This Land is Your Land

This Land is Your Land

THIS LAND IS YOUR LAND

 An online talk given by John De Val on 14 November 2020

 (The views expressed in this talk are my own views, and do not necessarily represent the views of the School of Philosophy, Cambridge – John De Val)

The title of this talk ‘This Land is Your Land’ comes from a song with the same title which is one of the United States' most famous folk songs. Its lyrics were written by Woody Guthrie in 1940 as a critical response to Irving Berlin's "God Bless America", which Guthrie considered unrealistic and complacent. Tired of hearing it sung on the radio, he wrote a new song which he originally called "God Blessed America"

 

Here is the first verse of that song;

 This land is your land, this land is my land

From California to the New York Island,

From the Redwood Forest, to the Gulf stream waters,

This land was made for you and me.

 

A little further on in the song we hear;

As I went walking, I saw a sign there,

And on the sign there, It said "Private Property."

But on the other side, it didn't say nothing!

That side was made for you and me.

 

In the squares of the city, In the shadow of a steeple;

By the relief office, I'd seen my people.

As they stood there hungry, I stood there asking,

Is this land made for you and me?

 In the song, Guthrie’s use of the word land refers to the country of America. But in order to have a country, you first of all need land, you need some part of the dry surface of this physical planet, Earth. From here on in this talk, that is the meaning of land I am going to use. I am going to suggest that this simple claim ‘this land is my land’, put into effect, lies at the heart of our current economic troubles. It is not the only claim that produces problems but it is a very important one.

 What are our current economic troubles? Big question, and we could easily spend all morning describing them. But I would like to illustrate one of them by drawing on an article by an American journalist, Michael Goldfarb, living in London but writing in the New York Times. He wrote five years ago but the conditions he was describing were still very close to what was being experienced earlier this year, pre-Covid.

 Here is what he said;

Our neighbours Lauren and Matt and their kids moved out of London to Cambridge the other week. Bibi, Andy and their two left for Bristol in June. Another of my 8-year-old’s classmates and her family are heading out after Christmas.

 In my book this is a trend.

The moves are not examples of the life cycle of the striving middle classes. Nor are they examples of middle-class folks being thrown on hard times by the sluggish British economy. The families moving out had good incomes.

Matt, who had been looking for a house for more than three years, summed up the reason for leaving best: “I don’t want to be a slave to a mortgage for the next 25 years.” Given the astronomic rise in house prices here, he wasn’t speaking metaphorically.

This is what happens when property in your city becomes a global reserve currency. For that is what property in London has become, first and foremost.

The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent. It has made my adopted hometown a no-go area for increasing numbers of the middle class.

The ordinary uses of the city have been changed beyond recognition. London was never a cheap place to live, but now more expensive property means more expensive everything else: restaurants, cinemas, bars and theater tickets.

And as for services, the minimal tax paid by those who have made property into money means that a city whose population has increased by 14 percent in the last decade can’t afford to build new schools. As a result class sizes will grow to untenable proportions. So younger people, like my former neighbours, feel compelled to leave — even though they were making a very decent living. The delicate social ecology that made London’s transformation into a great world city over the last two decades is past the tipping point, I fear.

For the quarter of a century I have lived here a sense of community has defined my life. A very organic sense of London pride has allowed this city to withstand substantial shocks — some welcome, like its transformation into a true cosmopolis; some unwelcome, like jihadist terrorism.

Now it is beginning to feel that the next phase of London’s history will be one of transience, with no allegiance to the city. I wonder whether those just parking their money here by buying real estate will ever be able to provide the communal sensibility to help the city survive the inevitable shocks it will experience in years to come.

I have quoted from that article not only because it describes a current malaise in the housing market but because it also highlights the close connection between an economic system and the type of society that it gives rise to.

Now you may well say that the problem Goldfarb identified was a London problem and London has always been different. What’s happening elsewhere in the country? One of the features of the current situation in Britain is illustrated by the so-called “boomerang” phenomenon – young adults returning to their parents’ home until well into their 20s or early 30s – is now a permanent feature of UK society and likely to trigger a profound rethink of the way that many families live their lives.

Research found nearly two-thirds of childless single adults aged 20-34 in the UK have either never left or have moved back into the family home because of a combination of a precarious job market and low wages, sky-high private sector rents and life shocks such as relationship breakups.

