Conversation with Georgists; 4

Exploring the ideas of protection free trade wages taxes automation and unemployment. Line. These are just some of the topics to be heard our conversation with George's produced in cooperation with the Henry George School of Social Science. Now here is your host for a conversation with Georgia at. The faculty of the Long Island extension of the Henry George School of Social Science a school devoted exclusively toward stimulating an interest in economics and the dissemination of the philosophy of Henry George through free courses and economics welcomes you to the fourth in a series of programs dealing with the subject of economics. It is

our hope to clarify and elucidate upon much of the vagueness that sets this all important area in an area which affects all our lives. We feel that economics is everybody's concern regardless of sex profession education or occupation. This program conversation with George just deals with economics in this vein and we hope to bring forth some answers to the current problems that face our nation and the world. My name is Stan Rubenstein director of the Long Island extension of the Henry droid's school. And with us tonight are three members of the faculty of our school. Each one well-versed in the field of economics. Having spent many years teaching our free courses Mr. Jerry Schleicher is an interior decorator. Mr. Wayne Barry is an engineer and also

Mr. Ed Moyer is an engineer. Our subject for tonight deals with the subject public that's and in direct taxes from Henry George's book social problem which was written during the 1880s. He states the following that in spite of the progress of civilization Europe is today a vast camp and the energies of the most advanced portion of mankind are everywhere attacks so heavily to pay for our preparations for a war. All the costs of war is due to two great inventions that of indirect taxation and that of public debt. Once again I'd like to remind the radio audience that this book was written back during the 1880s and I'm sure that this particular paragraph which is part of the chack the

public debts and indirect taxation could readily apply today. I'd like to start off with you Mr. Wayne Barry and ask you why does Henry George state that public debt and in direct taxation are great inventions. Well public debts enables the government to get sums of money they can't get by taxation. In other words they float the bond loan and they are in order to build some big project they think is necessary. And in that indirect taxation is just a gimmick it gives the government the power to obtain money more easily. Say times call a hidden tax and these are just. Well they are inventions of the government to to get these things they think things the

easiest way and sometimes they think they're fool and the public. And I think they are. People seem to vote for bond issues for this and that and it's it's one of these things that I think is the only way we should do. We should save our money to buy something we need not go in debt. And I think that of course as we when there's a war of course there's tremendous public it carry on the wars. Now when you speak to me when you speak about public debts then an indirect taxation as being great inventions I know what I try to do many times is to conjure up in my mind what would have taken place if such and such did not occur. And I try to do this with many of the inventions in order to see exactly what the importances of invention is perhaps now would be an apropos time

to investigate what happened. We'll speak about public debt first. What what happened. Wayne if we didn't have public debt. Well I think that we wouldn't have had as many wars because wars are way back in the middle ages and had to be financed by the public. Otherwise they could never set up great armies to go out and plunder other countries. Can you clarify this point in getting the connection between war and public debt. Why wouldn't we have had wars. I mean wouldn't the same type of fighting have taken place even if we didn't have public debts. Well there may have been some fighting but not on a larger scale I guess because I am not too sure that you can keep people from fighting exactly but I think there would been a building up these

great armies ships and you've got to have you've got to the government's got to go into debt. And of course of course that's not the cause of war probably is having a gun. But if you have somebody else who's going to have to have to. But this isn't necessarily really iffy. If you have REAL. Well you might say freedom among all the peoples of the world real freedom which we don't have today. Let me perhaps rechannel this question and pose a similar type question to you Mr. Jerry Schleicher on public debt. I assume that in what Wayne is talking about when he speaks about public debts as maybe being a reason why we may have

war not that public that is the reason for wars but that there may be a connection is perhaps Wayne's suggesting that if people really knew what it cost to fight a war beside the lives you know we all get figures. For example we all get the figures that it cost two billion dollars a year to fight the war in the two billion dollars a month to fight the war in Vietnam that if we did not finance this war to public debts and we tax the people directly you know whatever it costs we had to take directly from the people is perhaps Wayne suggesting that there would be more of a likelihood that people would really see the cost of war and perhaps this would lead them in the other direction. I think that is a wonderful way of putting that whole statement into

