Conversation with Georgists; 11

Exploring the ideas of protection free trade wages taxes automation and unemployment. These are just some of the topics to be heard on. Conversation with George's produced in collaboration with the Henry George School of Social Science. And now we're here is your host for a conversation with Georges. The faculty of the Long Island extension of the York School of Social Science a school devoted exclusively to the dissemination of the philosophy of Henry George and its relevancy today welcomes you to the eleventh in a series of programs dealing with the subject of economics. This subject has been relegated by many to a back seat with respect

to our interests and knowledge and left in the hands of the so-called experts. We feel that economics is everybody's concern. Regardless of education occupation profession or sex we offer and teach our free courses in economics with this in mind. This program and conversation with George's deals with economics in this vein and we hope to bring forth some answers to the perennial problems that face our nation and the world. My name is Stan Rubenstein director of the long around extension of the Henry George School and with us tonight are two members of the faculty of our school. Each one well-versed in the field of economics. Having spent many years teaching our free courses in economics Dr. Sam Scheck is an orthodontist and Mr. Wayne Barry is an engineer. Our subject for tonight deals with the urban crisis.

Gentleman if anyone were to skim through the book written by Henry George untitled social problems way back in the 1880s he would have come across many of the conditions and many of the events of the hour that face our nation today. I know that in several of his chapters he has mentioned the slums. He has mentioned the crisis in the cities of course not mentioning any dates. He has mentioned the problem of crime. He has mentioned the problem of poverty. Now according to Henry George and you gentleman here how is he able to forecast of the problems that confront our society today. Dr. Sheck. By knowing the laws of economics the Henry George it could predict the dire results that would follow from ignorance of

these laws and from flouting these basic economic laws. The Emory Georgia predicted pauperism and distress among the working classes he predicted poverty ragged and care for children. The more hideous hundreds and fiercer vandals of whom Macaulay prophesied. These are quotes I wonder if you mind if I read a paragraph from page 10. Go right ahead of it and Henry George in 1887 wrote this book and here is what he says on page 10. This association of poverty with progress is the great enigma of our times. It is the central fact from which spring industrial social and political difficulties that peopled that perplex the world and with which statesmanship and philanthropy and education grapple in vain. From it come the clouds that overhang the future of the most progressive and

self-reliant nations. It is the riddle which the Sphinx of fate puts to our civilization and which not to answer is to be destroyed so long as all the increased wealth which modern progress brings goes but to build up great fortunes to increase luxury and make sharper the contrast between the House of have and the House of want progress is not real and cannot be permanent. The reaction must come. The tower leans from its foundations and every new story. But hastens the final catastrophe to educate men who must be condemned to poverty is to make them rest of the base and a state of most glaring social inequality political institutions under which men are theoretically equal is to stand a pyramid on its apex. This makes us think think of today's race riots student riots and so on.

Now perhaps if we can focus a little more attention rather on the some of the basic problems that you have mentioned then perhaps we can get a little bit into. Detail on this can we be a little more specific Dr. Sheck and pinpoint what is the crisis that is taking place today in the cities and perhaps we can handle one at a time and see if we may analyze them. Well in the cities the central problem the central problem problem is poverty. And this is seen in its share in its shop as contrasts in the slums as compared to the expensive apartments on Park Avenue and Fifth Avenue. Now I know that one of the things that Henry George has well to pass on and that is that we can expect to see this poverty that develops and evolves will usually be

in those areas or at least adjacent to those areas which are extremely wealthy and might correct in this. Yes. Henry George felt that if people found a difficult to make a living. On the farms for example they would emigrate to the cities looking for jobs. And here is where you would find lots of unemployment and poverty. And this was exemplified in his time by the poverty of the ordinary Londoner Londoner which was even greater than that of the negroes in the south. Right but but getting back to this that I think that most people along with myself have made this observation that as they move into a new way area and I know that this has occurred on Long Island that as they move into a new area and they live

