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 HENRY GEORGE COMMEMORATION ADDRESS
Tuesday 2 September 2008
Terry Dwyer
The Athenian
historian Thucydides wrote of “the great and the good” but the
phrase may connote cynicism or irony. Tonight we honour the
memory of a genuinely great and good man. Henry George spoke
truth not merely to power but to that more capricious master, the
voting public. He always preferred to appeal to men’s reason
and their better natures rather than to score easy political
victories on the back of some sort of class envy or hostility.
In that spirit, tonight I want to pose some questions concerning
equal and inalienable rights to the Earth, to ground, water and air
and to ask “When and how should one allow enclosing the
commons?”
The avarice of Henry VIII launched the great enclosure movement
and saw the common people reduced to landless rural and urban
labourers. We are still living with the consequences of that
great enclosure and those which succeeded it, such as the
engrossing of the lands of the Australia, against which some of the
founding fathers of Federation such as Sir Samuel Griffith and Sir
John Quick wrote.
But today we are seeing a new enclosure movement. The
“great and the good” of the political and business establishment
and the wizards of high finance, blessed with the incantations of
many priests from the temples of science, are now saying that we
have entered a new period of scarcity where we must - for our own
survival - consent to an enclosure of the carbon and water
commons. Just as we needed to surrender the over-grazed
common lands to selective private ownership to secure their better
management, so it is now being urged that water and air are limited
resources which should be subjected to some form of licensing or
rationing - whether by free grant, by auction or by taxation.
Like Henry George, I am not a Malthusian. Henry George
declared “It is a well-provisioned ship, this on which
we sail through space. If the bread and beef above decks seem
to grow scarce, we but open a hatch and there is a new supply, of
which before we never dreamed. And very great command over
the services of others comes to those who as the hatches are opened
are permitted to say, “This is mine!”” (Progress and Poverty
Book IV Ch 2 p 221).
Like Henry George, I distrust those who would keep the hatches
forever locked or charge us for opening them and I too
consider it a blasphemy upon a beneficent Creator to suggest that
he sends children into this world to starve. And, like Henry
George, I see lurking behind the new enclosure movements to secure
rights over carbon and over water, not the invisible helping hand
of Adam Smith, but the grasping or mailed fists of monopoly, vested
interest or ideology.
As an economist by training, I naturally tend to accept the
proposition that whenever any resource becomes scarce, its price
should rise to ensure its allocation to the highest and best
use. So I want to ask the question of when, how, how
much and for how long the commons should be enclosed in the three
cases of ground, water and air, assuming - without deciding – such
resources do become scarce
As a lawyer, I also want to ask questions about rights. If
we have equal rights to something, what happens if one of us wants
to use it and the others don’t want it used at all? Does the
majority simply squash the minority? Or should the majority
match what the minority is willing to pay to use the
resource? Is public ownership the same thing as equal
ownership? Should treasuries pay for locking up resources
from the revenues they get from releasing resources? How does
a Georgist deal with mandatory conservation?
Let us turn to what Henry George wrote on the question of equal
rights to land, by which he meant all natural resources, including
air and water. In A Perplexed Philosopher
Chapter IV he wrote–
“… Mr. Spencer has dropped the idea of equal rights to land, and
taken up in its stead a different idea—that of joint rights to
land. That there is a difference may be seen at once.
…
When men have equal rights to a thing, as for instance, to the
rooms and appurtenances of a club of which they are members, each
has a right to use all or any part of the thing that no other one
of them is using. It is only where there is use or some
indication of use by one of the others that even politeness
dictates such a phrase as “Allow me!” or “If you please!”
But where men have joint rights to a thing, as for instance, to
a sum of money held to their joint credit, then the consent of all
the others is required for the use of the thing or of any part of
it, by any one of them.
Now, the rights of men to the use of land are not joint rights:
they are equal rights.
Were there only one man on earth, he would have a right to the
use of the whole earth or any part of the earth.
When there is more than one man on earth, the right to the use
of land that any one of them would have, were he alone, is not
abrogated: it is only limited. The right of each to the use
of land is still a direct, original right, which he holds of
himself, and not by the gift or consent of the others; but
it has become limited by the similar rights of the others, and is
therefore an equal right. His right to use the earth still
continues; but it has become, by reason of this limitation, not an
absolute right to use any part of the earth, but (1) an absolute
right to use any part of the earth as to which his use does not
conflict with the equal rights of others (i.e., which no one else
wants to use at the same time), and (2) a coequal right to the use
of any part of the earth which he and others may want to use at the
same time.
