Private property rights in natural resources

[Saurabh]

You said land had intrinsic value, meaning value before anyone ever did anything with it and now you have just agreed that land is worthless without men to make it worth something. So now having abandoned your idea of intrinsic value you claim that the mans effort to make the land worth something releases its potential value and that is what you are planning to steal from the man who made it exist.

The man who owns the land and puts it to work is the only person entitled to anything from that land. Period. Full Stop. End of discussion.

Your entire post is nothing more than a ridiculous rationalization of theft, of wanting the unearned of looting and mooching.

I propose that we close this debate on this forum then - as we are stuck.

In case anyone is still keen on debating - I will be more than glad.

For those of you who are still keen:

I was trying to get agreement on our basic point of disagreement- (a) There is some money that needs to be paid for the use of land just because of the fact that demand (at zero price) for land exceeds its supply

My next steps would have been to argue that this money is not earned by any particular person - as it is arising out of demand (at zero price) exceeding supply.

Then, I would have argued that this money needs to go equally to the group of productive people who have caused this scarcity.

Nevertheless, I have enjoyed debating so far, and the debate has helped me modify my position as well. Thanks for that!

Edited November 10, 2009 by Saurabh

[Randroid]

Imagine the world was flat and square, had an area of nine acres and a population of 9 people. One acre is occupied by a small village, where each man lives in a little hut surrounded by some land that he owns. The surrounding area is unowned land. One man decides to use an acre of unused land as farmland. He builds a fence, starts cultivating the land and claims the land as his property. The other 8 people were not using the land anyway, so they do not suffer any loss that the new farmer would have to reimburse them for. The others think, "Hey, land is good for stuff!" and seven of them claim the remaining seven acres. Same process. Unowned land = unused land = worthless land. No one loses anything. Note that one guy was too slow - there's no unused land left for him to claim. This, as far as I can tell, is what you mean by "demand at zero cost exceeds supply". Yet, he was not wronged and did not suffer any loss every time some available land was claimed. He wasn't using it then and he isn't using it now. No harm done.

Your mistake is to assume that guy number 9 has any sort of right to land at "zero cost" (Zip has explained very succinctly that there is no such thing, either, but I'll let that slide for simplicity's sake). In fact, there is no right to free stuff, or to any stuff at all. Proper rights can only refer to actions, not things.

It's like when you're at the supermarket late at night and some other guy grabs the last can of Ravioli from the shelf right before your eyes - he's not stealing from you, either. You did not have a right to that can of Ravioli and the guy does not owe anything to you or the rest of the customers in the supermarket for taking that can. Yes, the can was neither free nor provided by nature, but the same principles apply. You were simply too slow. If that is anybody's fault, it's your own.

[Saurabh]

Imagine the world was flat and square, had an area of nine acres and a population of 9 people. One acre is occupied by a small village, where each man lives in a little hut surrounded by some land that he owns. The surrounding area is unowned land. One man decides to use an acre of unused land as farmland. He builds a fence, starts cultivating the land and claims the land as his property. The other 8 people were not using the land anyway, so they do not suffer any loss that the new farmer would have to reimburse them for. The others think, "Hey, land is good for stuff!" and seven of them claim the remaining seven acres. Same process. Unowned land = unused land = worthless land. No one loses anything. Note that one guy was too slow - there's no unused land left for him to claim. This, as far as I can tell, is what you mean by "demand at zero cost exceeds supply". Yet, he was not wronged and did not suffer any loss every time some available land was claimed. He wasn't using it then and he isn't using it now. No harm done.

Your mistake is to assume that guy number 9 has any sort of right to land at "zero cost" ... Proper rights can only refer to actions, not things.

Thanks for the example Randroid.

So your point is that since 9th person (9) was slow in claiming land, he has no right to ask for it now (at zero cost).

I fully agree with your point, if 9 does not have any intention/capability to use the land.

