Stewardship or Ownership?
C. Lowell Harriss
[A paper written in 1995. Details on publication not
Stewardship or ownership? A challenging question. Is there a
Most parcels of land in this country (neither most acreage nor,
perhaps, most in value) are, I expect, occupied by the owner and used
as the home. And it is my impression that most owners are rather good
stewards. My knowledge, of course, reflects no careful sampling and is
incomplete, casual, anecdotal. In fact it consists largely of
impressions from the plane and some auto travel, an occasional walk,
and what advertisers and reporters give me in the media.
This conclusion leads to another: For a considerable portion of this
country the structure of land ownership encourages good stewardship.
The owner has concern for his neighbors and his place in the
community. The house and land are major investments to be nurtured and
made more valuable - for sale or for bequest to children. The rather
comforting impressions about land use in so much of residential
America, however, do not embrace all land about which we as a
community should be concerned.
Land Differs from Man-made Capital
Why imply that an owner might not be a good steward? Who has more
interest than an owner in preserving and enhancing the worth of
possessions? As a rule, no one. But for land there are relevant and
important considerations not found in ownership of machines or
household property or most of what one thinks of as wealth. My concern
grows out of the characteristics of land that make it "different."
My listing is not necessarily in order of importance.
- Nature made land. The great mass of the earth's surface is the
product of nature - in striking contrast to housing or machines.
But what one pays to own or use land has little effect on the
quantity physically in existence. Some persons believe that land
as the creation (gift) of nature really belongs to everyone. Try
to convince my neighbor, however, that each Californian, each
Chinese, should own a portion of the land under his house. Still,
taxation can achieve some of the same result.
a. Human use of land can erode and destroy elements of value.
b. Investment of labor and savings can and do alter the physical
dimensions and character of plots of "land"; for legal
purposes the results will usually be treated as land. For our
purposes, however, their worth should be excluded.
c. Things above the earth's surface (air rights, the broadcast
spectrum) and below (minerals) should often be included as "land,"
but there is not space for me to do so here.
- "Location, location, location" - how often we are
reminded of its influence on land value and its importance as a
unique characteristic. Whereas economists can attribute
homogeneity to many outputs and inputs, the concept most
definitely does not apply to land. No two plots of land can be
identical because no two units can be in the same location. Each
owner has a (little) monopoly.
- Land as a physical unit is immobile - though the same is not
true of the factors influencing land values.
- The value of a parcel of land depends to varying extent upon
what exists in the "neighborhood," the surroundings next
door and beyond - including governmental facilities. What an owner
of land does on his parcel has effects for those around. So not
only "no man" but "no parcel is an island, entire
- Buildings on land, the result of decisions made in the past,
affect, perhaps for many years, what may be done profitably with a
- A special body of law applies to land.
- The permanence and fixed-quantity nature of land give rise to
something of significance in the present discussion. Some actions
have long-lasting results. Some, in essence, are irreversible.
Decisions about land use can have a "time element" that
is much longer than is involved in typical economic choices.
This list of seven "differences" could be extended. Mason
Gaffney has identified twenty-five, and most of his factors would
contribute to my discussion. In fact, I shall draw on a few without
explicit identification. What appears here will, I hope, establish the
point that land does have differences from human efforts and man-made
The Individual and the Community
The owner or occupier of a parcel of land - who may be the same
person or different ones -serving his (may I be permitted to use the
masculine pronoun to include, respectfully, the feminine?) interests
will often exert some effects on neighbors, both at once and perhaps
indefinitely into a long future. The crux of our concern is how to
take account of others, in space and in time. I can affect others, and
they can affect me, perhaps for a long time.
To the extent that some guide seems desirable, would the Golden Rule
not serve? Or Kant's "Categorical Imperative"? Yes and no.
Perhaps these two rules are hopelessly naive. Reciprocity cannot be
assumed. Are we not likely to know our own interests better than those
of others? Would it not be better than most alternatives to aim at
producing for others whatever we would like them to produce for us?
Two among several obstacles appear. We do not know much about the "beyonds,"
the benefits and the costs. And often it is group or collective
(community) interests that are involved in land use. Moreover, the
conditions under which a group acts will often require some
considerable element of coercion.