It is, thus, only where two or more men want to use the same
land at the same time that equal rights to the use of land
come in conflict, and the adjustment of society becomes
necessary.
Locke was not in error. … Labor can, of course,
produce nothing without land; but the right to the use of land is a
primary individual right, not springing from society, or
depending on the consent of society, either expressed or implied,
but inhering in the individual, and resulting from his presence in
the world. Men must have rights before they can have
equal rights. Each man has a right to use the world because
he is here and wants to use the world. The equality of this
right is merely a limitation arising from the presence of others
with like rights. Society, in other words, does not grant,
and cannot equitably withhold from any individual, the right to the
use of land. That right exists before society and independently of
society, belonging at birth to each individual, and ceasing only
with his death. Society itself has no original right to the
use of land. What right it has with regard to the use of land
is simply that which is derived from and is necessary to the
determination of the rights of the individuals who compose
it. That is to say, the function of society with regard to
the use of land only begins where individual rights clash, and is
to secure equality between these clashing rights of
individuals.
What Locke meant … is simply this: That the equal right to life
involves the equal right, to the use of natural materials; that,
consequently, any one has a right to the use of such natural
opportunities as may not be wanted by any one else; and that the
result of his labor, so expended, does of right become his
individual property against all the world. For, where one man
wants to use a natural opportunity that no one else wants to use,
he has a right to do so, which springs from and is attested
by the fact of his existence. This is an absolute,
unlimited right, so long and in so far as no one else wants to use
the same natural opportunity. Then, but not till then, it
becomes limited by the similar rights of others.
……………
For so long as only one man wants to use a natural opportunity
it has no value; but as soon as two or more want to use the same
natural opportunity, a value arises. Hence, any question as
to the adjustment of equal rights to the use of land occurs only as
to valuable land; that is to say, land that has a value
irrespective of the value of any improvements in or on it. …
As to land that has a value, or, to use the economic phrase in the
economic meaning, bears rent, the principle of equal freedom
requires only that this value, or economic rent, be turned over to
the community.
……………….
In this way all members of the community are placed on equal
terms with regard to natural opportunities that offer greater
advantages than those any one member of the community is free to
use, and are consequently sought by more than one of those having
equal rights to use the land. And, since the value of land
arises from competition and is constantly fixed by competition, the
question of who shall use this superior land desired by more than
one is virtually decided by competition, which settles clashing
individual desires by determining at once both who shall be
accorded the use of the superior land, and who will make the most
productive use of it. In this way all, including the user of
the superior natural opportunity, obtain their equal shares of the
superiority, by the taking of its value for their common uses …
This is the single-tax system.”
The Lockean proviso to which Henry George refers was John
Locke’s argument that any man had the right to take whatever he
wanted from the land to use so long as he left “enough and as good”
for others.
Interestingly, John Locke’s argument reflects the English law on
riparian rights to water whereby every landholder adjoining a river
can take as much water as he likes provided that he does not unduly
disturb the flow of the river going to others.
Neither John Locke nor Henry George makes the exercise of this
natural right of the individual to use land subject to the consent
of any sovereign or majority. The sovereign or the majority
may regulate access to land where there are competing would-be
users, but neither has the right to forbid the use of land where
“enough and as good” would be left for others. Nor may they
prohibit the use of land by him who is willing to compensate his
fellows.
The idea of equal rights to use the Earth raises many
interesting questions.
• Are these rights
inalienable? Can I sell my right to draw water, air or stand
on land and make myself a slave to him who would provide me with
these things and more besides?
• Can 99% of the voters veto
the use of a river by a farmer where the flow is hardly
affected?
• And where the flow is
affected, but the farmer offers to pay for the privilege of drawing
water from the river, should those 99% of voters be able to veto
his right to use natural resources without matching any bid he
makes to use the river?
• Can a majority of this
generation lock up natural resources from development by anyone on
the argument that “enough and as good” would not be left for future
generations?
o Can a fundamentalist ecologist say nothing should
ever be developed by anyone since, by definition, future
generations will never see Melbourne, Sydney, Rome or London as
they were in BC 753 and therefore “enough and as good” has not been
left for those future others?
• Or does the Earth belong
to the living – neither to the dead nor the unborn nor the
unconceived - and one’s right to use the Earth only arises once one
is in being?