The growing cost of housing has fuelled the boomerang trend, with the proportion of adults aged 25-34 that own a home falling from 55% in 1996 to 34% twenty years later. Renting privately consumed 9% of tenants’ income on average in 1961; by 2017 it accounted for 36%. Stagnating wages and insecure employment for young people are also factors.

 According to the Resolution Foundation, in the 1980s it would have taken a typical household in their late 20s around three years to save up for an average-sized deposit. Now it takes 19 years.

 Expensive housing is a longstanding curse for Britain. It locks up financial resources in unproductive brick-and-mortar assets. It impedes the mobility of workers around the country. It requires buyers to take on high levels of debt which could, should interest rates rise sharply one day, bring economic ruin to many. It transfers resources from house buyers to house owners and thus tends to benefit the old financially at the expense of the young.

How did we end up in this unhealthy position?

I will start by considering why land matters?

Traditional economics held that there are three factors of production: land, labour and capital; but conventional economists today now consider land to be part of the factor, capital, and not different or special in any way. To contemporary economists the same law of supply and demand is implicitly assumed to apply to the natural resource, land, as it does to any other factors. This single failure to understand the special nature of land is an important reason for the failure of contemporary economics to solve the pressing social problems of the day, particularly the one of deep and deepening poverty, existing alongside great wealth and progress.

 So, why is land special? There are four distinct reasons why land is different from the other factors of production; four distinct reasons why land is special.

  •  First, everybody needs it. Human existence is impossible in the absence of access to land. The demand for land or, to be more precise, the demand for access to land, is a universal and undeniable demand. Irrespective of the particular human activity in question, that activity can only be carried out if land is available. Access to a site is a necessary condition for any, and all, human activity, including, of course, that of simply living. It is necessary for purposes of conducting a business that there be access to land; it is necessary for establishing a home that there be access to land. Of course, the amount of land needed for the conduct of the multifarious human activities varies widely from activity to activity, but nonetheless, the need for land is universal.
  • Second, land is not a product. It is not produced. Its existence is not the outcome of human effort, except in rare instances when land is reclaimed from the sea. Land is not produced because it does not have to be produced. It exists. It is given. And, as Woody Guthrie asserted, it is given to the whole human race, to everybody. This is so, because, as already noted, everybody (i.e. every body) needs it. Now because land does not have to be produced it has no cost of production. Improvements made to and upon it do have a cost of production, but the land itself does not. Hence any payment for land is not made to cover the cost of production of that land. This is a very different situation from that which prevails in the case of man-made goods. Payment for them is made to cover their costs of production, and hence to encourage them into existence. If no payment were made for man-made goods, production of them would cease. Land does not and cannot cease to exist; and it exists, in its entirety, irrespective of the payments made for it or not.

  •  Third, land has a market price only because people give it one. A site of land, that has an increasing market price over time is being given this increasing price – given by those who want it. That price is entirely unrelated to any increase in the cost of production of that land (which, as already noted, was and is zero). However, the increasing price is related to increasing levels of service provided to and around that land (such as roads and public utilities) and to increasing demand for that land. The fact that land has a market price only by virtue of being given one would have been an obvious fact to new arrivals in previously uninhabited countries. The first settlers simply found the land and put it to use. They were certainly not hindered from using it because its price was too high. It had no price at all, and it had no price because there was no community to give it one when they arrived. It is only when a community, however small, is established that a price for land arises. 
  • Fourth, land is the one natural factor of production that can be bought or sold. If air, like land, could be purchased and ‘fenced’ in such that it was available only to those able and willing to purchase it at the asking price, then economic progress – economic growth – would be absorbed by the owners of air and would be reflected in a rising price for air. Those who owned the ‘fenced-in’, enclosed air would charge for access to it, and because of the unattractive alternative of going without air, human beings would pay as much as they could afford to pay for it. This would be the only limit to how much the owners would demand. Thus its price would rise as the capacity to pay rose, and so the extent of the rise would be in step with the rate of economic growth.

