African economies are among the fastest growing in the world, many expanding by 7% or more annually, but their people continue to live in poverty. In fact, rates of poverty have remained unchanged or even increased. South Africa’s unemployment rate is 27%. It is the economic powerhouse of the continent. Many foreign companies have well established businesses there. CCTV reports that French businessmen are there en masse this week for a business development conference. Yet the rate of poverty among South Africa’s people has actually increased over last year’s rate.
This anomaly -- an increase in economic progress being met with a corresponding increase in poverty -- sparked Henry George’s work in economic theory, first fully set forth in “Progress and Poverty” and published in 1879. George had come to San Francisco from his native Philadelphia, where he had not been able to find work that was both remunerative and at the same time meaningful to him. After working in a relative’s dry goods business for a time, he found his calling as a newspaper reporter, editor, and, eventually, owner and publisher of newspapers. He wrote skillfully, truthfully, and with a passionate sense of justice for all.
One day he was out riding his horse in the hills above Oakland, taking in the expansive views of the entire San Francisco Bay. (My grandmother’s grandfather published “The Oakland Daily News” in Oakland from 1871 to 1877, and I like to think that he and Henry George were at least acquaintances, if not friends.) Rounding the flank of a hill, George came across a teamster busy repairing a broken axle on his wagon, his horses idly munching the grass to one side.
The newspaperman had been contemplating the rapidly expanding cities and the throng of ships on the bay, their masts a huge forest taking the place of the now eradicated redwood and oak forests that had covered these denuded hills a mere decade before. He asked the teamster, “How much is the land here worth?” to which the laboring man replied, “I got no idea what’s worth. But there’s a man down there,” waving a hand covered in black axle grease in the general direction of a small farm lower down the slope, “who’ll sell you an acre for a thousand dollars.”
That teamster’s remark held the kernel of what would become the life work, first in his thoughts and then in his writings, of Henry George. The difference between the value and the price of land, the fact that a single man had the authority to dispose of acres and acres of land at his discretion, and the inherent motivation to leave land unused while awaiting a higher price, explained why economic development was bringing poverty to the Golden State.
George had observed in his short time here that there had been no poverty in California when he first arrived, at least what might be called “urban poverty.” The rural poor may have tattered clothing and few possessions, but they have clothing, food, and a home in which to sleep. The poor people whose fate so weighed on George lived by contrast in abject misery, the children begging for food and eating out of garbage bins, the women forced into prostitution, the men hopeless, staring blankly on the filth and degradation in which they and their families were mired. The lives of these people and the economic conditions that led to such ruin could not be explained. Shouldn't the growth of a huge city, the arrival of trading ships laden to the Plimsoll line with goods from around the world, and the opening of the trans-continental railroad bringing the wealth and power of the United States to this place have improved the living conditions of even the poorest folks? Why was there not, in Ronald Reagan’s phrase, a “trickle down” effect? Why didn't the tide lift all ships?
The teamster’s remark led George to realize that “progress” increased the incentive for landowners to make the resource they controlled scarce and thereby to increase rents. He also realized that there is no need for private ownership in land. The institution amounts to nothing more than a monopoly granted by the State to individuals who can thereby enrich themselves without labor, without making any contribution at all to the society. Landlords themselves he compared to the Pharaohs of Egypt and the Maharajahs of India as a parasitic class of people who extort their riches from the working class and employ men at arms and entire judicial systems to keep the oppressed subservient, to prevent revolution. It is this system that causes poverty.
George believed that no one should escape the duty of working to benefit his fellow citizens by virtue of holding “title” -- a designation on paper created and enforced by the State. You are entitled to own anything you make or anything you can get by trading what you have made with someone else. If you build a house, you can own that house, but you cannot own the land under it. If you plant a crop on a piece of open land and harvest it, you have full ownership of that harvest.
George showed that it is labor that creates capital, not capital that creates jobs. Reagan’s lie that tax cuts for the rich would spur job growth has been decidedly disproved, despite the fact that the business media and politicians still cite the idea as unquestionable truth. So too George laid to rest the idea that immigrants impoverish a nation’s citizens by taking up resources that would be available for the native born. “Every mouth arrives in this world with two hands,” he liked to say. The result of immigration is increased economic growth and more goods for everyone.
I find myself wondering most every day how George’s ideas would play out if implemented in this country now. In fact, these imaginings are the raw material for my next novel. In it I also imagine the magical transportation of Jose Cornelio Bernal, holder of a land grant (first Spanish and later Mexican) making him owner of a full quarter of what is now San Francisco, one of the most expensive cities in the world. When the Americans took California from the Mexicans, his family lost ownership of the land, though after decades of battling their way through the American judicial system, they ultimately won: the Supreme Court upheld the validity of their claim. But by then they had either sold it all to pay lawyers or had seen it foreclosed on by lenders. (The first to foreclose having been one William Tecumseh Sherman, who would later visit a terrorist campaign of violence and plunder on the Confederate States as he burned his way to the sea.)
Of course, now-a-days, Bernal would have no choice but to find work in the Mission as an undocumented alien. From there he could watch the civic turmoil wrought by rising housing costs and reflect on the justice or injustice of what had been, he thought, his rightful prerogative and a birth-right he would hand down to his children and their children, the private ownership of land.
But that tale will have to wait for now . . . .