Who are the makers and the takers?

Since the end of the presidential election last week, I've been seeing a lot of tweets and blog posts that will say something like "takers outvoted the makers"(see here, here, and here for examples).  I find the "makers and takers" narrative fascinating.  I've found few other narratives that so quickly and easily divides Americans and get us to hate each other. I wanted to take a closer look at the supposed logic behind it.

"Makers and Takers" is a right-wing meme.  The basic story is thus:  The economy is make up of people who make stuff and people who take stuff.  The takers take from the makers - usually using the power of government.  The story comes from Ayn Rand's Atlas Shrugged.  But she called them producers and looters.

Unfortunately, as often as conservatives will refer to "takers" as the problem, they rarely define or identify who these nasty people we're supposed to hate are.  Mostly, it seems to be based entirely on whether or not you pay federal income tax(payroll and other federal taxes don't count).  That is the impression I get from Mitt Romney, Paul Ryan, and other random conservatives.  The conservative commentator, Mary Matalin, helps clarify a little more.  Old people and veterans don't count, only people who use any anti-poverty program.

So, let's look at two different people.  Let's take a single parent with two children.  The parent works 2 jobs.  28 hours a week at Walmart, and another job at Home Depot working another 28 hours(give or take since schedules in retail shops tend to fluctuate).  At each job this person works hard and therefore earns above minimum wage... about $8.50.  Neither job pays benefits.  This translates to just under $2,000 a month(before payroll taxes and state income taxes).  That makes him qualified for a small amount of food stamps and for their kids to get Medicaid.  In right-wing language, this 56 hours a week worker is a "taker" and a "moocher" and a "looter".

Let's take another person.  Say, a former presidential candidate who made 14 million dollars last year by doing nothing.  He pays about a 15% tax rate in income taxes.  He didn't do anything except give his money to a banker.  But since he paid income taxes, In right-wing language, that makes him a "maker" and a "producer".

In this scenario, I question the right-wing framing of maker and taker.  Who is truly the maker, and who is the taker?  Are the minimum wage (or just above minimum wage) workers really taking?  Is that work of packing your groceries and loading the shelves that meaningless?  Is the work of giving someone else your money so important that it is the equivalent of MAKING something?

I would be tempted to reverse it and call the rich guy the "takers" and the workers (who are actually WORKING) the "makers".  But I find this whole narrative odious and would rather see it die than co-opted.  We're all in this together and we all have something to contribute to society.  If we think individuals are taking advantage of the system let's deal with that.  Let's not deal with it by demonizing the most vulnerable people in our society.

General Theory Study Guide: Chapter 3, Section I

This Chapter introduces the Keynesian concept of "effective demand".  He does so in the most confusing way possible.  I'll try to simplify as much as I can.

In section I, all Keynes does in this section is define "effective demand".  Here's the theory from Keynes's own words.

The amount of employment... depends on the amount of the proceeds which the entrepreneurs expect to receive from the corresponding output.  For Entrepreneurs will endeavor to fix the amount of employment at the level which they expect to maximize the excess of the proceeds over the factor cost.

In other words, Employers will guess what the most profitable level of employment will be, and that is how many people will be hired.  If entrepreneurs don't believe hiring more people will be profitable, they won't hire them.  The point where the cost of employment meets the expected increase in revenue is the point of "effective demand".

Keynes contrasts this with the classical theory(The belief that supply creates it's own demand).  For that belief to be true, any increase in the number of employed people must mean that the cost of hiring will always be less than or equal to the expected profits .  If that were the case, then entrepreneur's would constantly be hiring people until there was no one left and employment really would be determined by the Marginal Disutility of Labor.

Obviously, Keynes doesn't believe the above paragraph is true.  He will lay out his explanation and theory of why in Chapter 3, section II.

Hopefully, my non-math and non-statistical explanation of his definition of "effective demand" will help you understand Keynes's math heavy explanation in Section I.

