|
On True Political Economy
(The Whole-Hog Book)
John Wilson Bengough
1908
| |
Notes and Links
|
|
CHAPTER XVI:
A STRAIGHT LOOK AT THE "SHIELD"
|
|
|
The first aim of the High Tax plan is to "shield"
the home trade; that is to say, it seeks by means of
a tax on the goods sent in to raise their price, so
that the firms which make the same class of goods at
home can raise their price, too, and thus make more
than they could if there was no tax.
|
protectionist,
prices, cost of
living |
| Of course, the price thus put on must be paid by
those who buy the home goods. |
|
If the tax fails to raise the price it proves to be
no good, for that is what it is for; that is its chief
aim.
|
|
| You might think, in view of this fact, that though
it might be hard on those who buy, the high tax scheme
would be sure to make all the firms it thus "shields"
rich. Yet this is by no means the case. It is found, in
fact, that the gains are as small in these lines, and
the chance of loss as great, as in those that do not
have the tax to help them. Nor is it hard to see why
this is so. |
|
| The rise in price is all they have to look to for
gain. But they do not get all of this. It costs them
some part of it to get the tax they want put through
the House. They have to "see" the men who have votes
and square them, and pay all the costs of the game of
pull and haul. All this work comes high, and it must be
done not once, but it may be year by year. Then there
is the loss that must cling to a trade so weak that it
must be kept up by the tax, and could not pay at all on
its own base. Such trades as a rule are run with great
waste, and are not kept up to date, as they would need
to be if they had to "hoe their own row." So that, it
is but a small part of what the tax adds to the price
of the goods that they get in the end. |
deadweight
loss |
| As for those who buy the goods, their case is, of
course, much worse. They have to pay (1) the price of
the goods plus the tax, plus the charge on the tax. (2)
The loss that may come through those who dodge the tax,
and sneak goods in free. (3) All it costs to catch and
try such crooks; (4) the bribes paid to those who are
set to guard the port and get the tax. |
paying
twice, corruption |
| Add it all up and the loss is a vast one. It is
safe to say in each case, the loss to all is far worse
than the gain to the trade can be. But as the loss,
spread far and wide, can not be seen, while the gain to
the Mill, or what not, seems so plain, the plan on the
whole may look like a good one. |
|
| A plan that will shield all trades by means of a
tax has not yet seen the light of day, nor will such a
plan be found while the world lasts. |
|
| More, a plan that will shield some trades and not
hurt others can not be made. If it helps one (by a rise
in the price of its goods) it must hurt all trades
which have to make use of such goods. A tax on Steel is
a good thing for the Steel Mills, but it harms all
forms of work in which steel must be used; a tax on
salt hurts those who cure fish or feed stock, and so
on. Both ends of a teeter board can not be kept up at
the same time. |
|
| A plan to be fair should shield all and hurt none.
The High Tax plan as it is is a gain but to the few,
and this gain grows less with each new trade that gets
into the ring, since for each new line that gets aid,
more and more have to bear loss, and this is felt
through the whole field of trade. If all trades were
dealt with in the same way (as, of course, they should
be by rights) then things would be in the same state as
though none got aid. The plan would be of no use if it
were fair. And in fact the good goes out of it at a
point far short of aid to all. Say there are 100 lines
of trade, half of which are of a kind which you can aid
by means of a tax; and let us say that the part of the
tax which they can get, that is, less what it costs
them, is one fourth. Now in the first place, half of
these trades can get no aid at all, since no goods of
the kind they deal in are brought in, but they have to
help to pay the tax in aid of the rest in the form of a
rise in price. The whole tax is 100, and if but one of
the trades gets aid (less what it costs) it will get
25. If two get aid, each will get 12 1/2; if three get
aid, each will get 8¼, and so on. When 25 trades
come in each will get no aid at all that will be of any
use, though in the mean time all the rest will be at a
loss. When 26 come in a loss comes in with it, and so
on. |
special
interests, barriers to
entry, |
One can not find out to a jot just how such a tax
works out, but there is no doubt there is a point at
which such "aid" gets to be of no use; and in the
States, they have gone past that point. The high wall
there is a dead weight on the whole trade of the land;
it is a dead weight on those very trades the law seeks
to shield and nurse and feed.
