The Henry George Portfolio

Progress & Poverty: A Practical Review

Only a few economists’ works have inspired eponymous schools. Marxism and Keynesianism come to mind, but almost memory-holed is an American, Henry George, whose “Georgist” movement was a major political force in the heady days of late 19th- and early 20th-century progressivism. George was the author of Progress & Poverty, a bestseller shortly after its publication in 1880. In the 1880s and 1890s, P&P outsold every English-language book except the Bible. Yet today, no major publishing house handles his works, and the best edition is a scanned reprint of the 1905 edition from tiny Dover Publications. His work is so obscure and forgotten, despite his historical popularity, that no mainstream publisher can be bothered to pay for new typesetting.

Like Marx, George blamed the social pathologies and inequality of his era on a singular actor. Marx’s devil was capital; for George, it was the unfair advantages accruing to landowners. George proposed a less radical solution than Marx: laissez-faire except for a single tax on the value of land, not improvements, sufficient to offset the value of income derived from the land itself.

The Georgist Economic Model

George, unlike previous economists, separated production into three rather than two factors: raw land (including all materials and natural resources attached to it), capital, and labor. For George, moral rights in property can only accrue based on man’s thrift (capital, as a form of accumulated labor) and work (labor). Since land is provided by God and nature, he believed any income derived purely from land was immoral and parasitic upon the rest of mankind, in that the landowner received value from others without an equal exchange of his own smarts, virtue, or production.

George arrived at his conclusions somewhat empirically, though I’ll have to more precisely quantify what he seemed to be saying. He noticed that the conditions of the unskilled laboring class, say the 25th percentile, were highest where economic development was lowest. In newly opened territories, men could find good land cheap and, with their own hands, scratch out a better living than what was offered as an unskilled laborer in the cities or more developed parts of the country. Effective “wages” or quality of life were higher on the frontier for the poorest people, and inequality the lowest.

To George, this was a paradox, because higher population density results in higher economic output per person, because each person can more efficiently specialize. This is even true at the micro level in agriculture, in that 5 men working 25 acres will have higher output than each working 10 acres alone.

And scaling beyond this, all things being equal, quality of life ought to be better in a city for everyone, given higher production. But this wasn’t the case. The squalor of laborers in the cities contrasted with the obscene wealth of the upper classes was something universally concerning to 19th-century social reformers. Conservatives argued it was due to nature, some combination of Malthusian and Social Darwinist reasoning, whereas liberals argued it was due to capitalism and called for direct wealth redistribution.

George made the more elegant argument that it was caused by land rents. Now this sounds like a weird concept to non-economists, but it was and is a widely accepted economic fact, first defined by Ricardo.

Imagine an independent farmer growing a cash crop. Out on the frontier, settlement has coalesced around a river, where irrigation is easy, and the soil is rich. This land, however, is already owned by someone else. Other land, not as good, is available for free if one claims a homestead. Now, say the rich land can produce a crop worth $5,000 per year per acre after expenses, and the free land, with the same labor, can produce a crop worth $2,000. The guy who owns the good land can offer the newly immigrated farmer a deal: if you work my land, I’ll take 50% of the crop, and you can keep $2,500. The landowner does zero work, collects $2,500 equivalent as rent, and the farmer is still better off than owning his own land, which would only produce $2,000 per acre. In this scenario, like all realistic scenarios, the tenant farmer is offered a small incentive relative to acquiring his own land, but we can see that the maximum “rent” of good land can be defined as the difference between the profit generated on the good land and the profit generated on the next best land available to work, in this case, $3,000 per acre.

This is the simplest example, but land rent is even more pronounced in densely populated areas. Imagine a modern scenario in a city for an operator of a coffee shop. The shop occupies 1/10 of an acre. In a prime location, it would generate $200,000 a year in profit, and in a less prime location would generate $100,000 per year in profit. Assuming the building is identical in both locations, what is the marginal value of the land rent for the prime location? $100,000 per tenth of an acre, or $1 million per acre. But the value created by the prime location, according to George, is nothing attributable to the landowner other than his luck in owning it, but rather to the network effects of the city, the labor and production of millions of people, in which the landowner effectively owns an interest, which George thought morally worse than slavery (more on that later).

The Idiot Index, or Gross Material Profit

Perhaps the easiest way to explain George’s model is to borrow Elon Musk’s “idiot index,” which compares the material cost of inputs to the sales price of the transformed output. Musk brings stuff in-house when any component seems to have a high idiot index. This can be expressed as a workable accounting I call gross material profit, modified for George:

Gross Material Profit = Sales - Material Costs

Thus, gross material profit is all of the money possibly available to pay the humans involved. Such that:

Gross Material Profit = Profits (“Supervisory Labor”) + Return on Capital (Equity / Interest) + Labor + Land Rent

George’s thesis is simple: mathematically, the higher land rents, the less money available to compensate business operators (George calls owner profits “supervisory labor,” and as a business owner who sometimes loses sleep worrying about various problems I agree with George’s taxonomy), investors and/or lenders (which George lumps together as “interest,” all the same thing just varying degrees of risk), and laborers. George would predict that as an economy develops, landowners will do best, businesses and investors second, especially to the extent their businesses aren’t constrained to local markets where rent extraction hits hardest, and labor third.

