I think it is relevant because Progress and Poverty is the book about:
...strange and immense and terrible forces behind the Poverty Equilibrium.
The pitch of the book is that the fundamental problem is economic rents deriving from private ownership over natural resources, which in the book means land. As a practical matter the focus on land rents in the book heavily overlaps the modern discussion around housing. The canonical example of the problem is what a landlord charges to rent an apartment.
One interesting point is that while UBI is suggested (here called a Citizen’s Dividend), it is for justice reasons, and is not proposed as a solution to poverty. I expect Henry George would agree that a UBI would not eliminate poverty, and would predict it mostly gets gobbled up by the immense and terrible forces behind the Poverty Equilibrium.
I think George does see the dividend as necessary for solving poverty, but only in addition to taxing rent. On its own it would indeed be gobbled up by landlords.
Also, what George suggests is a bit different from UBI (and I think Universal Land Dividend is a better name for it than Citizen’s Dividend). With UBI, the law dictates a set amount to be given each person each year/month. With the Citizen’s Dividend, whatever revenue isn’t spent at the end of the year is distributed equally between everyone. This on the one hand leads to a variable income, on the other hand it doesn’t place an obligation on the government that it might not be able to fulfil. Personally I think it’s a better and more elegant policy.
This on the one hand leads to a variable income, on the other hand it doesn’t place an obligation on the government that it might not be able to fulfil. Personally I think it’s a better and more elegant policy.
I also like the elegance, but… people being people, I would expect that if five years in a row the “variable income” happens to always be around X, people will start to expect it, will make this expectation a part of their personal finances, and if the next year the income is only X/2, there will be riots in the streets.
(Compare to the mortgage crisis of 2008, which happened because of a change in numbers much less directly related to people’s incomes, and yet many people have lost their homes because they relied too much on the numbers staying constant.)
So I expect that in practice the government would take it at least as a soft obligation, and would use various accounting tricks to keep the income constant (and if that means a disaster in 10 years, the advantage of democracy is that it becomes someone else’s problem).
I would expect that if five years in a row the “variable income” happens to always be around X, people will start to expect it, will make this expectation a part of their personal finances, and if the next year the income is only X/2, there will be riots in the streets.
Doesn’t this kind of already happen with the stock market? I can imagine rioting in the case where people loose half of their investments overnight, but I think it’d be different for a cut in dividends since any economic downturn that reduces land values (and thus land taxes) would correspondingly reduce rents and thus people probably wouldn’t be left immediately destitute if dividends cut in half or something.
It is similar, but reducing the UBI would lead to immediate loss of money at hand, for everyone, at the same time. So the reaction would be stronger than if today some people lose money at stock market, which they didn’t plan to spend this month anyway.
Yeah, given that Eliezer mentioned Georgism no less than 3 times in his Dath Ilan AMA, I’m pretty surprised it didn’t come up even once in this post about UBI.
Personally, I wouldn’t be surprised to find we already have most or all the pieces of the true story.
Ricardo’s law of rent + lack of LVT
Supply and demand for low-skill labor
Legal restrictions on jobs that disproportionately harm low-wage workers. For example, every single low wage job I have had has been part time, presumably because it wasn’t worth it to give me health benefits.
Boumol effect?
People really want to eat restaurant food, and seem to underestimate (or just avoid thinking about) how much this adds up.
A lot of factors that today cause poverty would have simply caused death in the distant past.
That’s just off the top of my head
EDIT: Also the hedonic treadmill is such a huge effect that I would be surprised if it wasn’t part of the picture. How much worse is it for your kid’s tooth to get knocked out at school than to get a 1920′s wisdom tooth extraction?
Labor may be likened to a man who as he carries home his earnings is waylaid by a series of robbers. One demands this much, and another that much, but last of all stands one who demands all that is left, save just enough to enable the victim to maintain life and come forth next day to work. So long as this last robber remains, what will it benefit such a man to drive off any or all of the other robbers?
Such is the situation of labor today throughout the civilized world. And the robber that takes all that is left, is private property in land. Improvement, no matter how great, and reform, no matter how beneficial in itself, cannot help that class who deprived of all right to the use of the material elements have only the power to labor—a power as useless in itself as a sail without wind, a pump without water, or a saddle without a horse.
I want to support this; the initial motivation behind Georgism is, in fact, the exact question of why poverty still exists when so much progress has been made—and the answer is that when private actors are allowed to monopolize natural resources (most importantly land), all the gains accruing from productivity increases and technology eventually go to them.