• What if we have two
competing would-be users of land – a farmer who wants to develop
land as a farm and another who wants to keep it as forest?
o Does it matter that the one who wants to keep it
as forest wants to keep it for public use?
o If there is such a contest should it be resolved
by letting the land to the highest bidder?
• Should the majority, if
operating through the Government, be forced to bid against a
private individual if the land is Crown land?
o If not, what is to stop the majority, through
Crown ownership, blocking all use of land, even where the Lockean
proviso is satisfied?
o If the majority do bid through the Government,
should they be allowed to use public funds to do so where those
funds are raised from the whole community including those who are
content to accept the farmer’s bid for the land?
o Should any bidding for land be regularly revisited
from time to time, bearing in mind that an exhausted farm may be
better returned to forest or a forest preserve may be better turned
to housing in 100 years time?
• Can a Government right of
veto as to land use be squared with the idea of a direct original
right in the individual? Can I do what I like with land if I
am willing to pay the going rate for it? What if I want to
build a nuclear waste dump?
o On the other hand, should others demand a rental
bond or indemnity for the damage such a use of land may cause?
• How should we charge land
rent for depletable resources?
• How do we apply the idea
of equal rights to common lands where there is excess demand
taking, for example, the cases of crowded beaches, parks, highways
or footpaths?
o Should we impose congestion charges on surfers,
picnickers, motorists or pedestrians? Who is to set these
charges? And who is to receive them?
o Or should we let congestion act as its own
deterrent to over-use of common lands?
Let me throw in some more confronting questions.
• If I have a right to do
something, like breathe air while trapped in a coal mine even
though it means less for all of us trapped down below, can anyone
stop me? By analogy then, even if the global warming thesis
is true, if I am on this planet by the grace of God, who is to tell
me I cannot breathe the air or make a fire to stay warm?
• What if three carbon
emitters say - “We, as much as you, have an equal right to use the
resources of the Earth, we will put in one collective bid to burn
all we like. If you, the rest, want to stop us, you should
bid against us instead of trying to veto our right to do as we
please with our inheritance – it is as much ours as yours.
Fair enough, we recognize that by burning so much we may be
encroaching on the amenity of the commons but if the rest of you
aren’t willing to put a value on limiting our rights why should you
be able to do so? Words and rhetoric are cheap and it is
unfair to us that we should be prevented from using a resource just
because you don’t like it. Put up or shut up. Let’s
have an auction. We start the bidding at $1”
In throwing up such questions, I do not want to presume on the
answers but to highlight the importance of getting both the
questions and answers right. If we can define the problem
correctly often we can often see the solution.
Let us now look at enclosing land.
Ground
The argument for allowing the enclosure of the ground is that it
leads to better and more efficient management which is in
everyone’s interest. No one would build a skyscraper if he
could not guarantee his tenants quiet enjoyment of the
premises.
Henry George’s solution was elegant and simple. You may
enjoy exclusive tenure provided you compensate your excluded
fellows by paying rent to a common fund. This solution is
much the same adopted by the executors of a deceased estate where
one beneficiary is allowed to occupy the family home upon paying a
market rent to the estate for the equal benefit of all
beneficiaries, including himself.
But we cannot allow the enclosure of all land. To
allow all land to be enclosed as private property in the sense that
private landholders can exclude the rest of the population would
mean that civil society ceased to exist.
We cannot and should not allow the enclosure of public roads and
foot paths willy-nilly. Nor has it ever been done. If
it had been done, we would all long since have starved as prisoners
in our own lots. No business could operate if it had to
negotiate a way through 300 plots to get its goods to the
ports. It was for that reason that in America and England,
railroads were given rights of eminent domain to resume some
private lands to ensure that more lands were served in the public
interest.
There is a natural limit to the extent to which enclosure of the
ground should be allowed. Privately held land requires the
existence of common use land, just as a home unit requires the
existence of common use facilities such as stairs, lifts and water
pipes.
When we see persistent congestion of roads, economists tend to
leap to a solution of congestion charging (which is justified on
the grounds of pricing according to short run marginal
cost). However, is it possible that congestion problems
are at least partly due to an excess private enclosing of common
land?
To see this, suppose the Victorian Treasury were to grab some
easy money by selling off streets so that Melbourne’s streets were
all reduced to one or two lanes. The city would face far
greater peak hour congestion. But if the present congestion
is intolerable, is it not perhaps a sign that the right of eminent
domain should have been used to restore land to common use by
resuming private lands to build better expressways?
