Mason Gaffney: The Great Elucidator

Mason Gaffney likes lists; he catalogues with gusto. At their best, his lists rival the sweep and grandeur of that master cataloguer, Walt Whitman. Gaffney’s lists, like Whitman’s, always serve to make a good thing better, reeling off one cogent surprise after another, and then some more!

The catalogue is an effective device for Mason Gaffney, particularly for the sort of writing collected here: essays for general readers, eschewing math and in-house discussions. Catalogues work for Gaffney because, in the main, he writes to elucidate a point that has long been obscured, by social scientists of every stripe, and yet is momentously important to society: the economic role of natural resources and opportunities — of land. It is an insight that ramifies profusely. Indeed, the opportunity to expose something so undeniable — and yet so prominently and repeatedly denied — affords delicious rhetorical possibilities, as in the following paragragh in which Prof. Gaffney compares real estate values in rich vs. poor neighborhoods in British Columbia:

Now do us both a favor, please. Pause and savor that comparison. Let it linger, as though you were testing a slow sip of wine from Fredonia’s famous grapes. Roll it on your tongue, mull sensually over its aroma and bouquet, and, getting back to business, mull cerebrally over its full import. The house that shelters the very rich family is worth 2.8 times the house of the modest family; but the land under the house of the very rich is worth 17.5 times the land of the modest. Seventeen and one half times as much! Again, it is lot value, more than building value, that divides the rich from the poor. Seldom will you find an economic rule more strongly supported by data. It’s just a matter of presenting the data so as to test and bring out the rule.

Gaffney writes about other stuff too, of course. His published works include three books and hundreds of articles in peer-reviewed journals, essays, lectures and class notes. He has researched and written on the economics of forests, the environment, water, urban development, economic history and international relations. Yet the land — how it is owned, controlled, collateralized, its rents captured — has been the red thread that runs through every patch.

Mason Gaffney recently retired from active teaching at the University of California, Riverside, at age 90 — with his wits fully intact: three of the essays in this collection were written this year. Prior to Riverside, he was a Professor of Economics at several Universities, a journalist with TIME, Inc., a researcher with Resources for the Future, Inc., the head of the British Columbia Institute for Economic Policy Analysis, which he founded, and an economic consultant to several businesses and government agencies.

Given the radical insights that Gaffney has propounded throughout his career, it’s amazing that he rose as high in the profession as he did. Over the years he found that the subjects that most interested him were precisely the ones best left unexplored by young economists seeking advancement. In a recent essay he recalled being invited to join an Air Conservation Commission in the late 1950s.

Hardly any economists at that time had any interest in air pollution; they dismissed it and like matters as “externalities,” outside their narrow realm of markets for “commodities.” So, for lack of anyone more senior... this writer [was picked].... [At our] first meeting... each of us was asked to suggest a postulate on which we could all agree, as a foundation for further dialogue. I suggested that “Air is common property.” Shocked silence! They didn’t know whose property it is, but weren’t ready for anything so, well, common, and who was I, anyway?

By the 1990s, mainstream economics was coming in for some pretty harsh criticism. It was labeled “autistic” — obsessed with self-consistency and increasingly abstruse mathematics. The field had come no closer to resolving the long-unanswered questions of political economy, and its most eminent practitioners seemed fine with that. Theorists such as Coase, Laffer, Stigler and Friedman won renown for theories that, made into policies, consolidated the gains of the rich. No distinction was to be tolerated between the earned incomes of labor and capital goods, and the unearned gains of privilege. “Capital” could be physical, or human, or financial — and land, outside that totally fungible realm, didn’t exist at all. The more Gaffney looked into the provenance of these ideas, the more the field’s descent into self-referential irrelevance seemed intentional. If, he reasoned, there existed a large and growing political movement bent on exposing and ending landed privilege (and there did) — and if the prestigious universities of that time, funded by oil and railroad barons, wished to devise an academic system to blunt and diffuse the influence of those progressive forces (and they did) — why, what they came up with would look a whole lot like neoclassical economics. Mason Gaffney’s seminal work “Neoclassical Economics as a Stratagem Against Henry George,” published in 1994 as The Corruption of Economics, told a story that needed telling — albeit one that no other insider seemed willing to stick his neck out and tell.

My own 20-some years in the Georgist movement has come toward the end of Mason’s long career. I encountered him as an avuncular, unhurried, preoccupied sage. He can hit big-league pitching, yet he has never been impatient with boneheaded questioners (such as myself); if folks exhibit more zeal for justice, perhaps, than practical competence, he’ll still work with them. He has generously shared his work, time and insights with those who wish to advance the principles that Henry George set forth in Progress and Poverty. He has no time for cynicism and hypocrisy, but has long been patient with bumptiousness.