here for a number of years they see taking place within the midst of certain communities and these can even be very wealthy communities as has taken place and many of your large cities throughout the United States they see developing pockets of poverty. We would call this today slum areas and of course it seems to be developing in areas which are able to produce a greater amount of wealth than another equal area. What does Henry George say as to the reasons as to why for example we have in New York City. In one area we have the severest poverty that people can envision. And then right next to it just several blocks away we may very well have some of the wealthiest apartments that people can afford in New York. What is the reason that poverty seems to exist side by

side in many of the cities or rather slum areas exist side by side with very wealthy areas. Well a Jew to the high cost of land. People are concentrated into high rise apartments in cities and from another angle due to the high taxation on the buildings themselves. These buildings tend to do to deteriorate. They it does not pay to maintain these buildings. Because if they're worth more they are taxed more. And if they are become worth less they are taxed less. No way is the owner of a slum receives a tax benefit so he through having to pay lower taxes on his building and having his land being and not paying as much taxes on the land that he should. And this results

in slums in the city. Now this explanation that you have given seems to be somewhat different than if there are explanations given as to why there are a slum area that is somewhat different than other people give. Now you are associating the existence of slums. As being basically I don't mean only but basically a land problem I correct here. Well it is actually a two fold problem it's a land problem and a you know a building and a building problem. It is a single problem in that it's based on incorrect taxation of these two subjects which are commonly called property. Now these land is under-taxed and the building is overtaxed. Now before I get to Wayne Berry just one final question on some of your comments. Are you stating that the slum

area is profitable to certain groups of people. Yes owners of. Slum areas find it more profitable to invest their money in these slums then new buildings. Otherwise they wouldn't do so. Wayne perhaps we can follow up on this point because I think that this point is so relevant today and I think that this subject is our primary concern I think to almost any decent human being because they realise the problems that confront the cities today. And I think we are beginning to recognise more and more that we cannot run away nor close our eyes to many of these problems because strangely enough no matter where we run the same problems seem to appear and perhaps if we can solve the urban crisis if we can solve the crisis in the cities then

perhaps we may be if we want to be selfish about it we may be able to forestall or even to alleviate a suburban crisis which is developing. Perhaps we can follow up on Sam's point. Why is it advantageous to certain groups of people in slum areas so continually let their buildings become dilapidated. It's exactly it said I agree with that. Slum land the best investment there is today. Very little goes in and a lot to take out. I think Mr. Perry Prentice just has an article in the latest Henry George news that Perry printed on his portion of his keynote address for an all day property tax conference in San Francisco on June 8 of this year which was sponsored by the California Henry George School.

And Mr. Prentice's vice president of Time Incorporated he says this this land in the slums is really referring to this urban problem that this city slum problem this is a subsidy he calls it. This is the way it's happening nobody seems to know it's a hidden subsidy so well-hidden it never gets on the government books. It's so well hidden that the beneficiaries are never named so well hidden that they never get a government check for their subsidy payment. There's a secret subsidy worked not by sending subsidy checks to the beneficiary but by tax treatment. So extremely favorable. It almost completely exempt land speculation from the ordinary working of the law of supply and demand is work by taxing the owners of unused and under US land so rightly that they pay only a trifling share perhaps 2 or 3 percent of the truly enormous cost other taxpayers must absorb to pay for the public improvements that multiply the value and selling price of their under used land and surely the land is being any use with

them when there is nothing but slum buildings on it's right next to the most valuable land in the world and yet it's not used and it's there is no incentive for private enterprise to go in and write tax laws today to go into the slum area and build a beautiful apartment building because then they know that the city will tax them. And there's no profit for them so they leave it as it is and it deteriorates and the taxes go down and their profits go up by not building. And we should have a US incentive taxation as Mr. Prentiss points out later it is docked that will stimulate good buildings and not penalize those that are putting them up. And the subsidy is hidden as he called it that's a hidden subsidy that's going on from year to year. The taxpayers are paying these landowners are you stating Wayne that our present property tax isn't in coverage meant for people not to improve their areas.