Alienation once does not found a perpetual right to keep
land alienated from the commons. Land should be returned to
the commons when there is not enough left. Curiously, this is
recognized by urban planning practices which require a return of
land to open space when developers want to demolish old buildings
and replace them with higher ones.
True, where congestion on highways becomes persistent,
congestion charges like peak time tolls should be applied if they
can be applied without undue administrative costs. But this
should not be regarded as a permanent solution.
Congestion revenues should be spent on resuming privately-held land
and building better transport facilities to reduce the congestion.
Congestion rents, like other super-normal profits, are a sign that
supplies should be expanded
Nor can congestion charges cannot be legitimately imposed where
there is no congestion. For example, if a local council
imposes parking meter charges at times when car parks or streets
are half empty, that is a violation of the principle that price
should equal short run marginal cost. It also violates Henry
George’s idea of a “direct, original right” to use space no one
else wants. Perhaps this explains why motorists become angry
when they receive a parking ticket in a half empty car park on a
Saturday or Sunday!
Water and Air
These days we see arguments for charging resource rents for
water and air. Personally, I see merit in such arguments
provided –
• the resource in question
is truly limited;
• the resource cannot be
augmented and
• the charge is based on
free, open and fair competition, not bureaucratic fiat.
But we should remember that, in contrast to sites (which are
spatially fixed), water and air are flowing resources which can
move or be moved from place to place and which can be recycled by
both Nature and Man. So scarcity may not be a permanent
issue. Water and air may be captured from Nature or produced
as goods. One can drink clean water from a mountain stream or
have it produced by a desalination plant. Water can come to
Melbourne from Gippsland, from Tasmania or from the Murray-Darling
Basin. Air quality may be degraded - or improved - by
Man.
Without water or air we die. We take our right to breathe
and emit carbon dioxide for granted, as we used to take for granted
our right to catch water on our land. Access to clean water
is often seen as a basic human right. The delivery of water
is important enough to be mentioned in the Constitution Act of this
State.
But what if there is not enough water? Alfred Deakin tried
to solve this problem by vesting water in the Crown and allocating
irrigation licences. But what if the Crown, having
taken away the public’s general right of access to flowing water,
gives water licences for a low price to some large users and
imposes high charges on large numbers of small household
users? You will see I am describing how Australian States
have punished small urban users while enriching some very large
water users by giving away cheap or free licences to large amounts
of water.
How does this square with Henry George’s philosophy? Is it
right that a majority can make our common birthright the plaything
of patronage for politicians buying rural or urban votes? Is
this the way a common resource should be enclosed or are we seeing
a repeat of the landgrabs of the squatters? What would that
great Victorian and Father of Federation Sir John Quick say about
this, having deplored in the 1880s the heedless alienation of the
Crown lands of this State?
If water in excess of that required to satisfy the subsistence
needs of the community is to be tradable it would seem only fair,
in terms of equal rights, that the Crown should offer it to all by
free and open auction.
Where is the justice or equality or economic efficiency in
imposing different prices for water on town and rural users in the
same location? It is hard to see equal rights where some
urban users in the Murray-Darling Basin are paying 30 to 40 times
more than holders of rural irrigation licences. I am not, of
course, suggesting that rural users enjoying intermittent supplies
of untreated irrigation water should pay the same for as town users
may pay for a permanent supply of treated clean water. I am
saying that they should pay the same for raw water of the same
security.
Further, if there is to be a free and fair auction, shouldn’t
those who want excess water to be withheld from human use bid for
it against those who want to use it? In other words, should a
majority or minority of pressure groups or voters be allowed to
prevent the use of a natural resource by their fellows without
having to put their money where their mouths are? In other
words, should environmental water flows be paid for if some people
want them?
Let us apply Henry George’s doctrine of equal rights to the
Murray-Darling.
Consider a householder in Canberra near the head of the river
system, a farmer in the Murrumbidgee Irrigation Area and a retiree
living at the river flats near the Murray Mouth. Each wants
water; each has an equal right to water.
The view of Governments and the law, once riparian rights were
abolished, is that the Crown owns the water and none of these
people may have it except as the Government pleases. Hence if
the Canberra householder is charged 50 cents per kilolitre, the MIA
irrigator pays 20 cents per kilolitres and the retiree pays nothing
because the water comes past as an environmental flow, that is all
fine. No one should complain since you are lucky to get any
water at all.