Most of the essays in this book appeared in a forum that some, indeed, would call “bumptious” — The Georgist Journal. This magazine goes out to members of the world’s three largest Georgist organizations. Such groups are devoted, in multifarious ways and styles, to spreading “the Georgist philosophy” and implementing the collection of land rent for public revenue, and the removal of taxes that burden production. They include many “true believers” whose high-volume zeal might be seen as an albatross ’round the neck of a serious economist and writer. Nevertheless, Mason Gaffney has steadfastly supported this rag-tag movement over the years. He doesn’t accept error without complaint, but his (mostly) judicious corrections are offered without condescension. It’s a sort of unassailable, humble authority that comes from really, really knowing what one is talking about.

This Georgist movement finds itself, in the 21st century, wobbling back to its feet after numerous setbacks. One of its vulnerabilities — which is, yet, also a source of strength — is its long tradition of autodidacticism and disdain for intellectual authority. This spirit traces back to Henry George himself, a high-school dropout and jack-of-all-trades who rose to become a major political voice and influential economic theorist. George’s style has a messianic flavor — he was not about to mince words about the land question! The fervor rubbed off on many of George’s followers. In later years they became caricatured as zealots who think there’s only one important book about economics. Mason Gaffney’s willingness to engage with all who care about the land question has been invaluable to the Georgist movement, both in terms of morale and of intellectual substance.

Though Gaffney is obviously deeply influenced by George, he is not shy about pointing out — and constructively building on — the errors he finds in George’s works. In this he has performed an indispensable service. Many have commented on Henry George’s deficiencies in capital theory, and on the precise mechanism of boom/bust cycles. Almost all, however, have mentioned these things in passing. This creates two problems. Some seize on these fairly obvious mistakes, using them to dismiss all of George’s work as naïve. Others ignore them, teaching a chapter-and-verse reading of George’s books that gets them dismissed as cultists. Mason Gaffney’s essays clear away the fog of such fantasies and get to the real issues. Thus, his work serves to correct the simplistic errors of both camps and to highlight the vital relevance of an updated form of Georgism — now called “Geoism” by many — to the most serious economic, social and environmental questions of our day. All of these themes come together in Gaffney’s recent essays, in which he considers economic themes over long historical time-frames, identifying the universal themes within superficially different contexts. For example, the essay “Europe’s Fatal Affair with the Value-Added Tax” is far more than an explanation of the economics of sales taxes. It becomes a meditation on the age-old question of what belongs to individuals, and what belongs to communities. He shows how the views of the Physiocrats, the French economistes of the 18th century, had far-reaching influence on the US’s founding fathers, and on the American economy to this day. Public, societal choices with regard to this question have consequences, and Gaffney’s long historical view shows that these consequences are more predictable than many (particularly modern economists) would have you believe.

Likewise, in “Reverberations,” he delves into history to illuminate, as few others have done, the inner workings of the “business cycle.” In 1933, Ferdinand Pecora, an unknown prosecutor chosen at the last minute, had the audacity to ask rational questions, in hearings before the US Senate — which paved the way for the banking regulations that ushered in unprecedented growth and prosperity in the United States. Unfortunately, however, Pecora’s investigations stopped short of uncovering real estate’s crucial role in the boom/bust cycle. This essay is the best — bar none — brief exposition of the mechanics of macroeconomic cycles, and should be required reading for every econ major.

One last point before you get to the good stuff: Mason Gaffney’s work as an economist is deeply important, but he gives you more: his work as a wordsmith, and as a whimsical, eclectic historian, is delightful. He might send you to your dictionary from time to time, as he did for me with his unusual use of “compose,” in the sense of the American Heritage Dictionary’s fifth definition, “to settle (arguments); reconcile” — in a way that even alludes to its fourth, “to make (one’s mind or body) calm or tranquil” (c.f. the title of the final essay in this collection). Dear Reader, you’re in for a treat: there’s deep wisdom here, snazzily expressed.

— Lindy Davies, Program Director, Henry George Institute

Table of Contents

  1. Taking the Professor for a Ride
  2. Eighteen Answers to Futilitarians
  3. What Is “Consumption”? Rent-Seeking and Global Conflict
  4. The Philippines: Land Reform through Tax Reform
  5. Repopulating New Orleans
  6. What’s the Matter with Michigan? The Rise and Collapse of an Economic Wonder
  7. Economics in Support of Environmentalism
  8. The Unplumbed Revenue Potential of Land
  9. The Danger of Favoring Capital over Labor
  10. Money, Credit and Crisis
  11. Denying Inflation: Who, Why, and How
  12. The Great Crash of 2008
  13. How to Thaw Credit, Now and Forever
  14. Turgot’s Legacy: Our Commerce Clause
  15. The Reburying of Martin Faustmann
  16. Europe’s Fatal Affair with the Value-Added Tax
  17. Tom Jefferson and the Dandelion
  18. Corporations, Democracy and the US Supreme Court
  19. Reverberations
  20. Henry George: the Great Reconciler