George is surprisingly charitable among progressive reformers towards business owners, and particularly merchants and traders. He rightly acknowledged that a distributor who, for example, ships oranges from Florida to Ohio is essentially an economic alchemist who produces amazing value. Most people’s consumption of oranges is very limited, so moving oranges from where there is an excess of production to where they are demanded is of the essence of producing common wealth for society.

One of George’s ideas that rings true for me as an operator is that he says that wages are not paid by capital out of an arbitrary fixed pool, but rather by labor itself. In other words, no business owner hires anyone without an expectation of sales from customers to absorb that employee’s wage plus some profit, either now or in the future, appropriately discounted.

Land Speculation

His theory doesn’t stop there, however, blaming most of the problem not on rents per se, but rather on land speculation. Land rents are bad enough, but when lands are bid up beyond their income value to the value someone expects them to be in a few years, this introduces distortion into the economy. Land demanded for food, or housing, or some productive use is held in reserve by speculators. According to George, the primary benefit of his land tax would be to make holding land out of production inordinately expensive, as the only way to offset his tax is to put land into use.

One of George’s key insights is that supply and demand are the same thing. In his time of relatively high moral development, he thought it absurd that men who wanted to work in order to provide goods for their families often could not find employment. The man with a supply of labor and a demand of wants, he thought, ought to be able to find work, especially in a specialized economy! His work, though specialized, should satisfy the wants of other men’s families, and likewise the work of those other men his own.

George suggests, but does not prove, that it must be land speculation that causes the occasional disruptions and depressions that prevent supply and demand from naturally finding each other. He says:

That land speculation is the true cause of industrial depression is, in the United States, clearly evident. In each period of industrial activity land values have steadily risen, culminating in speculation which carried them up in great jumps. This has been invariably followed by a partial cessation of production, and its correlative, a cessation of effective demand (dull trade), generally accompanied by a commercial crash; and then has succeeded a period of comparative stagnation, during which the equilibrium has been again slowly established, and the same round been run again. This relation is observable throughout the civilized world. Periods of industrial activity always culminate in a speculative advance of land values, followed by symptoms of checked production, generally shown at first by cessation of demand from the newer countries, where the advance in land values has been greatest.

And invites us to compare the starving urban masses to a man on an island:

In his own willing hands is the supply. Put him on a solitary island, and though cut off from all the enormous advantages which the co-operation, combination, and machinery of a civilized community give to the productive powers of man, yet his two hands can fill the mouths and keep warm the backs that depend upon them. Yet where productive power is at its highest development they cannot. Why? Is it not because in the one case he has access to the material and forces of nature, and in the other this access is denied?

Caveats to George

While I find George generally persuasive, his strident, idealist tone is off-putting (more on that in the Coda). But a couple of quick caveats that occurred to me:

The increasing production of population density, even in agriculture, is George’s strongest argument against Malthusianism, which he takes significant time to refute, as it was the core objection Social Darwinists used to counter progressivism. We now know from more robust economic histories, such as Clark’s A Farewell to Alms, that Malthus was right about most of history, but started being wrong just about when he came up with his theory around 1830. Wages and birth rates did, in fact, go up after medieval plagues because population limits were running up against the carrying capacity of the land.

And by George’s day, the Industrial Revolution had broken Malthus, and I’ll note that George was making his observations in the 1870s, at the peak of the post-Industrial but pre-petroleum age. Petroleum enables cheaper transport of goods and people, decreasing the value of location and land rents relative to other factors in the economy. It would not surprise me if it were true that George’s observations were true at the time, but became less true as petroleum supercharged the Industrial Revolution. And George himself, in his less wide-eyed moments, acknowledges that improvements in technology can raise absolute wages even as it captures a greater proportion for landowners.

Where George’s arguments seem weakest is in his claim that agricultural wages, net of land rents, must determine factory wages. It seems to me that manufacturing is more agnostic to land quality and location than agriculture or, say, retail stores. As more of the economy drifts into manufacturing, I don’t see how that necessarily translates to more rent for landowners. A factory can take the worst land and pay higher wages, driving up the competitive wages for agriculture, and thus lowering landowner rents.

But George here has a ready counterargument, and an empirical one. Take, say, a knowledge worker whose need for land is trivial. That same worker consumes the products of land: food, petroleum, and most critically, housing. The inability of Gen Z to find affordable housing, as the reasonably commutable suburbs of major cities have been built out over the last 50 years, would tend to make George’s arguments more relevant than ever. In other words, the fruits of petroleum in increasing the local addressable supply of land, and expanding the middle class, was a one-time windfall that has mostly been reaped, and George’s iron laws of land rent are back in operation¹.