Henry George suggests a radically different approach.
First, neither the Government nor the irrigators with their
licences should be seen as “owning” the river. If there are
competing uses and one person’s equal rights must be limited by
other people’s equal rights: we should all be treated equally.
That suggests that all claims to use water must be thrown into
the pot, including claims to use it for environmental
purposes. Ignoring for a moment transmission losses, this
means that the householder, the irrigator and the retiree should be
charged the same for raw water of the same quality. In the
case of the retiree, if he is enjoying the flow in the river by
virtue of environmental flows, the government which wants those
environmental flows should pay the same price as other
users.
This sounds a bit odd – the Government paying itself to use
water it owns anyway?
But if you think of the river as being claimed by all users,
each must contribute to a common user fund to compensate those
whose equal rights are being abridged. From the Henry George
point of view, the Government does not own the river – it
has no more right to it than you or I.
For practical purposes, such a common fund should not be a
central treasury fund but a fund for would-be river users
(including the cities of Adelaide and Melbourne which, though
outside the Basin are tapping water from it). So the
Government would not be exactly paying itself.
The discipline of having to weigh environmental flow uses
(desired by many) against other uses (also desired by many),
prevents a system where political fiat can abridge equal rights
without any compensation.
For example, in the ACT, the residents of Canberra have been
limited by a stroke of the pen to less than 5% of their available
water resources and the rest earmarked for environmental
flows. It seems to me Henry George would take a dim view of a
social arrangement where the equal rights of some can be abridged
by fiat to favour water uses desired by others without any form of
compensation.
Curiously enough, the idea of paying for environmental flows is
one which commends itself to an economist because it makes explicit
the nature of the social choices and the benefits and costs
involved. However, the Henry George solution is not for the
Government to pay the farmers for their water rights – as if they
were the only ones with rights to water – but to make all of us bid
on equal terms.
I suspect that Henry George would then go on to say that if
these payments are large it indicates a great value in use for
water and that perhaps these payments into a water fund should be
used to build more dams, improve aqueducts etc so that more water
can be stored in years of plenty and less lost in years of
drought. In other words, maybe we do not need
permanent enclosure of the water commons but only in periods
of scarcity and if we use the money from that period well we may
reduce the need for and the extent of charging. We may end up
with more water for all uses, including environmental
flows.
Scarcity rents
This brings us to basic questions about the nature of scarcity
rents.
The objective of economic progress is to eliminate
scarcity. Economics is about creating wealth so that we can
have more of what we want more cheaply.
Economic progress should drive the price of all
material wants ever lower, just as computers have fallen in
price.
What then should our attitude be to scarcity rents for water,
air or land? Should we rejoice that they exist and try to
appropriate them for the public purse? Or should we try to
eliminate them?
Some scarcity rents cannot be eliminated. Though
skyscrapers can increase lettable space they cannot overcome the
fact that space on earth is essentially finite. Yet
skyscrapers do work to reduce the scarcity of usable office
space. What they cannot do is expand ground space.
But with reproducible or recyclable things which carry rents
such as scarce water, it is conceivable that investment in storage,
aquifer management or desalination can reduce or eliminate scarcity
rents.
The attitude of Henry George would be to delight in the
reduction of such scarcity rents for natural resources, just as he
would rejoice in the opening up of the American prairies reducing
the cost of wheat in Britain, reducing British land rents and
improving the lives of working people.
The fact that scarcity rents in reproducible or recyclable
resources such as water may be reduced or removed does not mean the
Georgist state runs out of public rental revenue - far from
it.
The cheapness of other natural resources increases the
productivity of sites and increases ground rents.
There is no need to put arbitrary prices on air or water and
call those prices rents to fund a Georgist state. It is
enough that, if there is a scarcity, the going market rate be
collected on those resources for public revenue.
Conclusion
Tonight, I have asked a few questions. I have tried to
provoke thought rather than impose dogma. I do not know all
the answers or even whether the questions are well
framed.
But I hope that fact that we all may find such questions and
their answers not only interesting but of great social importance
will be seen as a fitting tribute to the man who so clearly placed
the question of rights to the natural resources of the Earth at the
heart of all economic reasoning and all discourse in social
philosophy.
I therefore ask you to charge your glasses. I invite you
to stand and drink to a great and generous man who is with us
yet. I give you a toast to Henry George. | 