World-Wide Sharing of Rent
as the Foundation for Peace

T. Nicolaus Tideman

[A paper presented at a Conference of the International Union for
Land Value Taxation and Free Trade, London, March, 1991]

I. Introduction

The world needs a new foundation for peace. The practice of seeking to preserve an evolving status quo that is established by force is bound to yield recurring wars. The status quo is too tainted by its origins in violence to serve as a basis for lasting peace. We need a new understanding of the rightful basis for claims to territory and legitimacy. Seeking to undo historical injustices one by one is not practical. The solution is to develop a world order in which claims of nations to territory and legitimacy emerge from an understanding of human equality.

Section II of this paper explains why we can expect wars if we continue to rely on the ways of the past. Section III argues that justice among nations requires an acceptance of equality in per capita claims to the undeveloped rental value of land. Section IV discusses some of the issues that arise in efforts to measure undeveloped rental value. Section V describes a clearing-house mechanism that could be used to compensate for differences in the per-capita territory and resource claims of nations. Section VI discusses the manner in which causes of wars would be removed, or at least reduced, by acceptance of a principle of equal per capita sharing of rent. Section VII discusses the need to complement equal sharing of rent with some means by which dissatisfied groups can start new nations, either by secession or by settling otherwise unsettled territory. Section VIII discusses the benefits of equal sharing of territory in promoting democracy.

II. Our Propensity for War and Efforts to Prevent it

Wars seem to have been part of human experience since before the dawn of history. In fact, it is possible to give war a biological foundation. Darwin said that fighting among males of a species serves to give control of territory and desired females to the strongest males.[1] Lorenz said that the most important biological function of aggression is to spread the members of a species over all of the territory that can support them.[2] But the fact that a trait such as aggression has biological foundations does not mean that we must reconcile ourselves to its expression. Consider the matter of population. Natural selection would generally predispose individuals to having the greatest possible number of children. But both because we have other personal goals and because we have constructed societies that give us a different orientation, humans generally do not strive to have as many children as possible. We can similarly aspire to develop personally and socially into beings that transcend the biological impulses that lead to war. But we have a long way to go.

We seem to have been trapped by evolution, at least temporarily, in a mode in which societies are dominated by persons with unlimited appetites for power and wealth. In satisfying these appetites, leaders draw nations into wars of immense cost. In the war over Kuwait that has just been concluded, if estimates in the news are to be believed, as many as 100,000 persons may have been killed in six weeks. Between the wages paid, the materials of war and the resources destroyed, this war probably cost more than $150 billion. But this is just the most visible sign of a malady that pervades the world. The war between Iran and Iraq may have cost a million lives. Civil wars have plagued Ethiopia, Sudan, Somalia, Liberia, Sri Lanka, and other nations for years. In other places, such as Israeli occupied Palestine and the Baltic Republics, unrest seethes below the point of war only because the power of imposed rule makes full-scale war ill-advised.

In earlier times it was not uncommon for the side that won a war to kill every man, woman and child of the losing side. As a strategy for avoiding the resumption of conflict, such a practice has a certain coherence. But most of the human race has developed to a degree that this is no longer acceptable. We must deal with one another.

It should not be surprising that we experience so much war when one examines the ways that we seek to establish peace. Peace has connotations of consensus and harmony. But in practice peace is all too often a set of conditions imposed by the victors on those who are defeated in war, with little or no concern for the wills of the defeated. When this occurs it is understandable that peace should last only until the defeated side can regain enough strength to resume the conflict.

Our efforts to achieve peace by dealing with one another are made more difficult by the fact that it is through demonstrations of violence that aggrieved parties establish that others must contend with them. It was principally through violence that colonial powers were persuaded to grant freedom to their dependencies. It was through violence that Jewish groups persuaded Britain to leave Palestine, and, similarly, that the PLO has come to be seen as the authoritative voice of Palestinians' aspirations for political rights. While it may be understandable that the nations of the world are not prepared to negotiate with just anyone, it is also true that as long as dissatisfaction persists and repression is incomplete, groups that want to be dealt with seek inclusion by demonstrating their capacity for violence.

To discourage violence by those who wish to have their claims considered, efforts are often made to establish a principle that "no concessions will be made to terrorists." But it is generally not possible to maintain such a commitment in the face of escalating violence combined with a lurking suspicion that those who advance the claims might have justice on their side. With violence thus rewarded, however reluctantly, it should not be surprising that violence persists.