|
deadweight
loss |
| If the force of a tax on a class of goods is to
start up works in that line — and this is what we
may count on — in due time rates will be cut down
till the "good thing" that was in it is gone; there
then is no great gain to be made by any, though the
price that has to be paid by those who buy is more than
they would have to pay had there been no tax. As soon
as a tax is put on and there is a chance of big gains
in any line, there is a rush in to that line, and this
tends to pull the gains down. But here and there we
note there is some force which serves to head off such
a rush. This force takes more than one shape. |
|
| As a case in point, take that of the thing we call
chrome. There is a tax on chrome in the States, and as
luck will have it, one man there owns the only chrome
mines that are known. By means of the tax he can, of
course, add to the price, and yet there can be no rush
in to his line of trade. |
special
interests, natural
resources, well-provisioned
ship, monopoly,
land
monopoly, land
monopoly capitalism |
| Then the same thing may be done by what we call
patent rights. There is a tax on wood pulp, and the man
who owns the sole right to the plan by which paper is
made from this sort of stuff has what we may call a
cinch; and no fear of a rush. |
intellectual
property, monopoly |
Then, once more, the force may take the shape of a
trust, or pool or ring, in which a lot of strong firms
join hand in hand to crush out those who are in their
line, so as to keep up the price.
|
special
interests, monopoly |
| In each case it is clear that the gains made are
not gains from work. If the tax is to be a gain to you
(with no fear that it will be cut down) you must own
some thing which no one else can get hold of. You then
may be said to have your feet on firm rock and can put
forth your strength to keep off the crowd that would
rush in to share your gain. |
unearned
increment |
| Now there ought to be clear thought on this point.
Much turns on it. Yet strange to say, there are few who
seem to see that a line must be drawn to show that gain
from work is not the same as gain from a "cinch." A man
who owns a toll gate and does not have to keep up the
road may make great gains, yet no one would claim that
he does any real work for it. If the same man has a
shop in which he makes boots and shoes, that, of
course, is a fair form of work, and what he makes at it
he earns in a true sense. In such a case, what we claim
is that it is not fair to take his whole year's gain
from both these lines, though they are put in one
purse, and call them the fruit of his toil. In so far
as he has hides and tools, wax and thread and so on, he
is a capitalist; in so far as he works he is a laborer,
and the gains he thus makes are interest and wages. But
in so far as he owns the tollgate, he is a monopolist
and his gain from that source we call Toll or Rent. He
is, in fact, two men in one, for his wealth comes to
him in two streams 'twixt which we must draw a clear
line. Yet there is a great fog these days on this plain
point. |
monopoly,
privilege,
special
interests, unearned
increment, theft, privatization,
three hats, rent, |
| We hear shouts of wrath at Capitalists. It would be
as good sense to shout at Labor, for they are just two
forms of the same thing. Those who raise the shouts
thus prove that they have not clear thought, and do not
see the line we have drawn 'twixt "work" and "cinch."
In so far as men get wealth through their work, no odds
how much they get, they do no harm to the rest; but, in
so far as they get gain; not through work, but just by
means of what they own — the toll they take in
some form — they may do harm, for what they thus
get some one else who made the wealth must lose. Now,
not a few both work and own — as in the case of
the tollgate man I have set forth. But we can see that
when we call such a man a "law made thief" we do not
take note of what he gets by the trade of boots and
shoes, but of that part of his gain which comes from
the tollgate he owns. |
theft,
he who
produces, three hats |
| It is not hard to see that as the whole
race of man must live on the ground — since they
can not live in the air nor in the sea — the man
who owns land holds the prime key to wealth.
For no wealth at all can be got but from the ground and
from that but in one way — by toil. This is true,
as will at once be seen, of wealth in the form of
crops, on a farm. And it is just as true of wealth in
the form of sheep, cows, pigs and so forth fed and bred
on a farm. This is plain to all. But to some it
is not quite so clear that wealth is got out of the
ground in the town and city. To be sure, it is
not got in just the same way; but it comes in just as
real a way out of the ground there. For a town must
stand on ground, must it not? Is not the ground in a
town worth much more per foot than the land of a farm?
And why so? This is why: A man can make more
out of land in towns. The wealth to be made in trade is
as a rule more than is to be made on farms, and the
work is not so hard. The chief worth of farm
land is in what it will grow. The chief worth
of a town lot is its site; that is, the part of the
town in which it lies, with the chance for trade there
is in it. As a town grows large the chance
grows with it, and the lots go up in price, and in each
town they range on a scale from low to high. Lots at
the heart of a town are best for trade and so are worth
much, from there out to the bounds, less and less.
