoming threatened.
Cities Are Not Filled Up
There ought to be plenty of affordable housing. If one examines any US city — by driving through, flying over, or scrolling through Google Maps — one will see a truly amazing amount of real estate that is either entirely vacant, or grossly underused. How many surface parking lots does Downtown Brooklyn need? This waste of infrastructure-rich urban land happens throughout the city, from the hyper-valuable core right out to the fringes, making the urban area sprawl out much farther than it would otherwise need to (and drastically increasing both pollution and travel times).
Manhattan, Upper East Side (note subway entrance)
Why does so much valuable land go to waste in cities? Because those who own the land are allowed to profit from community-created land value even though they don’t use the land. The vast majority of new urban developments are not undertaken by the land’s longtime owners. Developers acquire the land — often along with obsolete buildings they then pay to demolish — by paying big prices to owners who have not contributed one penny to the local economy. This is the major cause of urban blight and sprawl, and unnaturally high — and volatile — housing prices.
It’s vital to separate the owners of land from the builders and operators of buildings. They may or may not be the same person — but economically their function is entirely different. In our economy, the value of land is not enjoyed by the people who create it. If that seems a bizarre statement, it’s only because we’re so accustomed to the utter conventionality of it. The value of locations is enjoyed by real estate owners, and banks (who hold equity in the property until the mortgage is paid off, and earn interest on the money loaned to buy it). Location value is created by the community, yet collected by private investors. In fact, it is collected by private investors whether they build housing or not. That is why housing is unlike any other commodity — and that is why the problem of “affordable housing” seems so unsolvable.
We have all been inspired, from time to time, by the moving statements of Native Americans, and other aboriginal speakers, about their deep and abiding relationship with the land. Here’s one:
What is this you call property? It cannot be the earth, for the land is our mother, nourishing all her children, beasts, birds, fish and all men. The woods, the streams, everything on it belongs to everybody and is for the use of all. How can one man say it belongs only to him? — Massasoit
We like that; it echoes feelings we had as kids. Why should we not be allowed to walk across an imaginary line? The earth belongs to everybody — and nobody should be allowed to dump toxic crap all over it!
I’ll bet you can remember — I sure can — coming across “No Trespassing” signs and annoying your parents about them. “Why can’t I walk here? I’m not gonna hurt anything!”
“Because it’s illegal. It’s Private Property.”
This seemed to make sense to grownups. Grownup sense. Woody Guthrie didn’t quite get it, either (but then, he never really achieved bona fide grownup status, did he?):
As I went walking I saw a sign there And on the sign it said “No Trespassing.” But on the other side it didn’t say nothing, That side was made for you and me.
Crazy Horse put it bluntly: “One does not sell the land on which people walk.” It’s that “does not” that makes his statement poignantly militant. It’s a very different thing to say, “One should not.” One does not: selling the land is unthinkable in any kind of human society that hasn’t utterly lost its way.
But — of course one does sell the land; it’s the basis of the entire financial system of a modern economy. Secure, transparent rights to private ownership are seen as essential to economic development. In areas where land ownership is ambiguous, where fee-simple ownership intersects with traditional tenure systems, where deeds are inconsistently (or corruptly) registered, trade and development are severely hindered. It makes grownup sense.
Efforts to find something better than private ownership haven’t generally gone well. Farm collectivization in the Soviet Union, for the most gruesome example, was bitterly resisted by the peasants. After World War I, Lenin’s New Economic Policy increased farm production by allowing farmers to sell what they could produce in excess of official quotas. Stalin, impatient to fuel large-scale industrial development, wanted the peasants to work not for themselves, but scientifically, with modern equipment, for the Fatherland. After Stalin introduced large-scale collectivization in 1929, food production in the Soviet Union fell sharply, and the whole enterprise killed between 10 and 12 million people.
