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Modern State or Finding "Mr. Goodbar"
Chapter IV discusses economic theory and the little known but arguably conservative "singles tax."
All human sovereignty over land has been a result of conquest and bloodshed. Throughout history, tribes, hordes, kingdoms and empires have sought exclusive domain over land by the massacre or displacement of aboriginal peoples. Those aboriginal tribes themselves no doubt were conquerors over weaker tribes or human societies. Amidst blood and untold suffering, each group usually under a king or despotic ruler claimed the resources of some part of the planet and by dint of this conquest claimed all the rights of the land and the resources within a geographic boundary. Nomadic groups would continue to rule over new grazing or arable land. More settled societies would establish relatively “permanent” boundaries under which the ruler held absolute power over his subjects’ claim to the land and over the rights of “outside groups” to exist within the borders at all. Perhaps the first sign of sovereignty is the ability of the ruling authority to establish recognized “land titles” within the realm.
Over the centuries this rather crude reality has been significantly sanitized. We now take States and National borders as a natural fact of life. Moreover, not all States are equal. While States may be as old as mankind and share a rather dark, primordial past with mankind, some states have been formed to be subservient to the people within them and to provide people with a protection to their humanity. These “free” States have tried to reign in the inherent coercive absolutism of the State and transform that power into a force for the benefit of “citizens.” In no case can such free States be said to have evolved without civil war and bloodshed. Rulers do not willingly relinquish Power and thus tyrants must be overthrown. As we shall discuss, the tendency for new tyranny is an intrinsic quality of the State. The more willing the people to forsake their liberties for the security of a strong leader or the less able the people to fight for their rights because of ignorance or oppression, the greater and more total the tyranny.
When the ancient Jews sought a king in order to be like the nations the prophet Samuel warned them of the natural outcome of absolute leaders. It should be noted that unlike the dogma of libertarians, it is not a king per se that is wrong. The sin of the Jewish people was to ask for a king “like the nations” and not one bound constitutionally to G-d and His Laws. This is what Samuel tells the people of an unrestrained monarch.
This episode between Samuel and the people requires some explanation. At first glance, the people would tend to be correct in that it is a commandment that upon conquering the land, the Jewish people are to appoint a king.* The Torah outlines very severe limitations to the king’s power and the king is permitted to rule only so long as he is subservient the G-d laws and is a servant to the people.* Thus the Torah outlines the first model of constitutional monarchy.
When discussing ancient Israel, some important exceptions must be considered. Unlike the nations, G-d directly apportions land titles to the tribes and families. Lest anyone accumulate a superabundance of land or create a permanent underclass, the rights to land accumulation are limited and revert to original heirs every fifty years. Amongst the nations, the king is free to parcel out land monopolies at will. Each land title gives the holder the right to collect rents, make use of the natural resources and offer unique monopolies within his domain. The king, in turn, collects rents and may create any monopoly he likes within his borders. The king may establish toll roads, levy taxes, hold exclusive mineral rights which must be leased and may tax not only the raw land and resources but also the fruits of human labor such as harvests, finished textiles and most anything of which the human imagination can conjure. As the king parceled out land and all market rights, the king or, by delegation, the landlord held the power of life and death over his subjects. In return the king was expected to maintain some form of social order and protect his subjects from even more rapacious kings.
The ability of the state to endow individuals with monopoly power protected by the force of the State is the source of much unjust or monopolistic gains. In ancient times, the idea was fairly simply. If a “lord” under the king was given particularly fertile land, or land especially good for grazing or rich with minerals or on a harbor, the land was particularly valuable. The rents collected would reflect not only the actual use of the land but also the potential use of the land. For example, it would not be unreasonable that land around harbor would have an intrinsic value higher than interior land. Such land might naturally create a town around it. Classrooms, preachers, doctors, pharmacists, retailers and many other would be able to sell their services in such an environment. The lord would receive not only the rents from gathering townsmen but also could potentially sell the now appreciated actual value of the land which would reflect the relative scarcity of the land in that harbor area. This may encourage the speculative hoarding of land. This would also be true in particularly fertile or mineral-rich land. Both types of land endowments would encourage the creation of communities or cities. In this way the king could reward loyal supporters and create a wealthy oligarchy. As profits from labor or capital rose, these would largely be reflected in higher rents from landowners. In this way landowners would continue to increase their wealth relative to labor or capitalists. This is the origin of land titles and remains the economics of land value. In this way, we see in its most raw form the political (as opposed to economic) accumulation of wealth. The State is in the unique position to offer monopolies. Were it not for the coercive power of the State, monopolies would be unable to exist.
It is certainly true that advanced technology and transportation has certainly weakened the State’s power to preserve monopoly rights for crops or textiles or goods in a given area. Nevertheless, the State maintains the right to monopoly over airspace and airwaves (broadcasting). The State still maintains eminent domain over all land and particularly means of transportation such as railroads or highways. The State has also given itself exclusive rights to offer licenses to sell certain services, goods and to legitimize products. All these powers of licensure are simply another means of parceling out monopoly profits. He who controls the State is “Mr. Goodbar.” In an instant, he can make a person wealthy or reduce him to penury. By means of taxation, the State may redistribute income and wealth in any way the king or even a republic deems fit. The greater the power of the State to grant economic favors; the greater the likelihood or certainty of bribes and corruption of officials will be.
Throughout history the confiscatory and taxing ability of the State has made it by far the most attractive means of acquiring wealth as it does not involve inherently difficult labor. Instead, the State lives off the labor and wealth created by others. Economic producers and innovators are everywhere faced by a predatory class ready to steal the products of their minds and labor. The obscene discrepancies of wealth and poverty become the fodder of demagogues who would use the State to redistribute wealth inequality largely (but not entirely) caused by the State itself.
