Popular Science Monthly/Volume 33/June 1888/The Earned Decrease vs the Unearned Increment
By JOEL BENTON.
READERS of Henry George's empiric philosophy have been told—and his acolytes peddle out the platitude with much phrasing and infinite iteration—that society is greatly wronged by something which he calls an "unearned increment." This un-earned increment is a thing which all property, personal as well as real (if you except cash in hand and some of its exchange equivalents), is subject to. It may heap itself just as vigorously upon a dozen eggs or a bucket of soap as it does upon a piece of land. The increment arises, too, from some want or movement of society. But this habit which property has doesn't trouble these millennium-makers and poverty-extinguishers. It is only a subject for complaint, in their view, when it touches a piece of land.
The stock sample of the injustice they inveigh against is the rise in value of a town lot. In fact, you can not get the mind of a Georgeite off from a town lot. He pitches his tent there; and if, for any reason, he strays briefly away, when you are not talking to him, to the open country, a word of opposition to his whim will send him back flying to that magic foothold. One would suppose, if the fury with which he thrashes the air were really evidence, that nobody ever bought a town lot or a plot near a city who did not at once ride into a fortune by its buoyancy, or else reap a happy sum which, in equity, belongs not to him, but to everybody collectively. But the whole doctrine of Georgeism is a strange perversion of, not only political economy, but of the exact truth of the matter in hand. The history of land-ownership of all kinds everywhere is as strikingly a history of losses as it is of profits. We see the successes, as we see the ships which float on the ocean, while the unnumbered wrecks in both cases are out of thought and beyond vision.
At one time in the history of St. Paul, Minn.—to make one instance stand for a multitude—only two or three men could comfortably hold their real-estate purchases. All the rest who had investments were not only glad to give away the hope of increment, but were willing to give up all, and often more than they gave to purchase their holdings, to be freed from the debt on them. In fact, a universal bankruptcy and panic prevailed among all who owned land. It is not an uncommon circumstance to find, too, that those who buy city realty, and hold it any length of time, although the increment may seem very large, have paid for this increment entirely through taxes, interest, and improvements. I am not sure that the man who said he had seen the time when he could buy all the ground Chicago stands on for a pair of boots, and only hesitated to do so because he lacked the boots, would have made such a wonderful bargain as might be supposed, provided he had had to pay for everything necessary in order to hold it, and had held it up to date.
But suppose, in Chicago's case, there would have been a profitable purchase for him who thought he saw the opportunity. His capital embarked, his possible risk, his care and time, would entitle him to the outcome. But what shall be said of a town not a hundred miles away from Chicago, which was laid out on the same lake with equal expectations, whose broad, houseless avenues now are—as for thirty years they have been—a silent comment on something quite different from the so-called "unearned increment"? And what of other similar would-be cities—frogs that, like Æsop's, burst themselves irretrievably, or those who took stock in them, in trying to attain the ox's magnitude? The situation in reference to disaster with the city lot is full as appalling—if foresight and gain are appalling—as it is in the direction of profit. If society has a claim upon this profit in the socialistic way which George and his followers claim it has, then, to make the equities right and even, it ought to shoulder, without a whimper, the losses which have befallen the land-owners who have suffered from the "earned decrease."
Probably, if we go outside of a few large towns (the area of all towns being an insignificant part of the planet), it will be found that what I call the "earned decrease" is a more surprising factor in the history of land than any other fact connected with it. Just now there is no farming in this country to speak of east of a line drawn as the Alleghany Mountains run, and very little east of the Mississippi River, that is really comparable in its profits with the profits of almost any other business that is good from skillful management. The farmer himself is a toiler who has—with a day's labor at least from twelve to thirteen hours long—constant obstacles against his rise, and the majority of farmers in the older States are little better off to-day than when they began their business twenty, thirty, or more years ago, provided they began without capital already earned. Who does not know, too, that the owner of land works harder than any man he employs?—frequently with less success, and always with an amount of harassing anxiety that the hired man rarely experiences, and can not, in fact, possibly experience in kind.
One only needs to make a study of the farms, as they stand all through the country, to discover that it will need a more powerful catholicon than access to land to cure all our social ills. Nor is there any way to apply this remedy if it were an effectual one.
Again—to refer to the farmer once more—the land of a farm well tilled is not only now thoroughly mixed with the farmer's toil and skill in the improvement of its constituents, but it is covered with buildings, fences, ditches for drainage, and wells, that represent his hard-earned labor or his free capital applied to it. Can he get its whole value back when his estate is settled, or if he wishes to retire or remove? Very rarely—almost never, in fact. Other business plants that have been well handled usually sell out at a profit, more or less. But the farm goes off at the sacrifice of an "earned decrease." Two farms within a half-day's ride of the place where I am writing, in one of the best soiled and best settled counties in the State of New York, have lately been sold (not under legal constraint) for less than half what they and their improvements originally cost, involving losses respectively of from eight to ten thousand dollars. And this is not a strange or infrequent thing. It, or something like it, is one of the commonest of modern occurrences. But do we hear any school of philosophers agitated about these losses? Society, in some way, has unbuilt or leveled their value by just as responsible doings as it has by worthy and rewardable doings built up the city lot.
