How a similar movement was killed a 100 years ago

Henry George was a journalist-economist-politician who is not well known today, but in the late 1800s, was one of the most popular and famous persons of the US. He had a number of interesting economic proposals that threatened the existing power structures through elegant solutions that were win-win for the vast majority. For instance he proposed a tax on land (but not on the buildings) as the principal tax. The argument is that the value of the land arises from various things that society has provided, and this is simply a recovery of that. Also, by taxing all land, more land will be made productive, and less will lie empty. This will create employment, which in turn will create its own demand, driving a virtuous cycle. Large land owners, especially those who kept land idle, would suffer.

Dustin Mineau argues in Evonomics that as a result of a battle of ideas against Henry George (reminescent of the battles against linking smoking to cancer or denying global warming), economics has been significantly distorted. He argues that the fundamental distinction between land and capital has been obscured. Gaffney documents the struggle to obscure Henry George. This is a cautionary tale, and we have much to learn.

In our work, we have struggled with dis-entangling the various forms of capital. For instance, there’s wasting (aka depreciating) assets and “non-wasting” assets (aka inheritable assets). There’s assets that deplete, there’s assets that are renewable. Each of these warrant different treatments in certain situations, but the absence of categories, and by extension, economic theories have been a significant obstacle. The work on government accounting brings up some of these issues.

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