Henry George's Progress & Poverty: 10,000+ Words on Economic Inequality

Understanding the Core Principles of Progress & Poverty

Henry George's seminal work, "Progress & Poverty," published in 1879, remains a profound exploration of the paradoxical relationship between economic progress and persistent poverty. George argued that the root cause of poverty lies not in individual shortcomings or technological advancements but in the unequal distribution of wealth.

Land and Economic Rent

Central to George's theory was the concept of "economic rent": the payment made for the exclusive use of land, which is a natural resource that cannot be increased in supply. As society progresses and the population grows, the demand for land increases, leading to higher rents. This process, known as the "law of rent," drives up the cost of living and concentrates wealth in the hands of landowners.

The Distribution of Wealth

George believed that the unequal distribution of economic rent creates a disparity between production and consumption. As land prices rise, a larger share of societal wealth goes to landowners, leaving less for the producers of goods and services. This disparity leads to stagnant wages and widespread poverty.

Table 1: Distribution of Wealth in the United States

Source: Pew Research Center

The Use of Land Value Tax

To address the problem of economic inequality, George proposed a "single tax" on land value, also known as the Land Value Tax (LVT). LVT would be levied on the value of land itself, regardless of how it is used. This tax, he argued, would discourage land speculation and encourage more efficient use of land resources.

Table 2: Potential Revenue from LVT in the United States

Source: Center for American Progress

Benefits of LVT

George believed that LVT would not only reduce inequality but also spur economic growth. By removing the burden of land prices from businesses and individuals, LVT would lower the cost of living, increase investment, and ultimately lead to a more prosperous society.

Benefits of LVT:

• Lower inequality: Redistributes wealth from landowners to the rest of society.
• Stimulates economic growth: Lowers business costs and encourages innovation.
• Protects the environment: Discourages land speculation and promotes sustainable development.
• Promotes social justice: Provides a more equitable distribution of resources.

Objections to LVT

Despite its potential benefits, LVT has faced criticism and objections:

Objection 1: Expropriation of Landowners

Some landowners argue that LVT would amount to an unfair expropriation of their property. George countered that LVT would only be applied to the value of land, which is not created by individual efforts but rather arises from society's collective activity.

Objection 2: Difficulty in Assessing Land Value

Another objection is that land value can be subjective and difficult to assess accurately. However, modern technology and data analysis make it increasingly feasible to determine land values with precision.

Common Mistakes to Avoid When Implementing LVT

• Not differentiating between land value and improvements: LVT should only be levied on land value, not the value of buildings or other improvements made by property owners.
• Exempting certain types of land: Blanket exemptions for agricultural or other types of land could undermine the effectiveness of LVT.
• Setting too low a rate: A low LVT rate would be ineffective in capturing the full economic rent and redistributing wealth.
• Ignoring political resistance: LVT can encounter resistance from powerful landowners and other vested interests.
• Failing to educate the public: It is essential to build public awareness and understanding of LVT to gain support for its implementation.

Conclusion

Henry George's "Progress & Poverty" remains a relevant and provocative examination of the causes and consequences of economic inequality. By understanding the core principles of economic rent and the distribution of wealth, we can develop policies like the Land Value Tax to create a more just and prosperous society for all.