O C T O B E R 2 0 1 9 , V O L . 1 RSF DIGEST N E W S L E T T E R O F T H E R O B E R T S C H A L K E N B A C H F O U N D A T I O N

WHAT'S INSIDE?

RSF'S NEXT CHAPTER 2

DIRECTORS' PERSPECTIVES 2

FEATURED PROJECTS 3

ANNOTATED WORKS RAFFLE 6 WHAT IS RSF?

The Robert Schalkenbach Foundation (RSF) is a private operating foundation, founded in 1925, to promote public awareness of the social philosophy and economic reforms advocated by famed 19th century thinker and activist, .

Today, RSF remains true to its founding doctrine, and through efforts focused on education, communities, outreach, and publishing, works to create a world in which all people are afforded the basic necessities of life and the natural world is protected for generations to come.

MEN LIKE HENRY GEORGE ARE RARE UNFORTUNATELY. ONE CANNOT IMAGINE A MORE BEAUTIFUL COMBINATION OF INTELLECTUAL KEENESS, ARTISTIC FORM AND FERVENT LOVE OF JUSTICE. EVERY LINE IS WRITTEN AS IF FOR OUR GENERATION. THE SPREADING OF THESE WORKS IS A REALLY DESERVING CAUSE, FOR OUR GENERATION ESPECIALLY HAS MANY AND IMPORTANT THINGS TO LEARN FROM HENRY GEORGE. - ALBERT EINSTEIN

Who was Henry George?

Born in Philadelphia in 1839, Henry unjustly captured as rent by land owners Although Henry George is no longer a George was raised in a lower middle and monopolists, rather than made household name, his policy prescriptions class, devout Episcopalian home. An available to better the lot of all workers have been implemented, to great effect, observant, curious, freethinker, and further fuel economic development. in localities all over the world, including George abandoned his religious Restriction of access to natural Australia, Canada, and areas of the education as soon as he was able, and resources and unjust taxes on labor, he United States. ceased all formal education by age 14, argued, are the root causes of poverty. choosing instead to traverse the globe as a formast boy on the ship Hindoo. Unlike so many others, George rejected Today, Americans find ourselves In 1858, he left his seafaring ways the idea that poverty was the behind, taking a job as a typesetter for unavoidable byproduct of increased inundated by accounts of the the (then new) San Francisco Times. almost unimaginable luxury enjoyed by the 1%, juxtaposed His career in journalism flourished, against stories of otherwise and provided opportunities to share his opinions and observations with a average diabetics dying after public audience. Those ideas, rationing unaffordable insulin. We informed by his reading of works by struggle to satisfy the demands of economists including Adam Smith and David Ricardo, as well as philosophers an overbearing and opaque tax Herbert Spencer and John Stuart Mill, system. We watch as our were largely focused on the government and China impose rapid development he was witnessing economy-dampening tariffs tit for firsthand in the American West. Henry George at 26 years old. While some individuals amassed the tat... economic sophistication, and promoted beginnings of great wealth, others policies, including the implementation of floundered - a duality which , as a way to ensure that all At RSF, we understand that Henry fascinated and inspired George. people would reap the rewards of George's teachings are as relevant societal advancement. It was this contrast between the today as they were in his lifetime,

"House of Have and the House of George's provocative, well-argued ideas, arguably even more so. Want" that inspired his most famous coupled with his magnetic public work, , which persona, fueled his rise to fame. Once as was published in 1879. In it, and other Remember: "There is danger in renowned as contemporaries Thomas works, George argued that much of Edison and Mark Twain, George entered reckless change, but greater the wealth generated through the political sphere, making an danger in blind conservatism." technological advances is ultimately unsuccessful bid to become Mayor of New York City.

