Friday, October 31, 2008

An Open Letter to Our Next President

Dear Next President, whoever may win this election:
Prepare ye this day for the monumental challenge of the century, our economy.  For this, I have two suggestions.
First, converse with a few real estate salespeople.  Take note of the many times they recite the ever-popular real estate mantra, "The three most important things about a location are location, location, and location."
Next, read the nineteenth-century book Progress and Poverty by Henry George, which explains what all this location business is all about.
You see, all human activities, without exception, have one thing in common, that is they require a location.  At a minimum, in order to do anything you have to be someplace while you are doing it.  Some locations are better than others for certain activities.
It should come as no surprise, therefore, that all meaningful investments contain a major component consisting of the market value of their location.  The influence of land speculation artificially jacks up this location value component, making the entire investment appear more valuable than it really is, thus we end up with investment "bubbles" of various sorts.
When the location value component reaches a certain point, land usage patterns become less dynamic because of the greater amount of money that needs to be borrowed for a land sale, thus decreasing the efficiency of industry and leading to economic stagnation.
Mr. McCain, your party has traditionally believed that the Invisible Hand envisioned by Adam Smith will, if government simply butts out, magically cause more wealth to be created.  How do you expect this to happen if the Invisible Hand is chained to the dungeon wall of land speculation?
Mr. Obama, your party has traditionally believed that there's plenty of wealth and all that's needed is equitable distribution.  If you redistribute wealth from the rich to the poor, how do you propose to prevent the forces of land speculation from re-redistributing it back to the rich?

Mr. Next President, whichever of you should win, you've got your work cut out for you!

1 comment:

LVTfan said...

There is a modern language abridgment of Progress and Poverty, available from Amazon (search on drake progress poverty henry george) and

You can read it online at and download the MP3 at

You might also explore Henry George's speeches, featured at (the URL comes from the subtitle to Progress and Poverty), and take a look at a blog devoted to HG's ideas in a 21st century context, at

I've come around, slowly and grudgingly, to believing that my late grandparents had it right: that without enacting HG's remedy, we are never going to solve our most serious social, economic and (I'd add) even environmental problems, and that its enactment would put us well on our way to solving a number of other problems we tend to regard as intractable.