Debunking Those So-Called "revenge"/"Obamacare" Layoffs (w/Math)

Did you know that 355,000 people were laid-off last week because Obama was re-elected?  Or, at least, that's what many Conservative activists would have you believe.  Apparently, there is this growing meme going around the internet that companies are laying people off because Obama and "Obamacare" is here to stay.  This is all likely to be typical partisan bull-crap.  I never thought I'd have to explain the inner-workings of the Free Enterprise System to the party that claims to love capitalism.  But... here we go.  We'll start with basic concepts and then move on to "the math".  By the end of this post, you'll know why this meme is likely to be crap, the numbers backing up that assertion, and when (and how) we'll have the numbers to prove it.

First of all, this is a huge country with a huge economy.  Large numbers of people are being hired and fired, laid-off and brought back every single day.  Additionally, large numbers of business are being started and bankrupted, growing and shrinking, every single day.  The beauty of free enterprise is that nothing ever stands still.  Things are moving and changing all the time which causes other things to move and change and so on.  This is the reason it is so hard to study macro-economies.  There are so many micro-economic things going on you can never be 100 percent certain of which event caused another event.

The best anyone can do to understand how an event affects the economy is to gather economic numbers(like jobs and sales data) and compare trends to certain events.  Unfortunately, even for the professionals, that is not an easy task.  Nor, can many things be definitively proven.  That's because, as any scientist will tell you, "CORRELATION DOES NOT IMPLY CAUSATION"!.  That phrase should be tattooed on the wrists of every economist so they have to stare at that phrase while typing up papers and reports that make that very claim.

In the beginning of the post I claimed 355,000 people lost their jobs last week because of the election.  That of course was a half-truth.  In an economy as big as ours we have 100s of thousands of people losing their jobs every. single. week.  Even in a healthy and growing economy.  The fact is, we have even more people being hired every week to offset that.  But, the right-wing aren't using employment numbers to make their current claim(we won't actually know those numbers until Thursday).

The right-wing is pointing to companies that are announcing massive lay-offs as proof, PROOF! that Obama and "Obamacare" are killing jobs.  So let's look at those numbers.  Fortunately, the department of labor keeps statistics on how many companies have a "mass layoff event".  Their definition of a mass layoff event is when at least 50 initial claims are filed against an establishment during a consecutive 5-week period.  Fortunately, they have the entire archive of their past data posted online.

As it turns out, there are a lot of mass layoff events every month.  For the last year there are usually over 1,000 mass layoff events every month (not seasonally adjusted).   I add that "not seasonally adjusted" because mass layoff events tend to fluctuate depending on the time of year.  For instance, post Christmas time will have a lot of lay offs as stores get rid of their extra holiday help.  Therefore, instead of comparing month-to-month numbers, it is sometime better to compare this months number to this month of last year.  That is what we're going to do.

November 2011 had 1393 mass layoff events.  Last I looked at a calendar there were 30 days in November.  So that means, on average, there would be at least 46 mass layoffs every single calendar day during a Normal November.  This is assuming mass layoffs happen on weekends as well.  If we assume mass layoff events only happen during the week the average would be even higher.  But since I want to give the right-wing the best chance to prove their crazy theories, I'll stick with the lower number.

Let's compare that number to right-wing doomsday claims.  If there are mass layoffs we should be seeing an increase over the average rate of 46 a day.  We should be seeing 50, 60, or 70 a day to register an increase in layoffs.  If there was a massive movement I would expect to see double of the average(like happened in 2008 when the Bush economy was spiraling downwards).

Exhibit A: The article I linked to earlier has a scary-sounding tweet that claimed that "45 companies announce layoffs in last 48 hours[after Obama's re-election".  In a 48 hour period, we should see an average of 94 mass layoff events.  That means their scary claim would be less than HALF the pace of mass layoffs during a typical November.  If their claim is true, that would be a low number and something to be celebrated.

