A short note: the Vanity Fair headline reads as though Rand was an economist. She wasn't. She was a screenwriter and novelist.
Some people also believe she was a philosopher. She wasn't. At least no more than anyone is.
From Vanity Fair:
The Obscure Economist Silicon Valley Billionaires Should Dump Ayn Rand For
He lived almost 200 years ago, but Henry George’s theories might have something to offer people who want to put their money to good use today.
So, you’re a Silicon Valley billionaire and you’ve already got the private plane. What you need next is a philosophy, something to live by, and to help finance, and—most important—to use to explain or justify yourself. Don’t just grab the next philosophy to come along. Chances are that will be Ayn Rand and her extreme form of capitalism, which she called objectivism.
Rand has a lot going for her, to be sure. First, you may have actually read her in high school and may have been genuinely influenced. Second, in a nutshell, she rationalizes greed, which you have nothing against. Third, she was into mildly kinky sex—something else you may have in common. Fourth, she was associated in some way you don’t quite follow with Alan Greenspan, who is respectability itself, whatever other Rand enthusiasts may have been up to.But you’re too late. Ayn Rand, who never was really undiscovered (The Fountainhead became a movie, starring Gary Cooper as a heroic architect, a few years after it was published), has by now been thoroughly re-discovered. According to James Stewart (the prominent business journalist, not the even more prominent actor), writing in The New York Times, President Trump says Ayn Rand is his favorite writer and that The Fountainhead, her pulmonary embolism of a book, is his favorite novel. Travis Kalanick, the onetime Übermensch of Uber, is on board, as is (liberal foodies, please note) John Mackey, co-founder and C.E.O. of Whole Foods.My dear billionaire, you need an economist almost no one has heard of. One who addressed the most pressing problems of today, which do not include the insufficient greed of rich people. But one who was not completely out of sympathy with rich people, either.May I nominate Henry George (1839–97)—economist, pamphleteer, journalist? Once famous, he is now widely forgotten. He described himself as a man who came out of the great American West, which he did—but only after he got there via Philadelphia, where he was born. He later moved to New York City, ran for mayor, and attracted 10,000 people to a political rally (but lost nonetheless). He made the best-ever short defense of free trade: You wouldn’t fill your harbor with rocks to keep out goods your citizens want to buy, would you? Well, that’s what you’re doing when you slap tariffs on imports.George’s masterwork, published in 1879, was Progress and Poverty, which set forth to explain how “increase of want” could go hand in hand with “increase of wealth.” Thus George took on precisely the question we face today: not the general question of poverty or inequity, but why specifically are middle-class incomes stagnating, and incomes of people at the bottom falling, while those at the top continue to rise?George was no vulgar Marxist. You might call him a “supply-side socialist.” All products of the economy, he reasoned, are ultimately derived from three sources: labor, capital, and land. What else is there? Labor and capital are both productive. Put them to work and you end up with more. But land is different. As the man said, “They aren’t making any more of it.” When you work for an hour, you increase society’s wealth (and your own) by an hour’s worth of wages. When you save a dollar rather than spending it, you increase society’s (and your own) wealth by a dollar. But when you buy a piece of land for $10,000 and sell it for $20,000, you haven’t increased the total wealth of society by a nickel. Yet the price of land keeps going up, up, up, as the population increases and society grows richer. Where does that money come from? It comes from the pockets of the other two factors of production, labor and capital.George distinguished, in other words, between the capitalist who is truly productive and the capitalist who is simply a “landlord.” If you’re a landlord, he wrote, “you need do nothing more. You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota to the wealth of the community, in ten years you will be rich! In the new city you may have a luxurious mansion; but among its public buildings will be an almshouse.”...MUCH MORE
HT: Marginal Revolution, Sept. 3
We've looked at Henry George and his suggestion of a land tax a few times. Here's the introduction to last year's "Forgetting History: 'Nothing Like This Has Ever Happened Before'" with more after the jump:
Back in 2012 there occurred one of those eruptions of comment* that seem to happen for no discernible reason other than some combination of network effects and echo chambers.
The eruptions peak and die away as the crowd moves on leaving almost imperceptible ripples where there had been much thunder and fury.
This is a reflection on one of them, Henry George and the land tax, updated for current values and valuations....
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*Even by the time we posted "The Economist Calls for More Taxes on Land" in July 2013 the commentariat was moving on:They are a bit late getting to the party, this discussion has been pursued in relation to the means of production for years and as far as our little corner of the www goes, we made mention of the FT Alphaville robo-rentier commentary back in 2012's "The Road to Serfdom: Where the Robots Are Taking Us":In September 2013's "Ben Franklin on Labor Economics (or how to create an underclass)" I intro'd with:
Not Hayek's "The Road to Serfdom". Rather this is a journey back to medieval society where all income is subject to taxation by the Church or the manor or both. At least in the current case it is freehold rent which is paid in cash rather than the labor rent that villeins and serfs owed their liege.
Let me explain....
The easiest way to create a dependent class is to price them out of the real estate markets.
In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single....In the United States The Land Ordinance of 1785 set the cost of land purchased from the government at $1.00 per acre in sections of 640 acres.
This price was raised to $2.00/acre in 1800 but purchase was paid for in four equal annual payments.
In 1820 the price of Federal lands was reduced to $1.25 per acre with payment in cash.
An alternate conveyance in the 1862 Homestead Act maintained the $1.25 price.
Compare the wages various craftsmen could command:
In 1785 a journeyman carpenter in New York City was paid $1.12 ½ per day.
Here are the average hourly wage for various years, note the post Civil War inflation in the 1870 numbers and the decreases of the latter 1800's deflation:...By January 2014 it was just a few stragglers:
"Land Value Tax Won't Fix San Francisco"
The first thing I thought of when I saw Mr. Smith's post was "Zoning" (it wasn't some flash of brilliance on my part, we've been down this road before)Finally, our final post, in May, 2014:
Yglesias at Moneybox:...
Last Word on Piketty
The headline is probably a lie.
Readers who have been with us for a while know I'll see something, somewhere, sometime in the future and want to save it to the blog. I'll do so and lose any pretense to statement/action integration. Which word probably has the same Latin root as integrity.Possibly also of interest, April 2017's "How Land Disappeared from Economic Theory".
Oh well.
Hell, I can already foresee a future post that will require making a lie of the headline:
If we are going the route of a Piketty wealth tax we need to look at doing one of these:
A Domesday Book!...