There is, in theory, a possibility of maintaining peace by having the weaker yield to the stronger. When the armies of Chinese war lords confronted each other, it was common for the generals of the two armies to sit down to tea and discuss the expectable consequences of the impending battle. They would talk about the sizes of their forces, their recent successes, their battle-readiness, and any other relevant factors. They would seek to reach a common understanding of what the outcome of the battle would be. And if they were able to reach such a common understanding, the general of the army that was predicted to lose would lead his forces away, without a battle.[3]

In the confrontation between Iraq and the nations allied against it, a similar effort to reach a common understanding could be seen. Saddam Hussein conceded that his army would suffer many more casualties than the forces that opposed him. However, he seemed to believe that the casualties would not be as asymmetric as they turned out to be, and that, based on events in Vietnam and Beirut, the Americans would not be willing to tolerate the level of casualties that his forces would be able to inflict. Saddam Hussein's miscalculation illustrates a cost of relying on negotiations based on force. There can be no guarantee that potential combatants will reach a consensus on the consequences of conflict, and their failure to do so can be exceedingly costly.

Another theme in efforts to maintain peace is the use of "trigger strategies." A trigger strategy is an announced plan to respond, to any encroachment by others upon one's territory, with measures whose costs to oneself are so great as to make the response appear irrational, despite the costs imposed on one's adversaries. The U.S. plan to defend Western Europe by responding to a Soviet invasion with nuclear weapons is an example of a trigger strategy. Trigger strategies are attractive because, if others are convinced that a nation will act in a stated way, then it will be rational for them to respect the line that the nation has drawn. And if a nation does not employ a trigger strategy, then it may be vulnerable to an adversary who nibbles away at its territory without ever taking enough in one action to provoke retaliation. However, it is inherently difficult to make the threat of a trigger strategy believable because it is not rational to carry out the threat when the provocation has already occurred. In these circumstances it is very easy for miscalculation to lead to violence.

Between the unresolved injustices that are preserved in the status quo, the propensity for taking seriously only those who have demonstrated capacity for violence, and the widespread use of trigger strategies, it is surprising that we do not have even more war.

III. Basing Territorial Claims on Human Equality

Any improvement in prospects for world peace must begin by rejecting the traditional approach that involves simply freezing claims to territory in the status quo. The status quo incorporates too much past injustice. When injustices of the past pertain to the borders of nations, a freezing of the status quo means a permanent deprivation of some peoples. While it is possible to imagine an effort to examine the past and undo its injustices one by one, such an effort is made virtually impossible by the manner in which history becomes increasingly murky with the passage of time. While the injustice of the incorporation of the Baltic republics into the Soviet Union is reasonably well established, it is likely to be much harder to establish what is required, by a principle of undoing injustices, for the much older conflict between Protestants and Catholics in Northern Ireland.

With the status quo incorporating too much injustice and the fading historical record making it impossible to achieve justice by the sequential correction of past injustices, the most promising avenue toward a just and lasting peace is one that operates on a principle of equality. A principle of equality with respect to territory means that no person can reasonably claim more territory than every other person can claim. When applied to nations, the principle of equal claims means that the claim of each nation is proportional to its population.

But what is the practical meaning of equal claims to territory? It cannot mean that humans have claims to equal areas of land, because land in one place differs in value so much from land in another. This concern contains the seed of its answer.

It may be agreed first that if all land were equal in value, then people would have claims to equal areas of land, and nations would have claims in proportion to their populations. Thus the claim is to equal shares of value.

Some of the value of land comes not from its natural characteristics, but rather from a combination of economic growth and public services. The component of value arising from these sources should be regarded as belonging exclusively to the community that grew and provided the services. If land values are higher in Singapore than in Djakarta, this is much more a factor in what the societies that developed these two cities have done with the land on which they live than of differences in the natural characteristics of the land with which they started. Thus the resource on which equal claims can be made is the unimproved value of land, understood as value in the absence of any economic development.

One must next deal with whether claims should be for the ownership of land in perpetuity, or for the use of land. It is exceedingly difficult to create a system of equality in ownership claims. Because generations arrive sequentially, it would be necessary to set aside land to be assigned to future generations as they arrived. It is much more straightforward to establish a system of equality in claims to the use of land. Thus each person has an equal claim on the rental value of land while he or she is alive, and each nation has a claim to an amount of land that gives it a share of rent equal to its share of population.

Some of the rent of land arrives in the form of royalties for extracted natural resources. For this component of rent, intergenerational equity is more complex, since use by one generation precludes use by others. It is not sensible to divide a resource such as oil equally among all persons who will ever live, because a much greater revenue can be received by using most of the oil in earlier years, and then investing the proceeds. Thus for depletable natural resources, a sensible application of the principle of equality is to plan for equal annual monetary payments for all persons in all generations, and then to strive to allocate the resource over time in such a way as to yield the greatest possible annual per capita payment. Taking account of the depletable natural resources that go with some territory, the following principle of territorial claims emerges:

A nation's claim to territory is consistent with the equal claims of others if the fraction of the world's undeveloped rental value that the nation claims is no greater than the fraction of the world's population that the nation comprises, and the per capita annual appropriation of revenue from depletable natural resources that the nation assigns to itself is no greater than the annual revenue that can be assigned to every person in every generation. An excessive claim is made respectable if the nation compensates those who have less than average shares.

