Monday, December 9, 2013

"Distributive Justice"?, XXIX: A Masterpiece of Misdirection


We are now in a position to address the specific influence of Henry George on the thought of Monsignor Ryan.  This is not difficult, despite the fact that the first part of Ryan’s Distributive Justice focuses on allegedly refuting George’s theories of the natural right to property, particularly the legitimacy of title to land.

It thereby appeared that Ryan was repudiating his earlier enthusiasm for georgist (or “georgeite” as he termed it) theory and the “single tax.”  The “single tax” is based on the presumed right of the State to take the “fruits of ownership” at will as an exercise of property: all income or increases in value from land.  This would make land ownership pointless, and vest effective (if not legal) title in the State.

The problem is that George’s analysis and rejection of the natural right to own land was only to justify the “single tax” proposal.  The question of title (dominion, proprietas) was never the main issue.

Going by George’s firmly stated conviction, title was irrelevant.  As far as George was concerned, people could retain nominal title to land as long as the State made ownership meaningless by taking away control (usufruct) through confiscatory taxation for social purposes.

The usufruct, the fruits of ownership, that is, control and all income and increases in value attributable to land, would belong to the State.  This would make the State the real owner.  As George put it, “In this way the State may become the universal landlord without calling herself so.” [Emphasis added.] (Henry George, Progress and Poverty.  New York: The Schalkenbach Foundation, 1992, 406.)

By rejecting George’s analysis of title to land, Ryan set up a straw man and demolished it.  He left intact the fundamental guiding principle of the georgist “single tax,” support for which was the trigger for McGlynn’s excommunication for disobedience and insulting behavior. (McGlynn was not excommunicated for heresy, but because he refused to go to Rome to present his views when ordered.)

Ryan’s whole theory was based on the State’s alleged right to exercise property in landed capital (effective title; dominion or proprietas) by controlling the fruits of ownership (exercise or use; usufruct), draining and exhausting a man’s means by excessive taxation.  (Cf. Rerum Novarum, § 47.) Consequently, the balance of Distributive Justice, while it argued persuasively for the right to private property, did so from a perspective that changed what “private property,” even the whole of the natural law, means.

This is because, as Church authorities realized in the case of McGlynn, it is the “single tax” itself, not the question of title, that is the chief problem with georgism.  George considered title an irrelevant legal technicality as long as effective title is vested in the State through the State’s control of all land by taking all profits from land as the “single tax.”

That being the case, taxes are not a grant from the people to the State to defray legitimate expenses of government.  They are, instead, an exercise of an ultimate property right by the State, to be used for any social purpose, i.e., to provide for individual goods directly, instead of indirectly by maintaining the common good.  As a 1942 article in Fortune magazine described this view of taxation that became official public policy with the New Deal,

. . . The purpose of the federal tax system is not to raise enough money to balance all federal outlays.  Although a balanced budget may at times be desirable, we never have to have one. . . . Once . . . freed from the obsolete concept of the balanced budget, the larger uses of federal taxes can be creatively explored.  (“The Domestic Economy,” Fortune, December 1942, 16, quoted in Harold G. Moulton, The New Philosophy of Public Debt, Washington, DC: The Brookings Institution, 1943, 10.)

As Alvin H. Hansen, “the American Keynes,” explained, these “creative purposes” are to redistribute income and to prevent inflation during periods of “full employment.” (Alvin H. Hansen, Fiscal Policy and Business Cycles.  New York: W. W. Norton & Company, 1941, 175, quoted by Moulton, The New Philosophy of Public Debt, op. cit., 72.)  That being the case, the difference between George’s “single tax” that takes 100% of the income or increase attributable to land for social purposes, and Ryan’s claim that, “To use the taxing power for a social purpose is neither unusual nor unreasonable” (Ryan, Distributive Justice, Third Edition.  New York: The Macmillan Company, 1942, 69) is only a difference in degree, not in kind.

Such a philosophy of taxation also puts every individual under direct control of the State.  Everyone becomes a dependent on the State for whatever he or she receives in wages and welfare.  What is received is subject to confiscation through the tax system if what someone has is deemed too much for the purposes of society.  Ryan confirmed his substantial agreement with the fundamental principles of georgist socialism when he stated, “If [the single tax] were fairly adjusted and efficiently administered it could not prove harmful to the community.”  (Ibid.)

The “single tax” abolishes private property, and is specifically designed to do so.  By abolishing private property, individual rights become nothing.  Collective benefits in aggregate, at least in material terms, become everything.  As for the effect on the individual owner, Ryan considered that, taken on principle (and confusing title with use), the “single tax” is “a fair and valid limitation on the right of ownership.”  (Ryan, Distributive Justice, op. cit., 73.)