But, if 9 wants to use the land now, then he will need to buy it from any one of 1-8. And 1-8 can charge him any amount. They can actually enslave 9 - and force him to work for subsistence wages. 9 does not have any bargaining power now. You may say that 9 can develop other skills (e.g. become a musician). But, even if he becomes an extremely talented musician, he cannot demand higher wages. The terms of trade are in the hands of 1-8. 9 can't even go on strike, as there is no land where he can grow food and self-sustain. 1-8 know this - and hence they have the bargaining power.

[Randroid]

Wow. Just... wow!

So your point is that since 9th person (9) was slow in claiming land, he has no right to ask for it now (at zero cost).

I fully agree with your point, if 9 does not have any intention/capability to use the land.

So, he has no right to free land only if he doesn't want free land in the first place, but as soon as he gets in the mood to have himself some land, he automatically has a right to it? First, you might as well admit that you flat out disagree - or that you didn't understand my point. Second, "want" is not a valid claim on anything, only production is. I want many things, but I can only claim what I earn.

But, if 9 wants to use the land now, then he will need to buy it from any one of 1-8. And 1-8 can charge him any amount. They can actually enslave 9 - and force him to work for subsistence wages. 9 does not have any bargaining power now. You may say that 9 can develop other skills (e.g. become a musician). But, even if he becomes an extremely talented musician, he cannot demand higher wages. The terms of trade are in the hands of 1-8. 9 can't even go on strike, as there is no land where he can grow food and self-sustain. 1-8 know this - and hence they have the bargaining power.

Seriously? "Enslave"? You obviously don't know the meaning of the word.

The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide

1-8 cannot charge 9 "any amount" - only what they expect him to be willing to pay. By the same principle, 9 can also very well set his own "wages" if he works as a musician - he charges what he thinks others will voluntarily pay. If they aren't willing to pay what he charges, he might want to reconsider whether what he offers is really that valuable.

I don't have the time or patience to explain rights and economics to you from scratch, which is, sadly, necessary. You might want to put down Das Kapital for a while and read up on some real-world economics. I recommend Basic Economics; A Citizens Guide to the Economy by Thomas Sowell and Economics in One Lesson by Henry Hazlitt.

[freestyle]

So someone found an example you were willing to participate in. OK... Let's follow it through.

Thanks for the example Randroid.

So your point is that since 9th person (9) was slow in claiming land, he has no right to ask for it now (at zero cost).

I fully agree with your point, if 9 does not have any intention/capability to use the land.

Good. So your position has been completely reversed here. Finally.

But, if 9 wants to use the land now, then he will need to buy it from any one of 1-8. And 1-8 can charge him any amount.

No, they cannot charge him "any" amount. They can ask for any amount. He (9) will be FREE to pay the amount that it is worth to him. By his own choice. They can ask for a Gazillion dollars, but 9 has to agree to trade with them, or not.

They can actually enslave 9 - and force him to work for subsistence wages.

Of course they can't. Unless you've added the point of a gun to this example, of course. No one here is suggesting the sanctioning of forced labor and/or slavery.

9 does not have any bargaining power now.

Yes he does. Have you ever run a business Saurabh? Have you ever had a garage sale (yard sale)? Even in this example, the potential customer here (9) has his labor to trade for... and there are 8 potential bidders.

You may say that 9 can develop other skills (e.g. become a musician). But, even if he becomes an extremely talented musician, he cannot demand higher wages.

According to your logic he could charge an infinitely high amount for his musical services. Why does you logic break down here? Rich land owners need music right?

The terms of trade are in the hands of 1-8. 9 can't even go on strike, as there is no land where he can grow food and self-sustain. 1-8 know this - and hence they have the bargaining power.

Just apply logic... You've got 8 people with land that they are "beholden" to and are the only ones that are working on that land. Do you really see no value in being able to hire some help? 9 can probably charge a hefty amount for his services since he's the entirety of the labor market here, and one of these land owners will take a competitive advantage over the other (who have no help)... and no musician.