In China, though collective farming had a more promising start, it brought about an even bigger debacle. In the mid-1950s, collective farming was introduced on a voluntary basis. After the Chinese revolution, some 50% of Chinese cropland was seized from landlords, without compensation, and distributed to peasants. To advance beyond primitive farming methods, the peasants were encouraged to form cooperatives, often of the 100-200 households that made up a village. This helped; under this system, farm production increased modestly. But, the collectives were still too small to tackle large-scale infrastructure projects, such as irrigation canals or dams. In 1958, as parts of it “Great Leap Forward,” China reorganized farms into much larger communes. All farm production was on behalf of the entire society, and the (meager) pay of farm workers had no relation to their productivity. Food production fell drastically, and some 30 million people died.
Various desperate modifications were made, over the next two decades, but the communal farm system tottered on in China even after the death of Mao Zedong in 1976. After farm production stayed essentially flat for four years in the late 1970s, the Chinese government began to allow more individual control over farmland, and yields slowly increased. However, farming in China is still much less efficient than in many of its neighbors. Land is still owned at the level of the village, not the individual family, and cannot be mortgaged. This means that farmers’ access to credit is very limited, and thus there is little opportunity to acquire the capital farmers would need to become more productive.
John-Boy: Grandpa, do we got something to show we own Walton’s Mountain?
Grandpa: You can’t own a mountain, any more than you can own an ocean or a piece of the sky. You hold it in trust. You live on it, you take life from it, and once you’re dead, you rest in it.
That’s the kind of ownership we want, is it not? The Waltons represented an American archetype: self-reliant, honest, close to their land. This myth, of the plain, industrious American farmer, lives on, serving to obscure the unfortunate fact that there are very few of such farm families left. American agriculture has undergone a collectivization of its own. Unlike the commie versions, ours was fueled by the profit motive (and lots of petroleum) — so, yields have gotten bigger and bigger. Once-happy farmhouses are now just creaking husks in the collective fields. Crops are gene-engineered, fertilized and mechanized, gathered by thundering herds of harvesters, each of them piloted from air-conditioned, wifi-equipped cabs. It’s a great system — if you really want to grow a LOT of corn, and aren’t concerned with external costs. In 2013, the United States burned 40 per cent of its humongous corn crop. That’s right: burned it — in the form of ethanol — a boondoggle, whose net environmental effect is negative.
A movement is growing in opposition to the inhuman destructiveness of factory farms. More and more people are coming to understand that locally-grown food, produced without genetic manipulation or petro-fertilizers, raised on labor-intensive farms by people we know, is much better. But, alas, it is much more expensive. Farmers’ markets and local-food coops are growing — but they still make up a minor portion of our overall food market. And, there are a great many areas that are not reached by such wholesome trends. They’ve acquired a name, too: “food deserts” — dystopian zones where the only vegetables to be found are in cans of soup.
In our mad scramble to get on top of one another, how little do we take of the good things that bountiful nature offers us! Consider this fact: To the majority of people in such countries as England, and even largely in the United States, fruit is a luxury. Yet mother earth is not niggard of her fruit. If we chose to have it so, every road might be lined with fruit-trees. — Henry George
Yes, but still, these visions of sharing the bounty of nature, of roadside apples for the masses, of picking up after ourselves and not coveting our neighbor’s goods — these are childish things. Must we not give them up, if we are to have a career, a mortgage, a grown-up life?
Still, those statements of old wisdom haunt us. They make a whole lot of sense, and they articulate truths that, for all our hardnosed adult realism, we can’t quite bring ourselves to deny. Well, I can’t, anyway.
My reason teaches me that land cannot be sold. The Great Spirit gave it to his children to live upon. So long as they occupy and cultivate it, they have a right to the soil. Nothing can be sold but such things as can be carried away. — Black Hawk
I also think that the worldview articulated by aboriginal folk is by no means as childlike as we would like to think. Native Americans, like indigenous people on every continent, had well-ordered, sophisticated civil and political cultures centuries before they ever encountered Europeans. Not only that, most Europeans’ first encounter with natives was not with the people, but with their goods, which were widely traded. Native Americans rolled their eyes at the first bands of hapless European settlers who came to North America. They didn’t know how to farm, or build sensible structures. In the winters, they would have starved and frozen without the people’s help. They thought they could trade useless bits of metal for real goods, without even a word of greeting. They were totally unaware of the need to exchange food, gifts and conversation before entering into any binding agreement. They were laughably clueless.