sort of perspective. For example a farmer who spends a whole year planting crops and growing them and sees the wealth growing and then watch as the tax collector pull up of the wagon and take away 60 percent of his crop or 70 percent of his crop. It's certainly going to object strenuously. Yet the modern taxpayer today takes his checkbook out and he writes a number on it and he sends it to the government and he doesn't know what's happening. So I think you have a very good point. If our taxpayers in this country could see three quarters of an automobile being blown up in Vietnam the automobile if they wanted to buy. They might ask well is it worth taking my automobile. I plan on buying and blowing it up in Vietnam. Is it worth taking part of the house that I proposed to buy the next few years and sending it to Vietnam. Now I'm not saying at the moment whether we should or we shouldn't. I'm just saying that an answer to your question and as Wayne stated it's

possible that wars would not come about as easily if the people will have to pay for them said no I don't want to pay for them. Then where are you going to get the money to fight a war. That's an intriguing thought. Whether oil really stop wars I'm not quite sure but I'll say this the more information that the taxpayer has concerning how much of his actual wealth that he produces each year is going to go for the cost of the war will lead us to possibly look into our policy concerning war. Ed perhaps we can pursue this whole question of public debts and indirect taxation in the sense that we have spoken about with them with what I'd like to switch right over to the second part in this is on the record taxation. First could you tell us what is the difference between direct taxation and indirect taxation or indirect taxation is a tax on a product at the source of manufacture and that tax is added to the price of what you pay for the article. In

other words we buy an automobile. The price of the automobile as far as the manufacturer is concerned is $3000. There's a 10 percent excise tax which makes the car $3300 so the car price to us is 30 $300 it's more or less a painless tax because we don't think of it we don't break the cost of the car down into two parts. We just say we paid thirty three hundred dollars for the car and that's it. So we again this way and Henry George says indirect taxation was a great invention because people ante up the money without realizing it and without protest. Therefore you think perhaps the same may be true of public debts and I connect both of these. That in direct taxation is a gimmick and invention. Call it whatever you want for the government to obtain money to do certain things that it would normally not be able to do as

readily if it were something which were placed direct true just like we wouldn't in our own homes if we had US. As we mentioned we had to save money to buy an extension or something like that. We do a lot more thinking before we do it rather than just going to the bank and drawing out a loan for the extension to the attic. So how big is in direct taxation today does it represent our many items tax that the average person does not know about. And I would say just about everything that we are in contact with has some type of an indirect tax on it. Therefore would you say it's conceivable that if by some stroke of a law and we were able to eliminate in direct taxation that everyone would automatically be wealthier. Yes because that would of course cost if I made a hundred dollars a week. And I have to pay for

example 29 cents for a loaf of bread. And if you cut off we'll save five cents which may be involved in flour or any of the other ingredients that automatically I would be you know that that hundred dollars would certainly go a long way I'd be able to buy and other things and gradually improve your own status. Do you think that this type of thing is done intentionally by governments. This is in direct taxation. I do because it's a painless way to collect the tax. The people aren't don't realize it. The general public doesn't realize it. And so they pay for the price of bread. 29 cents instead of 25 or 24 cents and complain about the cost of living and that's it. Wayne let's let's follow up on this point of in direct taxation is I gather then from the comments that have been made by you three gentlemen so far that you are against deficit spending which is another way of stating public debts and you are against our whole

system of taxation since many of the taxes that we get although I don't know whether it's majority but certainly many tax we get are in direct taxation from indirect taxes. Now do you as followers of Henry George are you against deficit financing public debts and also in direct taxes. Yes definitely. In regard to this bread I was thinking back it's been quite a while. I think somebody told me once I read some places over 21 hidden taxes on a loaf of bread that whether that's something to back it up. I know but there's quite a few. But this this this is an easy way for the government. It's one of the canons of taxation the tax should be definite should know exactly what you're paying every taxpayer and you certainly don't know when you buy anything today. They don't put down on all these taxes some of the intermediate people the

