Presenting at the INET conference in Paris earlier this month Nobel prize winning economist and former head of the World Bank Joseph Stiglitz drew heavily on Georgist insights into the fundamental root cause of inequality. Appearing on the podium together with Thomas Piketty, Stiglitz critiqued the failure of his colleague to correctly distinguish between “wealth”, “capital” (man-made wealth used to further production) and sources of economic rent, chief of which is “land”. At the end of his talk he mentioned Henry George by name, essentially concluding that the great 19th century political economist was right all along.
This is important because Stiglitz is an influential economist at the forefront of efforts to find workable responses to the problem of ever growing extreme inequality. In particular his endorsement of Georgism is an encouragement to young thinkers and economists both within and outside of academia to explore George’s thesis themselves. Is a taboo in the process of being lifted? The ideas of Henry George, seemingly off-limits for so long, are now getting the attention they have been crying out for:
Stiglitz’ talk follows that of Piketty, beginning at 1 hour 50 minutes and 20 seconds. It is very much worth watching from the start but I have linked here to the second half of the talk when he addresses more directly the subject of this post.
In the talk Stiglitz says “Driving the growth of inequality – you have to conclude that minor tweaks in the economic system are not going to solve the problem … the underlying problem is the whole structure of our economy which has been oriented more and more at increasing rents [economic rent] than increasing productivity – [rather] than real economic growth that will be widely shared with our society … A tax on land, rents, will address some of the underlying problems. This is an idea that Henry George had more than 100 years ago …”
One quibble is Stiglitz’ claim that his analysis goes a step beyond Henry George in showing how a tax on the rent generating value of land would not only be non-distortionary but would actually promote or unburden productivity. Henry George fully understood this very point. Stronger still, it was a central part of his thesis which he made clear in many of his writings and speeches.