Hundreds of thousands of people die from malaria each year, but it took 141 years to develop a vaccine for it. Advance market commitments could speed things up next time.
Henry George were popular around the English-speaking world. His best-known work, Progress and Poverty, examined the importance of land in economics and proposed taxing land value as much as possible. It sold several million copies and was one of the best-selling books of its era.
Across the Atlantic from George, the wealthy landowners who dominated British politics predominantly supported the Conservative Party 1. In response, their opponents 2, the Liberals and Irish nationalists, increasingly harnessed tenant agitation for political support and with it, support for land taxation.
Asquith’s gambit failed spectacularly. Britain in the early 1900s became a case study in how administrative complexity can derail land value taxation. The tax cost more to administer than it collected, and it was so poorly worded that it ended up becoming a tax on builders’ profits, leading to a crash in the building industry. As a result, David Lloyd George, the man who introduced the taxes as chancellor in 1910, repealed them as prime minister in 1922. The UK has never fully reestablished a working property tax system 3.
This history serves as a cautionary tale for modern Georgist sympathizers who believe a land value tax will solve the world’s housing shortages. While Georgists argue that land markets suffer from inefficient speculation and hoarding, Britain’s experience reveals more fundamental challenges with both land value taxes and the Georgist worldview. The definition of land value was impossible to ascertain properly and became bogged down in court cases. When it could be collected, it proved so difficult to implement that administration costs were four times greater than the actual tax income. Instead of increasing the efficiency of land use, it became a punitive tax on housebuilders, cratering housing production.
Worst of all, it not only failed to solve the fundamental problem with British local government – that it had responsibilities that it could not afford to cover with its narrow base – but actually contributed to the long-term crumbling of the property tax systems Britain did have.
Not all countries failed as spectacularly as Britain, dooming not only the land value tax itself but also the existing property tax system it replaced, but few countries have successfully implemented a land value tax. Most countries that claim to have land value taxes, like Australia and Taiwan, exempt the two biggest uses of land: agriculture and owner-occupied housing.
How Liberals came to love land value taxes
By 1900, 77 percent of Britain’s population lived in cities, and around two thirds of men (but no women) could vote after three Great Reform Acts of 1832, 1867, and 1884. Still, a relatively small number of landowners continued to wield outsized influence in politics. In 1880, 322 of the 652 MPs owned more than 2,000 acres. The House of Lords, which possessed the power to veto all legislation (although by centuries-old convention, it had typically given way when the two houses disagreed), was even more landowner dominated, with 308 of its roughly 800 members being among the 6,000 largest landowners in England.
Henry George had long maintained an interest in Irish affairs. Despite being an evangelical Protestant of English ancestry, he had in 1869 edited a small Catholic weekly newspaper called The Monitor. Later, in 1879, he argued, for the Sacramento Bee, that the landlords of Ireland should be expropriated to lift the burden of rents on farmers. He sent 25 copies of his most famous book, Progress and Poverty, published that same year (but mostly ignored until later), to leading Irish-Americans in New York. One of them, George Ford, was the founder and editor of Irish World,the largest Irish-American paper at the time, for which George regularly wrote.