Exhibit B:  The Blaze, home of Right-Wing Glenn Beck, has a B.S. article listing 37 layoffs and "closure" announcements in a 48 hour period.  Even smaller than the claim in exhibit A.  Additionally, they cheat by listing EVERY layoff announcements, even ones that are less than 50(my 46 number counts only those over 50).  They are still very VERY far short of an increase, let alone a doubling.

Exhibit C:  These right-wing bloggers have now setup a website to try and document supposed mass layoffs.  Here are their numbers since the Wednesday after Obama was elected(combining layoffs and storeplant closures):  Wedenseday was 25, Thursday was 23, Friday 17, Saturday 25, Sunday 1.  I don't know if this site cheats like the Blaze and lists layoffs that are less than 50 - I'll let somebody else click and read each announcement.

As you can see these listing are far short of even reaching the typical November rate and therefore offer absolutely ZERO proof of mass "revenge" or "Obamacare" layoffs.  I suspect that not all mass layoff events are reported.  I'm guessing the real number is higher than these articles report, but they are also likely at a typical November rate.

Unfortunately, the mass layoff event data isn't printed quickly.  It takes time for the department of labor to compile the statistics and interview companies about their layoffs.  For instance, September's numbers weren't reported until October 23rd.  Which means we won't get November's number until around December 23rd.  (November 23rds report will be of October, before Obama's reelection).

When the report does come up, I recommend looking at seasonally adjusted numbers, to see how much different the number is from October.  The seasonally-adjusted numbers averages out seasonal affects.  As long as that number is near October's it will mean there was no mass "revenge" or "Obamacare" layoffs.  Additionally, you can check the raw numbers and compare them to the previous November numbers.  Unless that number is twice it was last year, it'll mean no mass layoffs happened above and beyond normal economic activity.

My educated guess is that these layoffs would've happened anyways.  For those claiming they are laying off because of Obama, I think some business people are making political claims to serve a personal agenda.

All that Bunk About Deficits and Skyrocketing Interest Rates

It is astounding how long experts can keep repeating the conventional wisdom in the face of -what SHOULD be - overwhelming reality.  The way things work today, the Federal Reserve sets the interest rate.  Additionally, inflation is determined primarily by aggregate demand.  We have nearly 5 years of data backing this stuff up.  Yet, the conventional wisdom marches on.

The federal reserve very plainly sets the (short-term) interest rate.  That is what they do.  It's called an Open Market Operation. When they want interests to go down they buy U.S. bonds.  That puts cash in the system and lowers interest rates.  When the Fed wants interest rates to go up, they sell their stock of U.S. bonds and remove cash from the system.  In this way the federal reserve sets the interest rate on U.S. bonds which then in turn influence other interest rates(like mortgages and car loans).  This isn't a secret.  They explain it on their website.

Despite this, we have deficit terrorists running around telling us that we need to cut social security and gut medicare right now! This very instant!  Because if we don't, interest rates will spike.  We'll have to start paying 150 bazillian% (Note:  not a real number) on the federal debt and our mortgages.  Pete Peterson, the stereotypical deficit terrorist, states the conventional wisdom very plainly.

I see two potential crises in the future: a near-term financial crisis rooted in declining investor confidence that leads to sharp rises in interest rates and forces sudden, draconian changes in the federal budget; and a longer-term economic crisis that would result from diverting more and more of our national resources to servicing debt instead of investing in areas that are essential to long-term growth. These crises are made all the more likely by the fact that growing debts aren’t just an American problem. Projections show that, by 2035, the world’s advanced economies could face debts approaching 200% of their GDP. With countries competing for scarce capital, interest rates are almost sure to rise steeply.
(emphasis added)

We are now on fiscal year 5 of approx trillion-dollar budget deficits.  I'm still waiting on those mythical bond vigilantes to spike our interest rates.

