Henry George and How Growth in Real Estate Contributes to Inequality and Financial Instability

153 Pages·2019·2.199 MB·English

by  Edward Nell

PALGRAVE STUDIES ON HENRY GEORGE
FOR THE 21ST CENTURY
Henry George and How
Growth in Real Estate
Contributes to Inequality
and Financial Instability
Edward Nell
Palgrave Studies on Henry George
for the 21st Century
Series Editor
Edward Nell
New School
New York, NY, USA
This is a series in memory of Henry George, taking off from his writings
and dealing with the issues he raised in his time, as they persist, but also
taking his approach into our time and dealing from his perspective with
some of today’s most pressing issues and problems in the political economy.
This series contextualizes Henry George as an important figure in what is
currently a widespread pattern of interest in critiques of mainstream eco-
nomics. Much critical work in economics in the late twentieth century was
aimed at critiquing and destroying mainstream theory, particularly those
aspects that appeared to support and justify neoliberal policies. But after
the crash of 2008, much more attention is being paid to non-mainstream
approaches that offer new explanations of economic phenomenon. This
series fits that mold, drawing on a uniquely significant American figure
once widely known and venerated but lost sight of during the dominance
of mainstream neoclassical theory.
More information about this series at
http://www.palgrave.com/gp/series/16249
Edward Nell
Henry George and
How Growth in Real
Estate Contributes to
Inequality and
Financial Instability
Edward Nell
New School
New York, NY, USA
ISSN 2524-8847 ISSN 2524-8855 (electronic)
Palgrave Studies on Henry George for the 21st Century
ISBN 978-3-030-18662-3 ISBN 978-3-030-18663-0 (eBook)
https://doi.org/10.1007/978-3-030-18663-0
© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature
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This book is dedicated to the memory of Andrew Mazzone, my friend,
colleague, and the President of the Henry George School of Social Science
from 2013 until his death in 2017. Andy’s commitment to bring Henry
George’s ideas into the twenty-first century was the reason for my joining the
Board and the driving force behind this book.
P : a H G
reface bout enry eorGe
Henry George was born in Philadelphia in 1839, the second of ten children.
His father was a clerk at the Philadelphia Customs House, a devout
Episcopalian, and a publisher of religious works. But the family lived modestly.
George attended school until the age of 13, when he told his father that
he desired “to go out into the world” to work and help support the family.
He worked odd jobs and learned to set type. At 16, he sailed to Australia
and India as a ship hand, eventually returning to the United States. At age
18, he headed west in search of gold.
George spent 1858 in West Coast mining camps and settled in San
Francisco in 1859. He found employment as a compositor. He met and
married Annie Corsina Fox in 1861. George struggled to find employ-
ment and pursued a career in journalism. George published his first book,
Our Land and Land Policy: National and State, in 1871.
In his landmark book Progress and Poverty (1879), George proposed a
deceptively simple solution to the problems of economic inequality and
industrial depression. He called for the replacement of all federal, state,
and local taxes with one tax on land. His proposal became known as the
“single tax.” Taxing only land values, George believed, would generate all
the revenue needed to operate government and produce ever greater lev-
els of opportunity.
In the winter of 1881–1882, George embarked on the first of several
tours of the British Isles. He influenced English politics, helping spur not
only a popular land reform movement but also modern British socialism
and Irish nationalism.
vii
viii PREFACE: ABOUT HENRY GEORGE
Back in the United States, George was invited to testify before the
Senate Committee on the Relations between Labor and Capital in 1883.
He published Social Problems, a compilation of his editorials. The United
Labor Party nominated him to represent the interests of more than
150,000 working men and women in the New York City mayoral race of
1886. Although he lost the election, his campaign attracted national atten-
tion as the culmination of what some commentators called “the year of
labor.” He out-polled Theodoee Roosevelt in that election. 
The campaign also ignited religious controversy. In 1891, Pope Leo
XIII placed Progress and Poverty on the Vatican’s List of Forbidden
Books. George wrote a powerful commentary on the Pope’s approach to
land and rents.
George edited a weekly newspaper and authored three books: The
Condition of Labor (1891), The Perplexed Philosopher (1892), and The
Science of Political Economy (1898).
He was nominated again for mayor of New York in 1897. Three days
before the election, on October 29, 1897, he suffered a stroke and died.
His funeral two days later was likened in size to that held for General
Grant. The New York Times reported: “No demonstration of popular feel-
ing on the death of a public man since Lincoln’s body lay in the City Hall
has been so imposing in extent and character as that of yesterday. Call it, if
you will, hero worship; but its object was really a hero.”
New York, NY, USA Edward Nell
a
cknowledGments
This book was written on the run and produced in a flash in order to
honor Andrew Mazzone at the opening of a new phase—which he himself
planned—in the history of the Henry George School of Social Science. To
make this happen a number of people had to work exceptionally hard and
do exceptionally good work. Tom Phillips did an immensely helpful read-
ing and editing of the first full draft. Barbara Ross then followed up with
subsequent drafts. Kenneth Wapner discussed every stage of the book with
me and helped over and over with difficult passages, seeing it through
from start to finish. Sam Truitt did wonderful work preparing the book
and cleaning it of errors and infelicities. Many thanks to the President,
Board of Directors, and Staff of the HGSSS, especially Andrada Chercheres,
for supporting this project and providing help at crucial moments. And I
owe a special debt to the outstanding editors at Palgrave, Elizabeth Graber
and Sophia Siegler. Finally I want to thank my wife Marilyn Adams for her
patience, sound advice, and common sense.
ix
c
ontents
1 Introduction: Reviving the Work of America’s Most
Original Economist 1
A Quick Look at Henry George 4
Bibliography 7
Part I Progress and Rents 9
2 Understanding Rents in the Real Economy 11
Henry George’s Idea of Progress 12
Growth Models and the Treatment of Rent 13
The Classical View 17
Factor Markets 18
Henry George’s Treatment of Distribution 21
Rents and Real Estate 23
Bibliography 25
3 Growth and Rents in the Real Economy 27
4 A New Look at the “Henry George Theorem” 35
The Traditional Case 36
Rents, Demand Pressure, and Taxes 39
Discussion of Revised 2016 GDP Accounts, by Andrew Mazzone 45
Bibliography 49
xi