doorkeeper probably doesn't realize what taxes he's paying in the wholesale market. But for the bread but the it's very it's it's it's if you should a tax to be good should should be definitely should be should everyone should know exactly what their taxes. That's just one of the rules for good tax. But certainly the indirect taxation or this hidden taxes don't comply with that rule. Good tax. I think that there would certainly be many economists that would agree with you today concerning these canons of taxation that you have mentioned. If we were undoubtedly to examine our complete taxation program we would see to it that we are violating the very principles that we would advocate that that would represent a good tax. And I think that there there are many many people that are in agreement with this indirect taxation but perhaps we can get to another point along these

lines. Henry George I get the impression mentions that these are great inventions by governments. Well have we always had public debts or is this something which was fairly recent in our history. Well I would suspect without knowing the complete history and going back 5000 years that a public that is a good gimmick and I'll tell you why. Want to say I am the king of a particular country. Thousand years ago. And I want to raise some money to start a war somewhere. Now you know a problem that also promises to pay interest to the people that hold the bonds and you might think of it this way if I can borrow money from certain groups of people who have it and don't want to support me with a promise that I'm going to pay them 10 percent you might get these people to say well you know that's a pretty good deal forgetting about what we're getting wrong to begin with and they don't even look at a word. Now it's a business proposition and they'll say well gee 10 percent it's a good return. And you know and get all involved figuring out yeah it's great. I'll give it a thousand or 2000 or 5000 and I'm

sure that going back as far as any kind of history there are always people willing to put up money for any purpose and you decide what you want to do with them as I get 10 percent or 20 percent and so on and possibly this is the way public that started we might lose fact cited of that fact but actually I think that's what a public that is today. And maybe that's why we don't have too many people objecting to public debt because they're making money out of it and therefore they'll say great Sure I could I'll put up a thousand dollars I got eight percent from the government. Now you might say well who's giving me 8 percent if there is a group of people putting up money and getting interest from this well who was paying interest. I mean they have people that are producing wealth being taxed on the wealth they produce. They must take a percentage of that wealth and send it to the people that own this debt and those that are bondholders. And yet you would suspect that the people who pay his tax should object but they don't. And I think the reason that they don't at least one of the reasons is they actually don't know. They don't realize how much of the actual wealth that they produce is going to pay this public debt

I might say that if the government tomorrow said well look this week we're short of money and we need $50 each family in the United States of any public official to get up and set it that way. He probably sent to an insane asylum. He doesn't do it that way. He gets up and he tells on his people that he knows in the center of the house look he says as we need so much more money. Want to increase that tax you know. Nobody is not sure where the tax is because they forgot when it was started and I forgot what he's talking about and we're going to dig back and find out. Yeah we'll raise it another 5 percent and bang there's the $50. And nobody says anything because nobody really knows what's happening and your income just shrinks that at $50. Now I know that if anyone were to certainly check the public debts that this country has incurred over since certainly since World War 2 they would see that is at a definite steady increase and it's been rising and rising. And I get the impression from what Jerry has stated is that somebody has

to pay for this and it just means that you must take the money that you have to pay back to people that own certain bonds or whatever certificates they may have. That must be taken from the wealth pie. But I've also heard I don't know how true it is but that we are still paying off part of our debts that this country incurred from the American Revolution. I think that this brings up a very interesting point concerning public debt on future generations. Ed what does public debt do for future generations. I mean does it help them. Does it hinder them. Is it a neutral effect. It is quite a involved question because you take a public debt that is a good word for it. Obligated to cover a massive hydroelectric project or a river control project. It helps the people

but it also helps the people in the future it helps our children and their children. And the question is should they pay for that or just should we pay for the public debt set up. Is that to a large extent our children and our grandchildren will pay for this project or a public debt is another means you might say of transferring today's obligation onto the succeeding generations. Would you say that this would not only involve the question of economics but would involve a bit of morality in this as to whether we have a right to pass on to future generations something that they must pay. Yes. Because as I mentioned earlier certain types of projects help us only. So why should the future generations be stuck with paying for it now would you also say without certainly getting into the merits or demerits of the present