The remainder of this paper seeks to establish that this is a coherent and workable basis for settling territorial disagreements among nations.

IV. Measuring the Magnitudes of Claims

The first question that might be asked is, "How would one measure 'the fraction of the world's unimproved rental value' that a nation was claiming?" Because we have not thought of asking this question before, our ability to answer it is not well developed. But some principles that might be applied are straightforward. First, in circumstances such as the U.S.-Canada border where land is economically equivalent on the two sides of an international boundary, the undeveloped rental value of land is the same on the two sides of the boundary. Second, when cities and towns occur in agricultural regions, the land under the cities and towns has the same value as the surrounding agricultural land. Cities and towns on rivers are an exception, but the land under cities at undistinguished points on rivers (Paris, Warsaw and Moscow might be examples) has the same undeveloped rental value as land at other undistinguished points on rivers.

Land under cities where navigable rivers join, such as Pittsburgh and St. Louis, must be assigned a higher undeveloped rental value because of the special advantages of locating cities in such places. It is hard to know precisely how much more, but there should be principles that would apply internationally.

Other places of special value are harbors and sites such as London that are at the navigable limits of major rivers. Again, international standards for the value of such places would be needed.

In addition to land, it would be necessary to place value on both renewable and non-renewable natural resources that are scarce. Among the most significant renewable resources is water. This resource is depleted both by drawing down the level of underground water and by extractions from rivers. Part of the value of natural resources that a nation appropriates for itself is the reduction in the value of future opportunities for using land over underground water reserves and in the value of current opportunities for using land downstream from rivers. Where rivers are polluted, the costs that are borne in other countries would have to be counted as well.

It is important to distinguish water that is scarce from water that is not. A nation that draws fresh water that would otherwise flow into the ocean does not deprive others by its action. It might be charged for the special value of land with such access to water, but it should not be charged in proportion to the water it uses. In the same way, a nation that obtained water by desalinization of sea water would not be charged for that activity. Fish in the ocean constitute another scarce renewable resource. Nations that fish should include, as part of the resources they appropriate, the cost in reduced opportunities for others that result from their fishing.

Most non-renewable resources are scarce, so equality requires that the value of the opportunity to extract them be shared. There are exceptions, however. Salt is extremely important for life, but not at all scarce, in oceans at least. Thus nations should not be charged for any salt they extract from the sea. It is possible that mineral nodules at the bottoms of the oceans are also not scarce. If this is true, then the citizens of any nation should be allowed to remove these nodules freely, without any charges to their nations' claims on resources. A possible concern with respect to a world of equal per capita claims to territory and resources is that nations might try to increase their rates of population growth, in order to achieve control over greater shares of the world's territory and resources. The first comment that should be made about this potential concern is that one cannot be confident that the problem will materialize. Population growth rates are generally lower in richer countries. It is possible that greater equality in access to land and resources will disincline individuals toward larger families.

But it is also possible that the problem of unsustainable population growth rates will persist. If it does, then that means that having children-appropriating parenting opportunities if you will-is an activity, like extracting resources, that diminishes opportunities for others. Then nations should be charged for their growing populations. The appropriate charge for extra growth would be the amount of money that would be needed to compensate every other nation for the reduced territory that they could claim. An appropriate charge would eliminate any gain to a nation from having a population that grew at a rate higher than the rates of other nations.

V. Compensation for Variations in Per Capita Claims

It would be a remarkable coincidence if a nation's use of territory and natural resources were exactly equal to its share. Thus some provision must be made to compensate for deviations from the target of equality in the per capita claims of nations to resources and undeveloped rental value. The natural mechanism is a clearing house. A nation with appropriations in excess of the norm would make payments into the clearing house, and the clearing house would make payments to nations whose appropriations were less than the per capita norm.

One indication of an intuitive recognition that some such institution is needed is found in the calls that are heard for the oil-rich Arab countries to share-at least with their resource-poor Arab neighbors-the wealth that flows into their hands.

VI. How Acceptance of Territorial Equality Removes Causes of Wars

Consider how acceptance of a principle of equality would remove the causes of many wars. It seems unlikely that Iraq would have thought it worthwhile to invade Kuwait if success had not meant obtaining oil worth hundreds of billions of dollars. A significant incentive for Argentina's invasion of the Falklands islands was the possibility of using a claim to the islands as the basis for a claim to the value of the fishing rights surrounding the islands. An important part of Japan's aggressive militarism prior to World War II was a feeling that it could not compete adequately with other industrialized nations unless it expanded its access to natural resources.