R S F D I G E S T P A G E 1

RSF'S NEXT CHAPTER

B Y J O S I E F A A S S , E X E C U T I V E D I R E C T O R whether and how the adoption of a land

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commitment to to creating a world of themselves Georgist, but who share Education is an area in which the liberty and equality of opportunity our ideals, priorities, and the belief Foundation has long been active, and arising from economic, social, and that everyone will benefit from the one on which we will remain focused. environmental justice. implementation of more sound tax By providing support to educators Those familiar with RSF know that we’ve and trade policies at the local, and students of all ages, we will been involved in publishing and book national, and global levels. Key to our continue to share the wisdom of Henry distribution for a long time. In the next success in these efforts will be the George and like-minded thinkers. few years we’ll focus on supporting the formation of partnerships with like- creation of even more scholarly and minded organizations and individuals Finally, and perhaps less visibly to the popular content, digitizing our existing who can help us amplify and outside world, we’ll work to collections into a free online database, propagate our ideas into new spheres optimize our own operations and grow and converting all of our titles to e-book of influence, and we look forward to our resources, thereby enhancing and print on demand formats for ease of strengthening existing ties, and to our efficiency and impact. distribution. creating many new ones. At RSF, we know that once you “see the Another major area of activity in RSF’s RSF will also be more actively cat,” you realize “it’s all cat,” future will be outreach – outreach to communicating with individuals and and are committed to facilitating this outreach to the Georgist community and groups interested in exploring fundamental shift in the way people to those who don’t (yet) consider view the world and our place in it.

Land Va lue Tax (LVT): a tax imposed on land as a way of recapturing the portion of its value th at results from the community-generated amenities to which it gives its owners unique access. LVT can discourage land speculation and sprawl, and create a stable, progressive local revenue stream without discouraging private investment. Directors' Perspectives W H E R E R S F ' S B O A R D O F D I R E C T O R S E X P L O R E S C U R R E N T A P P L I C A T I O N S A N D I M P L I C A T I O N S O F H E N R Y G E O R G E ' S T E A C H I N G S . That’s unfortunately increasingly rare George Theorem is simple. For many these days and it is due in large part to public services, such as parks and THE HENRY the country’s segregated housing libraries, their benefit is greater to the patterns. people who are closer to the place where GEORGE the service itself is provided. Therefore, (A) GROUP OF INFLUENTIAL people bid up the rental value of land THEOREM that is closer to provision of such REFORMERS THAT INCLUDED ALBERT

B Y N I C T I D E M A N desirable services. If all of the benefits EINSTEIN, HELEN KELLER, LEO

from proximity to a new public service “The Henry George Theorem” is the TOLSTOY, AND EMMA LAZARUS WERE are reflected in increased rents, and if name that economists have given to PUSHING A REFORM THAT WOULD the service is worth at least as much as it the postulate that, under certain costs to provide, then public collection HAVE HELPED... circumstances, a public service will of the increase in rents will suffice to increase land rent[1] enough that, if If you start learning about housing pay for the service. (Cont'd pg. 4) the increase in land rent is collected segregation—meaning the patterns in as public revenue, this revenue will which whites predominantly live in sufficient to pay for the service. This areas apart from areas in which people idea is important because it maintains SEGREGATION of color predominantly live—and how it that public services can be financed B Y R I C H N Y M O E N developed, you learn that concern with not by sales taxes, income taxes or “property values” played a big part. It other taxes that burden the economy, My kids recently started back to their drove both individual and institutional but simply by collecting the increase high school, as did millions of other kids behavior by having what experts call in land rents that result from the across the country. I’m fortunate that “push and pull” effects. Push refers to public services provided. they attend public school in a district the reasons whites leave integrating that is academically strong and fairly neighborhoods and pull refers to the The main premise of the Henry well integrated along racial lines. reasons why whites... (Cont'd pg. 4)

R S F D I G E S T - S E P T E M B E R 2 0 1 9 P A G E 2 A GREEN TAX SHIFT B Y F R E D F O L D V A R Y

The most effective way to reduce with command-and-control regulations. be bought and sold in financial markets. climate change is with a “green tax They are called “command and control” This approach enables firms adjust their shift” which replaces taxes on wages, because these laws command businesses behaviors to respond to the price of goods, and enterprise with levies on and households to do something, such as getting additional permits, but the gains pollution and land values. getting a smog test or adding chemicals in permit value go to the permit holders, to gasoline. The problem with this kind and in many cases, firms do not reduce There are three basic ways to reduce of regulation is that it presumes too their pollution output if they can get polluting emissions: regulations, much about the knowledge and wisdom credit for owning undeveloped land. permit trading, and levies on of central planners, and it ignores the Permit markets are also subject to pollution. costs to those affected. financial manipulation, such as with derivatives that invite speculation. Most governments have responded to Permit trading allows polluters to obtain polluters and pollution production permits to pollute, but these permits can The most efficient and... (Cont'd pg. 5)