If it is to have the fat meat in its pudding, on what principle can it free itself from responsibility for the lean? Can society or the state play at seesaw with the owners of land? Can it say, "Heads I win and tails you lose," and ever undertake hereafter to talk about right and virtue and honesty? If it should ever hanker after the "unearned increment," there should go with it when it is passed over an accounting for the "earned decrease."
That this is not a small matter, a reference to the New England "hill-farms," so called, will amply show. In hundreds of towns there, from which the population has withdrawn itself to aggrandize certain factory towns, or to develop the West, the whole farming area has met with an irremediable loss. Farms can be bought for far less there than their surface improvements alone cost. A friend of mine bought a productive farm of one hundred and sixty acres in Massachusetts a few years ago, with a good house, barn, and other fixtures upon it—and he did not pay the price that the barn alone cost! Purchases of farms at a similar advantage can be made to any extent in New England, not far from pleasant country villages and near railroads, and there is no place in Massachusetts that is over twelve miles from a railroad. This means getting the land itself for less than nothing, which is on better terms than Henry George's creed calls for. In addition to his land, my friend had the house and fences, and some other things, thrown in. And yet the millennium is a good deal further away from those farms than good society and the railroads are. But, according to the doctrine of those who are afflicted with George's peculiar land-fetichism, it should be already there.
It is probably true that Western farming is a better business than that which prevails in the East; but an anecdote is told of that which, if not literally true, is illustratively so for many who are engaged in farming. It does not, at any rate, overstate the gravity of the task which many persons assume who undertake to own the soil that George would sequester to the state. And this is the anecdote: A farmer in the West, who kept his business going until he nearly became bankrupt, was obliged finally to sell his farm to his chief creditor, who happened to be his faithful hired man. After a term of years the new owner found himself hopelessly in debt, and he proposed selling out to his hired man, who happened to be the previous owner, and who by this time was able to buy back his old farm! Whether this process of exchange continued to go on like that syllogism of Epimenides the Cretan, with no conclusion, I can not say. But when anything like it can happen once, how is a mere divisional share in the soil to mend or make over the world?
To return for a moment to the "unearned increment," the question one would like to ask is, why an increment on the value of land is any more wicked than it is upon a ton of coal or iron taken from the land? The title to a house or chair made of wood can not be good if the soil which produced the wood is held by spoliation. That which vitiates or annuls in one instance must in the others. The increment-reasoning, too, if it proves anything, proves too much. Is nothing earned in this world but mere wages? Is nothing due to foresight or perceiving what is likely to happen? Must profit all be resolved into day-wages from muscular effort solely? Are mind and thought and skill not to be considered factors which a man may use in the struggle for existence? Is the inventor, who is usually a poor toiler, to have no benefit from his wits? The sect of "labor" seems to say "No" to all these questions; and both it and the Georgeites, if they could have their way, would put us all on an express train toward barbarism and the Bedouin Arab, who is a George communist, and to the extinction of all that makes a civilized life possible.
The "unearned increment," it should be noted, is not a discovery of Henry George's. Mill and Spencer gave it a theoretical existence, but proposed no such drastic remedy for the ills supposed to flow from it as Henry George formulates and would apply. They saw that in London, where poverty is wide in extent and squalid in character beyond that of any other spot on earth, the land on which people lived and moved rose to a fabulous value, the profit of which seemed to go to a few exclusively. The man who owns a lot in London sees it double and quadruple in value, and then double and quadruple in value again many times, not by any improvements he puts upon it, nor by any labor which he himself does, but simply by the increase of population about him, and the demands growing out of the multiplied business and wants which a population unparalleled in numbers creates. According to Mill and Spencer, it is society, then, which makes this value of the land, and not the owner of the land. The increase which befalls it is not earned by him, but is the result of the growth of society. Why not, then, give back to society what society makes? In looking at England away from London, and at Scotland, the land problem is, in addition to this increment, made complicate by absurd laws of entail and transfer beyond anything which any other civilized country knows. Out of all this aggravation, a part of which can be reached by the modification of or the repeal of unjust laws, the "unearned increment" was suggested.
But neither Mill nor Spencer proposed to restore equality where they indicate inequalities by a wholesale system of spoliation on the innocent owners. They have not spoken of the wickedness of owning land by comparing it with the ownership of slaves, and in the same breath alleging that a full rental tax, a confiscation tax, indeed, will leave every man's ownership unimpaired. These are the absurdities which have been let loose in America only, where land can still be had for the asking, and where the appalling problem is for the man who owns land to compete—other things being equal—with the man who is not so unfortunate. It was said jocosely once, by a newspaper humorist, that a man living on a small, rocky farm in Maine, on an unfrequented road, felt visibly ashamed one day when a well dressed traveler (as he stood in the front yard) passed his door and looked somewhat inquisitively at the dilapidated house and out-of-joint fences. As the traveler drew nearer, the supposed proprietor hastened to remark: "I am not so durned poor as ye think I be, neighbor; I don't own this 'ere land!" The joke is now too universal to be any longer humorous to the average land-owner.