What shall we call the value of land or any natural resources that by its fertility, location or some other unique quality provides exceptional value to the potential value of the raw natural resource itself? Since society is created around this resource by its very potential and without the specific input of the landowner, I call it “common wealth” or “social value.” The “common wealth” or “social value” by its very definition is owned by no one and is the inheritance of the community. Ownership, as mentioned earlier, requires the input of labor or capital, to become acquired. The fact that I own property upon which I did absolutely nothing, but by virtue of its location has become worth millions is not rightly mine. That property has become valuable because it has attracted tradesmen, financiers, retailers, professionals and laborers into its vicinity. In other words, the property became valuable by virtue of the society that grew up around it. The incremental value of the raw land itself is the property of those who gave it value—i.e. those who created a society around it. Thus the value of land itself should be taxed and returned to the community. In this way, there is no unfair confiscation in taxation. This Land (Resource) Value Tax would replace income, sales or capital taxes. It would rightly return to society the means for providing for the common welfare and protection without perpetuating an injustice against those who work, save or spend their justly earned dollars. This idea is not my invention but was originally the conception in modern times of Henry George who was famous throughout the United States and Great Britain for his “Single Tax.” Among the supporters of this type of tax have been men as diverse as Leo Tolstoy, Winston Churchill, Adam Smith, Thomas Paine and Abraham Lincoln, to name but a very few. Besides greater equity, this tax provides positive incentives for the most efficient use of land and natural resources and allows both labor and capital to prosper. Depending upon what is defined as the proper role of the State at any point in time, this tax should be sufficient or at the worst supplemented by a flat tax of some sort on labor, capital or sales. In any case, it takes away the current pernicious system of awarding tax favors and making some citizens net tax producers and others net tax consumers. It ends the atrocious practice in our times of using the State to provide one group at the expense of another. Imagine a world in which there is no tax on honest human effort and invention. Further imagine a world in which the State is no longer in the business of providing a few with valuable monopoly rights. To put Marx on his head, I think it is fair to say that the State creates economic classes. This would restore a true “free” market to America and all countries that adopted such a system. It would also take away the source of corruption of a free society—the granting of privilege. While this is not an economics text, I shall leave a further discussion of the Land Value Tax and Henry George for the Appendix. In the appendix, I shall also discuss the Biblical foundations of such an approach.
The State in its manifold forms appears to have existed since the dawn of civilization. We dare not just consider all States evil without redeeming features nor should we view all States as equal in their justice. The State does have a minimal moral obligation to uphold the law and administer justice. In a society with true constitutional and common law traditions, this is a noble cause. The society by maintaining order protects the individual and communities against aggression or unlawful theft. While we may question the ultimate origins of some land titles, on a practical level land and movable property must be protected from antisocial predators for civilization to exist. The only case in which a land title is clearly spelled out is the collective right of the Jewish people to the Land of Israel as described in the Bible. The State also has the responsibility to protect the country from invasion or illicit immigration into the country. While the State does not “owe” any material entitlements to its citizens other than protection of person, property and the fundamental rights of association and free speech and conscience, duly elected representatives may provide for various needs such as education, health care or housing. When such “welfare state” programs are enacted it is critical to remember that they are not entitlements but the privileges of living in an affluent society and that they exist in order to demonstrate compassion and establish “domestic tranquility.” The notion of “general welfare” and “domestic tranquility” are intertwined. Should a relatively free society create, for whatever reason and for any length of time, widely divergent social outcomes a true conservative would desire to see the situation remedied. Dire poverty and unemployment living alongside fabulous wealth and splendor undermines the moral fabric of a free market and—in the end—a free society. The key is to make sure that whatever ameliorating programs the government sponsors actually improves and does not exacerbate the underlying social problem. Further, it is important that the manner in which monies are raised to solve social problems are not done in a way that encourages envy or predatory practices on the part of the beneficiaries. It is just for this reason that progressive taxation or wealth taxes must be avoided. Not only are such taxes inherently unfair and confiscatory, but they establish the principle that certain people “owe” others a certain level of economic security. It is critical that some objective criteria of “need” be established in society or else suffrage becomes merely a legal form of plunder. Land value taxes at least can be fairly assessed. In the worst case, sales taxes or a flat tax has some sense of objectivity to them.
The failure of a democratic society to form a fair sense of taxation turns the natural sense of compassion on a community level to impersonal class warfare on a national level. Certainly no sane society would permit new immigrants to receive social welfare unless they were truly seeking asylum from a despotic government. The idea that there exists an inherent right of people to any particular level of living is absurd on its face. Not only would we have to let anyone in who believes they are entitled to the American lifestyle but the US would have to provide welfare to the entire Third World. Clearly America would be bankrupt and soon the entire world would return to massive poverty except that there would be no USA to produce more goods and services. In contemporary America it seems clear that the US must protect its borders from illegal Mexican and Latin American immigrants as well as the thousands of “students” or “temporary visa” visitors who stay permanently. Protecting the borders is as critical a role for the government as national defense and the protection of the nation’s global interests.
are many States, few are legitimate in the sense we have been describing.
Most States are simply dictators and supporting oligarchies. The
tyrant gives land and other monopolies to his cronies while the
masses suffer. The only people who are earning a decent standard
of living in these countries are the dictators’ army and blackmarketeers.
This is typical of most of the countries that belong to the United
Nations or the World Trade Organization. It is for this reason that
relatively free States should distance themselves from these organizations
and deligitimize the classic and almost universal Predator State.