With that in mind, I found two news stories that are oh-so interesting.  The first is that Mortgage rates hit a new record low last week.  So much for worrying about skyrocketing interest rates...  But what about U.S. bonds?   Maybe those are skyrocketing?  They are still insanely low.  On top of that, there was a bond auction this week where, for every 1$ in U.S. treasuries being sold, 3.16$ was bidding to buy them.  That is a record high amount of bids.  So despite low interest rates and high budget deficits, bond holders are not only sticking with U.S. bonds, but are flocking towards them in record numbers.

In both cases, it is because the federal reserve is purposely keeping the interest rates low.  They always keep it low when they want it low and always keep it high when they want it high.  At this point, I expect someone who is well-versed in the conventional wisdom to grab his or her hair and shout, "Fed keeping interest rates low?  zOMG!  Hyperinflation!  Weimer!  Printing Press!", and then their head explodes(Note:  I cannot be held liable for exploding heads).  All I have to say is that I am still waiting on that hyperinflation.

The small, but growing community of Modern Monetary Theory(MMT) economists can explain this phenomenon better than conventional economists.  They understand how Modern money works.  How Inflation an interest rates are really set.  Unfortunately, the conventional wisdom doesn't want to hear it.  Instead, we continue to have both presidential nominees talk about budget deficits without anyone asking to explain the supposed problem.

The 401k is a Government Subsidy for Wall Street

Wall Street apologists often try to defend Wall Street by pretending that it is somehow the last bastion of laissez-faire capitalism.  Even more comical, some wall street traders have even taken to call themselves defenders of free enterprise.  The truthais, the big bank bailouts in 2008 was the continuation of a long history of government sending our money to Wall Street.  There are several ways that the government subtly helps Wall Street fund it's addiction to speculation and stock market gambling.  One of the ways it does that is through the 401k tax provision.

It shouldn't surprise us that the 401K, marketed to us as a retirement plan, is just a cash cow for Wall Street. After all, the 401k started as a tax loophole for executive pay. So why do i call the retirement "plan" of millions a "Wall Street subsidy"? Well, let's see how it works.

A 401k retirement "account" allows one to make money on financial income without being taxed on it until later. For instance, if, one year, you put 100$ in your 401k, the income tax you would've paid on it is suspended.  Not until after you've retired and pull out that money will you pay income taxes on it - long after you've made interest, dividends, and other money with your untaxed money.

On top of that, your employer will get certain tax deductions and credits for setting up and directly contributing to an employee 401k plan.  When an employer sets up a 401k, a wall street firm will charge them a certain fee.  But lo and behold, the government gives the employer a tax credit to cover some or part of the fee.  This is essentially the federal government subsidizing 401k Management firms.  Funny how we hear the financial elite complain about healthcare subsidies, but not complain about this subsidy.

The worse part is the tax-free income of the 401k.  All money made in a 401k can get reinvested and doesn't get taxed until you want to spend it.  That might make sense for business taxes that pay only on profits, but not for personal taxes.  Personal income taxes, you pay on all income.  I don't get an exemption for investing in a car that can get me to my job faster, why do I get an exemption for buying Dow Chemical stock?

A 401k locks you into handing your money to Wall Street firms by specifying what you can't do with a 401k.  You can't use your 401k savings to invest in your friend's small business(You can take out a loan against your 401k, but still have to pay it back to wall street - with Interest!).  Unless that small business is listed on the New York stock exchange or some other stock exchange(that isn't a cheap(pdf) or easy task) and there is a mutual fund that invests in it(very unlikely).  Once Wall Street has your money via your 401k, they have it until you retire (unless you're willing to pay a huge fee, of course).

Some might think the answer is to boycott funding our 401ks.  Something akin to the Move Your Money campaign.  That campaign was trying to defund Wall Street by moving our money from the large commercial banks to local banks or credit unions.  But that won't work as well.  Moving to a local bank or credit union didn't involve losing much money.  In fact, it often means gaining money because credit unions often have better interest rates.  With a 401k, boycotting it means "leaving money on the table".

Because the government incentives employers to have as many employees to participate as possible, they offer matching funds(which are tax-deductible) that employees wouldn't get if they don't participate in the 401k.  If an individual employee doesn't participate he is losing money because of the government subsidies.