Spillovers, neighborhood effects, third-party results, such terms
suggest some of the issues that arise when one owner does something,
or fails to do so, with a plot of land. Because we have an interest in
what goes on around us, nearby, and sometimes in remote locations, "we"
have developed instruments for trying to serve such interests, e.g.,
zoning, deed restrictions, covenants, contracts, etc. Compulsions to
do some things with land and prohibitions against doing others lead to
results that in some cases are close to what simple ownership would
produce. In other cases the results are close to those of stewardship
for some broad or remote interest.
One range of issues involves learning about the "things"
around and beyond us or our parcel. What are the probable and possible
benefits and costs? Another set of issues concerns the "doing."
What are the instruments? How are they used? What do the law and
private conditions permit?
Owners and others have an interest in using political power to adapt
the rules imposed by government - for example, renters versus owners
(rent controls). Such efforts raise complex issues of ethics. Is it
ethical to use political force to make others do with land what they
would not do voluntarily with their market power? Under what
Currently problems of land use are sometimes associated with
environmentalism - particularly land use restrictions imposed to
protect spotted owls and kangaroo rats. Generally, I suppose, aspects
of ethics are not of obvious direct concern. But they are involved
whenever burdens are imposed to benefit someone. If there can be
benefits without burdening anyone significantly, then the only ethical
aspect involves responsibility for any failure to act.
My eyes have been opened by literature from the Foundation for
Research on Economics and the Environment." Their reports concern
broader ranges of problems than those of land. They provide some
evidence that voluntary actions do accomplish much and that government
actions can be misguided and unproductive.
Some cases get into the news, and into the courts, when a group or
community seeks benefits by depriving the landowner of something.
Reading a long article about the record of "takings"
litigation, in preparing for this paper, was a humbling experience.
Judges have faced a large variety of situations.
A more or less typical case will consist of a group, the community,
trying to get benefits without paying the landowner. My instinctive
reaction is that the community should compensate the owner. Presumably
the benefits are great enough to provide for payment. Is it not
unethical for a group seeking to benefit itself to use the compulsory
power of government to deprive one or a few landowners without
The U.S. Constitution has language that, to this layman, seems to
protect an owner against the desire of those who exert the power of
government without compensation. Even a majority must recognize limits
on the use of government. Is this not ethically admirable? I think so.
Yet objections arise.
For example, one sometimes hears that "the public" should
be able to do something good regardless of its willingness (and
perhaps its ability) to pay. Special assessments on property in the
area might be appropriate.
Of course, the attractions of "doing good with the other
fellow's property" can be tempting. In some cases the appeal
approaches the overwhelming, most clearly where irreversible change is
at issue. But I would be reluctant to concede the point, except with
restraints yet to be formulated (as far as I know).
A gray area lies between governmental actions that are clearly
takings and the authority to regulate, e.g., for public health and
safety, without obligation to compensate landowners or others who
suffer. I am not prepared to suggest concepts that would narrow
substantially the gray area. The issues are inherently difficult here,
as with some other aspects of public policy. For example, there is yet
no agreement on the meaning of "fairness" in taxation,
though Robert Gilmour has kid out some of the issues in his
presentation for this series.
One complication arises from a point central in Georgist thinking:
The (alleged) taking may be of value created by the community with
little or no contribution by the owner. After all, the history of land
prices reveals, strikingly in some urban areas, increases that by any
reasonable reckoning are unearned. Is there any real ethical
obligation to pay for taking what the community has given? So stated,
the answer seems to me clearly "no." But in searching out
what is "right" is there no need to distinguish between what
happened before and after acquisition by the present owner? If he paid
a prior owner for what the community did, he would suffer from an
uncompensated taking. What would be ethical?
Governments are responsible not only for takings but also, along with
the community, for "givings." These are especially
appropriate for financing government. What could be clearer than this
familiar Georgist point?
One might dream of a principle that a taking of land would not
require compensation for values created by the community. I cannot
envisage what results such a rule would have in the land market -
except undoubtedly confusion. Perhaps a time limit of five or ten
years, or some other period, could be set. Is there enough practical
prospect to warrant some discussion?