Featured Projects RSF funded the Northwest Economic R S F C O N D U C T S A N D S U P P O R T S W O R K I N C O M M U N I T I E S , Research Center (NERC) to simulate the E D U C A T I O N , O U T R E A C H , A N D P U B L I S H I N G . localized economic impacts of implementing LVT. 2019 NERC's findings supported the NATIONAL conclusion that implementation of LVT within the study area could be expected CONFERENCE to produce significant, positive effects - a finding with potentially significant OF STATE implications for one of the most costly housing markets in the country. To CSE ED Josh Vincent talks LVT with a access NERC's full report, visit: LEGISLATURES conference attendee. https://schalkenbach.org/community- N A S H V I L L E , T N LAND VALUE TAX resources/ In partnership with the Center for the Study of Economics and the Public ANALYSIS: Revenue Education Council, RSF SIMULATING THE attended the 2019 NCSL in Nashville, TN, to talk LVT with conference EFFECTS IN MULTNOMAH attendees, including state-level COUNTY elected officials, staffers, lobbyists, B Y N O R T H W E S T and practitioners. E C O N O M I C R E S E A R C H C E N T E R

The team interacted with a record Prior measures to limit property tax number of conference attendees, growth in Oregon have created many of whom were struggling with inequitable tax burdens. tax-related challenges and were Recognizing that adoption of a land interested to learn how the tax value tax (LVT) might bring some relief solutions we described could help to lower income residents while Figures from NERC's report showing their jurisdictions. encouraging desired infill development, more equitable tax burdens under LVT.

R S F D I G E S T P A G E 3 DIRECTORS' PERSPECTIVES, CONT'D

The Henry George Theorem (Cont'd narrow streets, old apartment improvements and the dislocation from pg. 2) buildings, and a previous severe costs for people who have lived in the shortage of parking. The area and do not value the public This kind of assumption is attractive neighborhood was previously well service as highly as it is valued by to economists who want to reach suited to people who did not own newcomers. When these costs are purely mathematical conclusions, but, cars, but the public parking lots make charged to the account of a public practically applied, it is not realistic. If it attractive to people who own cars. service that has benefits within a instead one makes the realistic Rents rise, and the people who do not limited radius, a comparison of the assumption that people differ in their own cars can no longer afford to live increase in rent, with the combination incomes and tastes, and that, for each there. If these people were perfectly of the ordinary costs of the service type of land, the ratio of benefit from mobile, so that they could move at and these external costs provides a the service to acres occupied varies zero cost to some other place that good test of whether the services are among persons, then it is no longer provided the same level of satisfaction worthwhile. possible to reach the conclusion that for them, then the need for them to the full benefit from the service will move would not be economically [1] Rent, as I use the term in this blog be reflected in increases in land rents. consequential. However, in the more post, is a payment for the use of land Still, the more uniform the ratio of realistic case, in which those who or some other natural opportunity. benefit to amount of land occupied at move are worse off for the When money is paid for the use of a any given distance, the more fully the combination of moving costs and building, the land rent is the part of benefit of a public service will be higher rents that are not quite high that payment that is attributable to reflected in increased land rent. enough to make it worth moving, the land under the building. Because these “gentrification costs” are part of the best use of land often involves In some cases, increases in the rental the cost of opening the parking lots. If constructing buildings that last a long value of land will be more than these costs are not included in the time, the meaning of the rent of land enough to pay for a public service, calculation of the costs and benefits under an existing building is not even though the service has costs that of the parking lot, then it would be obvious. The conceptual resolution of are greater than its benefits. This can possible for the increase in land rents this difficulty is that the rental value happen if the service has negative to be greater than the calculated cost of a plot of land for the coming year is consequences that are not charged to of the parking lots, even though that how much more valuable it would be its account. Two examples are given increase in land rents was less than to have the use of the plot of land, here. the full social cost of the parking lots. beginning with vacant land, into the indefinite future beginning now, than First, consider the building of a new To summarize, the benefits from it would be to have the use of the plot subway line. Land rents in the vicinity public services tend to be reflected in of land, beginning with vacant land, of the subway stops will rise greatly. increased land rents in the areas into the indefinite future beginning But to take efficient advantage of the where the services are accessible. one year from now. subway stops, it will be necessary to Under certain conditions, the benefits tear down existing structures and from public services will exactly equal replace them with taller ones. The the increase in land rents. For this Segregation (Cont'd from pg. 2) coming of the subway line turns the equality to occur, the benefits must existing structures into trash. A be received only by those in a limited leave integrating neighborhoods and proper accounting of the costs and area, rents must be determined by a pull refers to the reasons why whites benefits of the subway line would free market process, and all persons are attracted to non-integrated include a charge for the reduction in in the affected area must have the neighborhoods. the value of the structures. If this loss same ratio of benefits to acres of value is not charged to the subway occupied, at any given distance from The push effect for individuals refers line, then it would be possible for the the service. When people differ in to the behavior of whites leaving benefits to be greater than the their incomes and tastes, some small neighborhoods that are integrating calculated costs, even though the fraction of benefits will not be because they fear property values benefits were actually less than the reflected in increased land rents. would drop, leaving them owing more full social cost. Any change in public on their mortgage than the property services can be expected to change It is also possible for the financial cost is worth. For institutions, it refers to the value of fixed improvements, and, of a public service to be less than the insurance and lending industries to the extent that the existing resulting increase in land rents––even refusing to insure and lend against improvements were appropriate for though the service is not worthwhile, properties in integrating the site, a change in public services if the public service has negative neighborhoods for fear of drops in the will generally reduce the value of the consequences that are not charged to property values of their collateral. Of improvements. its account. Two costs that must be course, these are... (Cont'd pg. 5) included in a full cost accounting for a Second, consider public parking lots public service are the resulting opened in a neighborhood with reduction in the value of fixed

