What is Property?

Harry Pollard

[Reprinted from a Land-Theory online discussion, 20 August, 2005]

I think it is arguable that no person has more right to the planet than another. In other words, we own the planet in common.

Anything owned in common must be managed. The English Commons on which Hardin based his "Tragedy" mostly worked very well. I'm sure that any villager who tried to flood the common with geese would be approached one evening by a couple of visitors who over a beer would gently remind him of his obligations.

In wider context, the planet must also be managed by its common owners. Practically, we must stay within political boundaries.

Any income that attaches to US land rightfully belongs to its owners -- that's all of us.

There are three such incomes and they are very different.

Oil, gold, and other minerals, presumably belong to us all. Thus, we must design a method whereby we get the greatest return from our possessions. I assume that we would hire a manager whose job description would require him to achieve the highest profit from his endeavors.

The second income would come from 'renewables'. These are trees, fish, and suchlike. Our manager would be required to achieve the greatest profit for us while practicing sustainability (I assume).

The third income is perhaps the most important for it touches is where we live. This is location value or, as we call it, Economic Rent.

I describe Rent as:

"The value created by the presence and access of the surrounding community that attaches to a location with an address."

Incidentally, I use the term Land for "a location with an address".

Rent is completely local. No part of it belongs to anyone other than the surrounding community that created it. I don't think that rent will be a huge amount. I think it will pay for the infrastructure that help create it (by improving community access) -- but not much more. Perhaps it will pay for police protection -- a service that could be said to improve community access, but that can be argued.

If Rent is divided equally to every member of the community and we then get bills for infrastructure, I don't mind.

I would personally not want to be bothered with it. I want to go fishing, not examine and pay bills.

I think the question of Rent has been somewhat muddied by Georgists in recent times. We agree on the "throwing Rent in the sea" notion, an idea which confirms the economic importance of collecting Rent.

However, Rent as revenue takes the high ground in our present political activities. Quite understandably, for political reasons the greater the total of rent collected the more that can be spent on all the good things.

I'm not sure whether you're seen my analysis of Rent, rack-rent, and a land sales prices. It is based on the easily seen fact that Land is not controlled by the free market price mechanism.

The price mechanism works by reacting to changes in consumer demand. To respond properly it needs two conditions.

There must be no restriction on the production of goods, and there must be no restriction on the movement of goods to market.

Hence the problem -- no more land can be produced and what there is cannot be moved to market.

So, demand for land raises its price and there is no mechanism to bring it back to an equilibrium. As I have suggested, the land market has most of the characteristics of a collectible market.

Collectible prices have no relationship to income. One notes that land prices in the present bubble have escaped any connection to income -- that is Rent. However if you capitalize down from these high "collectible" prices, you get enormous "Rents".

For those who want a high revenue for government purposes, the temptation is absolute and some Georgists have succumbed.

I don't blame them at all for they have to do what they have to do. Usually, politics pays little respect to either truth or consequences but it's a game that has to be played. And it has to be played well, for the loser in an election has no significance.

So, all this to show you where I'm coming from. The question is how do we recapture the rent that we created as a community?

We didn't create it as individuals, it was created by a bunch of us. There seems to be an hormetic affect. At some point, an increasing number of individuals in a community creates Rent.

There is nothing intrinsically wrong with our managing our affairs as a community of people. Whether we do this as a company, as a corporation, or as a government, doesn't really matter.

What does matter is that we keep control of the entity we have created. This means that it is kept simple, local, and immediately answerable to its "shareholders"