(Crossposted to the July-August issue of GroundSwell Magazine - the official publication of Common Ground - USA).
For those who don't understand Georgism or Land Value Taxation, the following conversation may prove illuminating. For everyone else convinced there are no solutions to our economic ills, it will prove enlightening.
I recently met with long-time Georgist and expert on government finance, taxation and transportation policy, and Common Ground member, Bill Batt (http://centralresearchgroup.org/georgist-economic/bill-batt) and his wife, Karen, at the lovely country home of Common Ground-NYC's Treasurer and past president, Rita Rowan, just outside Albany. Also in attendance were some international friends of mine, who have recently moved back to New York City, including their precocious tri-lingual 12-year old son, Timothy, and his French mother Emmanuelle (not their real names).
We enjoyed lunch outside, on a beautiful Spring day on the grounds.
Following a summary of our recent Common Ground-NYC meeting, to which some of our less local members, like Bill, were unable to attend, the conversation turned, as it often does when Georgists gather, to what to do about the rent seekers, economic rent, and the general concepts of Georgist thinking. Perhaps others will find this inter-generational dialogue as interesting and guiding as I did. Herewith is a slightly edited version of that conversation. Followup comments are in parentheses.
Bill: "There was a recent article on one of the alternate news sites that said bring back the concept of economic rent. There was an interview of (Joseph) Stiglitz for a German Press where he talked about looking at rent-seekers as being the parasites in our economy.
Scott: Of course"
Bill: "and it's nice that he used those words.
Emmanuelle: What do you mean by rent-seekers?
Bill: Well, the word rent has a different meaning in popular language than it does in economics. And Rent"it may be the same as the French word "Rente" (http://www.thefreedictionary.com/rente). I'm not sure. In English, economic rent comes from any gain in wealth from a natural resource not made by human beings. For example, suppose you buy a piece of land for $100 and 5 years later it's $1,000 Well, the reason it got to be more valuable is due to the rent and the same with any other natural resource". oil (for example), after you subtract the labor and the capital investment in oil rigs and all that, the value of the oil is rent and so with any other natural resource like the radio frequency and whatever. And Joe Stiglitz argues, along with the way we (Scott, Rita and me) argue that we shouldn't tax people's work -- the labor -- we should tax the rent, and this is what contemporary economics has eviscerated in their formulas and definitions. But, if we go back to classical economics, to people like John Stewart Mill and all those 19th century figures"
Scott: even Adam Smith"
Bill: Yeah! Then you can see the value of the use of the word rent there. And all of those people believe the right tax was a tax on the rent of natural resources and not people's work. So that now that people are beginning to use that word again, maybe we can use it. (Joe Stiglitz's newest book, just out, talks about people who capture titles to resources and collect the rent -- the "rent-seekers" -- on almost every page! See "The Price of Inequality." Also, an adaptation hre: click here)
Scott: (Michael) Hudson made that point (in his recent appearance at the Left Forum) that with the junk economics as he calls it today, the concept of rent has just gone completely away. And of course, (Mason) Gaffney wrote that book, "The Corruption of Economics" where he describes the systematic expungement of Land and rent from economic terms.
Emmanuelle: Especially when natural resources are by definition limited".
Scott: And the location"
Timothy: So you're saying what they're doing is making property cost more because people need to pay for the land they work on?