A more inclusive, rewarding and efficient economy

Gareth Whelan

‘Henry George, among others, articulated an economic theory that says that the root cause of unemployment, poverty, low wages, unsafe working conditions etc. is the unavailability of land.

In the farming economies of centuries past if there was plentiful good land available, no one was without a means of sustaining themselves i.e. there was no unemployment. In those times, in contrast to the industrial revolution that was to follow, nobody was forced by fear of starvation to work in terrible conditions for a pittance.

What is not as easy to envisage is how in the 21st century, the making available of land to all who would make good use of it, could end this era of unemployment (and consequent poverty) that started with the enclosures. The theory says the economy would work better for the labourer, for the aspiring entrepreneur, for business, for ecological sustainability and for all.

This same economic theory asserts that the most effective means of having inefficiently-used land be made available to those who can make better use of it is that, instead of owning land that has a purchase price and a sales value like today, landowners pay ground rent on an ongoing basis for exclusive-use title to land, the sum due being determined by its market rent value.

It is likely everybody has seen articles that ask the question: how, with all the increases in productivity since the beginning of the industrial revolution and with rapidly increasing automation, most people work more hours than ever and some for little reward? Part of the answer, according to this theory, is that a substantial proportion of every increase in productivity results in higher rents such that we all produce more, get paid more for it but then pay more in rent, thus more-or-less taking us back to square one (other than the land owners who benefit).

The land was here before us all. And it is clear the value of some land still mainly arises from nature, for instance by being naturally well suited to cultivation or due to beautiful locations.  However, the rent of higher-value land is - as it has increasingly been over the centuries - determined more by human factors such as a largely functioning society, economic opportunity, infrastructure, public transport and services. In the 21st century economically-interconnected world, the every-day activities of almost every person connected to the global economy contributes to those human factors, thus indirectly causing rising demand, competition and increased rent (and consequently,  land asset values too). And most of that increase occurs in the centres of the largest global cities.

The combination of two facts – that nobody created the land and that everybody contributes to the value that accrues to it – leads me to the conclusion that the most appropriate thing to do with ground rent, paid by landowners, is that it goes toward what could eventually become a Universal Income, a proportion of which would be deducted as our public revenue contribution in place of most existing taxes. For me, the small steps taken by those involved in this project are potentially the tiny beginnings of a transition to this new economic paradigm – all of which, in my eyes, could come about without compelling anyone to participate, and without penalising those who did well from the system as it has been to date.’