 But of the natural elements which are essential to mankind for survival, air, like sunlight, cannot be privately captured and made available only to those who are willing and able to purchase it. Only land can. Air, fortunately, is too fine a substance to be ‘fenced’ in and held. So, it is the owners of land, not air, who absorb the fruits of economic progress. Hence the steadily rising price of land that is so readily observable. Land (via rental payments asked of tenants or the market price paid by purchasers of freehold title) has thus a pivotal function in the determination of the distribution of wealth. Land is the one natural factor of production the owners of which can ask their fellow human beings a price for its use; it is the one natural factor of production that can be, and is, bought or sold.

 Thus, land is not some quaint idea applicable to history prior to the industrial revolution. It is not stuff that was important only in the agrarian age. It is, of course, the basis of agriculture, but it is the same stuff that houses are built on in the twenty-first century, it is the same stuff that is the basis of our bustling cities with their teeming millions of people, and it is the very thing on which the value of a location rests.

 These, then are four reasons why land is special. Because land is so essential to life, it inevitably attracts the attention of those who know a good thing when they see it and are not too fussy about how they can get their hands on it. There is a term increasingly in use to describe them –‘landgrabbers’.

There have been many episodes of landgrabbing in British history and we will look at a few of them next because out of that history has emerged many of the economic problems that face us today.

I will start with the Anglo Saxon invasion

The Anglo Saxon invasion

As the Roman Empire began to collapse, the migrant pressure from the East forced the people of Europe to seek protection for themselves from external ‘barbarian’ attack, and consequent internal disorder. Families were ready to commit themselves to anybody who could protect them. When troops were still within call in the district, it was to the Roman commander that the people turned to for help. They were prepared to surrender their land to him if he guaranteed to defend them.

After the Romans had finally withdrawn, they had to seek protection from some other powerful individual. They became his vassals, holding their land from him subject to conditions of rendering him service, or rent in money or in kind.  Thus the feudal system emerged like a phoenix out of the ashes of the Roman Empire. Its terms were service in return for protection.

The Anglo-Saxons, whose invasion of Britain began in AD 449, regarded everything they seized by conquest as their common property, to be distributed as each new district was secured. ‘Property’ included the former inhabitants, all their moveable possessions, their livestock, and their agricultural land. The invaders shunned the towns and cities, settling in small villages usually composed of less than twenty households. The village community granted each household an entirely private area around their house usually bounded by a hedge, to be used as a kitchen garden, to rear chickens, to store crops and to keep tools and equipment.

By common agreement the village also allocated to each household a number of strips in its main field to be cultivated for a given period of time, after which the strips might be re-allocated, turned over to pasture or lie fallow. The harvest from these strips belonged entirely to that household. In addition each household had access rights to the meadow to graze their sheep and cattle, as well as to the surrounding ‘forests’ to glean wild foods, cut timber for building and fire-wood, keep pigs and hunt. These areas were known as the commons.

The sharing of fields and allocation of strips clearly required communal management and cooperation and general agreement was needed to alter the use of a field from cultivation to grazing, for the maintenance of fences, and other common responsibilities. Within this structure, however, each family was free to decide the crops to be cultivated and the type and number of animals reared. The Anglo-Saxons were fiercely independent and self-reliant.

But it is important to note that at this stage in our history, holding land, or more particularly holding the rights to use land, was a privilege with corresponding duties.

Around AD 500 the population of the British Isles was approximately 500,000, by far the majority of whom were the free Anglo-Saxon farmers of England. They all paid rent and contributed to the nation and community through civil and military service. The Kings, in whom the land was vested in the name of the community, only benefited from the performance of these services during their lifetime. But an army offers no protection after death. The monks, on the other hand, offered an extended service; they offered to pray for the souls of the monarchs after death. By granting land to monasteries, the rulers might be assured not only of prayers whilst living, but of prayers after death – for ever. It thus became usual to grant land to religious communities in perpetuity. Such a grant – a grant of what was known as Boc land – gave the land to the religious community for ever whilst they, in addition to the prayers, performed only what were considered the necessary duties – the maintenance of bridges and roads, and such like.

