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Jon Southall
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I think what Jon here is ultimately trying to argue is that an individual can only claim the right to use land/aluminium for productive purposes. But since they can't actually claim the right to own the items, only the right to use them for productive purposes, if they are not using the land/aluminium they currently hold to produce things, then they can't just hold on to it and rent it out collecting an unearned economic rent, and must gave the land/aluminium up.

 

Am I getting it right Jon?

Edited by VECT
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Hi Vect,

 

I'm not sure if you have 'jumped in' to this discussion so let me cover something from an earlier post again, which I hope will help clarify what economic rent is.

 

There are three factors of production - land, labour and capital. The return to production (wealth), is divided between the return to land (economic rent), the return to labour (wages) and the return to capital (interest). Economic rent exists when there is exclusive control over land which is used as a factor of production - whether there is scarcity of unclaimed land or not. Economic rents reflect the value of the location - of the opportunity - not scarcity of unclaimed land.

 

Consider you buy a piece of farming land in the middle of nowhere. You live off of the farm but have no neighbours within reasonable proximity to trade with. If you were to sell or rent out the land, you would get very little economic rent for it. I then build a railway which passes by your farm giving you access to towns and cities. As a direct result your farmland becomes more desirable. It's location value improves because of my investment in capital. You could rent it out and sell it at a higher value - the higher value representing the increased economic rent. What gave rise to the additional economic rent? Was it scarcity of unclaimed land? Or my new train link?

 

You asked:

 

"If you are going to argue that the building can belong to Individual_1 but not the space (land) that the building occupies, how would that work? Building is a physical object that have to occupy space. If he cannot claim the land that the building occupies, does that mean another can? And what would happen to his building if another claims that land? What if the new landowner wants to remove the building?"

 

Put another way, you could say:

 

Human beings are physical objects that have to occupy space. If a man cannot claim the land that he occupies, does that mean another man can? And what would happen to him if another claims the space he is occupying? What if the new spaceowner wants to remove him from his space?

 

Most posters to this discussion thread would answer as follows.

 

A man will have to find space that no-one else is claiming. If there is no such available space, he will have to pay them permission to occupy space or be evicted from it by force. He will have to pay for this permission by doing work for them, rather than for himself. This is perfectly moral because he does this voluntarily - he has volunteered to be a slave (whether he sees it this way or not) rather than be dead. The fact that such a man in this situation is owned by other men, is neither here nor there. He agreed to it voluntarily!

 

The building in your example has to occupy space. It is your building. No-one can interfere with it. So you occupy the land exclusively by virtue of this fact. Who would have the right to take over your building, or do something which as a consequence would violate your rights? If I wanted to lay a water pipe beneath your building, if my doing so causes damage then you would have every right to seek redress from me. I have no right to damage your property. If I don't, then you have no right to charge me to be allowed to lay a pipe beneath your property on the basis that you own the land. It is unowned - rights do not apply to it.

 

You have to occupy space. You are your own person. No-one can interfere with you. You occupy a space exclusively by virtue of the fact you are a physical being. Who would have the right to take ownership of you, or do something which as a consequence would violate your rights? If I wanted to work productively near to you, if my so doing forcibly prevents you from working then you would have every right to seek redress from me.  I have no right to prevent you from working to sustain your own life. If I don't forcibly prevent you from working, then you have no right to charge me a permission fee so I can work. Land is unowned - rights do not apply to it.

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Marc, do you disagree with Rand's statement about property rights being a right to action and not to an object?

You seem to be.

Man does not own the land he improves - he owns the improvement. By your reasoning, if I wanted to claim a house all I need to do is paint it. My improvement - a better colour paint, would, by your logic, make the whole house mine. After all, without the house how would the paint remain in place?

Improving land earns you the improvement - you were the cause of it, so it is yours. Land is not man-made - you are not the cause of it - it is not yours.

Problem solved.

Edited by Jon Southall
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You could rent it out and sell it at a higher value - the higher value representing the increased economic rent. What gave rise to the additional economic rent? Was it scarcity of unclaimed land? Or my new train link?

 

Both can.

 

Less unclaimed land means more demand on already claimed land. That scarcity translates to higher valuation for existing claimed land due to exclusivity.

 

Valuation can also be increased due to improvements, as is your case of train link, and increase demand that way.

 

This is economic basics. The reason I didn't mention this second fundamental reason for increase in demand is because it didn't pertain to the topic that was in discussion: When all the land (in a relevant area) is claimed, that's when people gets forced to rent from existing claimed land; that's why I only brought up the first reason. If there were unclaimed land people would just go claim them instead of be physically forced to rent.

 

 

But now I see there was actually no reason for me to bring up the source of economic rent. Your main argument is something else entirely.

 

 

On the main topic, given what you just said, so then I was pretty close to the mark with my last post: Your main argument is that an individual can only claim the right to use space/land, but not total ownership of it. If they are not going to use (or even not already using) the space/land in question, then they can't horde onto it, prevent others from using it, and/or extract an unearned rent from others for using it. If they are not using it anymore, that part of space/land gets returned to unclaimed status, and another can use/claim it.