Testing George Empirically

It occurred to me that George made certain predictions that can be tested in today’s economy. With the help of Dr. Claude, I tested two predictions of George:

1. The wage premium in the cities with the highest populations should be entirely captured by the higher cost of living.

2. That land ought to be a better risk-adjusted investment over long periods (say a century, 1920-2020) than any other asset class, including stocks. This intuitively feels wrong, but George claims that land rents will eat the lunch of business owners over time.

Looking at #1 first, nominal wages to cost of living, comparing the top ten metros to the cheapest metros, BEA statistics show that there is no wage premium for more expensive cities:

The data show that workers in the highest value metros receive virtually no wage premium in terms of cost of living, and the lowest wage earners are slightly worse off. This is even more surprising given that the highest value metros have more human capital: more education, and higher value industries. NYC has a GDP per capita of $100k, whereas Memphis is at about $65k. Median workers get virtually zero of that premium.

Claude estimates that median NYC workers lose just over 32% of their take-home pay in land rents²!

Now moving to #2, is land a better risk-adjusted investment? I asked Claude to compare a portfolio invested in land, real estate, S&P, treasuries, and gold from 1920 to 2020. To remove hindsight bias, the real estate portfolio was selected prospectively, based on the top ten cities as of 1920, so it includes some winners, like NYC, and some relative losers like Detroit. The simulation assumes a general downward trend in rents from ~6% in the early part of the dataset to ~3% today. Investors have bid up George’s core thesis!

Urban land had a higher return and less downside volatility³ than the S&P 500, gold, and bonds. And because of the difficulties in finding clean data, this analysis likely understates the true return, as the land portion comes from residential land estimates from the Case-Shiller housing index, not the most valuable urban commercial land. This means these returns are artificially capped as formerly residential land is distilled off into the highest-earning commercial properties.

A further tell on the superiority of land is that real estate is the only class of asset where banks will loan 80% of the value, with a fixed rate of interest. They will not do that with stocks!

The only sixth-generation wealth I’ve ever encountered was in real estate. The family’s patriarch purchased crop land outside the city, which became part of its eventual urban loop. The family has a simple rule: never sell and never borrow⁴. Likewise, Johann Kurtz highlighted a study out of Britain showing that, among nobles, the landed aristocracy, as opposed to those given to merchants starting in the mid-1800s, are today wealthier than the “new money” that was supposed to replace them. Your odds of being an elite in 2026 are much higher if your ancestor came over “with the battle-ax” in 1066 than the proprietor of a massively successful business in 1850.

The Georgist Portfolio

George was a utopian schemer whose land tax is practically unworkable for reasons not worth discussing because they’re also politically impossible. The man was economically correct, however, and the implied strategy is obvious. If landowners eat for free — a “first-rate fortune” endorsed by Dumas’ Count — then the task of any investor seeking permanent wealth is to transform as much of his labor and inferior assets into land rent income as possible.

Now, before you Texans get too excited, the implication here is not to go buy hundreds of acres of rural land so you can pretend to be a cowboy; they call it “land poor” for a reason. Your ranch is a consumption item, not an asset. The real engine of George’s thesis is not agriculture, but rapidly developing urban land that achieves rent density far in excess of its raw natural value. Improvements are a drag on returns because they depreciate, so the best investment would be prime land in urban cores with highly depreciated improvements that provide an acceptable rent based on the land value rather than the structure value. In other words, be a “worst of the best” slum lord: dingy warehouses, dilapidated parking lots, and almost fully depreciated triple-net fast food or retail franchises with fewer than ten years remaining on the lease, but in the best locations for redevelopment.

This also makes us feel pretty good about our top investment, pipelines, which are more of a real estate play based on the value of land than the improvements. The corridor of easements, etc, is many times more valuable than the transport infrastructure. They complicate the tax return with K1s, but that other great advantage of pass-through real estate income, depreciation, makes much of the income tax-free.

That said, because of the advantage of control, there are numerous advantages of owning parcels outright instead of slices. With minority stakes in real estate investment trusts or publicly traded partnerships, there are often situations where management acts irrationally to protect their own jobs, whereas an independent owner can close value gaps by taking action with the asset.

