Free Land - 20:19
And That’s Free As In Beer, Not Speech
In an Op-Ed from yesterday’s Charleston Gazette, Carl F. Shaw argues that land should be free:
Here are some lessons our society has learned: In the 1860s we learned that black humans should not be kept as slave laborers - and we did something about it. In the 1920s we learned that females were entitled to vote and hold public office - and we did something about it. In the 1960s we learned that black citizens still did not have equal rights promised to them a century earlier - we did something about it.
It is time we learned that land should be free of cost, and we should do something about it now. Poor economic conditions and unemployment, outsourcing jobs for lower production costs, are all results of treating land as a commodity. When people can’t find a job it is because a speculator is holding land off the market or waiting for an ideal price.
I have read and re-read this opinion piece, and I honestly can’t make heads or tails of it. I’m not sure why the civil rights movements that are mentioned have anything to do with land being free of cost, and Shaw never explains what links them. I can assume that, because it is almost unthinkable to question these tenets (”Slavery is bad,” “Women should vote,” “Racism is bad”), Shaw mentions them in conjunction with his “free land” ideal not because they are somehow related to that ideal, but because he hopes the association will keep people from thinking about what he’s proposing.
Unfortunately, that didn’t work, and I’ve now spent an entire day trying to figure out exactly what Shaw is proposing (and why he’s proposing it). I’m more confused now than I ever was.
He starts out saying that “[w]e are hearing daily that home prices are falling,” and then insists that, because the raw materials aren’t free and builders don’t work for minimum wage, that home prices cannot be falling. Therefore, he concludes, it is the price of land that is falling. None of this works, logically. Raw materials are not free is not sufficient evidence to indicate that home prices are not falling. Heck, that the price of raw materials hasn’t dropped at all would not be evidence that home prices are falling. The only thing that indicates whether home prices are falling would be whether homes (of approximately equal quality in both structure and location) are cheaper now than they were previously. Shaw never touches on whether that is the case, yet he acts as though he has proven that home prices are not falling.
Then there’s the artificial distinction between “home prices” and “land prices.” Generally speaking, the price of a home and the price of the land it is sitting on are irrevocably entwined, assuming the home exists on the land at the time it is purchased[1].
Folks, we never complain about low costs, but now that real estate buyers see falling land prices they complain while waiting for it to hit bottom. No sense buying today at $10,000 if the price may fall to $9,000 next month. This is what is happening to the real estate market today. As the cycle reaches bottom and land prices begin inching upward, buyers will again buy land, homes, commercial and industrial property, hoping to beat a higher price later.
I haven’t got any idea what world that Shaw is living in, but I hear people complain about falling prices all the time. One of my irregular commenters, Shinzou, always complains that every time he buys anything, the price of that item drops almost immediately afterward. It’s not that the price he paid was necessarily bad, it’s just that he missed out on a better deal. Is it any wonder that those who are looking to buy real estate, one of the most expensive purchases we can ever make, are complaining because they want to buy, but also want to make sure they get the best deal possible? This is even more to be expected if those buyers are looking to purchase real estate as an investment.
Shaw then moves from illogical to completely incomprehensible. I assume that he’s simply using jargon from his previous career as a real estate appraiser that would make sense to someone, but it seems odd to me that such jargon would find its way into a paper for laypeople without having some sense made out of it:
Now look at the real estate market in another way. Suppose we operated our land system in a fair and just way. Suppose we ran our tax system so that no site rent (the annual price of land) was left over after taxation to be used to capitalize into sale price. If all the rent of land was taxed there could not be any sale price. The land would be free, just like God’s air, rain, snow, sunshine and broadcast spectrum. The real estate market would not need to wait for land prices to turn around and go back up.
If I read this correctly, Shaw means that any value that an owner gets from his/her land would be taxed so that the owner made no profit whatsoever. This would negate the ability of a property owner to make money from his property, which would then… what? Cause him to let people use the land out of the goodness of his heart? I’ve seen what people put up with from tenants, the sort of damage people can (and, almost invariably, will) do to rental property. Trust me when I say that suddenly stopping landlords from obtaining profit from renters will not suddenly make all “rent” free — it will make all property owners absolutely refuse to let anyone use their property (and if they can’t make any profit on it, they sure as heck won’t sell the property, either).
How many people rent land, anyway? One might rent a spot in a campground or trailer park, I assume, but other than that, people pay to rent not the land, but the facilities that are on the land. Yes, the land might add value (I would certainly expect to pay more to rent a house with a five acre lot than I would to rent a house with a half-acre lot), but it is still the facility, not the land, that is being rented. (This gets back into the relationship between land and home prices mentioned above.)
Finally, Shaw gets back to the point I quoted above, that joblessness is caused (apparently solely) by “a speculator holding land off the market or waiting for an ideal price”. He elaborates, but the elaboration doesn’t really mean anything. Shaw seems to assume that the only startup cost for new businesses (or farms?) is the cost of the land that the business will sit on, and that the only reason that anyone is out of work is because they can’t afford the land with wich they would start their own business.
Assuming he’s right (which he’s almost certainly not), Shaw never explores the other consequences of what he is proposing. Everyone who has ever invested in real estate, particularly those who have purchased land sans development, would immediately lose every cent of equity. That would devestate a lot of people, especially those who invested in the land expecting to use it to generate income for their retirement (e.g., by selling off lots of the land).
Combine “free land” with Eminent Domain, and you have a recipe for disaster. Own a house with an acre of land? Why, that acre could be used to generate tax income for the city, and it’s free. Enjoy your check for $0.00; you’ve just been screwed by your local government (with the wholehearted endorsement of the Supreme Court).
Honestly, this opinion piece wouldn’t have bothered me (it’s an absurd idea that falls apart even with even the most basic of scrutiny, which makes it more laughable than anything else), except that the Gazette chose to publish it. Apparently, they need better editors and less sheer partisanship (My theory on how it got published is that it sounds pretty communistic, which appeals to the Gazette’s leftist editors).
- Also, assuming the home isn’t a mobile home that could easily be moved. [back]