R S F D I G E S T P A G E 4 Segregation (Cont'd from pg. 4) part of the home that fluctuates taken together generate less than 15 greatly in value, and if the land value percent of the pollution. Emission racist and irrational fears because by chance did go down, it would just reduction regulations should be property values actually increase mean the homeowner paid less in land chiefly aimed at the gross polluters when neighborhoods integrate, but rent. It would have reduced the pull rather than imposing regulatory costs the fears exist nonetheless. effects because buying into areas of on all cars and driving. increasing value would have meant The pull effect refers to the attraction that homeowners would pay The measurement of vehicle of buying into areas that have increasing land rent and the only way emissions can be done with remote- increasing property values because it to increase home equity would have sensing technology, such as the would result in growing home equity been to pay down the loan on the Stedman device, which works as even without having to pay down structure. follows: An infrared beam is shone what was owed on a mortgage. There across the road. As a car passes along were other factors as well, but this Unfortunately, the reform never the road, the exhaust plume absorbs dynamic around property values caught on and devastating results some of the light waves of the beam. played and still plays a major role in from housing segregation occurred The sensor receiving the beam can housing segregation and the major both for individuals in terms of infer the pollutant concentrations in implications that segregation has for reduced opportunities and for whole the exhaust. Low-cost remote sensing schooling, jobs, and other cities like Detroit that collapsed under can be combined with video and opportunities. the strains. But we can learn from computer equipment that history and work on increasing the automatically read the license plate of I first started learning about this use of land trust arrangements in the passing vehicle. Remote sensing when I was in law school and it housing. Then “property values” won’t devices can be placed at intersections motivated me to work on housing be such a concern, and segregation in and freeway on ramps. These measure issues both in my first job with the housing—and in our schools—may various pollutants in the exhaust Saint Paul Human Rights Department become a thing of the past. when cars pass by, and then and through volunteer work with photograph the license plates of community organizations. But polluters when they are above a eventually I learned that what people A Green Tax Shift (Cont'd from pg. 3) certain threshold. We can thus refer to as property values are significantly reduce air pollution at a actually land values. Real property is equitable way to limit pollution low cost to the public. made up of two parts: building value, output is through taxes or fees on which is made up of the labor and pollution production and other There can be green taxes on all toxic material costs that don’t fluctuate environmental destruction, based on emissions, not just carbon but from all very much, and the underlying land an assessment of the damage it sources of pollution: factories, power value, which is created by what is causes. Firms can then respond in plants, buildings, and vehicles. Rather happening in the surrounding their most effective ways, such as by than command particular outcomes, community and which can fluctuate a capturing the emissions, or changing policy can induce the outcomes at lot. production methods, or stopping lower cost and within the market. harmful practices. I learned that back when these A complete green tax shift would not housing patterns were developing in A “green tax” (also called an just replace economy-hampering the early twentieth century, a group environmental or ecological tax) is a taxes with environmental levies, but of influential reformers that included levy on activities which damage the would eliminate the waste that our Albert Einstein, Helen Keller, Leo environment. One type of green tax is current tax system imposes. Taxes on Tolstoy, and Emma Lazarus were a “carbon tax” which is levied either wages and goods impose a pushing a reform that would have on inputs such as gasoline or outputs “deadweight loss,” meaning a loss of helped: they proposed what was such as the emissions. The most benefits without any offsetting gains. essentially a land trust arrangement effective carbon tax is directly on the The main economic cost of taxation is in which, instead of paying taxes, carbon emission, since this provides not the tax payments, since that is a homeowners paid community rent for an incentive to reduce or capture the transfer of resources rather than a the land under their homes while still carbon. When the tax is on gasoline, it cost to the economy. The economic having title to the house on top of the does reduce the use of gasoline but cost is unseen but actual: the land. provides no incentive to capture the reduction of output and consumption carbon. because of the tax, and the reduction Under the reform, the homeowner of benefits due to paying more for the would have to borrow only for the Most auto emissions come from the goods. house and not for the underlying land. dirtiest 10 percent of vehicles. Over When it comes to housing 50 percent of on-road carbon The deadweight loss, also referred to segregation, this would have solved a monoxide comes from just five as the excess burden of taxation, is lot of problems. It would have percent of the cars. The same is true economic waste, while a waste of reduced the push effects because of hydrocarbon emissions. In each resources is environmental there would have been no loan on the case, the cleanest 90 percent of cars destruction to no (Cont'd pg. 6)