Don't run from the example now. There's no way you can logically make number 9 a helpless, enslaved victim here. Although, I do understand the philosophy of those who can't help but think that way. And I reject that philosophy.

[Saurabh]

Seriously? "Enslave"? You obviously don't know the meaning of the word.

1-8 cannot charge 9 "any amount" - only what they expect him to be willing to pay. By the same principle, 9 can also very well set his own "wages" if he works as a musician - he charges what he thinks others will voluntarily pay. If they aren't willing to pay what he charges, he might want to reconsider whether what he offers is really that valuable.

Randroid,

I think 'enslave' was indeed a strong word - I take it back for now. But I stand by the rest of my post.

I believe I am still not able to get my point on '9's lack of bargaining power' across to you. Just think about it a little more - only if you want to.

Think of this as a barter economy. 1-8 will be able to force 9 to offer them anything he creates (however valuable it may be) for minimum possible food in return. 9 needs food to live, so he will be forced to comply. Am I making a mistake here?

But if you think this debate is a waste of you time, then I would not encourage you to continue (though I was benefitting from your participation).

Also, I have not starting reading Das Capital yet. Now, just as you were not objective in assuming that I am reading Das Capital, in the same way it may be likely that you are not being objective somewhere else. Just think about it.

[Randroid]

Think of this as a barter economy. 1-8 will be able to force 9 to offer them anything he creates (however valuable it may be) for minimum possible food in return. 9 needs food to live, so he will be forced to comply. Am I making a mistake here?

Yes. Read freestyle's response. You are making two wrong assumptions:

First, that there is a monopoly on food. There isn't. There is not one but eight suppliers of food, all of whom want to sell their food to 9 and thus compete for his business by offering lower prices until prices reach an equlibrium.

Second, that 9's labor has no value. He is not begging for alms, he is offering value in exchange for value - to eight different potential buyers, who will, again, compete to make the best offer up to what his labor is worth to them.

[Saurabh]

Yes. Read freestyle's response. You are making two wrong assumptions:

First, that there is a monopoly on food. There isn't. There is not one but eight suppliers of food, all of whom want to sell their food to 9 and thus compete for his business by offering lower prices until prices reach an equlibrium.

Second, that 9's labor has no value. He is not begging for alms, he is offering value in exchange for value - to eight different potential buyers, who will, again, compete to make the best offer up to what his labor is worth to them.

Freestyle and Randroid,

I see my mistake here. 9 indeed has a monopoly in labor market - so he can push his wages up to the value he creates (marginal product of his labor).

This is a logical conclusion, given the facts of the example.

However, these facts do not conform with what we see around us - usually there are lot more laborers than there are landlords. This again resuscitates the issue I raised.

Let us modify the example to make it closer to reality:

5 acres of land (1 acre has houses built on it, 4 acres are land for cultivation)

54 people (1-54)

4 people (1-4) own land at 1 acre each

50 people (5-54) do not have any land (as they were slow to claim it)

Now, 5-54 are not in a monopolistic labor market. They are in a competetive market. Now my concern seems valid: 1-4 will bring the wages down from marginal product of labor to subsistence wages.

P.S. I think the example approach is very useful. We can identify contradictions/errors very easily using this approach.

Edited November 11, 2009 by Saurabh

[Randroid]

Now my concern seems valid: 1-4 will bring the wages down from marginal product of labor to subsistence wages.

Your concern might be valid only if all non-landowners 1) do not want to be self-employed by choosing a profession that is not related to farming and 2) can only offer unskilled labor.

[Saurabh]

Your concern might be valid only if all non-landowners 1) do not want to be self-employed by choosing a profession that is not related to farming and 2) can only offer unskilled labor.

Randroid,

If the profession some of these guys choose is unskilled (e.g. housemaids), then the problem of subsistence wages will again arise.

If they want to upgrade their skills - then the problem is that they do not have the money for that. They will not be able to even take a break from their jobs and develop skills.