Now the Saxons, living a thousand years ago, understood the law of rent just as well as a modern speculator. They knew that to get hold of land for ever like the monasteries was very profitable. So they started grabbing land. How did they do it? Well, at that time between the 7th and 11th centuries, the King was advised by an assembly of the important noblemen called the Witangemot (or Witan for short). Boc lands could only be granted by the Witan by a unanimous vote of the Witan in full session, and could only be granted in any case to religious communities. This practice soon degenerated. The Witan began to grant Boc lands to those expressing an intention to set up a religious community. Moreover, as the kingdoms grew larger, it became more difficult for all with a voice at the Witan to attend. Accordingly, the proposed beneficiaries arranged matters so that only those favouring the grant attended the meeting. Much land was granted away by a packed Witan to people whose expressed intention to form a religious community was no more than a matter of form. They wanted the land, and by devious means they got it.

The Normans

The bare facts of the Norman Conquest are that in 1066 a wanted criminal and his gang of villains arrived in England and overran the place. The next act of William the Bastard, as he was known in France (he seems to have met both criteria for being so-called), was to claim the place as his own.

Having usurped the administration of the country, William had next to regularise and institutionalise the revenues. St. Augustine in 492, some 600 years earlier described this process with amazing prescience;

And if these ragamuffins grow up to be able to keep forts, build habitations, possess cities and conquer adjoining nations, then their government is no longer called thievish, but graced with the eminent name of kingdom.

William’s method of legitimising his crime was the traditional one. He replaced the existing land records with one of his own, which became known as the Domesday Book. One historian comments that the Domesday Book is little more than a swag list, which was little regarded as a legal instrument at the time, since it consisted mostly of William’s donation to himself and his brigands of the lands they had  ‘acquired’ as visitors after the Battle of Hastings. In France historians wrote that William was lucky to be beyond the reach of the French law, which had him in mind for the long drop for various awful crimes, including rape, murder, pillage, arson and treason.

Today, the commonly held view is that the Domesday Book is a foundation stone of good administration and government in Britain. Yet according to many scholars, it is no more than 5% accurate as to the legitimate owners of land in England in 1086, the year that it was compiled. The local people in eleventh century England did not co-operate with William’s monks and soldiers, who in their turn understood neither the language nor record keeping systems of the natives.

According to one source, the broad distribution of land ownership before and after William changed little. Before William, around 20% was owned by the Crown, 30% by the Church and 50% by the barons. What he did do was to impose the idea that all lands, including to an extent, monastic lands, were ultimately held with the king’s consent. This principle lives on in the manner in which heirless estates still revert to the Crown in England and Wales.

William parcelled out the land to his supporters and some few others as head tenants in return for homage and military and other service. The process was repeated by tenants and sub-tenants producing a pyramid structure of land tenure throughout the land.

Henry VIII’s Dissolution of the Monasteries

In 1533 Henry VIII broke with Rome over his divorce from Catharine of Aragon and created himself Supreme Governor of the Church of England. Having done this, he then had to find some way to persuade the rest of the country to drop Catholicism, with the Pope at its head, and to accept the new Church, with Henry at its head. Violence and bribery were among the chosen instruments.

Violence came easily to a Tudor monarch, bribery less so. However, lying before him following the change of Church allegiance were the lands of the Catholic Church and its monasteries. By dissolving the monasteries, Henry at one stroke removed a major source of opposition to his rule and at the same time freed up around 10 million acres of England alone to distribute to those of his followers and barons willing to accept the new church and impose it in their districts

 In William’s land grab 500 years before, there had been no significant alteration in the scale of landholding of the king, the Church or the barons. Henry not only altered the balance of power hugely but also revolutionised the way it was wielded in England and Ireland by redistributing the ownership of land within a group of about 1500 families. Henry scattered the new barons and landowners he had created throughout the kingdom, interspersing them amongst the existing barons. In addition with the incomes that came from the old Church lands, the new barons had huge wealth at their disposal. From this point on there would only be two sources of real power in the country, the king and the peers. Even though it did possess a significant amount of land confiscated from its Catholic predecessor, after Henry the Church was on the sidelines.

Cromwell and his Republic

By 1642, the balance of power had changed again. In 1642, Charles I tried to arrest five Members of Parliament by arriving at the doors of Parliament and marching in with his guards. This was the trigger for Civil War to break out, a War which ended with the beheading of Charles I in 1649.

A Commonwealth was instituted in 1648, incorporating a republic, and one of its first acts was to abolish the monarchy and also the House of Peers. However, within a year, the Commonwealth was so short of cash to pay the army that it started to sell off the Church estate, the Crown Estate and the Royalist estates that it had seized.