I have long (and longingly) wondered what would have happened had the Indians of North America’s Eastern woodlands not been decimated by an onslaught of diseases to which they had no immunity. The plagues they endured weakened them in every way. Even by the end of the eighteenth century, so many had fallen that old nations no longer could be sustained; the Europeans negotiated with shifting, ad hoc alliances made up of what was left of once-strong tribes.
Had that not been the case, there would not have been a military and political vacuum to bestow upon Europeans what they came to call their “Manifest Destiny.” Native American nations would have been a political force with which the settlers would have had to negotiate — or fight — in earnest. I am tantalized to consider the North American history that would have resulted from such a beginning. It might have — it just might have — provided us with a valid connection between two apparently antithetical insights: the native understanding that we belong to the earth, and the modern wisdom that individual initiative, set free, can create social wonders.
However that may be, I think it behooves us to consider these words of Thayendanega (Joseph Brant):
Among us we have no prisons, we have no pompous parade of courts, we have no written laws, and yet judges are as highly revered among us as they are among you, and their decisions are as highly regarded. Property, to say the least, is well-guarded, and crimes are as impartially punished. We have among us no splendid villains above the control of our laws. Daring wickedness is never suffered to triumph over helpless innocence. The estates of widows and orphans are never devoured by enterprising sharpers. In a word, we have no robbery under cover of law.
The most recent chapter of Israel/Palestine violence got me thinking about the question of sovereignty. It’s all around the discussion, of course: about Israel having a sovereign right to defend itself against attack, and about the various levels of sovereignty a Palestinian state might enjoy.
What is it about, anyway, this crazy little thing called sovereignty? It definitely has to do with power and control. Though a sovereign nation can be overpowered, or occupied, or post-colonized, or whatever, the decisions it makes aren’t, supposedly, subject to contradiction.
WHICH SOVEREIGN LEADER IS IT? ___ More legitimate than powerful?* ___ Not even a citizen? ___ Seriously?* ___ More powerful than legitimate?
Sovereignty is secured through power; there’s no getting around that, but many people have felt, for quite a while, that it really ought to have some form of legitimacy, too. What constitutes this legitimacy has gone through some evolution. At one time, it was thought to be given by God (some still make this claim). After a while, Divine bestowal of sovereign power came to be vested in a series of hereditary monarchs; this seemed to confer a certain predictability to an essentially mysterious process. In the minds of the Enlightenment philosophers, sovereignty came to rest for a time (perhaps forever?) in the incontestable, and infallible, will of the people. Thomas Jefferson was a fan of this notion, writing that governments are instituted to secure the people’s inalienable rights, and that their powers — if they are just — are derived from the consent of the governed.
This raises many questions. Who are “the governed”? How is their consent to be sought and ascertained? How, and where, and in what ways are they to be “governed” — presumably through the exercise of the sovereign powers of a “government” which the people have chosen?
One thing we can see right off the bat is that for there to be any “governing” of “the governed,” the question of jurisdiction must be addressed. Some hardcore anarchists might consider individuals to be sovereign, but most of us see the question of sovereignty as a community matter. And while, someday, a global sovereign government may arise, this has not happened yet (for good, or ill). This means that our concept of sovereignty is inextricably bound up with the idea of nationhood. Now, whatever a nation really is, in spiritual or cultural terms (a holy covenant? a community brought together by its victimhood? a romantic generational consciousness, such as the “Woodstock Nation”?) a de facto nation in the real world is always a matter of jurisdiction over a (more or less) defined portion of the planet: a territory — a piece of land.
All right: so a nation amounts to a (theoretically) incontestable jurisdiction over what people can and cannot do on a piece of land. But, nations have various degrees of power, and various degrees, alas, of legitimacy. Governing a nation is a tough job. If the nation is not powerful enough, it may fall to conquest by external powers, and if it is not legitimate enough, it may succumb to internal revolutionary forces. Its just powers, Jefferson tells us, are derived from the consent of the governed — and it wields those powers through the process of creating and enforcing laws. Does this mean that if a majority of a nation’s citizens decide, through some representative process, that slavery is OK, then slavery is OK? Well, it’s legal, anyway; fee-simple private ownership of human beings was legal in the United States for 75 years.