So what does this all amount to?  The federal government pays employers to setup 401k "retirement" funds that can only invest in financial assets that Wall Street firms control, pays employers to get as many people to participate as possible, and then gives employees tax breaks to go along with it.  The "defenders of free enterprise" are suspiciously quiet on this racket.

You might think I'm exaggerating the importance of the 401k in directing money to Wall Street.  So let's look at the numbers.  The 401k law went into effect in 1980.  In that year, the percentage of people who owned stock was 13%.  A slight dip from 15% in 1970.  By 1989, the number was 32% - More than double 9 years earlier.  By 1998 over half of the country owned stock(source for numbers here).  There is significant financial wealth to be had with 401ks.  Nearly 3 trillion dollars worth.  That is a lot of money to be sloshing around in Wall Street's computer banks.  As you can imagine that 3 trillion dollars means a lot fees for managing all that wealth.

I have no problem with people entering the wall street casino willingly.  But now we incentivise people to enter it.  Requiring people to enter it to make sure they get all the tax breaks they wouldn't receive otherwise.  This requirement means that people who are not qualified to manage their own investments are forced into it.  The power elite know this.

I used to ask the CEO, CFO of my major clients, ... often in a conference room [after] some young employee would bring in coffee, and as they would be leaving, I would ask the CEO, "Would you allow that employee to direct the investment of your account in the 401(k) plan?" They always thought I was some kind of idiot: "Of course not. I wouldn't let them touch my account with a 10-foot pole." And I said, "But you force them to manage their own!" And they are running their money into the ground.

The irony here is dripping.  First, we are assumed to be too stupid to properly save for our retirement, so we have to have tax breaks that incentivize us to give money to Wall Street to save for retirement.  But once we make the decision to hand our money over, then suddenly we are magically smart enough to manage our own stock portfolio.  As you can imagine, most aren't educated nor have enough time to make informed decisions.  This disparity reflects poorly on those who most need a retirement plan.  Only the highest educated and most familiar regularly beat the system and maximize their gains.

I think what should happen is that this 401k tax loop-hole should be closed and in exchange we all get a general income tax cut(starting at the bottom bracket).  If we are all taxed less on our work and labor, we will have more money to save.  Then we can all decide on how best to save for retirement beyond Social Security.  Some might still enter the wall street casino that are knowledgeable enough, others might choose other routes like paying off mortgages early, or others still might try to build a small business.

The point is, we shouldn't let Wall Street use the tax code to force us all into the same option.  That would be a real "free market" principle.  You would think all those big bankers would be all for that.  Unfortunately, they rarely speak up when a free market principle would actually take away one of their cash cows.  People like Peter Schiff will go in front of congress and demand eliminating the minimum wage, unemployment benefits, and anti-discrimination laws, but not once has he ever suggested eliminating the 401k or any of the other canards that direct money to investment firms like the one he owns.  So much for our "defenders of free enterprise".

General Theory Study Guide: Chapter 2, Sections VI and VII

In Section VI, Keynes gives "Classical Economics" a final blow.  He starts to build his case that Money has an effect on the way an economy works.  The thought that the principles of a barter economy can be applied to a monetized economy was strong.  In fact, it is still strongly believed by Austrian Economics that barter is a useful model for monetized economies.

Keynes starts off section IV by quoting John Stuart Mill and Alfred Marshall.  This is to demonstrate the current thought which is that "supply creates it's own demand" as presumed by Mill.  The Marshall quote goes to show that the belief really is that if a person abstains from spending his income, it somehow automatically triggers a corresponding investment by himself or others.  Keynes claims this is incorrect because the two are using a false analogy between the world in which we live(a monetized economy) and a Robinson Crusoe economy of pure barter.