[Randroid]

If the profession some of these guys choose is unskilled (e.g. housemaids), then the problem of subsistence wages will again arise.

First, even on a small farm there is usually more than enough work for two or even three people, or many more depending on how much technology is available. More tech means less manpower required, but at the same time the employees need more skills. Second, there are many more jobs than just "farm help", e.g. maids, cooks, etc. Every farmer will probably need more than one employee, which evens out the supply and demand of labor.

If they want to upgrade their skills - then the problem is that they do not have the money for that. They will not be able to even take a break from their jobs and develop skills.

Many, if not most, marketable job skills are acquired on the job.

Finally, capitalism (i.e. the consistent application of human rights) does not guarantee equality of outcome, nor does it attempt to. There is no right to take the unearned, only to keep what is earned. Any scheme of wealth redistribution, including "scarcity rents", reverses this and thereby nullifies human rights.

---

Edited for typos.

Edited November 11, 2009 by Randroid

[Saurabh]

First, even on a small farm there is usually more than enough work for two or even three people, or many more depending on how much technology is available. More tech means less manpower required, but at the same time the employees need more skills. Second, there are many more jobs than just "farm help", e.g. maids, cooks, etc. Every farmer will probably need more than one employee, which evens out the supply and demand of labor.

Randroid,

The basic issue involved here is not whether there will be enough divisions of labor. The basic issue is whether the markets - for those divisions of labor - will be competitive or not. The asnwer to which is yes - as far as unskilled labor is concerned.

If any of these market (say cooks) start getting higher wages than the other unskilled markets, then workers will move there and wages will come down again.

I agree that this will happen less in labor scarce countries like Germany and US, but in countries like India there are just too many laborers in any unskilled market.

Many, if not most, marketable job skills are acquired on the job.

Let us argue with a concrete example here. Can you give one - in the context of our example?

Finally, capitalism (i.e. the consistent application of human rights) does not guarantee equality of outcome, nor does it attempt to. There is no right to take the unearned, only to keep what is earned. Any scheme of wealth redistribution, including "scarcity rents", reverses this and thereby nullifies human rights.

My approach is fully consistent with these properties of capitalism. Only, I believe that when 1-4 put the fence on the land, they do not earn it. They earned only the right to use it after paying the market price for that land (which was zero then, but is a positive amount now due to scarcity), and also the product of their labor on that land.

The problem was that 1-4 were allowed to own the land then, as it was not scarce. But, now it is. And it is very difficult to undo the wrong done in the past, as that land has changed lot of hands by now (often with properly earned money).

But this should not deter us from problem-solving (after agreeing that this is indeed a problem)

Edited November 12, 2009 by Saurabh

[softwareNerd]

But this should not deter us from problem-solving (after agreeing that this is indeed a problem)

Actually, there is no problem to solve.

[Saurabh]

Actually, there is no problem to solve.

Would you want to make this statement in the context of our example, and show why the problem does not exist?

We can also postpone this debate for sometime - there is no unnecessary hurry.

Edited November 12, 2009 by Saurabh

[Zip]

My approach is fully consistent with these properties of capitalism.

No it isn't. Capitalism, true capitalism, demands a free market and as I and others have already pointed out your system sets up an unfree market. Hell your very next sentence after this one serves only to add a condition which you would impose on a capitalist (free market) economy.

You remain inconsistent in your application of even the simplest concepts of capitalism, free markets and freedom itself.

[Saurabh]

No it isn't. Capitalism, true capitalism, demands a free market and as I and others have already pointed out your system sets up an unfree market. Hell your very next sentence after this one serves only to add a condition which you would impose on a capitalist (free market) economy.

You remain inconsistent in your application of even the simplest concepts of capitalism, free markets and freedom itself.

Zip,

We are using the example approach to argue the point.

Can you stick to the example and respond to my concerns raised in that setting, and also raise your concerns? The argument will become more concrete that way. Thx!