Now, if we think about it for a while, I imagine we can all agree that Job #1 for any nation is the administration of its territory: its boundaries and their defense; the duties and prerogatives of states, municipalities and other lesser jurisdictions; and — most important — what people can do with that territory: what rights they have to its possession and use, and (since nothing can be produced without using land) what rights they have to the things they make from, and on, the nation’s land.
Well, fine, OK — all of this sounds so commonplace as to hardly be worth mentioning. But, when we start to think about how these issues play out in the real world, we find some astounding breaches of logic.
For example, it’s often said, these days, that nations are yielding up their sovereignty to the forces of big business. One way this is accomplished is through international “trade” agreements, agreed by their participants to have the force of law. Thus, nations are persuaded to do without environmental or worker-safety regulations that their duly-elected legislatures would have qualms about yielding, if doing so required public debate. Often, the governed give their consent simply by failing to withhold it. I wonder how many citizens in struggling, export-dependent poor countries have any idea what prerogatives their “sovereign governments” have given away in order to stave off trade sanctions.
But it’s not just the poor countries that are “yielding up their sovereignty” to multinational corporations — oh, no! Lots of people in the Great and Powerful USA are deeply exercised about the increasing ease with which corporations reconfigure their profits into other jurisdictions to avoid paying “their fair share” of US taxes. Have the governed given their consent to that? In so many words, yes; the Emperor, in any case, has made it legal.
If Job #1 of a nation is to administer its territory, what can we say of a country that allows foreign investors to hold hundreds of thousands of hectares of that territory entirely idle, while its citizens have no place to make a living? If that land’s value were collected for public revenue, would it be withheld from those workers who desperately want to use it?
Furthermore, if a corporation is making “obscene” levels of profit in the United States and then paperworking them into another country to avoid taxes, well — did it not need land, locations and natural resources, to undertake the activities that created those profits? Did it fully compensate the community for the privilege of exclusive access to the land it used?
Any nation that allows fee-simple ownership of land has already — long since — yielded up its sovereignty to private interests. These current “sovereign giveaways” are just minor embellishments. This is no less true of Israel than it is of any nation in the world today — including, one can’t help but suspect, any sovereign Palestinian state that may emerge.
People sometimes accuse Georgists of giving disproportionate weight to the question of land ownership — but it seems to me that many, many people, just about everywhere, for a great many compelling and pernicious reasons, downplay and avoid it.
*B. Goodluck Jonathan, president of Nigeria; D. Luis Guillermo Solís, president of Costa Rica
In the fiscal year that ended in June, 52,193 undocumented minors were caught crossing the United States’s Southern border. That is twice as many as the previous year. Many of these children were unaccompanied. The vast majority are from Honduras, Guatemala and El Salvador, into which drug gangs and violence have spread from Mexico. There are persistent rumors in these countries that children who cross the US border wil be allowed to stay. An industry has arisen of “coyotes” who collect large fees for a promise to get people across the border. Their services are, of course, unregulated, and many children have reportedly been subject to abuse, and rape, along the way.
Undocumented minors coming into the US from Canada or Mexico are routinely sent back home. However, because of a 2008 law (proudly signed by George W. Bush) designed to protect undocumented children from various forms of abuse, minors from non-contiguous countries must undergo a more detailed fact-finding process — and they must be housed during their stay in the “least restrictive setting” available.
Quite a few Americans have reacted shamefully to this. However one feels about immigration policy, it’s ugly to scream and curse at a busload of scared, hungry children. It is also unproductive, to say the least, to call these people “invaders,” and to rail at the president for “failing to do his job” of Securing Our Borders. (It’s also worth mentioning that the 52,193 minors were only about a quarter of the total number of “illegal” aliens apprehended by the Border Patrol.) US Customs and Border Protection estimates a cost of $22.4 billion to erect a fence across all 1,969 miles of our sudden border, and cautions that fences can be breached, climbed or tunneled under. There is an Invisible Hand helping undocumented immigrants cross the border; it’s called economic opportunity. Anyone who has eaten in a restaurant or stayed in a hotel recently has benefited from the industrious work of “illegal” immigrants.