With the Restoration in 1660 in England, however, many Royalists regained their estates. The substantial losers were the Church of England and the Crown Estate. The Church never fully recovered as a landowner, and the Crown Estates not until the 20th century. 

With the Restoration in 1660 and even more decisively after the Glorious Revolution of 1688, the power which in the Middle Ages, had been divided between the monarchy, the barons and the Church, was monopolised by the large landowners. As Peers, they sat in the House of Lords; the defects of the representative system gave them complete control of the House of Commons; through the power of patronage, they controlled the Church; as Justices of Peace, they held in their hands the administration of justice, and responsibility for local government. 

The Enclosure Movement

Overlapping the Tudor era and Cromwellian eras was another development which was to have lasting repercussions – the Enclosure Movement. The first land enclosures, in the 15th and 16th centuries, literally entailed putting fences around the land to keep people out and put sheep in. This process was hastened by the dissolution of the monasteries which created substantial land holdings, which as we have seen, were given to friends of the king, Henry VIII, and from which the common people were largely excluded. 

One of the outcomes of that, after a period of 70-80 years, was the first Poor Law in 1601, the very first attempt at a welfare state. The Poor Law required parishes to provide for the impoverished in their own parish, and it was enacted because of the prevalence in the countryside of what were known as ‘sturdy beggars’. We now call them the unemployed; fit, able and competent people who had nowhere to go, no work and nothing to fall back on. So the Poor Law was enacted to make parishes provide for their own poor and to return people to their own parishes so that they could be cared for. That state of poverty was not a state of independence, it was a state of dependence. From it came the work houses and the long history of poverty in Britain. 

But it didn’t stop there. It was followed in the 17th and 18th centuries by the agrarian revolution which preceded the industrial revolution and was a revolution in farming methods. People discovered that if they grew crops in bulk, they could grow more of some things than was being grown before. But they needed bigger landholdings in order to do so. Agriculture became a very profitable activity and as a result there were more land enclosures which continued until the end of the 19th century, by which time all the land in Britain was effectively enclosed i.e. in private ownership except those parts that are retained to this day as public parks and commons. 

The process by which this was achieved was in very many cases marked by callousness, greed and an utter disregard, by those who ruled, of the welfare of those over whom they ruled. It marked the end of independence for most of the population. At one time the commons were an economic resource available to everyone; they were places where people kept animals, and could forage for timber and other products of nature. Henceforth if you wanted to scratch a living, you usually had to work for someone else. With greater efficiency in agriculture, employment opportunities in the countryside decreased. There followed the great migration of the landless, to the towns and cities – a vast pool of very cheap labour.   

The upshot of all this land-grabbing was that in 1872 when the only comprehensive exercise ever undertaken to establish who owned land in England and Wales, showed the following position;

  • 400 people (0.002%) owned nearly 15% of the land
  • 5% owned 95% of the land
  • 95% owned no land at all

Electoral Reform

During the 19th century and early 20th century another momentous development was happening. A series of electoral reform acts meant that by 1928 all men and women had the right to vote irrespective of whether they owned property. Up until this point in our British history government was firmly in the hands of those who owned property. This change presented the Conservative party, still largely the party of choice for the landowners, with a problem in the 1920s and 30s. How could they appeal to the non-property-owning classes and particularly the newly enfranchised women, and prevent them from voting for the fast growing party of the working classes, the Labour Party? An idea, first aired in the 1920’s, gradually gained traction. This idea was that of the ‘property owning democracy’ a concept energetically pursued by a chap called Lord Skelton, a close colleague of Harold Macmillan.

In essence this idea meant, in practice, that having been driven off the land, the people would be encouraged to buy it back it again – with interest. The property-owning democracy concept really got wings after 1953 when Harold Macmillan was PM and again during the 1980s under Mrs Thatcher’s government. In 1918 23% of households owned their own property. By 1971 the figure had risen by 50% and it reached a peak of 69% in 2001. One undesirable effect of all this is that we have become a nation of debtors particularly vulnerable to the sort of problems we have been experiencing since 2007/8. You could summarise the period between the time enclosures first took place and the present as one where the people were displaced from the land which was then re-sold to their heirs at interest. 

