interest, have to be paid back to the lender through taxation, which must result in rising prices—or revolt. In the long run, then, the bulk, if not the cruelty, of the burden will fall on the exempt; and bleeding to death is said to be very painless in the early stages. But the actual suffering of the producer and the weaker investor has already commenced.
(j) Overcrowding of Cities. This is an obvious symptom of badly arranged taxation and a less obvious symptom of a steadily deteriorating unit of value.[1] Within any large city we see certain property increasing in value from generation to generation far faster than the average rate of increase; and this type of wealth in reality is due not to enterprise and service but to a power to demand tribute from the thwarted producers who, because of our devastating unit of value, crowd in to become money-changers, bond-salesmen, traders, hawkers and lackeys. Such power should not be confiscated: it has been dealt with by all of us as tangible property: but it should be recognized and then held responsible. In a national area with an average population-density of 10 per acre, one acre with a population-density of a hundred is basically one hundred times as valuable as an acre with a population-density of one. If taxation rested on this basis we would, by destroying privilege and encouraging production, have gone a long way toward the prevention of over-crowding.
(k) Lack of Demand. In discussing the net product of trade, Professor Pigou[2] refers to an estimate of an annual expenditure, the world over, for advertising, of £600,000,000, or roughly, $2,790,000,000. Some of this advertising undoubtedly has an educational value; but the mass of it—soap vs. soap, toothpaste vs. toothpaste, flour vs. flour—is purely competitive. Little of this advertising creates effective demand: it bids fiercely and wastefully for a share. From an engineering standpoint the most significant consideration is that there is no logical reason why well-stated demands—which would also have an educational value—should not be advertised as lavishly as supplies. They are of equal value. If this assertion is disputed it is fair to ask why more money is spent in looking for the thing of less value.
