Arrowman

Thanks GFA, now a little slower if you will.. it's been over 20 years since I did Economics 1H

So - tell me where I go wrong here - A piece of land is a "factor of production" (of wheat, sheep, roadside cafes or whatever). There will be a certain return from, or which can be attributed to, that factor (leaving aside all other factors such as cost of seed etc). There is also a cost of maintaining that factor (land) in a state suitable for the production - fertilising, perhaps, for wheat, maintaining water supplies for sheep, whatever. And economic rent is the difference (a form of "profit", I suppose - but I know "profit" isn't the correct term).

But if under perfect competition everything is "bid down to marginal cost", and economic rent doesn't exist, then why would I bother to maintain the land and produce from it? Where have I gone wrong in understanding your explanation?

Also, can you relate your explanation to my example - that is, if the value of a piece of land increases because of its location next to a development (eg highway).... where does economic rent come in there?

Regards,
Your eager pupil.

David Gould

I think that the aquisition of property always harms those who do not aquire it, simply because then they do not have the ability to aquire it themselves without the consent of the owner.

I guess it comes down to this: how was ownership established in the first place?

If everyone was given an equally valued piece of land to begin with then it could be argued that no harm was being done to any.

But as soon as children are born or people die, the situation becomes unbalanced again.

So too if things external to the owners increase or decrease land value - earthquakes, floods, government investment.

I think that private ownership of property automatically leads to economic harm to others.

Aesthetic harm may also ensue in an equal division - I may not want the million dollar apartment in New York; I may want the million dollar farm in the Appalachians. And if two people want that property, harm is done to one of them automatically.

And if my neighbour works hard at making his property aesthetically pleasing, the value of my property may increase despite me doing anything at all.

Is this benefitting from my neighbour's work doing them 'harm'?

Likewise, I can certainly do harm to my neighbour by making my property look like a construction site and a dumping ground.

I suspect I am a true communist on this question...

God Fearing Atheist

Nope, you got it.

In your example, rent arises because more supply cannot rise to bid down the price of imputs. There is, after all, only once piece of land located at that spot, and few other that have the same sort of general qualities you would be looking for.

God Fearing Atheist

(This is to both you, Arrow, and David, since you posted the same sort of objection)

To talk about making someone worse off is to speak of ones condition after my action to the status quo ante...to your lot now, as opposed to your lot prior. Acquisition has to subtract from what one *actually had* to qualify. But clearly, it does (barring externalities, of course) does nothing of the sort.

Yes, it is true that you can only longer claim what i have claimed. So what? There is no positive right to land.

God Fearing Atheist

I told you: all actions but those that make others worse off ought to be allowed. Ownership makes no one worse off. Ergo, ownership ought to be allowed.

Arrowman

Good to see I haven't forgotten it all. So, to complete the point, the only reason I can make a profit from my farmland at all, is because either a) supply matches or exceeds demand and/or b) we ain't got perfect competition. -?

God Fearing Atheist

Well, its not *all* profit; its sometimes called "excess profits". When most people speak of profit, they're ususally talking about the marginal product of capital. Under perfect competition, we can expect a capitalist to garner the marginal product of his capital (just as we can expect laborers to earn the marginal product of their labor), but under normal circumstance, he may or may not take in more.

(Just as a side note: im not entirely sure perfect competition is a sufficently acceptable model, so when im talking about this stuff, im not nessecarly agreeing with it)

99Percent

This topic interests me greatly

Arrowman: Yes, but then there is the concept of "economic rent" which as I understand it, is based on the idea that property (in particular, land) can in fact rise in value, disproportionately to other property, through no effort or input on the part of the owner. The difference between the "original" and "improved" values being economic rent.

That the price rises in value with no effort or input on the part of the owner is a fallacy. The perceived value of this property in effect does rise in the owner's mind because he can choose to sell it or not, using the possible capital gained in other endeavors or in the purchase of other properties. The fact that he does not choose to sell it is costing him this potential earning to himself. So the maintainance of this property is in fact costing him even though it appears that he is just sitting on it.

This argument is the basis for property taxes - I will end up paying an increased property tax, in effect paying back my economic rent to the government.

The economic argument for property taxes is really to force the issue of the right price on property. If the owner of the improved property did not have to pay taxes at all on this perceived increase (perceived by the government mostly, an entity which does not really have a play in determining the real prices - only the free market does) then he can have more of luxury to sit on his "improved" property and not do anything. But now factor in that he has to pay taxes then he is going to have to consider it harder whether to sell or make something out of this improved property, which I think it completely immoral on the part of the government.

God Fearing Atheist: 1)Property rights (which i intend in a strictly moral sense) exist independent of the State (as i attempted to show).

Property rights in the strictly moral sense are those which are produced by man. The point I am making is that land property by itself is not worth anything, unless it is worked upon by human endeavor. This is the right of property I am claiming. Government must then exist in order to protect individual right of property, as property is in effect a violent state (as it strictly denies anyone's elses claim to it).

2)Not all citizens recognize the State as a legitimate soverign. I, for one, do not.

You have to, if you are going to have property rights, or else you are going to be forced into defending your property with your own might. Government exists to concentrate and monopolize the people's power, power that can be used violently to take away legitimate property, again because property is a violent state.

David Gould: I guess it comes down to this: how was ownership established in the first place?

Because of individual human endeavor, which was then protected through government.

If everyone was given an equally valued piece of land to begin with then it could be argued that no harm was being done to any.

Pieces of land are worthless by themselves. It is human work on pieces of these land that makes them valuable.

But as soon as children are born or people die, the situation becomes unbalanced again.

Because new people have to work in order to advance economically.

I think that private ownership of property automatically leads to economic harm to others.

No, it leads to economic opportunity to others. Private ownership leads to the obligation to work on this property, with the rewards of labor protected by property rights.

Aesthetic harm may also ensue in an equal division - I may not want the million dollar apartment in New York; I may want the million dollar farm in the Appalachians. And if two people want that property, harm is done to one of them automatically.

These are subjective values injected into objective values (money). How did the two who are fighting for million dollar farm in the Appalachians, obtained their money in the first place? No harm is really done to the other who was not willing enough to put up the right price for the farm.

Likewise, I can certainly do harm to my neighbour by making my property look like a construction site and a dumping ground.

Of course if you want to be destructive you can do so, but look at how your just destroyed your own property. Once you destroyed your property the affected neighboring owner is going to be able to buy it cheaper and everything balances it out in the end. Property makes people want to trade, and improve on their own property, in effect it, obligates people to work together, not the other way around.

God Fearing Atheist

'X is A's property' means 'A has the right to determine the disposition of x'. We could equally well use as our definiendum the expressions "A owns x" or "x belongs to A. The idea is just that insofar as the characteristics of item x, values of the predicate-variable F, are brought about by the actions of moral agents, then A has the right that x have characteristic F if and only if A permits it to be the case that x has F. Property, and the protection of property, are logically independent concepts.

As to the second point, it simply doesnt follow that protection doesnt exist without monopolization; without coercion. Its faulty on a number of grounds, historical as well as theoretical.

God Fearing Atheist

One more quickie...

The economic argument is really that taxes on economic rent dont upset the information flow of the market. We can take it without affecting the structure of production.