And then, of course, there’s the 1031 exchange, an unbelievable gift to real estate owners. Imagine if stock market investors were able to defer capital gains indefinitely as long as they bought a new stock within six months of selling an old one. Well, real estate investors get exactly that with a 1031 exchange! They can sell and buy new property without zero tax liability as long as they reinvest within six months, effectively never paying taxes on gains unless they leave the asset class. And given the returns, why would they? Mason Gaffney, one of the few recent mainstream Georgist economists, thought the entire project of neoclassical economics was a conspiracy of sorts by landowners to strangle George’s movement, and the 1031 exchange makes this believable! And as I wrote in my review of The Sovereign Individual, land even seems to survive conquest:

Even conquest from a competing state rarely results in a permanent loss for a great asset owner. Nazi Germany, for example, mostly did not seize multi-generational landed wealth in France nor Poland. Go down one tick in rapacious severity to the previous European tyrant, and we find that Napoleon conducted virtually no private wealth seizures and simply redirected tax revenues to his coffers. Unless your occupiers are ideological communists, even hostile enemies understand that they are better off collecting taxes from a competent owner than risk mismanagement of the assets underlying their tax revenue stream, or disrupt supply chains that could starve millions.

Self-owned parcels could also be superior in that one of their weaknesses, illiquidity, may be a strength. The aforementioned Johann Kurtz, in his recent Leaving a Legacy, recommends real estate for durable family fortunes because it is a) hard to sell and b) relatively easy to manage. All heirs have to do is not sell and cash rent checks. If the heirs are self-controlled enough to follow the advice of The Missing Billionaires and calibrate consumption to income rather than the market value of assets — which is easier to do when an asset is illiquid and only easily valued by monthly income — then a fortune is much easier to keep by avoiding overspending from temporary wealth effects endemic to frothier times in the stock market. Some critics call this “volatility laundering,” but since stock market earnings are much less volatile than stock market prices, it seems salutary if one’s liquid value isn’t reassessed daily, which, given Mr. Market’s irrationality, would exacerbate the twin demons of fear and greed.

But control is key because owners have the power to reduce volatility. Owners decide how much of the cash flow goes to reinvestment vs dividends, with no conflict of interest with management. They can sell something if values are high, but the management of a public company can resist sales and poison pill to preserve their jobs. Control enables taking advantage of irrationality on the upside and downside. And because real estate is typically evaluated based on earnings yield, buying at a low price feels more like a win (“we bought a Class A property for an 8% cap rate”) than with stocks.

So how should one acquire a Georgist portfolio? After all, one of George’s theses is that land is often bid up past its inherent economic value in advance of expected future appreciation, and Buffett famously said an asset owner makes his money when he buys: don’t pay too much. It is harder to overcome bad timing and buying when speculative values are at their max. You’d rather be an unsophisticated real estate investor with good timing than a sophisticated one buying at a peak.

Interestingly, Georgists have identified an approximately 18-year cycle in real estate based on George’s theory of land speculation driving economic crashes. Our last cycle peak was 2008, which would mean our next peak is (checks math)… 2026. Once a peak occurs, the ideal time to buy is 4-8 years later, which would be 2030-2034. If George is right, it’s fortuitous to discover him now, with time to accumulate dry powder when the next cycle begins.

Later in life, George began to see that other types of monopolies were akin to land rent⁵. Yet, all businesses need “moats” to survive, some form of monopolization, and it is the duty of all business owners to turn earned advantage into more durable and sustainable unearned advantage, as the same pitiless forces that oppress the laborer oppress the owner of a commodity business.

But George, however impractical, is a moral witness that all successful enterprises incorporate some aspects of unfair, lucky, or providential monopolies. To whom much is given, much is required, and while one can reject George’s radicalism, those blessed in the capitalist system should keep in mind their obligations to others and be particularly generous to those who co-labored with them to build durable margins without unlimited upside, as well as do their part to maintain the communities and political systems that enable their prosperity.

Coda: The Two Georges & Yankee Idealism

George’s rhetoric was my first book-length encounter with the type of Yankee idealist cited by another George, the Southern apologist George Fitzhugh, who said:

The Abolitionists, the only assailants of Southern Slavery, have, we believe, to a man, asserted the entire failure of their own social system, proposed its subversion, and suggested an approximating millennium, or some system of Free Love, Communism, or Socialism, as a substitute.

…

The failure of laissez-faire, of political economy, is admitted now by its last and lingering votary. Free society stands condemned by the unanimous testimony of all its enlightened members.

…

The people in free society feel the evils of universal liberty and free competition, and desire to get rid of those evils. They propose a remedy, which is in fact slavery; but they are wholly unconscious of what they are doing, because never having lived in the midst of slavery, they know not what slavery is.

Fitzhugh attempted to link abolitionism to other radical Northern doctrines, and the documentary record made that rather easy. “Free love” included the “complex marriage” of the Onedia colony, the polygamy of the Mormons, and the “radical individualism” of Stephen Pearl Andrews. Unlike most provincial Southerners, Fitzhugh had an intellectual curiosity about Northern radicals, considered many his friends, and took their claims about the interconnectedness of various liberation movements seriously. Andrews made explicit his belief in the abolition of both slavery and marriage:

I take the position which, saving the judgment of my critics, is exceedingly new in the world, that I have no better right to determine what it is moral or proper for you to do than I have to determine what it is religious for you to believe; and that, consequently, for me to aid in sending you or another man to prison for fornication, or bigamy, or polygamy, or a woman for wearing male attire, and the like, is just as gross an outrage in kind, upon human rights, as it would be to aid in burning you at Smithfield for Protestantism or Papacy, or at Geneva for discarding the doctrine of the trinity.

