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Torah-Based Economicsby Dr. Edward Tamler and Yisroel PensackThe Jewish Community Federation of San Francisco has recently purchased two buildings next to its present downtown location for $28 million to alleviate pressure on other Jewish nonprofit agencies in that city which are facing expiring leases and "skyrocketing rents," according to the Jewish Bulletin of Northern California.The Federation hopes to mitigate the problem by leasing space in these buildings to local Jewish agencies at below-market rates. Sharply rising rents and land prices -- in Northern California and elsewhere around the country -- also pose a dilemma for many other nonprofits, businesses and individuals needing affordable workspace or housing. Soaring rents and high land prices shift wealth from producers to non-producers. This translates into lower real spendable wages for most workers. The San Francisco Federation's private subsidy approach to dealing with rising rents may solve the problem facing Bay Area Jewish agencies, but it won't help the rest of society. Interestingly, however, the Hebrew Bible offers guidance as to how to establish an economically just society for all. The Torah recognizes the importance and unique economic status of land, which includes not only the earth's surface but all natural resources. Land, by definition, is fixed in quantity, essential to human life and not a product of human labor. From a biblical perspective, land is the gift of the Creator to all mankind to use and enjoy; no one has the right to monopolize it. Equal rights to land were the economic foundation of the Jewish commonwealth envisioned by the Torah. Every 50 years there was to be a Jubilee restoration of each family's equal footing in the Promised Land. Except for the priestly classes, who were to live primarily on specified donations of agricultural produce from landholders, no citizen was to be permanently deprived of equality of land tenure. The Torah promises that if its commandments, including equal rights to land, were maintained, poverty would be unknown and economic justice and prosperity would prevail (Deut. 15: 4-5). In modern times, urban and suburban land are far more valuable than outlying agricultural land. Periodic restorative reallocation or redivision of the land, the Torah's approach, is no longer a practical way of securing equality of land rights. An equivalent and far simpler method is to annually collect the ground or site rent of land for the benefit and use of the whole community by means of a tax on land values, irrespective of the value of improvements, such as buildings. Land rent is socially created. Landholders, as such, do nothing to create or increase the value of land. Land values arise and grow due to population growth, community investment in infrastructure and public facilities and services, and as a result of advances in technology and general economic activity. It is both proper and imperative that the community recover for itself the value which the community as a whole, by its very existence, creates. No one should be allowed to reap where he has not sown, especially not at the expense of others. Owning valuable land is a privilege; landholders should pay rent to the community based on, and proportionate to, the value of land they hold. Most landholders have no qualms about raising rents they charge their tenants. But private landholders themselves are actually tenants of the sovereign public, and should be treated as such. They should be required to pay market-rate ground rents to the community through the land value tax, while taxes on houses, buildings, personal property, incomes, sales and commerce should be drastically reduced or abolished. Productive activity should not be penalized by taxation. This reform, advocated by San Francisco economist Henry George in his 1879 book "Progress and Poverty," adapts biblical principles of land tenure to modern economic conditions. George, who though not Jewish was an outspoken admirer of Moses and the Torah (George is cited at least six times in the widely used "Hertz Pentateuch"), died in 1897 during his second campaign for the mayoralty of New York. He was a world-famous figure at that time. George's proposal, which came to be known as the "single tax" on land values, would raise wages and liberate labor by putting an end to land monopoly and land speculation -- the systemic withholding, nonuse or suboptimal use of valuable land in expectation of future price increases. Land monopoly and land speculation cause an artificial market shortage of reasonably-priced land, which in turn raises rents and land prices beyond normal levels. This discourages economic activity and drives down wages because of excessive private tolls charged by landholders for merely allowing others access to land. All man-made wealth comes from applying labor to, and on, land. Heavy taxation of land values -- by means of an annual ad valorem property tax on market-determined land valuations -- will compel holders of valuable land to use it optimally or sell it to someone who will, because the annual carrying charges on such land will increase significantly. This will tend to reduce land prices and rents, because the land value tax cannot be passed on to tenants. Without resort to public or private subsidies, this simple but far-reaching reform will extirpate involuntary poverty by opening up natural opportunities to labor, thus dramatically raising wages and increasing employment. It will greatly alleviate urban decay and suburban sprawl, with their attendant traffic congestion and adverse environmental effects. It will also help cure the shameful plagues of homelessness and beggary in our cities. --------------------------------- Edward Tamler and Yisroel Pensack are Jewish Georgists who live in San Francisco. Dr. Tamler is a retired ophthalmologist. Pensack is a former newspaper reporter and founder/president of the Alliance to Raise Wages and End Poverty (ARWEP), a Georgist group. | |
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