What Caused the Crisis?
GroundSwell, March 2012]
(The following text is from a pamphlet produced by
Earthsharing Canada member Jeff Dean, and forwarded to GroundSwell
by Frank De Jong. Jeff Dean says he wrote this pamphlet to
distribute at rallies October 15, 2011 in solidarity with the Occupy
Wall Street protesters. GroundSwell did not space for the graphics
in the pamphlet.
What caused the crisis?
The financial crisis was in large part caused by a housing bubble. As
the bubble grew, fueled by property speculation and risky mortgage
lending, people thought the rise in house prices was inevitable and
based on fundamentals. As rises in house prices outstripped rises in
income, people borrowed against their house price to keep up their
consumption, while private savings collapsed.
Once the housing bubble burst, however, people couldnt keep up
their consumption. Demand collapsed, leading to the destructive
The root cause of this crisis is right in front of us, yet it escapes
Speculative bubbles in real estate, oil, commodities and food have
punished billions of innocent bystanders. Financial speculation, cheap
credit and bank bailouts prey on this underlying cause
all need the earth to live yet allow some to privatize and speculate
on its value.
But theres a simple solution
One that was worked out more than 100 years ago by the American
economist and social reformer, Henry George. It has been endorsed by
Poets, Statesmen and Nobel-Winning Economists:
People do not argue with the teachings of [Henry] George, they
simply do not know it. And it is impossible to do otherwise with his
teaching, for he who becomes acquainted with it cannot but agree.
The earth belongs to the people. I believe in the gospel of
Georgism. Mark Twain
I have made speeches by the yard on the subject of land value
taxation, and you know what a supporter I am of that policy. It is
quite true that the land monopoly is not the only monopoly which
exists, but it is by far the greatest of monopolies it is a
perpetual monopoly, and it is the mother of all forms of monopoly.
The teaching of Henry George will be the basis of our program
of reform. Sun Yat-Sen
I have already read Henry Georges great book and really
learnt a great deal from it. Yesterday evening I read with admiration
- the address about Moses. Men like Henry George are rare,
unfortunately. One cannot imagine a more beautiful combination of
intellectual keenness, artistic form, and fervent love of justice.
Every line is written as if for our generation. The spreading of these
works is a really deserving cause, for our generation especially has
many and important things to learn from Henry George.
It (land value taxation) guarantees that no one dispossess
fellow citizens by obtaining a disproportionate share of what nature
provides for humanity. William Vickrey, Nobel Prize
Winner in Economics
I think in principle its a good idea to tax unimproved
land, and particularly capital gains (windfalls) on it. -
James Tobin, Nobel Prize Winner in Economics
It is important that the rent of land be retained as a source
of government revenue - An Open Letter signed by 30
economists, including 4 nobel-prize winners, to Soviet president
Mikhail Gorbachev in 1991
We need a big debate on different kinds of taxation, to talk
about how corporations are freeloading on public services and getting
tax breaks while taxes are falling on workers and smaller businesses.
We need to open a debate about land taxation and Henry George, to tax
bad things, not good things, and not to tax people who go to work
every day. Ralph Nader
Is it fair?
Land Value Taxation would considerably dampen property speculation
and housing bubbles, leading to sustainable growth. The public revenue
would support needed government services and infrastructure, while
untaxing the productive economy would raise wages and increase
business opportunities. Economic shocks that hurt people would be far
less frequent and severe.
Land value taxation and related policies are simple, realistic and
evolutionary measures we could take at any level of government.
What is Earthsharing Canada?
We are part of an international grassroots movement advocating
revenue-neutral tax shifting off consumption and income taxes and onto
site rental, resource rental, and pollution levies. Untaxing the
productive economy creates wealth while taxing nature conserves the
We believe that this is a missing economic link that could help
progressive movements realize their goals.
Learn more about the advantages
- A stronger economy
- Marginal areas revitalised
- Reducing unnatural inequality
- Ample revenue for public services
- Self-financing public infrastructure
- Environmental conservation
- Sustainable cities
- Less bureaucracy