…

I suppose the case that in the use of our new-fledged freedom I act on my convictions, not his, and change my relations every week or month, or take an unusual number of conjugal partners…

…

The restraints of marriage are becoming daily less. Its oppressions are felt more and more. There are to-day in our midst ten times as many fugitives from matrimony as there are fugitives from slavery; and it may well be doubted if the aggregate, or the average, of their sufferings has been less. There is hardly a country village that has not from one to a dozen such persons.

Subsequent history and the “penumbras and emanations” of Supreme Court jurisprudence seem to align more with Fitzhugh’s jeremiads and Andrews’ prophecies than conservatives’ standing athwart progressivism, demanding that it stop.

On the wage versus chattel slavery issue, Fitzhugh’s Cannibals All uses as its central rhetorical device an example borrowed from Andrews. Imagine a merchant’s carriage breaking down in a rural village where there is one wheelwright able to conduct a repair. The merchant has perishable cargo worth, in today’s money, $15,000, that must be delivered to a nearby port, or it will be worthless. The wheelwright offers to repair the wheel, which will take an hour, for just under $15,000, since that’s “market price” in the circumstances.

Most readers’ consciences are shocked by the wheelwright’s behavior, but to Fitzhugh, this is hypocrisy because a) the situation is not morally different but simply unusual, whereas everyday acts of commercial advantage-taking are accepted due to convention, and b) it represents a rare instance of labor exploiting capital rather than the reverse. To Fitzhugh — and many abolitionists agreed, which he extensively documents, with approximately half his book consisting of quotations or paraphrases of his opponents’ admissions against interest — free labor was nothing more than a race to the bottom to give the lowest possible wage for the maximum extracted output. Fitzhugh’s core argument to the North was to remove the plank in your own eye before seeking to correct the speck in the eye of your countrymen⁶.

Orestes Brownson, a prominent Bostonian and abolitionist, likewise critiqued the North’s wage system:

Wages is a cunning device of the devil, for the benefit of tender consciences, who would retain all the advantages of the slave system, without the expense, trouble, and odium of being slave-holders.

…

If the slave has never been a free man, we think, as a general rule, his sufferings are less than those of the free laborer at wages.

The laborer at wages has all the disadvantages of freedom and none of its blessings, while the slave, if denied the blessings, is freed from the disadvantages.

We regard the slave system as decidedly preferable to the system at wages.

Henry George agreed:

When the slaveholders of the South looked upon the condition of the free laboring poor in the most advanced civilized countries, it is no wonder that they easily persuaded themselves of the divine institution of slavery. That the field hands of the South were as a class better fed, better lodged, better clothed; that they had less anxiety and more of the amusements and enjoyments of life than the agricultural laborers of England there can be no doubt... In the Southern States, during the days of slavery, the master who would have compelled his negroes to work and live as large classes of free white men and women are compelled in free countries to work and live, would have been deemed infamous... But in London, New York, and Boston, among people who have given, and would give again, money and blood to free the slave, where no one could abuse a beast in public without arrest and punishment, barefooted and ragged children may be seen running around the streets even in the winter time, and in squalid garrets and noisome cellars women work away their lives for wages that fail to keep them in proper warmth and nourishment. Is it any wonder that to the slaveholders of the South the demand for the abolition of slavery seemed like the cant of hypocrisy?

…

Our boasted freedom necessarily involves slavery, so long as we recognize private property in land. Until that is abolished, Declarations of Independence and Acts of Emancipation are in vain. So long as one man can claim the exclusive ownership of the land from which other men must live, slavery will exist, and as material progress goes on, must grow and deepen!

George and others’ diagnosis of the poverty of free labor in this era was later verified with modern empirical techniques when Nobel-winning economist Robert Fogel documented that enslaved people had superior diets (about 3,400 calories / 165 grams of protein vs. 2,800 calories / 100 grams of protein for free laborers), longer life expectancy (36 vs. 33), fewer working hours (2,800 annually vs. 3,200+), and better housing (69 square feet per person versus 30-40 in NYC tenements). None of this is to say that slavery was good, but rather that if the wage free labor could attain was materially worse than what they would receive in-kind as chattel slaves, then there must be some hidden injustice in the Northern system, especially given industrial advances in production per capita⁷.

This, I think, is ultimately both why slavery had to end and some form of socialistic safety net extended into the free market: public workers’ compensation, unemployment, disability, and retirement insurance⁸. At some point, the moral logic of Huey Long’s “BBQ speech” dominates, in that when the common necessities of life become so trivial to produce due to technological advances, it seems unjust for basic material needs to go unmet. But this is a hard problem, and one set of benefits, morally justified, creates a constituency for bigger public benefits that create real moral hazard, given our current condition of mass public dependency and 11% of prime-age men not in the workforce.