 

From what I've seen, there is some confusion concerning exactly what you are arguing. Right now I'm just trying make sure I understand correctly; the above is your central argument is it not?

Edited by VECT
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Vect,

"I think what Jon here is ultimately trying to argue is that an individual can only claim the right to use land/aluminium for productive purposes." No, producing material values is the origin of property rights. It is the law of causality. That which you are the cause of, belongs to you until disposed of. You are never the cause of land.

"But since they can't actually claim the right to own the items, only the right to use them for productive purposes,"

No, its through the creation of material values that one has the right to gain, keep, use or dispose of them. If I build a boat, I am the cause of it and so I gain it, can keep it, use it or dispose of it. My right is as permanent as my being the cause of the boat's existence, until disposed.

" if they are not using the land/aluminium they currently hold to produce things, then they can't just hold on to it and rent it out collecting an unearned economic rent, and must gave the land/aluminium up."

See above. Any material values you are the cause of can be exchanged in accordance with the Trader Principle. Why must you give up your wealth?

You are not the cause of land, it is not yours, therefore it is nonsensical to say you would be giving it up at any time. The fundamental principle is non initiation of force. Economic rent is only payable to landowners but as they do not and cannot own the land, what right do they have to collect it from producers? It is not a trade - the payment of economic rent is always coercive in nature. It is immoral.

As per my previous reply to you, an improvement I make can enhance the value of economic rent you have the power to collect. It is the community of producers, the intelligent doers that are the cause of the magnitude of economic rent, it is private property in land that is the cause of it.

George's remedy was to take the unearned economic rent that landowners have no moral right to via a tax and return it to the community who does have a moral right to it. This falls short of restorative justice in my view. I would want restoration to follow the law of causality closely.

The difficulty is that it is hard to calculate, in a complex society, what affects progress is having on economic rent. My new road might increase the economic rent in an area, but so too might improvements to private healthcare, education and policing. To what extent did my improvements raise economic rents and therefore to how much restoration am I due?

I don't know a practical way to answer that.

I've heard mention of a citizen's income funded by the land value tax, or using the land value tax to wholly fund the government (scrapping all other taxes - a minimal government could easily be funded in this way). The latter has points in its favour but like I said the moral basis should be restoring wealth to those who were the cause of it and it doesn't achieve that.

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Vect, we cross-posted one another.

I would like to thank you for approaching this discussion in such a reasonable way. I mean this sincerely whether you agree or not with my argument.

You summarise:

"Your main argument is that an individual can only claim the right to use space/land, but not total ownership of it. If they are not going to use (or even not already using) the space/land in question, then they can't horde onto it, prevent others from using it, and/or extract an unearned rent from others for using it. If they are not using it anymore, that part of space/land gets returned to unclaimed status, and another can use/claim it."

Yes, I would say this hits the mark.

Just to respond to your point on scarcity. You argued that if all land was privately owned economic rents would increase. We have to remember that economic rents are paid out of production. If there are more people, there will be more production and so economic rents can rise. If there are more people but they are all forcibly prevented from producing by landowners, ceteris paribus they will not be able to sustain their own lives.

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There are only two fundamental items in the universe: Matter and Space.

 

Land is basically Space (a 2D approximation of 3D area). So essentially you have no problem with Objectivism's current view in terms of property right regarding physical matters. But when it comes to space (land), you are arguing things are a bit different.

 

As for your train link example, are you now arguing that it's wrong for the farmer/landowner to collect the raise of rent because it's the result of an improvement not of his own making? Because not just rent, any kind of liquidity inflow for a business, from sales to investment, can happen as a result of the improvements in the area done by another not of a person's own making. By this logic are you going to argue profiting on those increases by an individual is immoral as well?

 

 

 

Anyhow, the way I see it at the moment, there are two aspects to the argument you are making in this thread:

 

1. Immoral economic rent & Remedy

 

-Immoral status ---- in debate

-Remedy ---- Some sort of Taxation (while not the Georgian version you stated, but I am assuming you are for some kind of tax as remedy, correct me if I am wrong)

 

2. Immoral space(land) hoarding & Remedy

 

-Immoral status ---- in debate

-Remedy ---- unused space return to unclaimed status

 

 

There is some merit to the 2nd aspect of your argument.

 

But, the degree of productive action needed to qualify a land claim, the appropriateness of the size of land delegated, and the qualification for the space to return to unclaimed status, are generally province of law-making instead of philosophy.

 

In respect to this, as far as I know, philosophy really only deals with the questions: What kind of action should qualifying for land claim? (Might vs Productive Usage), Should an individual be able to claim a piece of land to use to sustain his life? Should land return to unclaimed status after disuse?

 

The last question, last time I checked Objectivism's answer was "Yes" (correct me if I'm wrong here people). Still, the speed and easiness of a claimed land becoming unclaimed in your example (while a part of the underground space is delegated to a building owner initially, if he's not using it, then it immediately becomes unclaimed and you can build pipes through them), that's debatable.

 

 

Now, the 1st aspect of your argument, concerning economic rent as been immoral and the remedy is some sort of tax back to the community (Georgian or not), that just opens a whole new can of worm. I might have more to say about it after you answer my counter-question concerning your train link example.