According to Ryan, the only people who would be treated unjustly would be those who would lose part of the value they originally paid for the land as it decreased in value as a result of the single tax.  As Ryan reasoned, the “single tax” that would utterly destroy private property is not unjust per se.  (Ibid., 73-75.)  As he concluded,

“To take all future increases in the value of land would be morally lawful if owners were compensated for positive losses of interest and principal.  To take a small part of the increase and to transfer very gradually the taxes on improvements and on personal property to land would be likewise free from moral censure.  The same judgment may be pronounced upon moderate supertaxes on large holdings of exceptionally valuable land and on certain agricultural land not cultivated by the owners.” (Ibid., 81.)

Ryan then applied this same reasoning to “excess” profits from the ownership of all forms of capital.  (Ibid., 223-232.)

The problem in natural law with respect to Ryan’s analysis is that taxation for social purposes (such as redistribution) in any amount is specifically intended to “drain” and “exhaust” private means (Rerum Novarum, § 47) to achieve a presumably more equitable distribution of wealth.  As we have already seen, this can only be justified as an expedient in an emergency, not as the usual way of running society (ibid., § 22).

The fact is that taxation for “social purposes” accomplishes its ends solely by taking from those with “too much” for redistribution to those who are judged by the authorities as not having enough.  This is prohibited under the natural law.  The principle of taxing for social purposes as a usual thing instead of as an expedient in an emergency is itself the problem, not how much is taxed or how the tax is administered. (Quadragesimo Anno, op. cit., § 49.)

The exception is permitted by default as an expedient under distributive justice in extreme cases.  This means that the expedient is limited to distributions made to citizens from the government.  It does not include exchanges between individuals and business enterprises that come under commutative justice.  There are different rules that apply in the latter cases.

In the case of a distribution made under distributive justice to deal with extreme need, however, the goal is not a more equitable distribution of wealth or to control inflation.  The purpose is to keep people alive and in reasonable health when no other recourse is available.

Ryan’s acceptance of the substance of George’s single tax, while altering the form and specific application of how private property is abolished, accedes to the socialist principle that taxes are an exercise of the State’s ultimate property right.  The single tax concept repudiates the theory that taxes are a grant from the citizens, and unjust without their consent.  Ryan’s redefinition of distributive justice effectively countered Locke’s theory of consent of the governed, and implemented totalitarian philosopher Thomas Hobbes’s concept from Leviathan that taxation is the exercise of an ultimate property right by the State, i.e., socialism.

#30#

6 comments:

Gary Reber said...

Such schemes are redistributive and must be financed by a tax. While it is true that everyone today suffers from past injustices in terms of property rights, further extracting taxes to pay an annual Citizens Dividend or Social Credit will further destroy private property principles and bolster the State as the effective, if not legal title owner of property. In essence such schemes made ownership meaningless by taking away control (usufruct) through State confiscatory taxation for social purposes. Such schemes accede to the socialist principle that taxes are an exercise of the State’s ultimate property right.

Such schemes would shift property ownership (control) from individuals to the State and usufruct and control the fruits of ownership, and all income and increases in value attributable to property would belong to the State. The State would assume the right to exercise property in landed and other productive capital (effective title; dominion or proprietas) by controlling the fruits of ownership (exercise or use; usufruct), draining and exhausting a man’s means by excessive taxation for social purposes.

What is never addressed is that our country's founders regarded taxes as a grant from the citizens, and unjust without their consent. Such schemes counter the our country's founding principles of consent of the governed.

The backers of such schemes consider ownership title an irrelevant legal technicality as long as effective title is vested in the State through the State’s control of all land and productive capital by taxing profits. That being the case, taxes would not be a grant from the people to the State to defray legitimate expenses of government, but instead, an exercise of an ultimate property right by the State, to be used for any social purpose, i.e., to provide for individual welfare directly, instead of indirectly by maintaining the common good. In other words, advocates for a basic income for all would use the taxing power for a social purpose. Such a State tax appropriation would utterly destroy private property and is unjust per se. Taxation for social purposes (such as redistribution) in any amount lessens private means to achieve a presumably more equitable distribution of wealth. Such tax extraction measures should only be justified as an expedient in an emergency, with the purpose of keeping people alive and in reasonable health when no other recourse is available––not as the usual way of running society.