war going on in Vietnam that if we are supporting the war in Vietnam via public debt then it seems to be every indication that one of the difficulties that we are. Having concerning that war is that we have to go into deficit financing to support that 25 billion to $30 billion that's being spent a year. Do you think that is now involved because I have never or very rarely heard this model. I suspect that there's a moral question here concerning whether we have a right to make future generations pay for what we are currently doing well in this case I would say we do have a model right because we are obligating the future generations now to ensure to the best of our ability that they will be able to live in their time with the type of government that we are now living under rather than

under a communistic type of government. So therefore this doesn't involve a certain moral question that we have. That's right. And it's something that has to be weighed with each move. You can't put a general blanket on morality as far as public debts are concerned. OK now getting back Wayne to the to the subject here of public debt I'd like to go back perhaps to the period of the 1930s when public debts became more or less of a way of life. Were Americans more so than they were familiar with in the past. Don't public debt serve a very useful purpose here in improving things for example. There were a number of projects that we're undertaking your 1930s work prior Progress Administration a number of others that built roads that build hospitals and all this was done at a deficit financing doesn't serve a worthwhile purpose to.

Well it may look like that but when I heard back in the 30s why they were hiring people who rake leaves to one side the street and hiring somebody else to rake them back. The other side's history just to give them some money as a dollar that they were thinking they were working for. Maybe Is that a little too simple. I just presumed that if is made for something that's really going to last. Why. There might be some reason for going that that but in most cases that I think they're really going into debt too much. I was in Congress I sat down in the Gowri only about a month or two ago and I heard the debate you go into the gallery area and what's been going on before and you try to pick up the bill. But there was a congressman from Oregon again with the congressman from California some project along the Colorado River. I don't know just what the project was but after they got to it it was a woman stood up. I don't know what state she was from but she impressed me very much she looked at this amendment to

me just means you're giving them a blank check. Well I got like clapping my hands and wish we had more women down in Congress to watch and our taxpayers money but they don't realize. I think sometimes where the money comes from. But getting back on this public debt to me I think we should save before we spend out and maybe some cases you can of course. And of course in a war then they come right out and say you can't let them an enemy come in you've got to keep my ego in the public debt. I don't know what the reason for the war is but the economic wars and if we we had a good economic system. I think we throughout the world we would see that the wars are just foolish. I don't think that would be much criticism in that last comment concerning the foolishness of war. I think man is well familiar with

that. And also I'd go along and agree that perhaps at the base of many wars is this whole question of economics but I'd like to get back to you on this question. Exactly what is the effect of public debt. What do public beds do in reality to the economy of the country. Well if you're going to spend a hundred let's say fifty billion dollars is here and you're going to fund it which means you're going to borrow it and then you spend the money. Now in this day we spend quite a bit of this money on armaments so that there is nothing really let's see after the money is spread there are no buildings there are no monuments there are no programs that some planes flying around which next year are obsolete. Now you have a 50 billion dollar debt with nothing to show. But you have the debt and you've got to pay the interest. So the future generations will end up paying the interest

plus the debt. Now what this has done is put a lot of people to work producing the types of physical things that cannot be. You can't wear it you can't sleep on it you can't eat it and therefore it means that you've expended so much energy to produce something that you cannot use. Of course it can be set up we use guns and planes to protect ourselves and therefore we have to end war. Why are you bringing this up. Well I admit that there's no question about it. You know I want you to understand this is just what we're doing we're using part of our energy that we could use to produce well to sleep eat and write in or what have you. And we type that section and we push aside all this we cannot use as individuals this we use this kind of wealth use to protect ourselves and we know that once we produce this kind of goods that's what I mean it's down the drain. We can never get it back.

Gentlemen one thing which is not in direct is the time on the studio clock our time is up. And I wish to thank Mr. Jerry Schleicher Mr. Ed Moyer and Mr. Wayne Barrie for appearing on conversation with Georges the Henry George School welcomes the opportunity to send any interested listener a booklet on the contents of tonight's program for information about the free courses offered in economics on Long Island. If interested please write the Henry George School Post Office Box fifty four Old Bethpage Long Island. That address again is the Henry joyed school Post-office Box 54 Old Bethpage Long Island. Exploring the ideas of protection free trade wages taxes automation

unemployment. This has been conversation with George's. Produced By W. H. Hofstra University in Hampstead in cooperation with Henry George School of Social Site. This is NPR national educational radio network