George never quite explains how he wants to spend the revenues of his land tax. It would have covered the entire government of the time and then some, and he’s unclear whether he would have redistributed the excess directly to citizens with some sort of UBI, or else have the government spend it on other public goods. Today, however, a total tax on land rent would barely cover 25% of government spending. George’s bigger prediction, never tested, was that such a tax would free up additional productive capacity to make many of today’s social welfare programs unnecessary.

And, this, I think, is the best argument contemporary Georgists can make. If George is right, it would be much cheaper and morally desirable to tax land (and presumably other types of monopolies) and open up labor and capital to expand output to more efficiently and evenly distribute the bounty of modern production, rather than engaging in ruinous schemes to redistribute the stunted yield of monopolies on the back end⁹. Like Fitzhugh, his ideas were a brilliant synthesis reconciling the productivity of capitalism with the moral claims of socialism, and unlike Fitzhugh, he does not feature slavery as a central organizing principle. And his land tax is endorsed by many mainstream economists as the least harmful in avoiding taxing productive activity, agreeing with George practically in his moral claim that God’s endowment of nature is rightly property of the entire commonwealth.

But George’s rhetoric goes well beyond that, and this is what ultimately kills his credibility. A wide-eyed idealist, he claims his land tax would, among other things:

…abolish poverty; tame the ruthless passions of greed; dry up the springs of vice and misery; light in dark places the lamp of knowledge; give new vigor to invention and a fresh impulse to discovery; substitute political strength for political weakness; and make tyranny and anarchy impossible.

That thieves, drunks, and prostitutes would disappear:

The potential earnings of the labor thus going to waste, the cost of the reckless, improvident and idle habits thus generated; the pecuniary loss... suggested by the appalling statistics of mortality, and especially infant mortality, among the poorer classes; the waste indicated by the gin palaces or low groggeries which increase as poverty deepens; the damage done by the vermin of society that are bred of poverty and destitution—the thieves, prostitutes, beggars, and tramps...

That he would eliminate pride and greed:

It seems to me that in a condition of society in which no one need fear poverty, no one would desire great wealth—at least, no one would take the trouble to strive and to strain for it as men do now. For, certainly, the spectacle of men who have only a few years to live, slaving away their time for the sake of dying rich, is in itself so unnatural and absurd, that in a state of society where the abolition of the fear of want had dissipated the envious admiration with which the masses of men now regard the possession of great riches, whoever would toil to acquire more than he cared to use would be looked upon as we would now look on a man who would thatch his head with half a dozen hats, or walk around in the hot sun with an overcoat on. When every one is sure of being able to get enough, no one will care to make a pack-horse of himself.

And George makes the error of many progressives in rejecting God if the world is, by design, unequal:

It is difficult to reconcile the idea of human immortality with the idea that nature wastes men by constantly bringing them into being where there is no room for them. It is impossible to reconcile the idea of an intelligent and beneficent Creator with the belief that the wretchedness and degradation which are the lot of such a large proportion of human kind result from his enactments; while the idea that man mentally and physically is the result of slow modifications perpetuated by heredity, irresistibly suggests the idea that it is the race life, not the individual life, which is the object of human existence. Thus has vanished with many of us, and is still vanishing with more of us, that belief which in the battles and ills of life affords the strongest support and deepest consolation.

George was accidentally right about Malthus, but takes this argument further, advancing an extreme blank-slate view about the uniform abilities of man, and the limitations of any differences to merely superficial. He argues in another passage that men are more equal in their ability than other animals, more like different colors of horses than breeds of dogs (and interestingly, he ignores the more obvious analogy of breeds of horses, which are significantly different from each other, say a Clydesdale versus a thoroughbred). But at the margin of productivity in complex, fragile, advanced economies, small differences can add up to big outcomes. This seems an unnecessary idealism for his theory, given that rejecting Malthus was sufficient. But for him, Malthus and Darwin are sufficient reasons to reject belief in God.

This makes no sense to me. The Scriptures teach an eternal, infinite inequality that seems much harder to accept than unequal temporal conditions, but this error is not uncommon among modern Christians, who somehow sit more easily with the doctrine of eternal hell, which I struggle with mightily, but can’t abide mere differences in innate productive capacities and resulting material inequality here, where our “days are as grass.” Divine election and hereditary traits are both non-meritorious favor or disfavor, but the former is forever.