A UBI, as Eliezer suggests, is a band-aid to the problem, addressing the symptom but not the disease, and so long as land rents (economic rent) are monopolized, the disease continues unabated.
I don’t know if the Georgist Paradise doesn’t have any poverty—land taxes don’t magically cure addiction or depression or any of the other reasons someone might become and stay poor. But I’d bet that it has substantially less of the ‘scrabbling in the dirt’ than our current economic equilibrium.
Over at Astral Codex Ten is a book review of Progress and Poverty with three follow-up blog posts by Lars Doucet. The link goes to the first blog post because it has links to the rest right up front.
I think it is relevant because Progress and Poverty is the book about:
The pitch of the book is that the fundamental problem is economic rents deriving from private ownership over natural resources, which in the book means land. As a practical matter the focus on land rents in the book heavily overlaps the modern discussion around housing. The canonical example of the problem is what a landlord charges to rent an apartment.
One interesting point is that while UBI is suggested (here called a Citizen’s Dividend), it is for justice reasons, and is not proposed as a solution to poverty. I expect Henry George would agree that a UBI would not eliminate poverty, and would predict it mostly gets gobbled up by the immense and terrible forces behind the Poverty Equilibrium.
I think George does see the dividend as necessary for solving poverty, but only in addition to taxing rent. On its own it would indeed be gobbled up by landlords.
Also, what George suggests is a bit different from UBI (and I think Universal Land Dividend is a better name for it than Citizen’s Dividend). With UBI, the law dictates a set amount to be given each person each year/month. With the Citizen’s Dividend, whatever revenue isn’t spent at the end of the year is distributed equally between everyone. This on the one hand leads to a variable income, on the other hand it doesn’t place an obligation on the government that it might not be able to fulfil. Personally I think it’s a better and more elegant policy.
I also like the elegance, but… people being people, I would expect that if five years in a row the “variable income” happens to always be around X, people will start to expect it, will make this expectation a part of their personal finances, and if the next year the income is only X/2, there will be riots in the streets.
(Compare to the mortgage crisis of 2008, which happened because of a change in numbers much less directly related to people’s incomes, and yet many people have lost their homes because they relied too much on the numbers staying constant.)
So I expect that in practice the government would take it at least as a soft obligation, and would use various accounting tricks to keep the income constant (and if that means a disaster in 10 years, the advantage of democracy is that it becomes someone else’s problem).
Doesn’t this kind of already happen with the stock market? I can imagine rioting in the case where people loose half of their investments overnight, but I think it’d be different for a cut in dividends since any economic downturn that reduces land values (and thus land taxes) would correspondingly reduce rents and thus people probably wouldn’t be left immediately destitute if dividends cut in half or something.
It is similar, but reducing the UBI would lead to immediate loss of money at hand, for everyone, at the same time. So the reaction would be stronger than if today some people lose money at stock market, which they didn’t plan to spend this month anyway.
Yeah, given that Eliezer mentioned Georgism no less than 3 times in his Dath Ilan AMA, I’m pretty surprised it didn’t come up even once in this post about UBI.
Personally, I wouldn’t be surprised to find we already have most or all the pieces of the true story.
Ricardo’s law of rent + lack of LVT
Supply and demand for low-skill labor
Legal restrictions on jobs that disproportionately harm low-wage workers. For example, every single low wage job I have had has been part time, presumably because it wasn’t worth it to give me health benefits.
Boumol effect?
People really want to eat restaurant food, and seem to underestimate (or just avoid thinking about) how much this adds up.
A lot of factors that today cause poverty would have simply caused death in the distant past.
That’s just off the top of my head
EDIT: Also the hedonic treadmill is such a huge effect that I would be surprised if it wasn’t part of the picture. How much worse is it for your kid’s tooth to get knocked out at school than to get a 1920′s wisdom tooth extraction?
From Protection or Free Trade by Henry George:
I recommend the full chapter, and book.
I want to support this; the initial motivation behind Georgism is, in fact, the exact question of why poverty still exists when so much progress has been made—and the answer is that when private actors are allowed to monopolize natural resources (most importantly land), all the gains accruing from productivity increases and technology eventually go to them.
A UBI, as Eliezer suggests, is a band-aid to the problem, addressing the symptom but not the disease, and so long as land rents (economic rent) are monopolized, the disease continues unabated.
I don’t know if the Georgist Paradise doesn’t have any poverty—land taxes don’t magically cure addiction or depression or any of the other reasons someone might become and stay poor. But I’d bet that it has substantially less of the ‘scrabbling in the dirt’ than our current economic equilibrium.