In the case of buildings in the case of the homes that's right it discourages people from making improvements. So you add another room to your house and the society penalizes you but doing today is they get a bigger tax debt up following year end. And even that is something I heard it's hard to believe there are some places even in small towns I've heard where they even they put new shrubbery or more shrubbery in their front yard. They upped their taxes and I told this one farmer up in this town and he says well we ought to get that straight now they're trying to beautify the town they're paralyzing Oprah doing it. And he could see but he said well I have to have money to run the town and I told him how they could without paralyzing people and he didn't. He just said well I said Henry George had the math and he said Well who is Henry George. So I tried to explain what you can't do in 10 minutes it takes 10 weeks in a course. But it shows that all through the country. Now

the only city I think the largest city in the world. That hasn't slums is not compared in size to New York or the big some of the big cities but in Melbourne Australia. I think it is right they have a land value taxation program that Henry George lectured down there and it took root and I've been taught I've never been there that you don't see slums in Melbourne or any places where they have land that taxation. So what you're stating very quickly then to sum up that Henry George when he speaks about a tax on land is against all other types of taxes. Said he is on buildings on anything which labor produces or anything which business is our capital investment. That's right the he the Henry George points out that all of the taxes taxes on labor should be eliminated. That includes income tax sales tax all excise

taxes any tax because the fruits of a man's labor belong to him. And because the government is not collecting this land by a tax or is what it's to share a share of it very little that they are collecting. Because I'm not correcting that and that's what they have a right to gripe. They have to go to tax man's labor today. Now if they don't start to collect this land rent it we call it. Then they can start to eliminate some of these taxes on labor. Sam I'd like to get back to you one this particular point. Don't we have taxes on land today. I mean this is nothing unusual what Henry George is suggesting is it. Now we have taxes land and perhaps we can credit the great advances of the United States has made partly to this.

A point that we have taxed land to some extent and we haven't had this runaway land speculation that they've had in South America for example now in South America there are many places where the landowner is not taxed at all actually exempt from taxation. Now if we started out in the history of our country with collecting taxes from land only this was as I read in 1795 we've only had land taxes then but there has been a gradual shift to taxation of property and there is a tendency even today to try to get rid of taxes on land altogether. We should reverse the process and go back to the tax man as Henry George mentioned. We don't the taxes destroy. When you tax labor and capital you destroy production. You cannot win your new tax plan. You cannot destroy a land it is

not a thing of human production. You only destroy the land speculator. But if we get back to the slum areas and the urban crisis that we are dealing with on this program. If you acknowledge that we do tax we don't have a law and tax on land value. Then why is it that we don't have slum areas. Well I didn't point out this fact we do not tax the land as as much as we should. I will laws for example only permit an equal tax on property and other words land must be taxed at the same rate as buildings and actually speaking the assessments on land are only a fraction of what they should be whereas the assessments on buildings are where they really should be. Buildings are assessed fully and not assessed fully. So even with the framework of existing law a landowners

get a very large tax benefit. So we certainly could see that the law is fulfilled regarding assessments to eliminate this tax loophole for large landowners. And once having achieved this we should try to transfer the taxes gradually from the buildings to the land. This is being done in Pittsburgh in the cities of Pittsburgh and Scranton and Pennsylvania. And it is being done fully in certain areas. As Wayne has mentioned in Australia and New Zealand that I know that by reading the papers recently a number of politicians and other economists have come out with suggestions concerning slum areas that private industry should receive certain tax incentives certain tax benefits so that they may go away and wish to develop the slum areas