Then, some parts of the town have choice sites for
homes, and these are of high worth, while less choice
sites are worth less. Of each town we may say —
when we note the chance there is for trade, the style
of the streets, the cars, the schools, and all things
which go to make up a full life — it is worth so
and so per year to live there. And we find that this
"so and so" is, as it were, writ in the land. That is
to say, the land is worth just what it is worth to live
in the town. In this sense, all that the town can gain
in wealth through trade comes out of the land, for, of
course, if the land was not there, there could be no
town. Now, is it not plain that if John Smith owns the
site of the town he can take, by way of toll or rent
from all who live in it all that it is worth to live
there? If he owns one lot can he not take in the same
way, all that lot is worth as a site for trade? And is
not this the same thing as for him to take, as the rent
of a farm, (in the form, it may be of a share of the
crop) all that the farm is worth? |
all
benefits..., landlord, urban land
value relative to rural, the Savannah,
rent, unearned
increment, absentee
ownership, leakage |
| What we call Rent is in each case the Worth of the
Chance, be it farm or town lot, and the rent is there
all the while, though John Smith works the chance, or
lets some one else work it. In one case he gets the
rent as well as the gain he makes by his work; in the
other he gets the rent and leaves the gain from work to
the man who has the use of the land. |
urban land
value relative to rural, |
| The great thing to be borne in mind is that each
jot of wealth through the whole world, on farm, in
mine, or in town, must be got out of the ground by
means of work, and in no way else; and that it is such
share of this wealth as goes to those who work to make
it, and no more than such share, that forms their "pay"
and gives them heart of hope to work on — that,
in short builds up trade in the world. So it must be
just as clear that such share of the wealth as goes to
those who do not in any way help to make it must come
off the share of those who do, and is a mere toll on
their toil. This is the case with the whole share that
goes in the form of Rent. The men who "own"
rent do no sort of work for it. They get it as a mere
toll on toil, and as the price for the use of the
ground. They get it just as the man who owns a
toll gate on the high road gets it. What does he give
the man who comes up in the rig? He takes a toll, but
what does he give? Nought but leave to the man to drive
on. So the man who owns the ground gives nought
but leave that work may be done. |
rent, ownership, possession, privilege, labor, land, wealth
concentration, in one's sleep,
all
benefits..., absentee
ownership, property
rights, theft, land as common
property, landlord, rack rented |
| A man who owns ground and gets rent may, of course,
work, too, but, if so, what he gets for his work is a
wage. The part he gets in the form of Rent is not a
wage, for he does no work for this. |
three hats, small business,
landlord |
| Now, let us see how all this bears on the case of
the High Tax plan. Here we find some smart folk in John
Bull's land who strive to get rid of what they now have
by the name of "Free Trade," and urge that the old plan
of a tax on goods be a tax put on grain. This is to
"shield" the farms of the old land, and it will do so
in so far as it lifts the price of grain. As soon as
that is done there will be a rush to the farms, of
course, for they will then have a chance to pay. There
will be a call for farms. Lands that have of late years
been idle will be sought. Then what? Why, of course,
the lords of the soil — those who own the land
— will raise the rent (as the chances grow bright
the rent goes up, you see — that is the rule).
John Bull at large will have to pay more for his bread,
since the price of grain has had a rise, but the men
who work the farms will in a short time be just where
they were, since all the fresh gain they make will have
to be paid out in fresh rent. The men who will
gain by the move in the end are those who toil not nor
spin, but who own the land, and sit in their clubs and
draw the rent. |
landlord,
all
benefits..., absentee
ownership, rack rented,
wages, rent, |
| To own the ground is the short cut to get
rich, and the High Tax plan ever plays into the hands
of those who own the ground. The ground may be
in the form of town lots or farms, or it may be what we
call wild land, it is all the same. In the States they
have a tax on boards. Do you think this helps the men
whose trade it is to cut down trees and saw them up in
mills? That is what it was meant to do, they said. But
some shrewd chaps long since got hold of the land on
which the trees grew, and it was, in fact, they who got
the tax put on. The tax keeps out logs from o'er the
lakes, and so, if the mills are not to close down, logs
must be bought from the ring, and the tax adds to their
price. This is a straight blow to the men who work at
this trade, but it is a "snap" for those who own the
wild land. |
fruits,
monopoly,
privilege,
special
interests, theft, |
| And so it works all through the list. |
|
| Should mills spring up by the score, and call for
scores and scores more of men to work in them, so that
vast stores of new goods would be brought forth, who in
the end would gain by it? So long as mills have to
stand on ground, and those who own ground have the
right by law to own the rent as well, is there need to
ask who would gain? |
all
benefits..., rent as
provisioning for all, privatization |
CHAPTER
XVII: THE "SHIELD" IS A HARM, NOT A HELP |
|
| If mills and so forth can not be built up in a land
which has no tax wall, how comes it that in the States
they had firms which made iron and cloth goods and so
forth ere the first High Tax Act in 1789? |
|
| If it is true that a "poor" or "new" or "young"
land can not hope to grow in the way of mills and works
if it has not a wall to bar out the trade of a land
that is near by and is full of big mills and the like,
with stores of cash, "hands" that have great skill at
their work, and cheap help, how comes it that this has
not been the case with the West in the U. S., though it
has had no wall to shield it from the East? As the tide
of life has swept from East to West, these works have
sprung up and have gone with it. They have grown up
just as there was call for them, with no aid from tax
laws. |
|
| In fact, they have grown up in spite of such laws.