The Decline of Obligations and the Rise of Taxation

Whilst this historical process was playing out something else was going on. The basis of economic freedom is observance of the economic duties, especially the duty of those holding land to pay the rent, the natural source of revenue for government. This was understood in Saxon times and was also observed, albeit blindly, after the Conquest with the payment of feudal dues, mainly in the form of services. But these dues became regarded as an imposition on the tenant and for convenience they were compounded into monetary payments. Through lack of understanding, these monetary payments were left as fixed sums in an economy where inflation meant that eventually the amounts became so trivial as to be lost completely.

The result for the kings was that they were perpetually hard up and had to find other ways of raising money to fight increasingly expensive wars. A whole range of different taxes were imposed on a reluctant population such as window taxes, the dreaded poll tax which prompted the Peasants’ Revolt and income tax, which was originally introduced as a purely temporary tax ‘to beat Napoleon’, but is still with us. Periodic attempts to increase the proportion of government revenue from land-based taxes were easily and successfully rebuffed by the ruling landowning classes. The culmination today is that taxes on land only contribute about 15% of government revenue. The remaining taxes, almost without exception, distort the development of the economy and in many cases are a burden on either production or employment and, quite often, both. Nor do they bring in sufficient revenue to cover government expenditure with the result that the government has long been reliant on borrowing to bridge the gap. 

So we end up with a country up to its neck in debt, both personal and public, a taxation system not fit for purpose and a growing disparity between the haves and the have-nots which if not successfully addressed will lead to increased social tensions.

One Possible Solution 

So how should the problem be addressed? One approach is to base taxes on ownership, in particular land, rather than on earnings; on unearned income rather than earned income. For a long period voices advocating this approach have been largely unheard or ignored. This situation is ever so gradually changing and I would like to quote an extract from an article from a hard-bitten financial journalist, the Editor-in-Chief of Money Week, Britain’s best selling financial magazine. The article was written for the Financial Times, albeit on a Saturday, albeit in the Houses and Homes section where it was probably not widely read. Here it is; 

What gives a piece of land its value? Why is a 500 sq ft plot in central London worth more than 500sq ft in the north of Scotland? The answer is obviously its location. The value of a bit of land is not in the land itself but in the location of that land. And what gives the location its value? Think good transport links, good schools, hospitals and the infrastructure to provide and support jobs. 

This brings us to the key question. Who facilitates the provision of all these services? The answer to that, of course, in the majority of cases is the taxpayer via the state. Clearly there is also value in non-state provided things such as beauty and the presence of minerals. But, if it is the state that gives land some of its value, why is it that all that value generally accrues to individual landowners, rather than to the state? 

That, in a nutshell, is the argument for land or location value taxation (LVT). Such a tax is levied not on the value of the property but on the value of the land that property sits on. After all, it is not actual bricks and mortar that make a flat in, for example, London’s One Hyde Park worth £6m-plus, it is the land on which it sits. So the LVT is just an attempt to collect tax on a regular basis on what economists used to call the ‘unearned betterment’ part of the value of a property – that part which is nothing to do with the actions of the owner but everything to do with the actions of the community. 

In theory, it is not just an excellent tax but the best of all possible taxes. Once the initial valuations have been done, it is remarkably easy to collect and impossible to avoid. It also discourages speculation and stops in its tracks the endless cycle of investment in land and property purely to rent it out. It promises no more property boom and bust. But as it is not collected on any improvements made to land or to buildings on land, it does not discourage productive activity. Instead, it encourages people to bring idle land into use, to improve land they own and to be as productive as possible. The end result is, in theory, at least, good for society, good for equality and good for growth. 

I shall leave the last word to Woody Guthrie

Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

And as through your life you travel,
Yes, as through your life you roam,
You won't never see an outlaw
Drive a family from their home.

--------------------------------------------------------------------------------------------- 

Related Reading

Who Owns Britain; The Hidden Facts Behind Landownership in the UK and Ireland; by Kevin Cahill

The Plunder of the Commons; by Guy Standing

 The Village Labourer; by J.L. and Barbara Hammond

 

Photo credit: Grainfields close-up at golden hour by Daniela Simona Temneanu from Noun Project