Keynes makes  a couple guesses as to why people have made this mistake.  The first is the strong case of Says law.  He agrees with the premise that the "income"(things it gets) of an entire community is exactly equal to it's "output"(things it makes).  This concept is confused with a (what Keynes calls a "similar-looking") proposition: "the costs of output are always covered in the aggregate by the sale-proceeds resulting from demand".  So what does that mean?  I found someone who explained it simply:

That is, I do not decide how many ipods will be made this year, but I do decide whether I want to buy one. Apple has to guess whether or not I will buy.

His other guess as to why people make this mistake is that those who believe Say's laws are basing it on individuals.  If an individual "saves" he is richer.  If every individual in the community "saves" then shouldn't the whole community be richer?  Keynes doesn't think so since.  This is his first hint at his fallacy of composition argument.

The two most important concepts from this section are:

1. Money matters.  It changes the way an economy works.  Money is not a "thing veneer" over a pure barter economy.

2.  The "classicals" are "fallaciously supposing that there is a nexus which unites decisions to abstain from present consumption with decisions to provide for future consumption."

This leads Keynes to declare that many theories of "the classicals" need to be re-examined.

Section VII

Section VII is a summary of the rest of the chapter.  Keynes summarizes the 3 biggest ideas of the classical economists(seen below) that he believes are flat out wrong.  The following ideas must all be true, or all not true.

1. The real wage is equal to the marginal disutility of the existing employment;
2. There is no such thing as strictly involuntary unemployment;
3. supply creates its own demand

Henry George, The First Progressive

Henry George(1839 - 1897) is a progressive hero that has been largely forgotten by time.  In his heyday, he was one of the most famous living Americans in the World.  Surpassed by only Thomas Edison and Mark Twain.  His most famous book was translated into dozens of languages and sold 3 million copies in his lifetime.  He was invited to speak and lecture all over the country and world, and his writings appeared in newspapers across the nation.  At his funeral in 1897, 200,000 paid their respects by filing past his casket(as a comparison, when President McKinley was assassinated 4 years later, only about 100,000 people filed past his casket.  So how did a 19th century printer, living in San Francisco , with no more than a 7th grade education become so famous?  And why was he forgotten?

Henry George went on a quest to find out why there is poverty among so much progress and wealth.  The result of his quest was a book called Progress and Poverty.  He started writing in 125 years this month.  Except for some anachronisms, the book could be mistaken for being written in any decade between then and now.  If you read it today, you could easily think it was written last year .  All the problems he describes are still problems today.  All the excuses that he debunks as causes for these problems are still repeated today.  Here is the opening of Progress and Poverty.

THE NINETEENTH CENTURY saw an enormous increase in the ability to produce wealth. Steam and electricity, mechanization, specialization, and new business methods greatly increased the power of labor.
Who could have foreseen the steamship, the railroad, the tractor? Or factories weaving cloth faster than hundreds of weavers? Who could have heard the throb of engines more powerful than all the beasts of burden combined? Or envisioned the immense effort saved by improvements in transportation, communication, and commerce?...
[snip]
...Yet we must now face facts we cannot mistake. All over the world, we hear complaints of industrial depression: labor condemned to involuntary idleness; capital going to waste; fear and hardship haunting workers. All this dull, deadening pain, this keen, maddening anguish, is summed up in the familiar phrase "hard times."

Does that not sound like it could've been written last year?  Change the century and replace the inventions with more recent inventions like robotics and computers, and this could be an Op-Ed in yesterday's New York Times.

Henry George described the conditions of the poor as, in many ways, worse than ancient man.

Nevertheless, no one who faces the facts can avoid the conclusion that -- in the heart of our civilization -- there are large classes that even the sorriest savage would not want to trade places with. Given the choice of being born an Australian aborigine, an arctic Eskimo, or among the lowest classes in a highly civilized country such as Great Britain, one would make an infinitely better choice in selecting the lot of the savage.
Those condemned to want in the midst of wealth suffer all the hardships of savages, without the sense of personal freedom. If their horizon is wider, it is only to see the blessings they cannot enjoy. I challenge anyone to produce an authentic account of primitive life citing the degradation we find in official documents regarding the condition of the working poor in highly civilized countries.