The fact is that taxation for “social purposes” accomplishes its ends solely by taking from those with “too much” for redistribution to those who are judged by the authorities as not having enough. This is prohibited under the natural law. The principle of taxing for social purposes as a usual thing instead of as an expedient in an emergency is itself the problem, not how much is taxed or how the tax is administered.

Furthermore, such proposals do not address the issue of concentrated ownership of wealth-creating, income-generating productive capital assets, or its impact on private property principles, but instead takes from those who are productive and redistribute earnings to those who are not or less productive. What should be the solution is to make EVERY citizen productive, so that they do not become dependent on an annual tax-extracted Citizens Dividend or Social Credit nor on wages from a job or State welfare supports, but through owning wealth-creating, income-producing productive capital assets.

As an alternative that does protect private property principles and is market-based, implement the Capital Homestead Act (http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm).

Dan Sullivan said...

It is not surprising that he misinterprets with George so relentlessly, as he has had an axe to grind for some time. In any case, this passage is full of errors.

"As far as George was concerned, people could retain nominal title to land as long as the State made ownership meaningless by taking away control (usufruct) through confiscatory taxation for social purposes."

That is not even close. Ownership is not meaningless, precisely because the control or usufruct remains with the title holder. What George takes away is the rent, which is not earned by the land holder. Usufruct (use of the fruits) is exactly what the landholder retains.

"McGlynn was not excommunicated for heresy, but because he refused to go to Rome to present his views when ordered."

This is also false. While he might have avoided excommunication by going to Rome, the charge was heresy, and he was later cleared of that charge, also without going to Rome, by an American Catholic tribunal under archbishop Gibbons. They tried McGlynn, sent their findings to Rome, and Rome adopted those findings, clearing him of all charges.

"This is because, as Church authorities realized in the case of McGlynn, it is the 'single tax' itself, not the question of title, that is the chief problem with georgism. George considered title an irrelevant legal technicality as long as effective title is vested in the State through the State’s control of all land by taking all profits from land as the 'single tax.'”

This is a gross misrepresentation of George based on latching onto and expansively interpreting a few words, while ignoring very pointed arguments by George against socialists who insisted that the state must take control as well as rent. It was nor a mere technicality, but a fundamental plank of liberty that a person who paid his land value tax must be free to use the land as he sees fit, so long as the use does not harm or endanger others. This caused George to be vigorously attacked by socialists who thought state control of land use was necessary.

This next passage requires not only misinterpretation, but a fundamental failure to differentiate between the profits from activity upon the land from collecting the rental value of the land itself:

"Such a philosophy of taxation also puts every individual under direct control of the State. Everyone becomes a dependent on the State for whatever he or she receives in wages and welfare. What is received is subject to confiscation through the tax system if what someone has is deemed too much for the purposes of society."

Contrary to this confused passage, George would completely untax wages, and any person who chooses to work on marginal or sub-marginal land would pay nothing. Here it is important to note that, in the absence of monopoly, marginal land would not be subsistence land as it is today, but would be far better than a great deal of land that people are currently paying to use.

"Ryan’s redefinition of distributive justice effectively countered Locke’s theory of consent of the governed, and implemented totalitarian philosopher Thomas Hobbes’s concept from Leviathan that taxation is the exercise of an ultimate property right by the State, i.e., socialism."

That would have come as quite a shock to Locke, who himself advocated that all taxes should be levied against the value of land:

"It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider."

- "Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money"

Michael D. Greaney said...

Fascinating, Mr. Sullivan. By the simple expedient of redefining humanity, natural law, private property, and misstating facts, you "prove" me wrong.

May I suggest that you actually read "Progress and Poverty," page 406:

"What I, therefore, propose, as the simple yet sovereign remedy, which will raise wages, increase the earnings of capital, extirpate pauperism, abolish poverty, give remunerative employment to whoever wishes it, afford free scope to human powers, lessen crime, elevate morals, and taste, and intelligence, purify government and carry civilization to yet nobler heights, is — to appropriate rent by taxation.

"In this way the State may become the universal landlord without calling herself so, and without assuming a single new function. In form, the ownership of land would remain just as now. No owner of land need be dispossessed, and no restriction need be placed upon the amount of land any one could hold. For, rent being taken by the State in taxes, land, no matter in whose name it stood, or in what parcels it was held, would be really common property, and every member of the community would participate in the advantages of its ownership."

and explain in what way it differs in either form or substance from No. 1 on Karl Marx's list of measures intended to abolish private property from "The Communist Manifesto":

"Abolition of property in land and application of all rents of land to public purposes."