with this represent a tax incentive or a tax benefit. So way build it to want to go into a slum area in order to improve upon the building there. Yes this definitely would represent an incentive to a builder. If a builder does not have to pay taxes. Before building he certainly would wish to build. This has been shown to be true in Pittsburgh where they are have rebuilt the town and the industrial section very much. It has happened to New York after World War 2 when I think there was a five or ten year tax moratorium and a great deal of building was done. And wherever taxes are lifted you find a tremendous amount of productive aid. This is the way we can eliminate unemployment and poverty in the cities and on this point let us know that slums are just the outward sign

of poverty this is a thing we can see the home. There is also a matter of food and clothing. Through which the slum dweller suffers. I know that this tax moratorium that you spoke about I think which occurred in New York City during the 1920s during this period most of the skyscrapers were built ever since that time strangely enough we have not had skyscrapers built. But let me just get back to one point that you mentioned say am I not many of your build is also lie and own is. Well build those who do own land and if they use the land for a building this is its necessary for them to have the land to put the building on. It is the of the land speculator who is the dog in the manger. You might

say he is the he's not the man who is doing the building. Just turn over his land to another speculator who also turns it over to him not the one and so on. Yeah it's only at the end of the series of transactions when the land is actually used. That it is built upon but in the meantime all the profit of the building has been taken out by the old man speculator who gets nothing for it. Let us see what the crux of the matter is. Land and labor are employed on the land and it is only by proper use of land which means taxation of land which is really not a tax. That is by means of this we can have proper employment of labor and capital in our cycle. Wayne I just thought I'd mention that in New York City and I imagine other large cities. The land is owned by the land owners that do not building they just lease it out for a certain number of

years. Forty five are ninety nine even and they collect. Like one parcel of land I know in a class I had with George school a teacher was in the assessors office in New York so we had a lot of illustrations and one some parcel and were let out by the St. Pierre Hope Hotel is now. He collected a hundred thousand dollars for that land the land on it every year and the builder had to pay the taxes on the land and on the building and before he could even start the building that it was ridiculous that the land owners just sit back and do nothing and and the ones that worked and generally lose their building that way. What is your feeling concerning the large governmental programs that are now in existence and it seems there is more talk about the government pouring in millions and billions of dollars into the cities in order to clean up the slum areas. What is

your feeling towards these governmental programs how successful do you think that they will be in light of what we have spoken about concerning the causes of slums and the ways perhaps to rectify or to cure the slum areas. Well I should think that most people can see should see that the government getting into the housing Dennis is wrong approach. The government is trying to overcome the slum conditions by building these housing developments and that means it's taken more money from the taxpayers to do that and they're going to be hurt and I hope that they will finally wake up and get out of that and as you said before then by giving private enterprise some incentive to go in and do this because every time the government puts up a housing project the taxpayers have to pay the difference but that the that the private enterprise can't do it today on account of our taxing situation. Sam's then winding up the this part of the program.

You want agreement with Wayne that the death of our cities is not inevitable. The death of US cities is certainly not inevitable. We can have our cities rebuilt practically overnight with the use of proper economic laws. If you look at for example Germany after the Second World War it was a mass of rubble people picking up bricks by then with their hands. But they rebuilt their cities very quickly and it can be done. Gentlemen I had so many other areas that I did want to go over in front of me I have notes I want to talk about the population problem about urban blight about the welfare program but this is what happens when you begin to analyze any single problems that almost becomes analysts. I wish to thank each one of you Dr. Sam Scheck and Mr. Wayne Berry for appearing on a conversation with Georges tonight. Henry George School will send

any interested listener information about our free courses which are offered on Long Island. Please write the Henry George School Post-office Box 54 Old Bethpage Long Island that address again is the Henry George School Post-office Box 54 all Bethpage Long Island. X. Knowing the ideas of protection free trade wages taxes automation and unemployment. This has been a conversation with Georgia. Produced by WB Yeats psy ops for university and Hamstead in collaboration with that retard school of social psych.

This as any on the national educational radio network.