Lesson 9 — The Effects of George's Remedy

Please read chapters 34 - 37 and complete Henry George's Remedy.

1. How does the contrast between New Hampshire and New Mexico demonstrate the soundness of George's remedy?  (Remedy 7)

2. What is the connection between the "Resource Curse" and the overall problem of poverty?  (Remedy 7)
 
The "Resource Curse" occurs when an economy relies heavily on windfall income from a natural resource, which leads to political corruption and a decline in the rest of the economy. But in fact, all land rent is "windfall income". When people and firms rely on it too heavily, warns Henry George, productive labor and capital are denied their proper returns. This is the basic cause of poverty and depressions.

3. Give some examples of (chp. 33; Remedy 10)
 
a) indirect taxes 

b) regressive taxes  
 
4. Rate the following kinds of tax according to the canons of taxation: (Remedy 10)
 
a) income tax  
   
b) sales tax 
 
c) conventional property tax
 
d) land value tax 
 
5. Compare George's proposal to the modern theory of "broad-based" taxation. (Remedy 10)
 
6. Which of the following is *not* an effect of taxes on production?  (Chp. 33)
 
a. Decrease of land rent.
b. More unemployment.
c. Decrease in the general rate of wages.
d. Increased complexity of government.
e. Taxes on production cause all of those things.
 
7. Unlike other taxes, a tax on land values cannot be shifted to the user of land because  (Chp. 33)
 
a. users of land already pay all that they can afford.
b. the supply of land is fixed.
c. the margin of production remains unchanged.
d. All of the above.
e. None of the above; it can be shifted.
 
8. Removing taxes on production  (Chp. 33)

a. is more important that collecting rent for revenue, because of the heavy tax burden on industry.
b. would increase rent.
c. would increase the return to capital goods.
d. would lead to a trade surplus.
 
9. What would be the effect on production if (Chp. 35)
 
a) taxes on wages and interest were abolished? 
 
b) land rents were publicly collected? 

10. How do we know that the full public collection of land rent would raise the returns to labor and capital? 
 
11. If the full rental value of land were taken in taxation, what would happen to (Remt & Selling Price)
 
a) the selling price of land?
 
b) the rental value of land?
 
12. If land values were the source of public revenue, what would be the effect on (Chp. 37; Remedy 8)
 
a) working farmers? 
 
b) urban apartment dwellers?
 
13. Compare George's remedy with the "enterprise zones" proposed to alleviate urban decay and stagnation.  (Remedy 8)

14. Under the Georgist remedy, 

a. inflation could be controlled without increasing unemployment.
b. interest rates would be set by the market, not by central banks.
c. employers would compete to hire scarce workers.
	-----> d. All of the above.
e. A and b, but not c.