THE UNEARNED INCREMENT. TO THE EDITOR.

Otago Daily Times, Issue 6738, 19 September 1883, Page 3

THE UNEARNED INCREMENT. TO THE EDITOR.

Sib, —A great deal has been said and written about tho unearned increment. A few still continue to talk about it. A late Attorneygeneral of this Colony was greatly exercised by it, and its spirit sometimes moves him still. Many in this country who have found time to read over John Stuart Mill put forward this doctrine of his with great fervour, particularly if they have little or no land it may be likely to affect. As a Scotchman I am very proud of Mill, but doubt sometimes if it is necessary to pay much heed to thoae who strut about among us under a few of his dingiest plumes, borrowed for the occasion. With Mill's life there are some melancholy facts, and with his death also, but he will ever be known as one of those teachers of a science for which Scotland is famous. He found political economy not ill understood, but its truths not too well arranged. He brought bis great breadth of intellect and generalising power to bear on them, and placed them and left them in an order and frame in which they still remain. But in a field so wide, some minor studies went half scanned. No man can own sufficient acumen to fully and unerringly pursue every truth and its bearings in that field. Mill, indeed, admits that he wrote his work rather hurriedly, and he did not consider it his best one. He- is, however, the greatest in another and kindred science, which alone certifies^ him unaurpasssed in his day on the arena of mind. When writing on the general principles of taxation, he gives it as his opinion that the rent from land is a kind of income which constantly tends to increase without any exertion on the part of the owners; that this " unearned increment" belongs to society, and should at least be taxed for their benefit. This he advocates in the fifth paragraph of the BBcond chapter of the fifth book of his work. The paragraph is perhaps too long to quote in full, but the following extract will give those who may not have seen it a fair idea of its teaching:— . . - • "The ordinary progress of a society which increases in wealth is at all times tending to augment the incomes of landlords; to give them both a greater amount and a greater proportion of the wealth of the community, independently of any trouble or outlay incurred by themselves. They grow richer as it were in their sleep, without working, risking, or economising. What claim have they, on the general principle of social justice, ts this accession of riches? In what would they have been wronged if society had from the beginning reserved the right of taxing the spontaneous increase of rent to the highest amount required by financial exigencies ? I admit that it would be unjust to come upon each individual estate and lay hold of the increase which might fee found to have taken place in its rental; because , there would be no means of distinguishing in individual cases between an increase owing solely to the general circumstances of society, and one which was the effect of skill and expenditure on the part of the proprietor. The only admissible mode of procedure would be by a general measure. The first step would be a valuation of all the land in the country. The present value of all land should be exempt from the tax; but after an interval had elapsed, during which Bociety had increased in population and capital, a rough estimate might be made of the spontaneous increase which had accrued to rent Bines the valuation was made. Of this the avcrago price of produce would be some criterion; if that had risen, it would be certain that rent had increased, and as already Bhbwn, even in a greater ratio than the rise of price. Of this and other data "an approximate estimate might bo made how much value had been added to the land of the country by natural causes; and in laying on a general land tax, which, for fear <>f miscalculation, should be considerably within the amount thus indicated, there would be an assurance of not touching any increase of incomo which might bo the result of capital expended or industry exerted by the proprietor." It is now more than 30 years since Mill wrote these wordß. Ido not know whether be was the first to give birth to the idea, but certain it is that, though enforced in these and other words with no little plausibility and care, it has mado very little progress and produced very little fruit. The reason of this is because, when inquired faithfully into, it is seen to be utterly worthless and erroneous,

The following aimplo lines, which your space docß not allow to make longer, will, I hope, show this:—

1. When tho land was sold and parted with, this claim was not advanced and conceded by tho parties concerned. There woro in ancient times certain -burdens laid on all the lands of England, but this was not one of them. 2. If it is unjust of thn landowner to demand this increment, why does tho buyer pay it? Tho landowner uses no physical forco, either by the civil mngistrate or individually, to enforco the payment. Why should tho civil magistrate bo asked to interfere to keep tho people from paying money which they need not pay if they deem it improper ? i 3. To separate the earned from the unearned jincroment would be a most difficult work. On

many properties the improvements manifestly exceed the value of both these, increments; but there may be others in a similar case which do not show the fact so clearly.. For instance, if 500 trees be planted with ordinary caro ana ability and only five of them grow, the landowner has a right to claim credit for the 495 dead a» well as for the five alive. Experience is worth money. It is not always what is seen on a farm that is costly; it is sometimes what is not seen. Governments have already plenty to do without interfering or meddling, in a business so intricate as this. The amount of corruption, indeed, likely to result from the attempts at valuation would be more than balanced by any revenue likely to accrue from it.