Further, you really should get your facts straight before pontificating on, say, someone's excommunication. On January 16, 1887, Cardinal Simeoni sent a transatlantic cable on the pope's instructions that Father McGlynn was to present himself in Rome within forty days or be excommunicated. McGlynn at first agreed, but was persuaded not to go by George, which outraged Michael Davitt, who stated several times in speeches before the Irish National League that George had made a serious mistake, and would regret it. McGlynn made excuses that got him some extensions, but on July 4, 1887, McGlynn was sent a registered letter notifying him that he was excommunicated for disobedience. As July 4 is a holiday, delivery was attempted on July 5. Since McGlynn had carefully absented himself from town, the letter was returned to the Brooklyn Post Office, where McGlynn picked it up on July 21, 1887, the last day before the letter would have been returned to the sender, Archbishop Corrigan.

The specific wording of the letter, of which I have a copy, as well as Archbishop Corrigan's detailed, first-person account of the case containing all communications, as well as the telegrams from the Vatican, and the later lifting of the ban, all make it crystal clear that McGlynn was excommunicated for disobedience. This was reported in the newspapers, e.g., “The Decree of Rome,” The Meriden Daily Republican (Connecticut), Monday, July 11, 1887, 1; “Rev. Dr. M’Glynn’s Case: Premature Announcement of His Formal Excommunication Yesterday,” The Toronto Daily Mail, July 11, 1887. (This latter raised the issue whether McGlynn was really excommunicated if he had not received the registered letter.)

Michael D. Greaney said...

In November 1891, McGlynn was told that the ban would be lifted if he met three conditions:

1) Agree to go to Rome to explain his views on land ownership and the “single tax,”

2) Apologize to Archbishop Corrigan, Cardinal Simeoni, Pope Leo XIII, and others whom he had insulted, and

3) Accept Rerum Novarum without reservation.

After returning from Rome, McGlynn went into seclusion. After months of personal reflection, he made full submission on Wednesday, December 19, 1894: "The Rev. Dr. Edward McGlynn has made a complete recantation. He is no longer an apostle of the doctrines for preaching which he brought on himself the ban of excommunication from the Roman Catholic church. . . . Archbishop Corrigan will soon put him in charge of a parish." (“Parish for M’Glynn: He Recants and Will Soon Be Completely Forgiven,” Meriden Daily Republican (Connecticut), Wednesday, December 19, 1894, 3.)

Note that the ban of excommunication was lifted without requiring McGlynn to surrender any personal opinions. He could not, of course, be assigned to parish duties as long as he held such opinions, but he was free to hold them.

Interestingly, after McGlynn recanted, he continued his friendship with George, but as a personal relationship, not as a representative of the Catholic Church. He also became friends with Archbishop Corrigan. Corrigan even gave McGlynn permission to speak at George's funeral, as long as he did not make any political statements, an injunction McGlynn obeyed. (“Tribute of Thousands: A Sorrowing People Gaze on the Remains of Henry George as They Lie in State; Eloquent Eulogy by Rev. Dr. McGlynn for His Old Friend Evokes an Outburst of Sympathetic Applause,” The Clinton Morning Age (Iowa), Tuesday, November 2, 1897, 1.)

As for George, his second campaign for mayor of New York in 1897 came crashing down when he was caught distorting facts and making claims that were immediately disproved, e.g., claiming the endorsement of William Jennings Bryan, whereupon Bryan sent a telegram stating "I have not expressed any opinion in regard to the New York mayoralty campaign, and do not care to express any opinion in regard to it.")

In short, please get your details straight, and cite your original sources for claims that contradict proven fact.

Econ Amateur said...

It is my hope that no one takes the confusion offered here for actual georgism. Not just a pummelled strawman but utter confusion on the most basic terms. This seems to have gone through the wringer at least twice, one incompetent commenting on another.

One should start to suspect incompetence by the utter lack of any complete and contexted quotes. Its a drive by shooting.

Here are, by this georgists opinion two modern abridgements with fidelity.

http://www.henrygeorge.org/pcontents.htm

http://www.henrygeorge.org/madsen/


Or the Original:
http://www.henrygeorge.org/pandp.rtf

Michael D. Greaney said...

I apologize, Econ Amateur. I assumed that citing my sources would permit people to see the context for themselves, and that the actual words of George were accurate, as are the contemporary news reports.

You may be right. People writing more than a century after the reported events who evade facts and denigrate others surely have a better grasp of the truth than eye witnesses and participants.

How, exactly, do YOU reconcile George's proposal to make the State the "universal landlord" with Marx'a proposal to abolish private property in land?