Winston Churchill on Land Monopoly

While I’ve long been passionate about economics, reading Michael Hudson’s Killing the Host was such an eye opener that it fundamentally changed the way I view our political economy. Specifically, it made me ponder why certain rentier elites – especially landlords – reap large rewards for essentially doing nothing; or, even worse, actively harming society.

As a Bay Area resident, I’ve seen the harmful effects of landlordism firsthand. Unfortunately, when discussing the housing crisis, many people tend to reduce it to a simple supply and demand problem. However, I’ve recently started to question just why landlords can raise rents so high in the first place. After conducting some research, I stumbled upon an old 1909 speech by none other than Winston Churchill. In his address, Churchill denounces land monopolies, arguing that they are uniquely harmful.

Per Hudson, we already know that unduly paying landlords weakens economies by reducing demand for goods and services. We also know that landlords do not legitimately earn their income, and that rising land values owe more to public investments and general prosperity than a landlord’s own efforts (as demonstrated by increased rents in New York). However, what makes Churchill’s speech worth reading is how he reveals that, beyond public infrastructure spending, any economic improvements will be used a pretext to hike rents. Churchill says:

If there is a rise in wages, rents are able to move forward, because the workers can afford to pay a little more…Some years ago in London there was a toll bar on a bridge across the Thames, and all the working people who lived on the south side of the river had to pay a daily toll of one penny for going and return- 5 6 ing from their work. The spectacle of these poor people thus mulcted of so large a proportion of their earnings offended the public conscience, and agitation was set on foot, municipal authorities were roused, and at the cost of the taxpayers, the bridge was freed and the toll removed. All those people who used the bridge were saved sixpence a week, but within a very short time rents on the south side of the river were found to have risen about sixpence a week, or the amount of the toll which had been remitted!

As Churchill’s analysis demonstrates, even if labor movements such as Fight For 15 get their way and a $15 minimum wage becomes the law of the land, it may all be in vain. How useful is an extra $3 an hour if rents continue to rise accordingly? To be absolutely clear, I support higher wages and improved job security for American workers; but unless landlords and other FIRE sector parasites are kept in check, most people won’t be able to truly take advantage of any (modest) wage gains.

That’s why I feel that many economic progressives make a mistake by focusing too much on employee vs employer struggles. In some sense, this is understandable: most people have to work, and everyone has some horror story about an incompetent or abusive boss. However, while agitating for better workplace dynamics is vital, we must remain cognizant of the negative role landlords play. If you speak with the average Bay Area denizen, the most common grievance you’ll hear is that there’s little affordable housing. Therefore, those who purport to fight for the common man should spend more time addressing common concerns.

On the flip side, even Randroids have compelling reasons to challenge landlords. Whether or not one considers private property rights sacrosanct, it’s blatantly obvious that landlordism is bad for business. Churchill says:

The manufacturer proposing to start a new industry, proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase price hangs around the neck of his whole business, hampering his competitive power in every market, clogging him far more than any foreign tariff in his export competition, and the land price strikes down through the profits of the manufacturer on to the wages of the worker.

Just think of how many more jobs productive capitalists could create if they didn’t have to shell out money for rent, health plans for employees, and other deflationary payments to the FIRE sector. Significantly reducing rents would also free up a lot more income for people to spend on goods and services – allowing both working grunts and entrepreneurs to come out ahead. Therefore, I think there’s great potential to forge strong political coalitions with a platform of curtailing landlords’ power.

Honestly, what’s not to like?

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6 Responses to Winston Churchill on Land Monopoly

  1. Christopher says:

    Sounds good in theory, so how excatly do you plan on curbing the landlords?

    • Bay Area Guy says:

      That’s a very good question, as it’s always easier to envision a better society than to actually create one.

      I think enacting a couple of simple laws would do a lot to bring landlords down to earth. For starters, we’re long overdue for rent control. As Dota once told me, it’s kind of absurd that the US does not have any serious rent control laws. Even in Dubai – a shark infested, plutocratic monarchy – there are rent control laws.

      I’m also a big proponent of a land value tax. In fact, as some have argued, calling it a “tax” is misleading; it’s simply landlords giving back what they never earned in the first place. Such a tax would discourage land hoarding, speculation, and other non-productive uses of land. Landlords who want to earn more will actually have to consciously improve their land, and with their own income.

      Reducing hoarding and speculation would play a big role in alleviating our current housing crisis.

  2. Old Ez says:

    This is just warmed over Marxism. “Rent” (a hopelessly nebulous, anachronistic concept) is not the issue, Usury is.

    • Bay Area Guy says:

      Marxism? Try Adam Smith, the father of capitalism. He had this to say about landlords:

      As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.

      So no, economic rent is not a marxist concept, but instead has its origins in classical economics. That you reflexively accuse me of espousing marxist views speaks volumes, and just goes to show how successful junk economists have been at erasing the history of economic thought. Since you’re anti-marxist and presumably hate people getting “free stuff,” you of all people ought to criticize economic rent, which is free riding at its finest. I should also mention that landlordism is not capitalism; it’s a vestige of feudalism.

      All of that being said, I too am anti-usury and look at banking askance. And yes, a lot of the money bankers make is pure rent.

  3. Helmut Schmidt says:

    If you get into MMT, or even accept the basic concepts of Super Imperialism, you’ll find that money is a political concept. It comes into being by the ruling sovereignty that declares it legal tender spending that money into circulation.

    Taxes then, are not about raising revenue. The United States is the most powerful nation in the history of mankind with enough weaponry and military power to lay waste to most of the world. We have no need for taxes. The US cannot go bankrupt. No nation can go bankrupt. They can only cease to exist, and with them their power to enforce a particular currency as a legal tender.

    So why then do we have taxes? Why did sovereigns of old ask for ceremonial items like tally sticks, which would make a Randroid cringe (Worthless wood!), as the sole means of taxes?

    Peasants didn’t pay taxes. Only landlords.

    Taxes, in the beginning, were always about removing the benefit of economic rent and curbing the incentive to pursue it.

    • Bay Area Guy says:

      Good point about taxation. As I said a while back during one of my appearances on Robert Stark’s show, taxation should not be treated as some tool to redistribute wealth. Instead, our tax code ought to incentivize productive endeavors and penalize rent-seeking. Likewise, as Michael Hudson has frequently pointed out, taxing economic rent would significantly lower – if not eliminate – taxes on labor and sales, which would increase demand. The economic benefits of reducing rent-seeking would help people a lot more than using tax money to fund a few modest social programs.

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