33 Oser: Reservations of a Friendly Commentator

Abstract

In 1974 Twayne Publishers, which six years before had brought out Edward J. Rose's biography of Henry George, issued, as part of its Great Thinkers Series, a study of by Jacob Oser, professor of at Utica College of Syracuse University and author of several well-known books on the history of economic thought. While also largely biographical, this work contains a chapter devoted to the critical analysis of the arguments in Progress and Poverty, George's magnum opus. Oser's approach is generally sympathetic, and the chapter in question begins with a section endorsing George's rejection of the wages-fund theory, his development of Ricardo's Law of Rent, his contention that the landowner as landowner does nothing to earn his income, and his insistence that to tax away all economic rent would stimulate rather than retard production. However, Oser then goes on to find George's thinking defective in the following ways: (1) he was wrong in believing that the landlord's share of national income would rise and that of labor would fall with industrial progress; (2) he confused the law of diminishing returns, increasing returns to scale, and growing efficiency; (3) he was naively optimistic as to the fiscal adequacy of a single tax on land rent; (4) he misconceived the nature of capitalism, failing to realize that the private ownership of capital is a more powerful cause than is the private ownership of land in explaining the uneven distribution of income in industrial societies. There is merit in some of Oser's criticism. Quite properly, he observes that George's generalization that wages and interest tend to rise and fall together is a dubious one. But issue must be taken with much of his analysis. Does Industrial Progress Raise Rent at the Expense of Wages? Oser contends that George was wrong in believing that wages probably would fall as society progresses, and the percentage of the nation's income that goes to labor certainly would fall; he was just as wrong in believing that the share going to landowners would increase. (1) As proof he quotes data supplied by the U.S. Department of Commerce that list the value of privately held land in the United States to have been $27 billion in 1900, and indicate that its value as a percentage of Gross National Product decreased from 159 percent in 1900 to 66 percent in 1968, when its value was said to have been $571 billion. Although popular today in economic circles, the use of statistics to prove or disprove economic principles is a questionable technique. Ludwig von Mises, the celebrated economist of the Austrian School, in his attack on the substitution of quantitative, economics for qualitative economics, pointed out that statistical figures referring to economic events are historical data. They tell us what happened in a non-repeatable historical case. (2) No doubt statistics may be useful in developing some corroborative evidence in analyzing a particular problem, but even in such an instance they must be treated with great circumspection. Controlled economic experiments being seldom possible, the statistics in use are rarely of the type that induce great confidence. Men, in their activities, do not bother to set down all the precise factors influencing their actions hence the statistics that economists are forced to utilize, particularly if they are in terms of money, often are little better than proxies for what actually may have occurred. In the ideal society, however, the real point at issue is not whether labor's share tends to decrease and the landlord's share to increase as society progresses. After all, if George's remedy were to be put into operation, the rent would all accrue to the people either indirectly through the provision of a multiplicity of services or directly through a per capita division. Under those conditions the division of income between labor and landlord (since the landlord, in effect, would be the people themselves) would probably not be nearly so important as it is today. …