5. But if land be taxed for the causes elated, then a good many other things will abo not escape. The world is full of such unearned increments. If.a hot wind rise in Australia, mid raise tho price of oats hero, and a merchant had a large lot in store before the hot wind blew, tho price will riso, and ho will get an unearned increment upon which he should bo taxed. Nobody can maintain that it was through his labours—were they ever so Hercu-lean-^that the wind rose. Again, if a strike takes place among tho coal-minors, an increment may result to those who happen to have coal in storo, and this not through their own labours, but through the idleness of others. It would not, however} be wrong to tax them on Buch an increment; When commodities fall in price from a contrary cause, the owners should, I suppose, bo compensated. Men make money by lucky speculations, and receive it by gift and private bequest. This last increment should, apparently, bo treated' as if it belongod wholly to society, or nearly so; for if it be wrong for a man to receive money from a society unearned, it must be wrong iilsn to receive it from his neighbour unearned. There is no compulsion in either case on the givers. The public protected the giver when he made the money;, and the pnblic, on this theory, have the best right to iC when the earner passes away. In a word, the reason of dear land is because that it is scarce land. Therefore, other commodities, when they happen to bo scarce, should have the increment resultant taxed. But this

scarcity, be it remembered, results from the supineness of the people interested, and from their possession of wealth; otherwise they would seek new fields of enterprise, where land is cheap and abundant. 4. Mill takes it for granted that the rent of land constantly tends to increase, and it is of course on this basis alone that the doctrine is raised. "I think, however, that the value and rent of land does not so constantlyHend to increase. Kingdoms wax, kingdoms stand still, and kingdoms wane; Town sections onco upon o, time in Babylon, Meroe, and Carthage sold, no doubt, for handsome sums; now they would not ba worth sixpence apiece. When the kingdom waxes what guarantee does society give that it will compensate or repay the tax when it wanes? For the last 50 years, when the peace spirit has been in the ascendent, land, perhaps, in tho greater part of Europe has risen in price. In Turkey it has not risen, perhaps, very much. In England just now it is falling. Were wars to break out and consume capital, land would fall; but even with peace continuing it would be a very hazardous speculation in England, in my opinion (and land and property is as secure there as anywhere), to value the lands as they at present stand, and to agree to tax for an inorement and compensate for a decrease. The means of transport havo been bo greatly improved that landa may easily become rnDro equal >,in value all over tho world, raising Colonial, and American, and lowering English and Continental—raising the New World and lowering the Old. When the huge steamship, with her compound engines, carries wheat across the Atlantic for, 1 think, 7d a bushel, comment is unnecessary on the effect of such i action, both on land, labour, and capital, all over the world. ■ '

Moreover, we have famines, and the death of millions of farmers, sometimes from that cause. What is to be done in this case? Here not; only increments earned and unearned go down, but the landowner himself dies of starvation. The fall here seems so dangerous and decided that society should compensate him to the third generation. Indeed, these famines which now rage, or lately raged, in many countries among landowners as well as .other classes of the community, show that land is not such a highly-favoured* friend after all. 5. The return from labour and capital also rises in the ordinary course of social economy, and where true progress is existent. This increment would seem to belong to the State also. The condition of the working classcß has greatly improved. Once they were slaves; now they are free, and get very high wages also.

Now I do not see why, when the wages of labour rise, land should not also to some extent rise with it. Riches are the result of labour and natural resources, and the landowner has worked as well as the rest of his countrymen. Even if there are idle landowners, there are also idle merchants and capitalists. If there be a reason why the landowner's profits should be kept at a certain level bylaw, and his unearned increments alone attacked, these facts will need to be, remembered. Where true progress oxißts, and where the labourer takes his labour to the best field, and the capitalist does tho same, land, with its increment even, will not give bo much higher a return than labour or money invested in other ways. If people choose to coop themselves up in a small island like Britain, progress is partial and unsound, and the case is altered, arid tho landowner ha 3 some advantage. But the cause 'of the advantage is not from him, but from the stupidity of the people themselves. When this stupidity slowly or quickly vanishes, as it is now doing,

tho land tbero will fall, as it is now doing. A nation, I maintain, can generally only be fiaid to be truly progressing when it people are moving towards an equality in weight and wealth with an ideal State where a proper proportion only of civilised population i 3 contained in it. When the too-heayily populated Eng;, land* and Ireland commingle with thotoolightly populated America there' is progress, as the benefits are undoubted to' both.. True progress is, indeed, where the.land all over the world is occupied and laboured on in an equal and oqually-mcreasing volume aud economy, and not, as now, .in-patches, where we see masses of population in the most absurd holes and corners of tho earth, growling at each other, or dying of want.- Were people to believe this, and which would result in an emigration which would bring all the lands of the world into a market at once, land increment would not be bo considerable anywhere or in any society. As it is, the rise in the price of land is a powerful force in driving population from over-populatod, or comparatively over-populated, countries, and is thus a force for good. It may still bo urged that men will grow more numerous in many lands as certainly as they will in few—that there will then be only an even general, and certain increment, instead of, as now, an uneven and partial one—that the increment will then be spread widely, thinly, and equally, and that more so than now ; but that it will still tend to grow thicker. This is possible, but I think it will thicken so slowly as, taken with the other reasons, not to be worth noticing. Man will not so easily overcrowd the world. He has many destroyers, both without and within him. There is also a scientific energy and advance, which may place the day of scarcity and increment a long way off.

When one looks at the map of the world, and sees the vast tract 3of uninhabited country, it seems very premature to impose such a tax. The landowner, unless backed up by external stupidity, indolence, or, more probably, cowardice, could not carry his head so high under such conditions. It would seem, if anything in the world could be had cheap and easily, it should be land. For, save around the coasts of continents, and on a few islands, the world is still all but a desert. One is inclined to propose that, if any tax is necessary, it should be laid on those who have no land, because they did not go forth and seek new habitations. The landowners should be rather encouraged to demand high prices, with this possible policy in view. The question, on reflection, where this and several other questions in economical philosophy lead up to is: Shall it be Communism, or no ? For if the civil magistrate is to claim for the people every unearned increment which the individual now claims as hia own, the people may at once throw their earned and unearned wages into the same basket, and share; as far as they can, alike,-rl am, &c, -r A Thinkeb. September 18.