[softwareNerd]

Would you want to make this statement in the context of our example, and show why the problem does not exist?

Wages will not be brought down to subsistence, but to the point where they equal the marginal output of labor. That's classical economics.

[Randroid]

But this should not deter us from problem-solving (after agreeing that this is indeed a problem)

The latter part (the assumption that there is a problem to be solved) is where I disagree.

My approach is fully consistent with these properties of capitalism.

Consistent with the properties of captitalism? Hardly! In your world, people do have a right to take what they have not earned (the "rent") and don't have the right to keep what they did earn, i.e. the money they are forced to pay as "rent". It is the opposite of capitalism.

Only, I believe that when 1-4 put the fence on the land, they do not earn it. They earned only the right to use it after paying the market price for that land (which was zero then, but is a positive amount now due to scarcity), and also the product of their labor on that land.

You claim that 1-4 did not earn the land, but how did everyone else earn it? By sitting on their collective asses? By virtue of wasting oxygen?

The problem was that 1-4 were allowed to own the land then, as it was not scarce. But, now it is. And it is very difficult to undo the wrong done in the past, as that land has changed lot of hands by now (often with properly earned money).

What wrongs of the past? I have shown you in my example that no wrong was done.

1-4 were not "allowed" to own the land then. The land was unowned. Finders, keepers. There was no need to get permission from anyone then, and there is no need to do so now.

What you are saying is this: "If we don't want it, 1-4 can have it - but as soon as we become interested in it, it's no longer theirs, and never has been, they have to rent it from us." This is how small children think. "You can have all the boring toys, but all the good toys are mine. If one of your toys turns out to be not-so-boring after all, it immediately becomes my toy and no longer yours."

It all boils down to this: You want free stuff and if you have to deprive someone else of his rights to get it, you're fine with that. Fancy talk about "scarcity rents" doesn't change anything, you're just a common looter.

You still haven't explained why there is supposedly common ownership of all land. I'm beginning to think that you can't. You just keep repeating your premises about market values in the absence of a market and scarcity simultaneously being the source and destroyer of property rights. No matter how often you say it, we will not believe it until you can substantiate your claims.

[Saurabh]

You claim that 1-4 did not earn the land, but how did everyone else earn it? By sitting on their collective asses? By virtue of wasting oxygen?

Randroid,

I want us to focus on the basic issues.

My issue with your position is: What made 1-4 earn the land? Please let me know your response on this.

Your issue with my position is: Why should there be common ownership of all land?

My response to your issue is below:

I have modified my position slightly - There should be common ownership only for productive people (who would use the land given a chance). I modified my position becuase I agree that rents should not be given to people who have no intention/capability to use it. Thanks to you guys!

Now, I take this (modified) position because I am still not convinced what made 1-4 get ownership of that land. They were first-movers, i agree. But, they did not discover the fertile properties of land. These were discovered by the Pioneer who is long since dead, and so are his heirs (I am adding this fact to bring our setting closer to reality. Let me know if you have any issues here). Now, by what right can 1-4 claim the land? They can only claim the produce.

So, in essence I am for individual rights. But, I want to differentiate between what is man-made versus what is nature-provided. I believe that this distinction needs to be made clear today.

[Saurabh]

Wages will not be brought down to subsistence, but to the point where they equal the marginal output of labor. That's classical economics.

This is only true for perfect competition. In our example, 1-4 are the only buyers of labor - so the market is an oligopsony.

You may want to consider going a level deeper.

Edited November 13, 2009 by Saurabh

[freestyle]

Are you being serious here? I happen to think you are playing a game to see how long you can keep this thread going in circles.

I have modified my position slightly - There should be common ownership only for productive people (who would use the land given a chance). I modified my position becuase I agree that rents should not be given to people who have no intention/capability to use it.

How can you even type that out as a "position"? I know, "[for the purposes of this debate let us not yet discuss how one would determine potential use or intention or capability]," you will say. Let us ignore logic and reality so as to proceed with abstract, not practicable theory.

