Why Georgism keeps Losing the Fight

[B.G. Hearns]

It occurred to me, after thinking about the pie analogy, that this also explains why Georgist ideas keep getting overturned.

For those on this list who didn't hear my little dissertation, it goes like this.

If we see the sum of all wealth in the land as a pie, sliced up by group, we find that the pie was once divided in half. The richest 20%, about forty years ago, owned half the 'pie' and everyone else owned the rest. Today, that wealthiest 20% owns 75% of the wealth. The slice owned by the majority has been shrinking.

(In a Georgist system, that fraction would change back the other way, so that the majority of people would actually own the majority of the wealth -- why those who have wealth and are so frightened of losing it fight so hard to keep it, just as Machiavelli described.)

The reason why people do not rise up, or are even aware of this shrinkage has to do with the other dimension of wealth: the radius of the pie. The amount of energy used defines that radius. As long as that radius keeps expanding, then that shrinking slice of pie is actually getting larger.

That radius has spent the better part of the 20th century expanding faster than the arc has been shrinking, and therefore people have been getting much wealthier. It's how the 1950s came to look so prosperous, how the 1960s had so much so easily, and why the 1970s were a period of such turmoil: the radius stopped expanding so much, but the majority slice has kept on shrinking. The reason it shrinks is because that is the natural behaviour of any unrestricted market system. Kari Polanyi explains this in The Great Transformation. (His implied solution, however, a managed economy, collapsed spectacularly in the 1990s with the dissolution of the Soviet Union.)

So, while the arc has been shrinking, the radius has been expanding. Since the 1980s this has just about kept pace, which is why the GDP needs to keep expanding: every time it stops growing, the fact that the majority-owned slice keeps shrinking means that people begin to have less. We have just seen what happens when it actually shrinks.

Politicians and mainstream economists understand that the GDP must grow or there is misery, unemployment, and voter discontent that threatens their jobs, but I see no evidence that they understand why.

Now, Georgist policies would redistribute those pie arcs and hold them in relatively stable relationships. The wealthiest would still have the biggest slice, but it would be a much smaller proportion of the pie. Everyone else would have a massively larger slice.

So why don't people demand this? I believe it is because the pie has been expanding so much due to increased energy use. Because our shrinking slice has been growing in real area, the shills and toadies who push the enticing story that YOU, Joe Schlabotnick, can become hideously wealthy (e.g. Bill Gates, Warren Buffett, Edward "Honest Ed" Mirvish, any popular entertainer) in this economic system. This has been demonstrably true, even though it is also demonstrably improbable. Every week, someone wins the Lottery, and Casinos send the odd individual home rich with a good story, even as the vast majority go home with less money than before. It it that enticing possibility that is pushed and cheered and promoted in papers and in the mainstream party platforms because it is so much more exciting than 'work hard and save your money'. This has become ingrained in the psyche of North American culture.

The only organized resistance with an equally good 'story' are

1) the conservative types who believe in rewarding hard work and who recognize that they are losing ground, but are encouraged to blame the poor and the welfare state for their problems instead of the wealthy. Hence their cry of 'less taxes'.

2) the socialist types who recognize the unfairness of fewer and fewer having more than they need and want a redistribution of wealthy, but who also believe that Robin Hood was an economist. Hence their continuous attempt to pretend that the same system that created the Soviet Union could have worked... it just needs some tinkering and adjustments... like in Czechoslovakia in 1968.

In the next decade or so, we are going to go through more and more economic spasms that are going to leave more and more people destitute and that is going to put huge strains on society. That is because, for the past four years, total energy production on the planet has been flat and that is why we are in 'recession' and why we are experiencing more poverty: because the market is still giving more and more property to the 'haves'.

We need to develop some really good PR to counter the enticing fairy-tales out there.