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Land is defined not just as space but all materials, forces and opportunities occurring in nature.

So for example, if exclusive ownership of land is immoral, then charging for things like sunlight, the breathable air around us, rain, ambient warmth and such like would also be immoral. These are all things which have not been caused by man. (If you heat your house this would be different - you would be the cause so that heat would be yours).

Rand argues clearly the basis of property rights is the law of causality - I am applying that criteria because it is logical.

"any kind of liquidity inflow for a business, from sales to investment, can happen as a result of the improvements in the area done by another not of a person's own making. By this logic are you going to argue profiting on those increases by an individual is immoral as well?"

Profit is the difference between total revenues and total costs. There is nothing objectionable about profit, but one must look at how a man has made his money before passing judgment.

A business that sells goods it has produced gets value through exchange. Profit from exchange involves no economic rent because it involves the exchange of only man-made goods - goods for which man is the cause. There is nothing immoral in a business profiting by selling goods and services. If it profits from speculative land banking this would be another matter.

Now, economic rents are immoral because:

1) The possibility of them requires claims of an entitlement to the unearned which is backed by force

2) It detracts from the returns to labour and capital, so individuals who create material values are being prevented from enjoying the full fruits of their labour

3) 2) forces wages and interest down to the point of subsistence living for some individuals forcing them into a life of poverty.

4) "The man who creates whilst others dispose of his product is a slave" - the collection of economic rent is exactly that practice. It violates the source of all rights, one's right to his own life.

1. Now turning to your questions. Am I in favour of tax? No. I think George made a mistake by calling it a land value tax. The intent with it is restorative justice so "land value compensation" or "land value reparation" might be a more fitting term. Provided this restores wealth to it's creators I would favour it.

2. Speculative land banking is a prime example of hoarding. Foreign investors are snapping up land in London, a city increasingly producing more wealth. This has led to massive increases in economic rents, forcing many who work there into a life of hardship.

Those who own the land grow ever richer through economic rent but this growth in their prosperity comes about not by creating wealth. They profit from owning the land, but the way they got this profit is immoral.

I heard that in Norfolk, Lord Mann owns 60% of all agricultural land. In Scotland 600 people own 50% of the land. The unearned income from this is what makes them some of the richest individuals.

A land value compensation claim for the economic rent would kill off land hoarding.

I would be interested to hear your thoughts on this, thank you for increasing the value of this discussion.

Edited by Jon Southall
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Land is defined not just as space but all materials, forces and opportunities occurring in nature.

So for example, if exclusive ownership of land is immoral, then charging for things like sunlight, the breathable air around us, rain, ambient warmth and such like would also be immoral. These are all things which have not been caused by man. (If you heat your house this would be different - you would be the cause so that heat would be yours).

 

I get what you are saying here.

 

The traditional method of claiming ownership of land historically is through might. A mafia could claim a block of city through might and demand a rent (protection fee) for those that operate in "their" territory. An army can claim a region and demand a tax for those that now live on "their" land. A group of bandits will claim a mountain pass and demand a passage fee for those that go through..etc.

 

Objectivism advocate the view that the act to claim ownership of land is not through might, but through productive actions.

 

If an individual construct a building on a piece of unclaimed land, the land the building sits on and a reasonable 3D area around it needed for it's operations, should be his to do as he will.

 

Now if he demolishes his building and leaves that piece of land an empty lot specifically for the purpose of renting, since there is no longer any productive operation of his taking place on that land, should that land still stays in his ownership or should it be returned to unclaimed status, this is an interesting question and something debatable further.

 

(Though I'm sure practically different level of productivity required to keep a land won't really make a fundamental difference. Any individual who is interested purely in the ownership of a piece of land would just do the minimum needed on that land to keep it. Once it's rented/sold to another, the new tenant can then replace the "decoy" operation of the owner.)

 

====Concerning Main Topic===

 

But now I see you are actually arguing for something further. You are arguing that even if this individual did not demolish his building to leave that piece of land an empty lot, the fact that his operation of him renting his building benefits from an unearned portion coming from land/location (economic rent) entails that he should compensate the source of this economic rent.

 

And you are arguing that the source of that economic rent are the other individuals around his property that increased the value of his land. If this individual and his building is in the middle of London, and suddenly the whole of London disappears, him and the portion of economic rent he would be able to collect in his rent would drop astronomically. Therefore, it then can be seen that the source of his current portion of his rent that is the economic rent is sourced in the community around him. And therefore he should compensate the community around him from a portion of the economic rent that he currently collects, since it's unearned by him.

 

I think I'm pretty much on the mark here, but do correct me.

 

 

So now my counter question:

 

Again, suppose this individual and his building is in the middle of nowhere and instead of renting he is running a retail business selling stuffs. Needless to say his monthly sales is horrible.

 

However, imagine by magic this individual and his retail building gets teleported into the middle of London. Now due to the community and the improvement around him, his monthly sales suddenly increased astronomically!