There is no doubt these laws have hurt the States as a
whole. If free trade had gone on from the first the
States might rule the marts of the whole world, where
now they make but a poor show, and for the most part
trade at a loss. When there is tax, tax, tax all round,
so that all parts of each piece of goods are made dear,
how could such goods hope to meet those made at a much
less cost? What is the fact at this time? That most of
what the States sends out is raw stuff from the farms,
and most of what it brings in goods made in mills and
works o'er the sea. There is a trade with Brazil. Goods
are brought from there; are goods sent from mills and
works in the States to pay for it? No. Wheat and so
forth is sent to John Bull, and John squares off the
deal with Brazil. He sends goods which Sam buys with
his wheat. |
|
| This is the queer way in which the high tax plan
has "built up the trade of the States with the world at
large." It is well known that the "Yank" is as shrewd a
man, with as good brains, as can be found on earth. He
ought of right to lead the whole race in trade. Yet it
is the fact that he does not; he is down near the tail
end of the list. Strange, you say. No, just what one
might look for when he loads tax weights on all things.
To get the trade of the world the first thing to do is
to make things cheap, and here this shrewd chap ties
his own hands, or puts a clog on his own leg in the
race. We hear much just now of how he "dumps" goods in
lands o'er the sea. It is true he does a good deal in
this line, but is it trade that is square, and that has
real gain in it to him? Not at all. For the most part
he sells these "dump" goods at cost, or less than cost,
just to get rid of them. How can he do this? you ask.
Well, you see, the high wall at home gives him the
chance to hold his home trade and force the folks there
to pay him twice the price the goods are worth, so that
he can keep his mills on the go all the while, and when
he finds more stuff on hand than the home man can take
he "dumps" it o'er the sea in this way at "any old
price." This, of course, is a good thing for those who
get the goods; let us hope the dear folk in the States
like the plan. It seems to be most kind on their part,
does it not? "It is grand — but it is not
trade." |
|
| Then, too, the Yank's bright, shrewd brain works
all the while on new schemes, and brings forth ideas by
which work may be done with less toil and cost. If he
could but get and hold the trade of the world in these
things when he had thought them out, it would be a fine
thing for him. But what takes place? Why the tax
strings so tie him up that he cannot do it. John Bull
takes up these new ideas, and, as he is not bound up
with tax bands, makes the class of goods on the plan
thought out by his smart friend, cuts down the price,
and takes the trade. Once more we must say this looks
kind on Sam's part. |
|
| If you would see one case in which tax clogs have
spoilt a great trade for the States, take ships. Where
will you find more brains and skill, or more wood,
iron, steel and all that goes to build a ship, than in
the States? Why, then, are no ships built there to
speak of? Think that out. It tells the whole tale. You
will find that all the things that go into a ship from
keel to truck, from the wire in her stays to the brass
in her log, and all that goes to fit and store her, has
to bear a tax load. Thus once more has the kind Yank
made a free gift to John Bull of the ship yard trade of
the world. |
barriers to
entry |
| And then note the facts as to the coast trade. The
law says that no ship but one which flies the stars and
stripes shall sail from port to port on the coast of
the States. The rates of freight from New York round
the Horn to the ports on the west coast are high. There
is no doubt they could be made much less, and yet be
fair, if all ships were free to go in for the trade,
and this would be a gain to those who own the goods.
But ships cost so much to build at home that few are
built, and that the rates may be kept up, the "pool"
which owns the lines of rails from east to west pay the
firm which owns the chief line of ships a large sum
each month to keep up its rates. Thus, once more, we
see how the high tax scheme plays into the hands of
those who own land or right of way, or some "cinch" of
the kind. |
special
interests, privilege |
full index |
previous | next
|
|