Perhaps a cutoff date for acquisition by the current owner would be
feasible. Whatever an owner had paid for would be compensated but not
amounts accruing during his ownership. Then two adjacent owners might
get very different amounts at a taking. The person who bought last
month would get full compensation while one who acquired when land
prices in the area were lower would receive less.
The principle seems clear. Implementation would present problems that
some Georgists and others seem not always to recognize adequately:
- What the law and markets call "land" does not
correspond precisely with the concept underlying the theory of
land value taxation. Investment in preparing sites, many possible
forms of input beyond the creation of nature, become land as dealt
with in the market. But in an economic sense such inputs are of
capital and labor. They should not in fairness be treated as land
for tax purposes. Moreover, more than fairness is involved.
Incentives to prepare and develop sites will be affected. The
adequacy of records of past inputs will vary. For many years
income tax considerations have given rise to need for accurate
accounting to distinguish investment for which depreciation can be
taken from land.
- Developers may seek their rewards in the form of enhanced land
values or land price increments. Development can be better or
worse. As judged by buyers, better products will bring higher
prices than poorer products. What may appear as capital gain is in
economic reality a combination of reward for risk-taking
(entrepreneurship of person and capital) and an equivalent of
To some observers land speculation seems always undesirable. There is
not space here to discuss this except to say that land development
does include speculation that can be constructive.
Legislation now before Congress would implement one element of this
policy as embodied in the Republican Contract with America. So these
issues are getting more attention than they once did.
The Ethics of Idling or Underusing Land
Individuals, businesses, nonprofit organizations, and governments
(from special districts to the United States as a whole) own land that
is essentially idle or substantially underused. What are the ethical
considerations? Remember, the owner did not create this resource. No
one else can create land to take the place of what is idled, as can be
done with machines and other man-made capital.
Relative to potential usefulness, idle land runs the gamut from
remote deserts to land whose use may be only a little below potential.
It may even be questioned whether a given piece of land is being
underutilized. Application of principles involved here must encounter
many fuzzy areas and difficult issues.
Professor James Buchanan in his 1990 Henry George lecture at St.
Johns University, to which I am indebted, made a point so fundamental
that it may be overlooked. The greater the quantity of production
capacity - i.e., the larger the available supply of creative resources
- the better off we all can and will be, and not merely for the
obvious reasons. There is an additional benefit: the division of
labor, specialization, can be more extensive, and thus more
productive, according to the quantity of resources usable. So with
land. The theory seems to me persuasive, although specifying the
precise locations or magnitudes of such benefits would hardly be
Any withdrawal of land from potential use would tend to deprive the
participants in of an economy of some benefit achievable from the
division of labor (beyond the more obvious product of the land). How
much benefit would be lost depends on a variety of factors.
In any case this line of reasoning would not be likely to induce any
appreciable, purposeful modification of landowner behavior or public
policy. The most that might result from a deliberate effort would
perhaps be to tilt government policy when specific issues arise. For
example, here is a reason to assess vacant land more nearly on the
basis used for other real estate as against frequent relative
A more significant factor can affect thinking about public policy.
Underused locations in a city force people to travel farmer between
home and work. More expenditure on streets and utilities must follow
from population dispersal due in part to idle (underutilized)
locations. The owners of such plots force avoidable costs on others.
Such burdens depress needlessly real levels of living but go largely
unrecognized by the victims. More gasoline consumption and auto wear
and accidents and time not used joyfully - in other words, urban
sprawl. The landowner who uses a lot on a major street to sell used
cars may be making what for him at the time is the best use. Nothing
compels him to account for burdens on others who pass by. And
neighborhood realities in fact foreclose what would be in the broader
interest. Each urban area has its unique elements of underused land.
The human costs imposed are dispersed and uncountable, but certainly
they are candidates for cost-effective reduction.