 

Now would you or would you not say that the INCREASE in the sales of this individual's business is caused, in this case, purely by the community and improvement of London around him, something not of his own making. And by the same logic, would you not say this individual owns compensation to the community around him out of the portion of the INCREASE in his sales that he benefited?

Edited by VECT
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Hi Vect, you are on the mark in summarising my position.

Turning to your counter question, let's say there is an increase in demand for his goods by the community he moves to.

What you are suggesting is entailed by my reasoning is that the community is the cause of economic rent and ought to be compensated for it, so because they are also the cause of demand for a producer's products they ought to be compensated for it.

There is a major difference. One needs to consider the distribution of wealth, and redistribution of wealth.

The proper distribution of wealth ought to be production. I have a right to the full fruits of my labours. If others want some of that, then we are talking about redistribution.

Rand was very clear. The proper basis for redistribution is uncoerced trade. Economic rent is redistributive. It is paid out of the fruits of the labours of productive men by coercion. Just like taxes are.

Economic rent redistributes wealth from producers by coercive means as we have discussed. Taking the wealth back and returning it to those who produced it is restorative.

When goods produced are traded voluntarily there is no coercion involved. The businessman who relocates to London uses no force in trading with the community. There would be no claim upon his profits by the community.

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Wait a minute, you keep talking about "force" and "coercion" in regard to rent. I always assumed in the beginning that you were talking about a scenario where all the land on this earth becomes claimed and an individual would physically have to rent from already claimed land.

 

But you are not talking about that.

 

I'm going to assume then the reason as to why you are calling rent forced is because you are drawing a parallel between these two scenarios:

-Landowner: If you want to stay on my property, pay rent or leave my land

-Government: If you want to stay in this country, pay tax or leave the country

 

There is a critical difference between these two scenarios. The landowner here would have claimed his land under Objectivism standard, through an initial act of production using the land in question (or brought from previous owner, if we are talking about already claimed lands). The government (a group of individuals) on the other hand, did not claim the land of a country under Objectivism standard. That's the difference.

 

 

The proper distribution of wealth ought to be production. I have a right to the full fruits of my labours. If others want some of that, then we are talking about redistribution.

 

I see. I re-read your post concerning your own rent in London. You are arguing that it makes sense to pay those portions of a rent that consists of Utility and Interest, but not the portion that is economic rent (permission to live in that location).

 

Let me ask you this, how do you draw the line between Interest and your economic rent? (Both in terms of principle and practically in terms of $ figure)

 

It skipped my mind; I assumed before re-reading that your economic rent is in fact, interest (or a portion of interest), but after re-reading now it's clear that you are differentiating the two.

 

Now I am assuming then you agree that interest payment on capitals is not some unearned one-sided collection, that there is a trade going on there.

 

So then, how do you differentiate between interest (earned from the building) and your economic rent (that supposed to come from the land)?

 

Because as far as I can see, the rise and fall of rent as a result of improvement around a landowner's property is a rise and fall of interest.

Edited by VECT
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OK you asked me about distinctions between interest and economic rent.

Say I work with my hands, collecting apples from the forest. I can practically carry maybe 10 apples in my hands. My wages for labour are typically 10 apples per trip. One day I collect 20 sticks (also forming part of my wages) and fashion them into a basket, which I intend to use to help me carry more apples.

Now each time I go into the forest I can collect 30 apples using my exertions and this basket. You can say the share of the 30 apples which relate to wages is 10, the remaining 20 relates to interest - the return to capital. There is no economic rent, I enter the forest freely.

Then things change. Jealous of my increased wealth, the strongest person in the village claims the forest to be his private property - he also collects 10 apples per trip so he is using the forest productively too. Now each time I go into the forest he demands I give him 15 apples. The only alternative if I don't pay would be to leave the area, but my livelihood depends on the forest and all my loved ones live nearby. So I agree to pay.

Then I still gather 30 apples, but now lets say I pay the forest owner 15 apples, 10 are still my wages and 5 represent my interest. The 15 apples is economic rent, in this situation my interest has fallen because of it from 20 to 5.

I then learn that the strong man has stopped going into the forest to collect apples. His livelihood now comes from the 15 apples I give him. He doesn't have to work and we are both just as prosperous. This angers me.

I complain to the village elders but they state, the strongman has been collecting apples too. This productive use has earned him the forest and the right to take my apples, they reason.

What is your verdict in this little moral tale. Is economic rent moral or immoral?

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The strong-man in your tale is immoral of course. But there is a critical flaw in your tale that makes it incompatible to be used as an analogue to be compared to the example of your rent.

 

The flaw is this:

 

The strong-man in your example did not claim the apple-forest as his property in the proper way by Objectivism standard, while your average modern landowner did.

 

-The strong-man in your example did not operate in the apple-forest FIRST (as compared to you) and nor did he build any sort of productive facility to claim it (e.g. an orchard).

-The strong-man also did not purchase the apple-forest from someone who did properly claim it previously.

-Therefore the strong-man in your example did not have a right to bar you entry to the apple-forest and collect from you a rent

 

Your average landowners today did either purchase land from someone who previously properly claimed them or have properly claimed unclaimed land themselves.