President Obama has asked Congress for $3.7 billion to deal with the current crisis. It seems likely that a good portion of that allocation would be spent on beefed-up border security. Nevertheless, Speaker Boehner (am I the only one who is unable not to mispronounce that name?) has angrily stated that this crisis is Obama’s fault (presumably because the administration is abiding by the 2008 law). The House of Representatives, Boehner says, isn’t about to give Obama a “blank check.” That got me thinking (considering what we taxpayers spend on, say, the F-35 Joint Strike Fighter and other fabulously expensive weapons) about what $3.7 billion could buy.
So let’s think about this: 52,193 undocumented minors were caught at the border, in the recently-ended fiscal year. Most of these kids entered the United States in Texas. Texas spends $8,400 per year on its public school students, but that’s low; Texas ranks 45th on per-student spending. So let’s be generous and allow $10K per year for public-schooling each immigrant child.
I looked at two Texas colleges for estimated annual room and board costs; they came out a bit below $10K, so let’s say another ten thousand for room and board.
According to the National Institutes of Health, average annual medical expenditure for a teenager is under $1,500, but many of these kids are probably sick, or malnourished, or have been traumatically abused, let’s figure $2,500 per year for medical care costs.
A fair amount of gummint labor will be expended in processing and transporting all of these kids. I have no idea how to compute that, but the Federal Government is not the most efficient organization in the world, so let’s add another $3,000 for processing and transporting each child.
Let’s give each kid another $3,000 per year for pin money.
That gives us an annual cost of $28,500 for taking care of each immigrant child. Multiplied by the 52,193 that were caught in the past year, that comes to $1.49 billion.
So, in other words, for the amount of money the president has requested for dealing with this crisis, we could feed each undocumented minor caught in the past year, clothe, house and educate them, fill out their government forms and treat them to a few dinners and movies — and still spend $2.21 billion on enhanced border security. Is there a problem?
With their new high school diplomas in hand, these kids would soon become highly motivated and productive members of the labor force, for whom our lowest wages seem refreshingly high in comparison with what they and their families have known.
Ah, but where would they work? That’s really the thing. Whose jobs would they take? The real problem with immigration has always been the idea that jobs are scarce. That “our” jobs — which provide a minimum standard of living suitable to “our” civilization, can be stolen by newcomers, who are not as civilized as us, and therefore are willing to work for less. We’re not wild about admitting it, but: when people like Sarah Palin talk about “American exceptionalism,” this is really what they mean: that American workers deserve protection because they are tax-paying citizens of the best gol-durn country in the history of the world.
Whether the US is the best country ever is debatable (I’d think that Costa Rica and New Zealand would be contenders). We do know, however, the exact remedy for the surplus of workers that drives wages down. Everywhere you look, you see idle or inefficiently-used land, and wasted capital. Why aren’t people using these resources? There are two forces that work together to keep our economy massively wasteful and inefficient:
Land is held mostly as an investment, and only incidentally as a factor of production. It is very often more profitable to use land only a little, or not at all, while waiting for its value to rise.
Taxes penalize every form of production.
It really is as simple as that. When the United States had lots of free land, immigration was actively encouraged, because everyone benefited from it. Well, guess what? The US doesn’t have any FREE land today — but it has lots and lots of unused land. And a very big portion of that unused or ill-used land (in terms of its value, which is the important consideration) is in urban areas — exactly those areas toward which new immigrants gravitate, to struggle and strive in this land of opportunity.
Friends, we do not have an “immigration problem.” We have a fundamental economic problem, a public-revenue system that locks in injustice and inefficiency. There is a solution: to eliminate taxes on production, and collect the rent of land for public revenue. There’s no time to waste. We need to understand this remedy, and demand it.
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