Consider, for example, the Federal Reserve Board,
created in 1913 to manage the nation’s money
supply. The Fed is a hybrid entity. Technically,
it’s a corporation whose stock is owned by member
banks. However, the seven members of its board of
governors are appointed by the president and confirmed by
the Senate to staggered fourteen-year terms. The genius
of the Fed is that its governors can make tough economic
decisions without risking defeat at the polls. In
particular, they can raise interest rates, which means
higher borrowing costs for businesses and higher mortgage
and credit card payments for millions of voters. No
politician wants to do this, and thanks to the Fed, none
have to. When constituents complain about high interest
rates, Congress members point to the Fed and say,
“Talk to them.” This model is so sensible
that, nowadays, almost all countries use it.
One can imagine similar entities for managing carbon
and other pollutants. Their governors would serve long
terms and have a fiduciary responsibility to future
generations. They could make tough economic decisions
— such as raising energy prices — without
committing political suicide. Such entities might appeal
to elected politicians precisely because they permit a
shifting of responsibility and blame.
And that’s not the only alternative to political
price-setting. We know from “cap-and-trade”
programs that markets can set prices for pollution. In
such systems, politicians have an important task —
they set up the system and assign the initial property
rights — but once they do that, they can be off the
hook on prices. ...
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The truth is self-evident. Put to any one capable of
consecutive thought this question:
"Suppose there should arise from the English Channel
or the German Ocean a no man's land on which common labor
to an unlimited amount should be able to make thirty
shillings a day and which should remain unappropriated
and of free access, like the commons which once comprised
so large a part of English soil. What would be the effect
upon wages in England?"
He would at once tell you that common wages throughout
England must soon increase to thirty shillings a day.
And in response to another question, "What would be
the effect on rents?" he would at a moment's reflection
say that rents must necessarily fall; and if he thought
out the next step he would tell you that all this would
happen without any very large part of English labor being
diverted to the new natural opportunities, or the forms
and direction of industry being much changed; only that
kind of production being abandoned which now yields to
labor and to landlord together less than labor could
secure on the new opportunities. The great rise in wages
would be at the expense of rent.
Take now the same man or another — some
hardheaded business man, who has no theories, but knows
how to make money. Say to him: "Here is a little village;
in ten years it will be a great city — in ten years
the railroad will have taken the place of the stage
coach, the electric light of the candle; it will abound
with all the machinery and improvements that so
enormously multiply the effective power of labor. Will,
in ten years, interest be any higher?"
He will tell you, "No!"
"Will the wages of common labor be any higher; will it
be easier for a man who has nothing but his labor to make
an independent living?"
He will tell you, "No; the wages of common labor will
not be any higher; on the contrary, all the chances are
that they will be lower; it will not be easier for the
mere laborer to make an independent living; the chances
are that it will be harder."
"What, then, will be higher?"
"Rent; the value of land. Go, get yourself a piece of
ground, and hold possession."
And if, under such circumstances, you take his advice,
you need do nothing more. You may sit down and smoke your
pipe; you may lie around like the lazzaroni of Naples or
the leperos of Mexico; you may go up in a balloon, or
down a hole in the ground; and without doing one stroke
of work, without adding one iota to the wealth of the
community, in ten years you will be rich! In the new city
you may have a luxurious mansion; but among its public
buildings will be an almshouse.
In all our long investigation we have been advancing
to this simple truth: That as land is necessary to the
exertion of labor in the production of wealth, to command
the land which is necessary to labor, is to command all
the fruits of labor save enough to enable labor to exist.
...
... For land is the habitation of man, the storehouse
upon which he must draw for all his needs, the material
to which his labor must be applied for the supply of all
his desires; for even the products of the sea cannot be
taken, the light of the sun enjoyed, or any of the forces
of nature utilized, without the use of land or its
products. On the land we are born, from it we live, to it
we return again — children of the soil as truly as
is the blade of grass or the flower of the field. Take
away from man all that belongs to land, and he is but a
disembodied spirit. Material progress cannot rid us of
our dependence upon land; it can but add to the power of
producing wealth from land; and hence, when land is
monopolized, it might go on to infinity without
increasing wages or improving the condition of those who
have but their labor. It can but add to the value of land
and the power which its possession gives. Everywhere, in
all times, among all peoples, the possession of land is
the base of aristocracy, the foundation of great
fortunes, the source of power. ...
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