 

As for your own rent situation, were you already living on the piece of land you presently occupy before your current landowner strong-armed you out and claimed that piece of land his own property?

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Vect, thank you for your continued interest in this discussion.

 

You seem to be stating that in order to claim land, you have to build a productive facility of some kind. What are your thoughts on earlier contributions about taking water from a lake? Do you think it is possible for someone to own a lake, rather than the water they take from it? A lake is not a productive facility, so would you conclude that it cannot be owned?

 

Imagine then a variation to my simple tale - a change to the scenario to explore the logic of this. 

 

I collect apples from the forest as before. I get the idea one day to plant an orchard on unclaimed land, which I tend to. This is more local to my dwelling and yields more fruit. I approach the village elders and they grant me a ownership title to the orchard, after five years. My ownership lasts forever.

 

In ten years time, my family and I move away from the village to somewhere else. The orchard is mine. However I no longer tend to it and what is yielded on the land returns to what nature would yield in an uncultivated state. The orchard ceases to be an orchard. According to the Objectivist Standard, I would continue to own the land in perpetuity. As I meet what you are calling the Objectivist standard by having once grown an orchard there for five years, being the first to do so.

 

A local has the idea that they could use the land to plant an orchard, tend to it in order to improve the yield of the land just as I had done before. The elders point out they will have to get my permission first as the legal owner. He contacts me and I demand a price from the local. Without paying he cannot use the land. What would this payment be a trade for? My capital, my improvements to the land (the orchard) no longer exists. It has returned to an uncultivated state. This payment is solely for my permission - not for my improvements.

 

Is it moral that I can demand such a payment from the local and prevent him from producing unless he pays? And on what basis?

 

In answer to your question about land in England. If you research English history, you will find that land ownership where I live stems from past conquests. The economic rent I pay is a result of past theft. This must be so because land is not man-made and so to say it is owned does damage to the meaning of ownership.

 

In England, more than 50% of farmland is owned by 36,000 individuals - 0.6% of the population. Are these 36,000 individuals farmers? No. They are the aristocracy, having inherited lands from a time of land conquest. Farms are leased out to farmers. Farmers are impoverished in this country and fewer and fewer can afford to continue - not because they are inefficient or unproductive. The suicide rate amongst farmers is very high. The owning aristocracy is not poor. Why do you think this is?

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The orchard ceases to be an orchard. According to the Objectivist Standard, I would continue to own the land in perpetuity. As I meet what you are calling the Objectivist standard by having once grown an orchard there for five years, being the first to do so.

 

The current variation of your example is comparable with my past example of an individual initially claiming an unclaimed piece of land by constructing a building but then demolishing it afterwards and renting out only an empty lot.

 

And I've said before, there is merit in stating that in this situation, the land might be returned to unclaimed status.

 

The appropriateness of the degree and the length of disuse needed for a landownership to be lost is the province of the discipline of law. Philosophy merely gives the answer that a certain degree of disuse for a certain duration should constitute loss of landownership. And that is the answer Objectivism gives last time I checked.

 

As for re-compensation concerning past conquest, that is an enormous topic all by itself. But in general, re-compensation is something done on an individual-to-individual bases.

 

So your saying that the land where you live stem from past conquest, did your direct family own the land you presently occupy, in the past, before your current landlord's army drove them out?

Edited by VECT
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Hi Vect,

 

We're making progress I think. You wrote:

 

"And I've said before, there is merit in stating that in this situation, the land might be returned to unclaimed status"

 

In your view, would a landowner lose his rights to economic rent in that situation? 

 

Remember that economic rent is due on the land, it is distinct from interest which is the return to capital. I think you are confusing the two. When you improve land, what you own are the improvements and not the land. The return to those improvements are in all cases interest. All economic rent collected by landowners is collected using coercion; whoever has to pay it is wronged regardless of who was responsible originally. Land is not caused by man so we cannot claim to have property rights to it. We can only claim a right to property that we are the cause of.

 

In my last scenario, if the landowner rented out his orchard, you would say what he receives is only interest. However when he rents it out when the orchard is excluded from consideration, you would identify that it would be purely economic rent. In reality, when he rents out the orchard, the higher rent he receives compared to renting out the uncultivated land is the interest, the rest is economic rent. Does this make sense?

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Just as a certain degree of disuse needed to be achieved in order to lose the ownership of a claimed land, so is there needed a certain degree of productive use in order to claim a piece of unclaimed land.
 
If for example, the law of the village elders allows an individual to claim that apple-forest merely by building a fence around it, productivity requirement of that shallow a degree would hardly be appropriate.
 
An individual by reason cannot claim a piece of unclaimed land by merely fencing it off with no additional productive plans as in your example.
 
 
 
But I get the spirit of your example and where you are coming from. So I will make a more appropriate example variation below:
 
Let's say that a landlord been first to use that apple-forest and claimed it with extensive productive actions (tending trees, killing off sick ones, planting new ones, watering/fertilization, grafting..etc.). He harvests the apples, but also allows others to collect apples from orchard, provided a fee of $1 per apple is paid.
 
