all men equally, it is urged, without regard to race, color, creed, or nationality. The patriot cares more for his fellow citizens than for the citizens of other countries; therefore, according to this type of anarchism, he is narrow in his views. Moreover, if he thinks more of his fellow citizens than of others, this will lead him, in case of war, to try to kill the citizens of the enemy country. Killing, it is argued, is murder. The fact that it is done as an act of war does not in the slightest degree change its character. When a great world state exists, then, of course, it will be proper to be patriotic toward it. We may even work consistently for it. But to condemn all patriotism for lesser states would, if this condemnation were effective, merely destroy existing states and all law and order and plunge the world in chaos. Family sentiment is narrow in the same sense that national sentiment is narrow. The man who loves his wife must care more for her than for other women. This and all other forms of family sentiment may, in a sense, make us narrow, but it does not follow that it is unwise or uneconomical to be narrow. Again, if we are to avoid narrowness, why be humanitarians? Are not many animals also companionable and lovable? To show a preference for men as against animals or even microbes is to be narrow in the sense in which these people have been using that word. CHAPTER .LIV THE SINGLE TAX Meaning of the single tax. By the single tax is meant a policy under which all the public revenue is to be raised by the single tax on land value. One of the most persistent misinterpretations of the single tax is that of assuming that it means a tax to be raised on real estate rather than on land values. Land value is defined as the value of the land itself irrespective of all improvements, such as ditching, draining, fencing, the planting of trees, and the erection of buildings. In short, everything done on the land itself to improve the value of an estate is classed as an improvement and, under the single tax, would be exempt from taxation. This leaves nothing except the location value and the fertility value to be taxed. The physiocrats, believers in the "rule of nature," believed in the impôt unique. The original advocates of the single tax were a group of French economists called physiocrats. It was their belief that land was the original and fundamental source of all wealth, and that the rent of land was the only real surplus wealth which the community ever produced. From their point of view, rent was due to the bounty of nature. They believed that every other tax must eventually be paid out of rent anyway, wherever it may have been laid by the government. If we tax the products of industries, there is no surplus out of which the tax can be paid; as a result we either raise their price or depress the price of the raw materials. If we tax labor we must raise wages accordingly; if we tax enterprise we must raise profits. Every tax, therefore, is shifted from one to another till it reaches the landowner, who alone has a surplus out of which it can be paid. The landowner cannot shift it any farther, and, since he must ultimately pay the tax, the physiocrats argued that it was better for him to pay it directly in the first place than indirectly after several shiftings from one person to another. They regarded the single tax as a good system of taxation for raising revenue, not as an engine of social reform. The classical economist regarded rent as a peculiar income. The idea that landowners who live entirely upon the rent of land are in a peculiar sense nonproducers is by no means new. Adam Smith' wrote, in 1776, "As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." And again, "They [the landlords] are the only one of the three orders whose revenue costs them neither labor nor care, but comes to them, as it were, of its own accord, and independent of any plan or project of their own."2 Economists from Adam Smith down have generally agreed on this point, though they have not generally agreed that this is the great cause of poverty, nor that the abolition of ground rent would be a social panacea. Ricardo, in developing his theory of rent, laid emphasis upon the fact that rent arises from the niggardliness rather than from the bounty of nature, thus taking a position opposed to that of the French physiocrats. This niggardliness shows itself in two ways: first, the best land is always limited in area; second, its productivity is limited. On any given area the amount of any crop which can be produced is limited; and even before that limit is reached, diminishing returns are received from successive applications of labor and capital. Because of these limitations upon the productivity of the best land, poorer and poorer land must be taken into cultivation as the demand for products increases. The fortunate possessors of the better grades of land are then in a position to demand a rent for their land. The single tax made an engine of social reform by Henry George. It was the late Henry George, in his book entitled 'Progress and Poverty," who seized upon these ideas to make 1 Wealth of Nations, Bk. I, chap. vi. the single tax an engine of social reform. He began his inquiry by pointing out that even in the midst of plenty, poverty still persisted. He stated that though the productive power of the world had increased many fold through mechanical improvements, nevertheless large numbers of people remained in poverty. In fact, he went so far as to insist that increasing numbers were compelled to live in conditions of increasing squalor. The persistence of poverty the great reproach upon civilization. This phenomenon of the persistence of poverty in spite of the world's increase in productive power has been an enigma ever since the rise of mechanical industries. Various answers have been given to the puzzle. Karl Marx and his followers attributed it to the fact that the owners of capital absorb all the benefits of the increase in productive power, leaving the nonowners of capital no advantage whatsoever. It is very easy to say-in fact, it looks like mere arithmetic to say that, with the same rate of productiveness, if certain classes who are now receiving large incomes should not receive them, there would be more left for other people. If the incomes of capitalists and landowners were cut off, more would be left for the laborers, provided the total production remained the same. It would be equally true from an arithmetical standpoint to say that if the skilled laborers and the high-salaried people did not receive so much, more would be left for the rest, if the rate of production remained the same. In other words, if one assumes a given rate of production, and then assumes that the incomes of certain classes are cut off, one can demonstrate that this would leave more goods for the other classes. This, however, is not a convincing argument. If anyone performs an important function in society, and thereby makes society richer, it cannot be said that by cutting off this person's reward for performing his function, society will be improved. By the cutting off of his reward there is the danger of killing the goose that laid the golden eggs: by so doing we may reduce his motive for labor and cause him to perform a less important function than he would if he were adequately rewarded for his effort. The real question is, therefore, whether the capitalist performs a function in society commensurate with the reward which he receives. If the answer is in the affirmative the cutting off of his income would hardly be a help to society. The same reasoning applies to the landowner: if he performs a function commensurate with the reward which he receives, it would obviously not help matters to cut off his income. So here again the real question is whether or not the landowner performs a function commensurate with the reward which he receives. Distinction between location value and fertility value. In Chapter XVI we saw that the two economic factors in land value are location and fertility. In so far as the value of land is based primarily on its fertility, that value may be easily destroyed and with difficulty replaced; and in fact the land of little fertility may, by careful and scientific farming, be greatly increased in fertility. This increase would be classed as improvement, and the increase in value would be similar to the increase which results from ditching, draining, irrigating, fencing, clearing, and other forms of improvement. Even where the land possesses original fertility (that is, where it is known as virgin soil) it may easily deteriorate under bad management or improve under good management. It is as much in the interest of society that good land be kept from deteriorating as that poor land be improved in fertility. If the owner of land is allowed the advantages of any improvements in fertility which result from his management, no one could of course consistently object to it. Again, if he is made to suffer some penalty for allowing the land to deteriorate in fertility by his bad management, it would seem equally just. Putting these two propositions together, it seems as though the owner of the land, whether it be good or poor land, should be rewarded for any improvement resulting from his good management and penalized for any deterioration resulting from his bad management. If the single tax were applied rigidly, and the value not only of the location but of the soil itself were taxed away, the owner would get neither reward nor pen |