Bill Mitchell, “Henry George and MMT,” Billy Blog, February 17, 2015The criticisms outlined here seem pretty convincing to me, particularly the way in which Henry George’s thinking was based on a gold standard mentality and how he came to be influenced by an absurd anti-government, libertarian ideology.
Tuesday, February 17, 2015
Bill Mitchell on Henry George and Georgism
Bill Mitchell subjects the economics of Henry George (1839–1897), author of Progress and Poverty (1879) and founder of Georgism, to an MMT critique here:
Posted by Lord Keynes at 1:06 AM
Labels: Bill Mitchell, Georgism, Henry George
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Essentially, it all boils down to the theory that taxes *are not meant* to cover the expenses of government, and are more of a way to cure social and economic ills (Because: MMT to the rescue). Even so, the land value tax is known as the economist's favorite tax for a reason. Many institutional and post-Keynesian(ish?) economists are in favor of its introduction. John Kenneth Galbraith was, and also said that such taxes could be used in place of labor and income taxes. Martin Wolf is in favor of it too. Milton Friedman called it "the least bad tax". And no extreme laissez faire libertarian has a coherent response to the idea of LVT and often mumble the Rothbardian notion of "taxation is theft" (which is why I'm rather sympathetic to Geolibertarians)ReplyDelete
The taxation system is all wrong. Last I heard, the basic idea was "Tax the things you don't want." Since when did incomes get involved? A limited wealth tax on the wealthy would make much more sense than a generally applied progressive income tax, would it not?
(This is a different anonymous from the one to whom I'm replying)Delete
"John Kenneth Galbraith was, and also said that such taxes could be used in place of labor and income taxes."
Galbraith also noted, however, in his historical discussion of George, that his charming idea had the disadvantage of being opposed tooth and nail by real estate interests, who have no small political influence.
Moreover, this opposition does not abate after the introduction of a land value tax: we observe that even in nations that have imposed some version of the tax, it has invariably been scaled back and watered down over time. Compare this to the FICA payroll tax in the US, used to fund Social Security and Medicare, which is basically untouchable despite being regressive (at least on the collection side).
Lastly, there is the fact that government policy in the US, and many other places, has promoted homeownership by individuals, so that now many more people live in owner-occupied houses than in George's time, and thus the landowner class includes numerous small holders. A tax that will soak grandma and your retired theater teacher is going to be a hard sell.
"A tax that will soak grandma and your retired theater teacher is going to be a hard sell. "Delete
Oh no! "The old widow bogey", as Winston Churchill called it. Those who "perceive" they would be financially harmed drag this one out each time.
OP Anonymous here. Indeed, Galbraith rightly noted that the tax would be subject to interest group opposition. No doubt, the LVT has been scaled back in various regions, but I suspect that the reason behind this is because the LVT was never implemented with the Georgist Idea, but merely as another way of raising tax revenue, alongside other already existing taxes, rather than in place of them. And since the establishment has already "established" these existing taxes, their removal becomes a sort of political nonconformity, and would never be taken seriously. Thus, it isn't the opposition entirely that is at fault, in places where the LVT exists.Delete
With regards to the idea about home ownership, the primary idea of LVT is that the price of land is merely capitalized rent. Thus, the tax would in fact reduce the amount the people would have to pay to acquire said land, because according to George, the burden of payment of the tax cannot be shifted. So land rent will inevitably get paid, the question is, to whom?
Questions 3 and 11 answer the question about poor people and home ownership.
This is almost too stupid to dignify with a response. Henry George was a Greenbacker who opposed the gold standard. He was not influenced by right-wing ideas, but he did influence some notable people on the right.ReplyDelete
You obviously did not read Bill Mitchell's critique: he said Henry George had a gold standard mentality in thinking that taxes must fund government spending.Delete
That "Henry George was a Greenbacker who opposed the gold standard" does not refute this.
George clearly did have a gold standard mentality, where as Billy Mitchell doesn't even make it to the podium. Boom boom..Delete
But seriously lionizing George is not the central the issue. Mitchell quotes copiously from Hudson yet neglects his most important statement on the issue.
'We need a land tax'
Some MMTers seem unable to either commit to the idea nor reject it out of hand so end up sounding oddly coy or come up with totally illogical and self contradictory reasons not to endorse it fully, just listen to Steve Keen on the subject.
Many simply misconstrue what the root of it is all about and read in what is not there or. It is very simple. It uses commonly created wealth to pay for common services. That can be in the form of reclaiming "economic rent" or fees. That is simple. The knock-on effects are phenomenal. The loose balls all drop into the right pockets.ReplyDelete
Henry George had a huge influence on various groups, such as the Greenbackers, the Knights of Labor, and even ran on a labor ticket in 1886 - getting 2nd in his run for NYC mayor.ReplyDelete
Not to mention that the land value tax is the best solution to the problem of access to land/natural resources for working people.
Going to head over to Mitchell's blog to read his own thoughts, but George was quite clearly in favor of greenbacks, as opposed to the Gold Standard.
Don't you think economics has moved on since Henry George's time? Georgists are like people who want to do modern biology by reading nothing after Darwin.Delete