Suppose we were to admit that some injustice exists in the irregular distribution of the rapid increase of land-values in large towns. The inequality is one which no legislation could possibly remove without opening a door to immeasurable evil and wrong. Wealth itself is an inequality which renders possible the most lurid contrast in conditions of human happiness. To see the brown-stone front with a gilded carriage at the door, while a hovel with starving inmates is not many blocks away, suggests a train of thought as pathetic as anything the world has to show. But you can not abolish wealth without punishing economy and thrift, and taking away the incentive to rise in the world. You can only abolish it by abolishing civilization, to which wealth and poverty are incidents; and poverty you can not abolish, either while civilization lasts or after it is destroyed. Nothing was ever truer—as a declaration for the present, a description for the past, and a prophecy for the future—than the statement, "The poor you have always with you."
But schemes have been suggested for limiting wealth in one way and another, either by extinguishing the owner's power to bequeath it at all, or by reducing to a small allowance what may go to his children, or what he may bequeath; or by taxing each additional ten thousand dollars acquired above the first ten thousand at such a frightfully increasing ratio as to make the incentive to obtain money no longer attractive. This is a backhand way of trying to abolish poverty, or make it more tolerable by making everybody poor compulsorily. You can not do a more effective thing toward paralyzing energy and industry, and offering a bounty to laziness and unthrift, than to make the thrifty men of the world draw all the sloth and incompetence along. This is taxing them not only to support poverty, but to multiply it and make it prevail.
I have been comparing here the evils that seem to have relation to wealth with those which seem to some to grow out of the "unearned increment," But if it is a fact that a hovel of starving inmates can be seen not far from the palace of a man of wealth, is it not even a more closely related fact that the rise of the palace, and the man who lives in it, has directly helped thousands of honest toilers, and continues to help such, whether the man who is wealthy wishes to help them or not? But we do not notice, on account of this hovel, the thousands of well-to-do workers all over the land who have drawn tribute for years from this wealthy man's multiplied wants and luxuries, and who live plainly and comfortably from the fact that he and others like him live luxuriously. A society where wealth exists has evils, because evil is inevitable; but to cripple or destroy wealth would bring a deluge of disasters which no man, if he could foresee them fully, would be able to avert. I have been supposing what I do not believe, that the "unearned increment" involves some element of wrong. In continuing the supposition, I must now emphatically remark that it really can not happen as a merely private benefit at all any more than wealth can happen as such. In a town of immensely rapid growth where this increment arises, the honest laborer and poor man who does not care to acquire land, or does not foresee the opportunity open to him, or can not command the means for doing it, still receives unparalleled opportunities in any pursuit he follows there. Wherever a so-called "unearned increment" arises, there society at large has reaped connected benefits which have been widely distributed. It would not be easy to set down how far this wave of advantage spreads; but we all know that it spreads very far, and that he is a very dull or a very shiftless man, who lives where it starts, who does not find some part of it beat over into his own cup, be it large or small. And the trouble which would arise from despoiling those who in a few instances have, by acquiring land, apparently obtained too easy a profit, would be the killing of the goose which had laid for the whole public the golden egg. It is more than probable that the "unearned increment" which has come to the land-owners in that Kansas town which has, in five years, jumped from a population of five thousand to nearly forty thousand, has gone in the largest measure to men who planned and made the progress seen there possible. In places where this is the case in a less degree, the effort to make things equal is a problem too great for any but angels and seraphs to deal with. No merely human device can touch it without breaking or deranging the mainspring of civilization. Yet there are plenty of fools who dare step in where angels fear to tread. The man who burned up his barn filled with grain to destroy a hornets' nest is not alone in the world. He now has a cult and a body of disciples.
Seeing, as all may, how little land does for its owner everywhere, and for an owner who has the utmost possible incentive that the strong motive of human selfishness supplies to enable him to succeed (which the state could not have), what possible hope can there be of any betterment of things by transferring all land to the state or to society collectively? Through what magic or enginery is it that the state is to conduct all its farms to a profit, and so rent city lots as to produce more benefits than now exist? No one not stricken with asinine idiocy can begin to tell.
How, too, is this needful transfer of land to the people to be made? This step is the pons asinorum which Mill and Spencer revolted from, and which George does not successfully cross. For the people to buy themselves out, would be the only honest way of transfer; but this would be like a man standing in a corn-basket and trying to lift himself by its handles over the fence. McGlynn, George's prophet and Hotspur, cuts the bridge down, and says all land must be taken, without compensation to the present "miscalled owners," and given directly to the state. It is not strange, with this crude conception of morals uppermost, that the new "crusaders" should not have a word to say of the "earned decrease." This whole scheme is all as shallow a piece of folly as the history of delusions will have to record. It will very properly take its place with "the moon-hoax," and with Captain Symmes's tubular theory of the earth, when the nine days' wonder of it, now waning, shall have collapsed.