Harold Kyriazi: Eliminating the ‘dirty’ root of systemic racism
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There are many factors underlying “systemic racism” in the United States. One rarely mentioned but surprisingly vital root cause, however, is our system of land tenure.
Currently, land is treated as purely private property, with little or nothing owed to the community for excluding all others from use of that land. Lack of enforcement of land titles recently alarmed many downtown Seattle home and business owners, revealing part of those titles’ normally hidden value. And Californians this year are considering whether to revise Proposition 13, their 1978 experiment in property tax reform, which several economists believe led to the state’s sharp decline since then.
There is a 10-fold wealth gap between median white and Black families in the U.S. ($171,000 vs. $17,150 in 2017). The reasons are many and well known: the landlessness of freed slaves; racially discriminatory Homestead Acts; mismanagement by Congress of the Freedman’s Savings Bank; Jim Crow laws; destruction of Tulsa’s “Black Wall Street” in a white race riot in 1921; home loan redlining, discriminatory urban renewal projects; failing inner city public schools; societal “soft” racism; and the steep rise of fatherless Black families. While all of these contribute, they are insufficient to explain what produced and maintains that gap.
Our land tax policy generates poverty in a powerful and unrelenting way. To grasp its perverse incentives, realize that, regarding land value, location is everything. For example, a vacant acre lot in Montana may sell for $100, while one in midtown Manhattan will sell for tens of millions, owing to the location value created by the surrounding businesses, apartment buildings, mass transit, and masses of people.
Because land values are severely undertaxed, land speculators, by “buying in the path of progress” and holding land out of use until its value fully “ripens,” are able to pocket the value created by surrounding developers. This practice creates an artificial scarcity of land, and inhibits development by raising its price. Higher land prices mean fewer small business starts, fewer jobs, less competition for workers by business owners, lower wages, less wealth creation, and a smaller economic pie. Higher land prices also mean fewer houses for sale and fewer apartments for rent, and thus higher rents and home prices.
The solution is that which American social reformer Henry George prescribed over 140 years ago, in his best-selling book “Progress and Poverty” (1879). He called for the removal of all taxes on productive behavior, and their replacement by a “Single tax” on the location value of land, also known as “land value taxation” (LVT). This would increase the carrying cost of land, eliminate the incentive for speculation and result in land being put to its highest and best use. With no taxes on work, income, saving and investing, or buying and selling, all workers would have more disposable income, housing, goods and services would be cheaper and more plentiful, and there’d be less incentive for criminal behavior. This means less need for policing and government welfare programs.
With government costs greatly reduced, some of the collected land rent could even go toward providing a guaranteed minimum income to all adult citizens, similar to the Alaska Permanent Fund. This would, if enacted fully and across all levels of government, solve the problem of reparations to not only African Americans, but Native Americans as well, as it would amount to sharing the land equally among all adult citizens.
Most importantly for the argument presented here, those at the bottom of the economic ladder are those least able to withstand the crushing, vice-like combination of artificially low wages and high rents. Blacks tend to occupy that lowest rung for all the reasons listed earlier.
Factor in that drug prohibition has created another easy route out of poverty for Black males besides sports and entertainment, and we see why they are incarcerated at six times the rate of their white counterparts. Realizing that drug gangs cannot take their territorial disputes to court but must often resort to violence, one sees why police naturally view them as grave threats to life and property. Ending the drug war now, however, would only trap more young Black males in poverty.
But preceding legalization by first removing the perverse dynamics surrounding land use will disproportionately help those mired most deeply in poverty, promoting good-paying jobs and better housing, and lessen the allure of black market profits from illicit drug trafficking.
Listing all the intellectuals throughout history who’ve supported the concept underlying LVT could fill several pages, from Old Testament icons to our Founding Fathers to Milton Friedman. It was the sole method for funding the federal government specified in our original constitution, the Articles of Confederation (see Article VIII). The idea has been tried on a small scale numerous times the world over and shown to be unerringly successful regarding increased economic development, with Pittsburgh having been a shining example.
If politicians such as those in California or on the Minneapolis City Council wish to try a radical and promising approach to solving, at their root, not only racism, but poverty and homelessness, LVT is it. Perhaps Pittsburgh City Council can lead the way, by voting to reinstitute our split-rate property tax system, and placing almost all the burden on land.
Harold Kyriazi, Ph.D., of Schenley Heights, was a neuroscience researcher at the University of Pittsburgh Medical School for 37 years. He is the author of “Libertarian Party at Sea on Land” and contributed a chapter titled “Reckoning with Rothbard” to the second edition of “Critics of Henry George,” which dealt with the economic dynamics of land.