And finally, I promise I’m not making this up, George believes his land tax would inaugurate the return of Christ:

With want destroyed; with greed changed to noble passions; with the fraternity that is born of equality taking the place of the jealousy and fear that now array men against each other; with mental power loosed by conditions that give to the humblest comfort and leisure; and who shall measure the heights to which our civilization may soar? Words fail the thought! It is the Golden Age of which poets have sung and high-raised seers have told in metaphor! It is the glorious vision which has always haunted man with gleams of fitful splendor. It is what he saw whose eyes at Patmos were closed in a trance. It is the culmination of Christianity—the City of God on earth, with its walls of jasper and its gates of pearl! It is the reign of the Prince of Peace!

And what of landowners relying upon their title and security? Well, under George, they get nothing for the diminution of their property:

Historically, as ethically, private property in land is robbery. It nowhere springs from contract; it can nowhere be traced to perceptions of justice or expediency; it has everywhere had its birth in war and conquest, and in the selfish use which the cunning have made of superstition and law.

…

This robbery is not like the robbery of a horse or a sum of money, that ceases with the act. It is a fresh and continuous robbery, that goes on every day and every hour. It is not from the produce of the past that rent is drawn; it is from the produce of the present. It is a toll levied upon labor constantly and continuously. Every blow of the hammer, every stroke of the pick, every thrust of the shuttle, every throb of the steam engine, pay it tribute… It takes little children from play and from school, and compels them to work before their bones are hard or their muscles are firm; it robs the shivering of warmth; the hungry, of food; the sick, of medicine; the anxious, of peace… it fills brothels with girls who might have known the pure joy of motherhood; it sends greed and all evil passions prowling through society as a hard winter drives the wolves to the abodes of men; it darkens faith in the human soul, and across the reflection of a just and merciful Creator draws the veil of a hard, and blind, and cruel fate!

…

Now if we apply to this case of The People vs. The Land Owners the same maxims of justice that have been formulated by land owners into law… we shall not only not think of giving the land holders any compensation for the land, but shall take all the improvements and whatever else they may have as well.

Security in property ownership is the foundation of the rule of law, yet we see, in one volume, a fanatical Yankee making the case for seizing it, without compensation, and those who refuse him are the moral equivalent of man-stealers and antichrists holding back heaven on Earth. Talk about Jurassic Locke! George may be directionally correct, and his remedy among the least crazy, but controlling the intellectual descendants of these people remains a challenge for any free society.

They were and are bats**t crazy religious heretics. Darren Beattie has argued that conservatives must have a positive vision for ruling, that “don’t tread on me” will always lose persuasively to “silence is violence,” and I tend to agree. But man, that seems hard when a Yankee liberal can work himself into a lather about the Second Coming of Jesus Christ over a preference in tax policy. What conservative is unhinged enough to compete with that?

Conservatism means not doing that kind of thing, of accepting limits in a fallen world, but I think attracting support in a mass democracy will require it. We see this drift already, with the masses attracted to insane but directionally correct narratives that thinking conservatives accommodate out of political expediency. Some bemoan this drift, but to me it’s no different than the way the Left has motivated their lumpenprole voters for decades, and part of conservatives’ finally figuring out a formula for durable electoral success, because a gentleman’s republic it ain’t. We could return to the elegant arrangements of our founding, but that seems less achievable than George’s land tax.

1. A friend informs me that prices of teardown homes in Scottsdale, Arizona imply a land value of over $1MM an acre in prime residential locations!

2. Claude: “Citywide median asking rent in 2025-26 is ~$3,500/month, but the median paid rent (skewed by stabilized units, longer tenancies, and outer-borough share) is closer to $2,200-2,500/month. For a single median-income renter in the outer boroughs paying ~$2,200/month, that’s $26,400/year in gross housing rent.

The land share of NYC residential gross rent is the contested number. NYC Department of Finance assessed land-to-total ratios run ~60-75% in Manhattan, ~35-50% in the outer boroughs. Glaeser & Gyourko’s “regulatory tax” decompositions suggest that in NYC, the land/locational component of housing cost dominates structure cost — roughly 55-65% citywide for new construction, somewhat lower (~45-55%) for the existing stock once you net out depreciated structure value. I’ll use 50% as a mid-case for an outer-borough median renter.

So: $26,400 × 50% = ~$13,200/year in direct housing land rent for an individual median renter.

Every dollar spent at NYC bodegas, restaurants, laundromats, salons, etc. has embedded ground rent that the merchant passes through. NYC commercial rents are extreme (Manhattan ground-floor retail can be $200-400/sqft), and most NYC retailers pay 10-20% of gross revenue in occupancy costs, of which roughly half is land rent versus structure.

A median NYC worker probably spends ~$12,000-15,000/year on local goods/services subject to NYC rent passthrough (food away from home, personal care, local retail, entertainment — excluding most online retail which has out-of-town fulfillment, and excluding nationally-priced goods). At ~7-10% land-rent passthrough: another ~$1,000-1,500/yearindirectly.”

3. Three measures, annualized basis. R_f = 3.4% (historical avg T-bill). Annual volatility from Ibbotson SBBI (stocks, bonds) and academic estimates (land, RE).