I keep coming back to this thread just trying to figure out your real purpose. You avoid 90% of the direct challenges and ask to shift the debate in almost every one of your replies. You ignore perfect analogies that would help YOU realize the flaws in your position.

According to you I am owed countless fortunes for all of man's prior discoveries.

It isn't my fault that I was born too late. I wasn't given the opportunity to head west and exploit all that gold in them hills! I'm not saying I should get all the world's gold, just my "fair share". A "fair" price should be given to the people that mined it, yes, transported it, ok, first discovered it, sure. But the actual gold was already there and "provided" by nature. These producers don't own ALL of it. I am a resourceful person with intentions and capabilities. It isn't fair that this whole gold discovery thing happened without me!

Is this really how you feel? Really?

(Please understand I am using the debate tactic of mocking only in an effort that it may induce a breakthrough)

[Zip]

Now, I take this (modified) position because I am still not convinced what made 1-4 get ownership of that land. They were first-movers, i agree. But, they did not discover the fertile properties of land. These were discovered by the Pioneer who is long since dead, and so are his heirs (I am adding this fact to bring our setting closer to reality. Let me know if you have any issues here). Now, by what right can 1-4 claim the land? They can only claim the produce.

Well, really no one is permitted to claim the attributes of land because land had the properties of being fertile before men ever set foot on it.

I hereby declare that none of the value (monetary or otherwise) of anything produced on land (or on any part of the natural world) is in any way attributable to land as found in nature. So of the $1.00 I pay for a loaf of bread none of it is intrinsic because there is no one living who made the land fertile.

Your problem is solved. No one is receiving anything for the "intrinsic" properties of land.

[Saurabh]

Freestyle,

To be honest I have not thought about Gold yet. This issue of gold is different than the issue of land, as land is not an exhaustible resource. Hence, I first want to problem-solve for land.

However, below I apply your concern in the context of land.

According to you I am owed countless fortunes for all of man's prior discoveries.

You are not owed any fortune for any discovery. In fact, you should pay some amount to the discoverers (if IPRs are properly established). I do not understand how you made the above conlcusion.

All you have a claim on is an opportunity to bid for the right to use the land and extract all the value that you generate. In the current state of the world, you do not have that right (I can elaborate if needed).

P.S. If you or others truely believe that I am taking the debate into circles, than you may want to excercise your right to not participate. I am participating as I am still gaining from it. Also, I believe that I am taking the debate very seriously, and continuously engaging (although I may have forgotten responding to some as I am engaging with mutiple people). If you read one of my earlier posts to Randroid, you would see that I have summarized the basic issues from both sides and have provided my responses. I have avoided a few issues deliberately - but that is for prioritizing the issues and focussing on the most basic one.

Edited November 13, 2009 by Saurabh

[Saurabh]

Well, really no one is permitted to claim the attributes of land because land had the properties of being fertile before men ever set foot on it.

I hereby declare that none of the value (monetary or otherwise) of anything produced on land (or on any part of the natural world) is in any way attributable to land as found in nature. So of the $1.00 I pay for a loaf of bread none of it is intrinsic because there is no one living who made the land fertile.

Your problem is solved. No one is receiving anything for the "intrinsic" properties of land.

Zip,

I did not understand you. Can you please bear with me and clarify?

[freestyle]

You are not owed any fortune for any discovery.

Every discovery uses elements from nature which you claim have "intrinsic value" that needs to be distributed.

If I build a boat, I have stolen the wood from other would-be boat makers.

If I build a farm, I have stolen the land from other would be farm builders.

I'll modify my statement since you didn't understand it.

According to you I am owed countless fortunes for all of man's productive use on land they didn't create. (Yes, only the fortunes from the portion of "intrinsic value" of that land... Not for the discoveries.) I would like my check.

Edited November 13, 2009 by freestyle