Today, conservatives berate the poor for having cell phones and TVs.  They use it as evidence that poverty is not a problem in America.  Henry George had an insightful response that is still relevant to this day.

Yes, in certain ways, the poorest now enjoy what the richest could not a century ago. But this does not demonstrate an improvement -- not so long as the ability to obtain the necessities of life has not increased. A beggar in the city may enjoy many things that a backwoods farmer cannot. But the condition of the beggar is not better than that of an independent farmer. What we call progress does not improve the condition of the lowest class in the essentials of healthy, happy human life. In fact, it tends to depress their condition even more.

Henry George was very progressive when it came to other cultures.  At the time, it was common to blame poverty on nature or racism.  For instance, the Irish were too dumb when they depended so heavily on potatoes, India and China were overpopulated.  These were popular myths for why these countries were or had so many poor.  Henry George demolished all of them.  All he had to do was point out how well off the elites were in each of these countries.

Another popular explanation of why the poor were poor, was based on good old fashioned classism.  That is, the poor are poor because they are lazy, criminally inclined, or just generally rude(sound familiar?).  Henry George had a great retort for these people too.

In society as presently constituted, people are greedy for wealth because the conditions of distribution are so unjust. Instead of each being sure of enough, many are condemned to poverty. This is what causes the rat race and the scramble for wealth. An equitable distribution of wealth would exempt everyone from this fear. It would destroy greed for wealth, as greed for food is destroyed in polite society. 

On crowded steamers, manners often differed between cabin and steerage, illustrating this principle of human nature. Both had enough food. However, steerage had no regulations to insure efficient service, so meals became a scramble. In cabin, on the contrary, each was assigned a place, and there was no fear of not getting enough to eat. There was no scrambling and no waste. The difference was not in the character of the people, but simply in the arrangements. A cabin passenger transferred to steerage would participate in the greedy rush; a steerage passenger transferred to cabin would become respectful and polite.

In other words, the negative behavior attributed to the poor is not the reason they are poor.  Rather, the behavior is a result of being poor.  This argument, and all other arguments boiled down to a refutation of Social Darwinism.  The crude theory that the poor are poor because they suck, and the rich are rich because they are awesome.  Henry George expertly busted this mythology that the elite told themselves.

Finally, the reason I call Henry George the "First Progressive" isn't just because he argued against Social Darwinism.  The reason is because he was the first popular figure to do so, that didn't blame capitalism and turn to a marxist solution to solve the problem.  From his preface to the fourth edition to Progress and Poverty.

What I have done in this book is to unite the truth perceived by Smith and Ricardo with the truth perceived by Proudhon and Lassalle.  I have shown that laissez faire—in its full, true meaning—opens the way for us to realize the noble dreams of socialism.

He blamed what he called the "Land Monopoly".  The details, and his solution, to the problem are too long for this already long post.  Just to give you an idea, he redefined the class fight from being capitalists VS. workers as Marx did, to Land(and other) Monopolists VS.  "real capitalists"workers.  His book is an easy read and is free on the web and as a pdf.  I think you'll enjoy it if you give it a chance.(my only recommendation is to skip chapter 5 in book III - it's a little convoluted)

As for why he has been largely forgotten, I can only speculate.  Maybe because he billed himself as an "economist" yet he expounded on classic political economy.  At the time of his writing, the world of economics was moving onto the "neoclassical" economics that we are more familiar with today.  Maybe the elite wanted us to forget about him.  Unlike figures like Adam Smith and Thomas Jefferson, they couldn't "rehabilitate" his legacy to make him appear as a conservative.  Perhaps it is as innocent as later economic figures like John Maynard Keynes over shadowing his legacy.

Whatever the reason for Henry George being forgotten, it certainly isn't because his work is no longer relevant, nor is it because his proposed solution was a bad idea(ever city, state, or province that has tried it has had enormous growth).    Here's to remembering a man that deserves to be remembered.