Monday, April 11, 2011

Henry George's Progress and Poverty

Henry George's _Progress and Poverty_ seems a valuable contribution to economics; an overlooked jewel.

It contains the intriguing discernment that perhaps capital and labor are united in their susceptibility to the landed, and share a common interest, instead of being set against each other. In support of this, George points out that when wages drop or unemployment grows, interest rates typically plunge as well, an interesting observation.

I quibble a bit with the postulated benefits of increased population on the quality of life, which seems to conflate the effects of better technology with simple increases in population at one point. This part of his two-pronged poke at Malthusianism seems off.

The book clearly and preciently explains a powerful analysis of industrial society, with an elegant remedy. Both mindful of the wisdom of markets and the unfairness of typical industrial cities, George first details the analysis, then passionately advocates for his thoughtful 'cure'.

Overall, a very important and well-written book.

Progress and Poverty: An Inquiry Into the Cause of Industrial Depression and of Increase of Want with Increase of Wealth; the Solution (Fiftieth Anniversary Edition) (Hardcover)

1 comment:

Ned Moseley said...

Great blog Brian, spoken like a true progressive! This comment is for my for the person who trained me, and my lab buddy!

Great read!

Luckily, George wrote this book during a time when Americans still, as the saying goes, were "speaking the language that Shakespeare spake." This makes it a pleasure to read.

He seems incredibly knowledgeable in the most up-to-date economics of that time. I'm not sure why he hadn't been more recognized. His deductions and use of Crusoe Economics at certain points have been, thus far, spot on (I am speaking of the fisherman, the bait-digger, the canoe maker, canoe repairman, etc. on ad infinitum). I particularly liked "Earning is Making," which reminds me of one of Ayn Rand's economic laws, that "no man may consume more than he produces."

Yes, I snooped through your notes, and I see you say he had conceded that wages are loosely based on productivity. I'm surprised that the belief was that wages were based on capital... I see you also made a note of "high wages accompanying high interest rates." This, to me, requires much deliberation, as I can't at first comprehend the correlation. I've learned to attribute high interest rates to a scarcity of capital, such that entrepreneurs bid the "price" of money to higher rates. Meanwhile, those who are saving their capital are doing so (this is an Austrian theory) not because of the high interest rates at all, but instead due to the ratio of want for present to future goods. Could it be, perhaps, that profitable work is scarce during these times, and as such, those laborers who are working are commanding a higher price for their labor? Any insight you may have on this sort of correlation, if there is one, would definitely be helpful.

I do find George's theory appealing, and I believe he is 100% correct to say that progress does yield disparities in wealth, but I am very skeptical about his reference to a "wedge" forcing some up and others down. It is interesting that my answer to this was conceded by him, that "it is true that the most poor enjoy luxuries today that the kings of the past could not have afforded," but that wasn't "enough" to falsify his claim. Regardless, there is a LOT of juicy economic law-talk in this book, and it deserves reading.

Welp, I'll continue on, and see you in the lab!