As a free-lance apple-collector, you are going to argue that while it's reasonable for the current orchard owner to charge a fee based on his operation cost and interest of his orchard, his orchard also benefits from the original apple growth when the forest was virgin, a growth that was not of his making. Since that growth is not of his making and his orchard currently is benefiting from it, you argue a portion of his fee (economic rent) then must be attributed to this natural growth, a portion he have no right to collect and must re-compensate you for it.
 
Also, had he not built his orchard, you (and anyone else) would have been able to collect apples from the original wild apple-forest for free. You estimate the value of a wild-apple to be approximately $0.3. This value of $0.3 you would consider as the size of the portion of the economic rent in the current $1 fee the landlord is charging per apple.
 
I think you'll agree I'm pretty faithful to your intention with this variation.
 
 
However, there is a critical flaw in your reasoning:
Just as the natural apple growth wasn't of his making, it wasn't of YOUR making either.
 
To ask for re-compensation to you because the landlord's orchard benefited from natural apple growth not of the landlord's making presupposes that the natural apple growth is of your making, and you had a claim on the wild-apples of the virgin forest.
 
This of course is not true.
 
 
All works of men can and do benefit from natural potentials not of his own making to one degree or another. An individual cannot claim a source of natural potential without adding a respectable amount his own work into it (e.g. merely fencing off a wild apple-forest).
 
But when he does incorporate a respectable amount of his own work with a source of natural potential, he is able to claim the product as his capital (e.g. the orchard)
 
He owes no other individual compensation for the natural potentials his work benefited from (e.g. wild apple growth) because no other individuals caused these natural potentials.
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Hi Vect,

I'm going to forward you a link to a podcast by Peikoff when I get time. I'd like to know your thoughts on it.

Your interpretation is off on your scenario above. The problem with economic rent is that it is coercive. In your example above, the economic rent is what producers had to pay to gather apples. Previously it would have been zero. Only when someone takes monopoly of the forest is economic rent meaningful as only then would anyone have to pay it to use the land.

If the economic rent is valued at $0.3 who pays this? Only people who are using the land to gather apples (producers) in order to have permission to produce. I want to know why should anyone have to pay for permission to produce using land? Paying for using improvements is completely legitimate, for the avoidance of doubt.

The trouble is with understanding interest and rents are separate concepts.

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I am assuming the orchard covers the entire forest.

 

But even if it doesn't, by your own logic the example would still stand. Even if an individual could still collect free wild-apples from the portion of the forest still unclaimed, your logic would still argue that the rent the orchard owner is charging should be less $0.3, because that $0.3 is contributed by a natural potential he benefited not of his own making.

 

And your use of "coercive" is interesting. Is it coercive to be able to force a thief from stealing your furniture? Is it coercive to be able to force a debater to pay back an overdue loan?

 

The real key question here is, how should rights be established, by reason. Rights sets the boundary between individuals that allow them to deal with each other objectively. The condemnation of coercion lies with the one who initiates a violation of right against another. Any reasonable actions of force taken by other parties afterwards to correct the wrong and restore what is right is justified. Objectivism doesn't condemn the use of force/coercion, but the initiation of force/coercion.

 

Also, while you keep pronouncing that paying for improvements is completely legitimate, what you fail to understand is that ALL improvements are an amalgamation of human work and natural potentials.

 

Take your apple basket for example. If free wood-sticks is laying around in the forest for anyone to pick. And if those naturally occuring wood-sticks are valued at $0.1 per piece.

If I pick up free wood-sticks laying around the forest and making them into basket for rent, your logic would argue that whatever I charge for rent for the baskets should be minus $0.1, because that $0.1 would be economic rent of me asking others to pay for permission to use naturally occurring woodsticks.

 

This logic would then go on, and on, and on.

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No that's incorrect.

When the orchard owner sells apples, none of what he is paid is economic rent.

I replied too hastily last time.

The owner is only paid economic rent when he rents out his orchard or sells it, for more than what the market would value just his capital at (I.e. his improvements - the orchard).

The excess paid above that is what constitutes economic rent and that is coercive. In your examples, clearly it isn't coercive as the use of force is retaliatory, not an initiation of force. Economic rent is an initiation of force. Would you say a border patrol guard who demands payment from you to 'persuade' him to let you pass is initiating force? If yes, you agree with my interpretation because it is no different.

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But he is not selling apples. That per-piece fee is a rent for those who wants to collect apples from his orchard. Would it be better if I make the example and say he charges the rent by the hour instead then?

 

As for your new border-guard example, you are chanting the same tone I've answered numerous times already. Instead of attempting to debate the fundamental issue here you are evading it.

 

Your very topic is named "Owning Land?" I've answered that Objectivism's answer is "Yes" and have described the condition needed to properly claim previously unclaimed land and take their ownership.

 

Now instead of trying to argue why Objectivism's condition for claiming land isn't proper, you are repeatingly giving examples of individuals that never claimed lands by Objectivism standard in the first place and asking me if I concur with their claim of land ownership.

 

If that's not a glaring example of evasion and straw-man, I don't know what is.