There seems to me an overwhelmingly real community interest in trying
to reduce such human burdens. Site value taxation can certainly help
to achieve more compactness in human habitation. The principle seems
clear to me as it has to countless others over many years (though
probably not to many of those who actually bear the burdens!) Some
steps of implementation would be obvious and doable. To serve the
community best, there should be conscious effort to formulate
agreement on the kind of open space worth its cost, e.g., parkland,
and its ideal location. Underutilization (idleness) of plots of land
(recall, location cannot be duplicated) imposes burdens. Market forces
have no reliable mechanisms for ending some of these burdens, nor can
the coercion of government properly be called upon to relieve them.
Persuading the public would require a difficult educational effort.
The term "stewardship" used in setting the goals for this
seminar series was not my formulation. But I welcome it as a
challenge. The steward manages for others. This is praiseworthy, and
perhaps a welcome offset to the self-seeking focus associated with
The steward has obligation and responsibility beyond his own personal
concerns. Parents act as stewards in considering the interests of
their children. The title of this paper seems to imply that this
aspect of landownership might be enhanced, particularly beyond the
family. "We," individually and collectively, should perhaps
try to take account of the interests of others in the neighborhood,
which might be conceived rather broadly, and of those who will come
Uniqueness of location and fixity of supply do distinguish land. They
call out, it seems to me, for explicit consideration and action. But
where and when is action "appropriate"? Who should take the
action? If land needs stewardship, who should select the stewards?
These are slippery (or prickly) questions.
Some land issues seem to have a more or less worldwide significance,
e.g., the expansion of deserts or the destruction of rain forests.
Some may be less far-reaching but extend beyond any one country's
borders. "Our" stewardship responsibility may or may not
extend so broadly.
In the United States some stewardship concerns are nationwide -
involving the huge and widely varied public domain and, conceivably,
matters not tied to specific locations, such as the preservation of
topsoil. Farm programs, I believe, were once "sold" to
national taxpayers as investments in food supply for the future.
Rivers, for example, raise important interstate issues, some of which
were addressed by a recent Lincoln Institute of Land Policy conference
on land policy and flooding. There are statewide and community and
neighborhood cases. Although many may have some things in common,
there is also likely to be much diversity. Stewardship opportunities
and obligations may have to be sorted out case by case.
One consideration should be "who pays and who benefits."
The more local the case, the more likely it is that those who pay the
costs also get the benefits, or at least that they will share costs or
benefits, or both, with their direct descendants. But nonresident
landowners may be forced to pay without getting much in return, and
vice versa. Over years or generations, it becomes very complicated to
determine, measure, and allocate the costs and benefits of stewardship
possibilities and actions (and inaction).
And as one thinks about stewardship beyond the community around and
for larger areas - a river basin, a region including parts of several
states, the country, the world - one will wonder about who will be
qualified to judge wisely.
The Need for Knowledge
Chokes must and will be made. Inaction is a form of choice. Problems
involve space, location. What can one, or a group, know about the many
different locations possibly affected? And when the results extend
over time? When thinking of narrow self-interest and enlightened
stewardship, the time horizon or horizons can be very long. Some of
the persons affected are not yet born; others may be elderly and in
pressing need for benefits at once or soon.
Unknowns will plague anyone seeking responsible answers to the many
complex issues that inevitably arise because of the special
characteristics of land. Markets reflect many of these forces. But
there are others. Who should choose the decisionmakers? We look
chiefly to government officials - legislators, the executive (elected
and civil servants), the judiciary, the military (Corps of Engineers),
and sometimes more-or-less voluntary groups with some authority from
government. The making of laws, their administration, their
interpretation by judges-all aspects call for knowledge and many
qualities not always in abundance, but, one hopes, increasingly
present with growing awareness and interest.
My education has included no formal training in ethics. I might have
been led to different conclusions if I had been able to prepare for
this lecture by reading the writings of ethicists. But I see no
general formula for bringing the various and frequently different
elements into the making of decisions. It seems inherent in the nature
of land that, because circumstances differ and no two parcels are
identical, one should examine each case both for its individual
elements and the elements it shares with other cases.
In short, we need more knowledge of how to assess both the facts of
each case on its own and the similarities and differences between that
case and others. Perhaps it seems self-serving for an academic to call
for more research. Be that as it may, our judgments about the ethics,
as well as the economics, politics, and aesthetics of our choices
about land will benefit from study and suffer from ignorance.