R S F D I G E S T P A G E 5 (Cont'd from pg. 5) no good end. We can have it all: a better On the Cover: Activists There is no deadweight loss from a environment and a better economy. If at the Philadelphia tax on land value because the supply we don’t do a green tax shift, if Climate Strike on of land is fixed. Land rent is an instead we continue to regulate using September 20, 2019 economic surplus which can be taxed permit trading, we will not eliminate without any bad effects. Taxes on the excess burden, but rather wages reduce labor, and taxes on increase the costs of enterprise, goods reduce goods, but land does which will create political resistance, not flee, shrink, or hide when taxed. and pollution will get worse and worse until it ruins our planet. Many environmentalists do promote a green tax shift. Their slogan is “tax Tell your representatives and bads, not goods.” With land-value candidates for office that we need the taxation, the ‘bad’ is the subsidy that green tax shift, now! real estate owners receive from the higher rent they receive due to the government’s public goods, double billing worker-tenants who pay both higher rent and taxes on their income and spending. Can't get enough A green tax shift is win-win, because it reduces environmental destruction while improving the economy. Some opponents of policies to limit the production of pollutants that contribute to or cause climate change George? say that the economic cost would be too high. Indeed there is an economic cost to regulations. But with a green tax shift, in the long run we can have a reduction in pollution and environmental degradation with no negative effect on the economy, because we are replacing market- inhibiting taxes with market- enhancing payments.

Some leaders in developing Enter to win the Annotated economies also say that they should not bear the cost to effect a reduction in global warming until their Works, Volumes I, II, and III! economies become more developed and wealthier. But all developing countries are imposing market- hampering taxes: on value added, on wages, on goods, on trade and enterprise. Developing countries too Click Here can implement a green tax shift and have even higher growth together with environmental protection. Or visit: https://givebox.com/518663

Taxing pollution production is the morally right thing to do and is really the only effective way to swiftly reduce pollution in a big way. It’s good for developed countries as well as for developing countries such as India and China. The green tax shift would help all economies.

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