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Vect,

 

I knew from the start that Objectivism's answer is Yes. It is that which I sought to explore, as there are flaws in the reasoning for that Yes. I was not asking "do Objectivists think land ownership is OK?" but rather "are Objectivists right to think it is OK to use land ownership as a source of unearned, coercive income" The consensus so far has been yes.

 

Objectivist thinking on this is frankly mixed up.

 

This is what Rand's view of it was:

 

"A notable example of the proper method of establishing private ownership from scratch, in a previously ownerless area, is the Homestead Act of 1862, by which the government opened the Western frontier for settlement and turned "public land" over to private owners. The government offered a 160-acres farm to any adult citizen who would settle on it and cultivate it for five years, after which it would become his property. Although that land was originally regarded, in law, as "public property," the method of its allocation, in fact, followed the proper principle (in fact, but not in explicit ideological intention). The citizens did not have to pay the government as if it were an owner; ownership began with them, and they earned it by the method which is the source and root of the concept of "property": by working on unused material resources, by turning a wilderness into a civilized settlement. Thus, the government, in this case, was acting not as the owner but as the custodian of ownerless resources who defines objectively impartial rules by which potential owners may acquire them."

 

  1.  Rand, Ayn (1964). "The Property Status of Airwaves". THE OBJECTIVIST NEWSLETTER 3.

 

According to Rand, the proper method of establishing ownership of land was "by working on unused material resources, by turning a wilderness into a civilized settlement". In this article there is a contradiction.

 

Rand later argued in the article that the airways (an another example of Land as George defined it), which were publicly owned, should be privatized and sold to the highest bidder. But hold on. This approach of allocation is at odds with the principles of the Homestead Act (which Rand argued should have been applied in the case of airways), which allocated land to applicants at little or no cost. The method of earning the land under the Homestead Act was using it productively for a number of years "by working on unused material resources, by turning a wilderness into a civilized settlement." This is definitely not the same method of allocation as selling it to the highest bidder.

  

An Objectivist supporting The Atlas Society told me that the just origin of property is not crucial nor particularly relevant. They said the crucial and relevant thing is that a system of private property and rule of law be established. They said that within a few generations all ownership will in time come to derive from the production and trade activities of the people involved (as long as rights are generally respected). Maybe dirty money really can be made clean. What do you think?

They also argued a land ownership title should be granted in perpetuity after the land has been worked for some time, such as for five years. They argued the working period is supposed to be sufficient to 1) show that the new owner is willing and able to use the land productively, and 2) to change the value of the land to being mostly the result of the new owner's productive work, from being in a raw condition. These conditions, he argued, made it just to recognize the owner's property right (in perpetuity) because the owner has showed himself to be of productive character, and the value he is coming to own is mostly the result of his own effort.

 

 I have several objections to this reasoning, in no particular order:

 

1) Role of community in determining land values

 

This overlooks the role of the community as the cause of land values - for instance if an individual builds an amazing school in the community then the local land prices will go up, if a local business builds an efficient mass transit system, the local land prices will go up, if another business provides better healthcare, then local land prices go up. Other people, seeing the success of the community, want to join it and participate in it - this is especially natural for traders to want to do. It may well be possible that even a majority of the land value is not the result of the landowner's own efforts - violating condition 2) above. I work in real estate and a recent development I saw particulars of had land costs which constituted half of the cost of the development - my employers had to pay that astronomical sum just to be allowed to make more productive use of the land. If it was half the cost of a brand new development, the value of existing improvements is vastly less - making economic rent the major part of the land purchase. My employers would be able to develop much more housing without such an impediment, at lower cost reaching more of the market. 

 

2) Productive character

 

The two conditions provided are used to determine whether someone can claim a perpetual ownership title over some patch of land. Note that the conditions are that the user is productive, and what he owns, is the value he has created. The assumption again is that he is the cause of the majority of the land value - which is an assumption that when he sells the land or rents it out, what he is paid is primarily, if not entirely Interest due on his improvements (using the language we have been discussing). As pointed out above, in practice this is probably rarely the case in an advanced community - most of what he will be paid will be economic rent. Perhaps on a frontier somewhere it might hold - but definitely not in New York or London. 

 

If land ownership is a right to use land productively in perpetuity and it is granted to a productive man, then I do not object. However, when a productive man then ceases to use the land productively himself and then demands unearned income from those who do use it, an injustice is done to the productive person who does use it. It goes against the whole principle of owning land. The owner who lives off of economic rent has disposed of his productive character.

 

3) Selling to the highest bidder

 

If land, or airways for that matter, are sold to the highest bidder in an ethical way, it rests on a number of assumptions. The most important of which is the right of the recipient to receive the payment from the highest bidder.

 

If all land was publicly owned, and it was to be sold off to the highest bidder, it would mean land would be allocated on the basis of who would compensate the rest of the community the most (as they are its current owners), for accepting the highest bidder's exclusive rights to it. Since when has the moral means of establishing ownership been to allocate land to whomever will pay the highest compensation to everyone else? As it stands, the principle proposed here is pure altruism.

