Spencer Heath Archive

Item 1071

Three Great Problems confront the Western nations today: the problem of unemployment affecting both labor and capital; the problem of public revenue and finance, aggravated by the need for public relief; and the problem of clean and efficient performance of the functions of government, that is, of the public services — for beyond serving the public, there can be no rightful thing for public servants to do.

In its present state of evolution government is a compound of predatory and tribute-taking activities carried on by elected and appointed politicians, and creative activities in the form of public services carried on chiefly by special officers and agencies established by public authority and delivering their services through the public highways and other rights of way only to the territory served by them and not to any individuals as such.

Where private labor using private capital, that is, using the materials and facilities of industry, needs the cooperation of public labor and public capital, the public authority takes private capital by taxation or otherwise and puts these materials and facilities into the hands of public servants and agencies to perform their public services.

These public services delivered by the government to its territory by the hand of its servants and agencies and through the public rights of way greatly increases the productivity of the private labor and capital which has access to these government services. A portion of this increased production is rendered up to the owners of territory along and between the rights of way in exchange for access to and use of the public services. This portion of increased production so rendered up to land owners is called rent and this rent is the value, year by year, of the public services delivered to the particular location. A portion of the rent pays the wages of the public servants. The other portion, remaining with the title holders, is their interest on their investment of capital in the public services. This interest capitalized is the proper selling price of land value. It is good business practice that land owners should receive this interest because all of the public capital is taken either directly from them in land value taxation or at their ultimate cost and detriment by taxes being levied on production and so reducing rent. The position of a land owner, therefore, is that of an investor of capital in the public enterprises of his community. This makes it of the utmost interest to him that the public capital be employed and administered in the most efficient manner. Moreover, he is, in effect, the paymaster of the public servants — directly so if he bears the whole burden of the budget and there are no taxes or other governmental restrictions on production and trade, and indirectly so if the public services are financed by the taxation of capital and business activities for, as the great finance minister, Turgot, maintained, all public levies and restrictions are to the detriment of rent.

Landlords are therefore the natural stockholders in the public enterprises and directors of the public servants not alone because they are the public paymasters but also because they are the only class or group whose private and particular interests are exactly the same and identical with the public and general interest. For every slackening of the public services reduces their rents and every needed improvement or extension of these services increases their net rents; that is, it increases the interest they receive from the capital which they or their predecessors have invested in the public services.

It is of the organic nature and structure of society that needed public services must create land value in the form of rents and that out of rents must the public services be financed. Adjusting the political economy in conformity with this organic law solves automatically three great classes of social problems: the problems of unemployment of both labor and capital, of want mid potential plenty and the need of public relief; the problem of public finance, of raising ample public revenue without distress or opposition; and the problems of public administration, of inefficiency, corruption and demoralization in public affairs.

Public financing directly out of production, taxation of industry and trade, disemploys the socially efficient capital and labor and leaves the socially inefficient entrenched as monopolies without competition, production declines, /words missing? check original/ prices rise under the double influence of scarcity and monopoly, the disemployed capital is driven into destructive speculation upon the rising prices of commodities and securities and the disemployed labor is thrown on public relief to be financed by further taxation levied on a still more declining volume of production.

But the financing of all public services out of rent, out of what producers offer and freely pay for these services, emancipates labor and capital from all restraints upon their efficient employment — leaves them fully and creatively employed and provides for them the cooperation of public capital and labor in the form of facilities and services delivered to them in and through the public rights of way. Further, the public funds now coming solely from the rents collected by location owners, there comes into being at once a special class of persons who become directly the financiers of the public services and the direct paymasters of all public servants. By their position in the total economy, they are specially differentiated as guardians of the purity of government and the efficiency of all its services. These functions they may be relied upon to perform because only by protecting and improving the public services can their rents be maintained and advanced. Thus it becomes assured that the volume of production can be indefinitely increased by an emancipated private industry enjoying the cooperation of efficient public capital and labor in the public services, and out of this increasing volume of production there properly arises a constant increase of rents accompanied by a decline in the cost of the public services that create them. The limit to this creative process can be seen only at the point where all the need and desire for wealth is fulfilled and the economic functions have become automatic and unconscious in the body of the social organism. From this point social growth and development doubtless will take the form even now already foregleamed in the unique psychic endowments and spiritual nature of mankind.