The immediate objective in almost all wars is the control of territory and associated resources. If additional territory and resources carried with them additional responsibilities for payments to a clearing house, then acquiring a greater share of the world's limited territory and resources would not be an avenue toward increased per capita incomes for a nation.

VII. The Need for Exit Options

The removal of causes of war requires that territorial equality be complemented by a second principle, namely that people who do not approve of governments under which they live must have the chance to provide or choose different governments for themselves, even if they are a minority. One of the ways that, it is now agreed, people may do this is by migrating to any country more to their liking that will have them. That people are allowed to do so is a very valuable and important principle. If the claims of nations on a clearing house increased with the number of immigrants they accepted, then it should be expected that nations would accept more immigrants. Also, the clearing house account would give nations that lost citizens a financial reason to make themselves more acceptable to would-be emigrants.

As important as these considerations are, the right to emigrate and take one's clearing house claim does not do enough for dissatisfied citizens. First, sometimes other countries do not wish to accept immigrants. Second, it is possible that those who are dissatisfied with their governments will not like any of the existing governments that will accept them. To eliminate the possibility of unjust oppression of minorities by majorities, dissatisfied minorities must have either an opportunity to secede or an opportunity to set up new governments in otherwise unsettled territory.

Both of these possibilities entail complications. A nation can justly resist many secessionist movements on the ground that secession would interfere with connectedness needed for efficient commerce, or would place outside the jurisdiction of the nation individuals who benefit from public services that it provides. On the other hand, if secession is costly for one group it is likely to be costly for the other, and acknowledging a right of secession may be a useful way to ensure that majorities dp not oppress minorities. History alone is not a sufficient reason to shackle peoples together indefinitely.

If secession is accepted in principle, there would have to be standards that secessionist groups were obliged to meet. A group that wished to secede would have to constitute significantly more than a majority-at least two-thirds, and perhaps 75 or 80% of the residents in a contiguous, reasonably compact region. They would have to be willing to compensate those from whom they were separating for any public investments they acquired. The secession would have to occur without interference with trade of those left behind. But it is conceivable that such standards could be developed and could sometimes be met.

The alternative to secession is to permit dissatisfied persons to establish new nations in otherwise unsettled territory. This requires that there be attractive, unsettled territory on a recurring basis, which may seem either improbable or inefficient. But for the same reason that a well-run office building does not have an occupancy rate of exactly 100%, a well-run world would not have a 100% occupancy rate for regions attractive for settlement. A price mechanism could be used to achieve the desired vacancy rate. A "target vacancy rate" would be set by international agreement, and whenever the actual vacancy rate was less than the target, rent on all land would rise until the target was met. The higher rent would not actually impoverish the world, because it would be paid back to nations in proportion to their populations, but it would motivate nations to identify regions that they were prepared to vacate for new groups.

In any event, groups that are dissatisfied ought to have the opportunity to establish new nations of their choice, either by secession or by settling otherwise unsettled areas.

VIII. The Value of Territorial Equality and Exit Options in Promoting

Democracy and Reducing Civil Strife. One important advantage of an exit option is that it overcomes obstacles to democracy in existing institutions. Current news accounts report that the only persons who are allowed to vote in Kuwait are men whose forbearers lived in there in 1920. There is a coherent rationale to such a rule in a world that does not recognize equal claims to territory and resources. Kuwait is rich from oil that happens to be found under its territory. It is rich enough to hire many workers from elsewhere to perform valuable tasks. But if these persons are allowed to vote, they can be expected to insist on a government that gives the population as a whole a greater share of oil revenues. And if that should happen, more people will come to Kuwait just so that they too can share in the oil wealth. A democratic government in Kuwait can be expected to enact strict immigration controls so that the persons who are already there will not have to share the oil wealth with newcomers.

The rejection of democratic rights for people who moved to Kuwait after oil was discovered there, or the artificial restriction on immigration that can be expected if all residents are allowed to vote, are both avoided if oil wealth is, in effect, shared on a world-wide basis. It is then not necessary to restrict people's democratic or immigration opportunities out of concern that these opportunities will be used by them to acquire more of the oil wealth for themselves.

So much political struggle and civil strife is concerned with who will be able to dominate whom. We can go a long way toward eliminating these domains of struggle and strife if we can come to a shared, world-wide understanding that every nation's claim to territory and resources (or compensation) is proportional to the number of persons who freely choose to be citizens of that nation.

Footnotes

1. Mentioned without citation by Konrad Lorenz in On Aggression, New York: Harcourt(1966)p.27.
2. Ibid., p. 35.
3. My source for this is conversations with Gordon Tullock, who became an oriental expert in the course of his career in the Foreign Service.