26: Ely: a liberal economist defends landlordism

American Journal of Economics and Sociology, The,  April, 2004  by Steven B. Cord,  Robert V. Andelson

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Jorgensen's rejoinder: To the above, Jorgensen juxtaposes Ely's passage on consumption taxes for the masses, quoted under the last heading. The obvious conclusion to be drawn from comparing the two passages is that Ely maintains that it is the landowner's own business what he does with his income, but that if workers spend money on such nonessentials as ice cream and "movies," they should be penalized by indirect taxation. It could, of course, be objected that such taxes would apply to landowners as well, but Jorgensen contends that the landowner's income, being a social product, is something that "justly belongs to the whole community," whereas the wages of labor and the interest on capital are returns for human effort expended and useful services rendered, and therefore rightfully belong to those who have earned them. "Hence, if any portion of these funds of wages and interest be appropriated by taxation, it is--so long as government has its own source of revenue--nothing less than robbery, robbery under the forms of law." (30)

"24--That the Singletax Means, Not INDIVIDUALISM, But SOCIALISM and COMMUNISM": "According to the single tax theory all land is a gift of nature to society; consequently all the returns from utilizing land belong to society, not to any individual owner." (31)

Jorgensen's rejoinder: Jorgensen correctly asserts that "the single-tax theory does hold that 'all land is a gift of nature to society,' but it does not hold that 'all the returns from utilizing land belong to society, not to any individual owner.' The singletax holds just the opposite of this; namely, that 'all the returns from utilizing land' belong to individuals and not to society." (32) Upon analysis, Ely's statement would indeed appear, as Jorgensen complains, to place the single tax "in the same class with socialism and communism." Whether this was, as he charges, Ely's design, is less clear. Yet Ely's treatment of George in his Recent American Socialism lends a degree of credence to the charge, for in that work George is presented as a harbinger and abettor of socialism (which to some extent he unintentionally was), with scarcely a hint that he was also a firm believer in the rights of capital and in free market competition. (33)

Later Criticisms by Ely

Ely's Outlines of Economics went into six editions over a period lasting from 1893 to 1937. Most of these had various co-authors, and the views expressed in them were not always uniform, but Ely, as senior author, was ultimately responsible for the content of each edition. While all the editions tended to be unsympathetic to the single tax, the fullest discussion of it is contained in the two last ones, and it is therefore to these that we shall primarily refer.

"On what ground of justice or ethics," asked Ely, "shall the landowner be singled out for taxation?" (34) Why should the rich merchant or stockholder go tax free while the landowner, who may be either rich or poor, is taxed to the point of confiscation? Ely maintained that the only just basis for taxation is ability to pay, and so was a strong exponent of the progressive income tax (although, as we have seen, he also favored taxes on consumption).