In 1879 Henry George published a book called Progress and Poverty in which he argued that people should own the value that they produce, but that land and natural resources should belong equally to all members of society. The book, which was apparently  the first popular economics text, was one of the most widely printed books ever, selling millions of copies worldwide. It helped launch the Progressive Era in American politics, but few economists seem to consider it now, even though there is an economic philosophy called Georgism, a Henry George chair in philosophy at St. John’s University, a Henry George Institute publishing the Georgist Journal, and an annual Henry George Lecture at the University of Scranton.

George argued that ownership of land and natural resources was a form of monopoly that exerted a downward pressure on wages to the point that increasing “prosperity” was always accompanied by increasing poverty. His cure was to tax land values or the rent from land so that land values were not subject to speculative bubbles. For George “land” meant the entire material universe except for human beings and their products, and, if economic actors had to pay for all the natural resources they used, he argued that other forms of taxation which impeded productivity would be unnecessary. It may be that the best way to dampen the tendency towards speculative bubbles is a heavy tax on capital gains on any sort of asset speculation.

Needless to say in our system land and the natural resources found on it are largely owned by individuals or companies, although there have been some communities which tried to implement George’s theories. The settlement of the American west provides a nice example of how every patch of land can have a deed or title of ownership. The land was considered “public domain” owned by the government and then given or sold to homesteaders, railroads, or speculators. How the government dealt with the previous inhabitants of the land has been well documented and part of what George was analyzing was the impact of speculation in land that accompanied the building of the railroads.

Real estate speculation obviously played a large role in the 2008 financial crisis, but the bubble in real estate values was exacerbated by the ability of mortgage lenders to securitize mortgages and pass them along in financial markets. Residential real estate presents a unique problem for money and finance. A home is not a capital asset producing income, but it has become a major source of individual wealth.

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