Sharpe Ratio = (R − R_f) / σ

Excess return per unit of total volatility (standard deviation of annual returns). Higher = better risk-adjusted return. The most widely reported measure penalizes upside volatility equally with downside.

Sortino Ratio = (R − R_f) / σ_down

Excess return per unit of downside deviation only (std dev of returns below the target/risk-free rate). Ignores upside volatility. Preferred by many practitioners because investors don’t mind upside surprises — only losses hurt.

Calmar Ratio = (R − R_f) / |Max Drawdown|

Excess return per unit of worst peak-to-trough loss over the entire period. Captures tail risk that volatility measures miss. Particularly relevant for leveraged positions where a drawdown can trigger margin calls or forced sales.

4. Though the scion told me, they do have the occasional “brother-in-law” problem, where an heiress marries some guy who thinks he’s smart and demands the family real estate be sold so they can have a “diverse portfolio,” i.e., he wants to play the stock market. It’s helpful in these situations to cite the rule, “we never sell anything.” Let heirs and their spouses invest the income however they like, but the underlying land never gets sold.

5. Interestingly, George wanted to abolish patents but preserve copyrights. He was perfectly fine with his rent extraction as a best-selling author!

6. Fitzhugh, a realist like Sam Houston, never supported secession.

7. Fitzhugh highlights Northern arguments that free labor was more profitable as disproving their case, which he took to mean, logically, that effective wages were lower, in that profit is sales minus expenses, notably labor. Robert Dabney, in his Defense of Virginia, showed that, in seeming contradiction, land values on the Southern side of the Ohio River were higher. Dabney reconciles this by showing that larger Southern operations would buy supplies in bulk, cutting out general stores with giant markups. So large southern farms could be less profitable on a percentage basis but more valuable as vertically integrated producers.

And this is where I would quibble a bit about Georgist claims of landowners wanting maximum rent per acre. What any capitalist really wants is maximum absolute profit for the entire enterprise, which I would reduce to profit per hour of the capitalist’s time at the limits of his ability to scale, which is the only limited resource, not profit per arbitrary unit of goods sold or acre owned. Even monopolists are profit maximizers, not profitability maximizers, and ordinary capitalists are not naturally uncaring towards their workers if margins are healthy. This is why a business that treats its workers well either needs the “moat” against competition or, if producing a commodity, extreme vertical integration to protect every basis point of margin. Henry Ford, for example, wanted to take care of his workers with his unprecedented $5 wage, and could because he owned much of his supply chain. Most small freeholders or wage workers lacked this compared to larger Southern operations and were often materially poorer despite being free.

In other words, free laborers were oppressed on two sides: landowners extracting some of their wages on the front end, and again on the back end when they went to spend their wages at gigantic markups. The broad Yankee “middle class” of shopkeepers and suppliers was an oppressor of the poor, according to Dabney:

In a farming neighbourhood of the hireling States, he saw at every hamlet and cross-road, pretentious shingle-palaces, occupied as large stores, where great accumulations of farm produce were paraded; sacks of meal, barrels of flour, bins of corn, packs of wool, garners of wheat, tubs of eggs, cans of butter, hogsheads of bacon, and even kegs of home-made soap, together with no little show of cheap finery. In the farming districts of the South, he rode along a quiet, shady road, with the country-seats of the planters reposing at a distance, in the bosoms of their estates; and found at long intervals a little country store, where a few groceries, medicines, and cloths were exposed for sale to sparse customers. Now this narrow trafficker, whose only heaven was buying and selling, very naturally jumped to the conclusion, that the South was so much poorer than the North, as she exhibited less local trade. Whereas in fact, she was just so much richer.

…

This coarse fellow behind the counter, retailing the meal and bacon and soap, at extortionate retail prices, to labourers, should be compelled to labour himself, at some really productive task; and the labourers should have gotten these supplies, untaxed with his extortion, on the farms where their own labour produced them, and at the farmer's prices.

…

But now, abolition comes: these ten labourers become freemen and householders. They now work the same lands, for the same proprietor; and instead of drawing their wages in the form of a generous subsistence at wholesale prices, they draw money. Out of that money they and their families must be maintained. One result is, that the landholder now has a surplus of four hundred bushels more than before. Of course it goes to the corn-merchant. And there must these labourers go, with their money wages, to buy this same corn, at the enhanced retail price. They get less for their labour. The local merchant, thus unnecessarily invited in, sucks a greedy profit; a vain show of trading activity is made in the community; and all the really producing classes are made actually poorer.

8. And we shouldn’t overstate the contribution of government outside of safety nets. Material improvement in the conditions of laborers since the Industrial Revolution, and the wealth to fund social insurance, derive from technological advances, which neither government nor capitalism can exclusively take credit.

9. The board game Monopoly was intended by its inventor to illustrate Georgist principles.