 

The Homestead Act was more just - first come first served - if they fail to be productive, then the next applicant in line gets his opportunity. That is the principle of the Homestead Act that I agree with.   

 

Rand was arguing that selling land or airways to the highest bidder would ensure the most productive would get to use the finite resources. That would probably be true but who has the most money to spend is not always equal to who has the greatest productive character, especially in these times. However who should get the payment? Who has the right to receive the highest bidder's payment when that payment itself is the basis by which the right to own is being established for the first time? It doesn't make sense. Does the government get the money? Or every other person? Why only the community that is alive now, and not future generations whose ownership rights are also being given up? It is a flawed principle. 

 

Perhaps instead, in combination with the Homestead principle, the highest bidder principle is used to determine who land is allocated to, but that payment is held in trust by the government. If the highest bidder meets the appropriation criteria, they get their bid back in five years time, otherwise if they fail to use the land productively, the community is then compensated by the value of the bid. That seems fairer. 

 

It still doesn't tackle the fact that location value exists due to the community, not due to a particular individual's improvements to his land (the return to which is Interest). So when a landowner sells or rents out his land, the question still remains: having not produced the community value he collects, what basis in justice or ethics does he have for taking it? This is the same as asking "Who has the right to receive the highest bidder's payment when that payment itself is the basis by which the right to own is being established for the first time?" You may not understand why it is the same.

 

I'm not dodging or evading your questions. This really matters to me - it feels to me like people have sleep walked into accepting a great injustice - if that was your evaluation too I suspect you would be as dogged about confronting it as I am. 

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An Objectivist supporting The Atlas Society told me that the just origin of property is not crucial nor particularly relevant. They said the crucial and relevant thing is that a system of private property and rule of law be established. They said that within a few generations all ownership will in time come to derive from the production and trade activities of the people involved (as long as rights are generally respected). Maybe dirty money really can be made clean. What do you think?

 

What I think is that this person is making the mistake of arguing from consequence rather than principle. While he is probably right about the consequences, it doesn't justify instances of wrongful property claim.

 

But then again nor did I attempt to justify any wrongful property claim on the ground of positive future consequences.

 

I'm going to guess this reply of his pertains to your example of past land conquest during wars. Forcefully claiming land through war and conquest is wrong, but possible present day remedy to some long past conquest is not anywhere near your version of some "re-compensation" of current average landowners back to the community. I've already talked about this in another post.

 

 

 I have several objections to this reasoning, in no particular order:

 

1) Role of community in determining land values

 

And in determining retail sales, and in local investment, and in resident satisfaction, and in tourism revenue. The list goes on, and on, and on.

 

The principle you are arguing here is that by indirectly benefiting from advantages, without consent or choice, an individual still owes compensation to the source of that advantage.

 

Compensation is an item reserved when an individual have done injury to another or as a payment in a voluntary trade.

 

Benefiting from local improvement such as trans-links in your examples is neither an injury nor a voluntary trade.

 

Now if a trans-link construction company asks nearby home-owners for a fee as payment for the in-direct advantages a trans-link system would bring to their dwellings (and if denied the company would not build a trans-link), and the home-owners agreed, THEN they would owe compensation to the trans-link company for the indirect benefit of a terminal.

 

Again, this principle of yours is something I've replied numerous times already. Everytime I reply you evade this very topic to try and discuss the topic of coercion instead, which is something else entirely.

 

 

2) Productive character

 

The two conditions provided are used to determine whether someone can claim a perpetual ownership title over some patch of land. Note that the conditions are that the user is productive, and what he owns, is the value he has created. The assumption again is that he is the cause of the majority of the land value - which is an assumption that when he sells the land or rents it out, what he is paid is primarily, if not entirely Interest due on his improvements (using the language we have been discussing). As pointed out above, in practice this is probably rarely the case in an advanced community - most of what he will be paid will be economic rent. Perhaps on a frontier somewhere it might hold - but definitely not in New York or London. 

 

If land ownership is a right to use land productively in perpetuity and it is granted to a productive man, then I do not object. However, when a productive man then ceases to use the land productively himself and then demands unearned income from those who do use it, an injustice is done to the productive person who does use it. It goes against the whole principle of owning land. The owner who lives off of economic rent has disposed of his productive character.

 

You mean YOUR two conditions.

 

The Objectivism conditions used to determine whether someone can claim a perpetual ownership title over some patch of unclaimed land are:

-Be first

-Conducted a reasonable amount of productive effort on that patch of land to transform it into a capital

 

No where did Objectivism state that the improvement an individual build must be valued financially higher than the naturally occurring land value to be able to lay a claim. And if one day the land becomes more valuable than his improvement he would lose his claim.

 

Nor did Objectivism state that the owner must stay actively productive to retain claim on that land. If he builds a building on it and never visits, it doesn't mean another should get the right to claim that land after and remove his building.

 

Now SHOULD your conditions be judged more reasonable when compared to the current Objectivism conditions? I don't think so.

 

 

On the topic of your economic rent:

 

Collecting interest from a rented capital is collecting income from active labourers without doing any active productivity yourself.

 

Fundamentally, the question of economic rent goes back to the right to claim land. If a piece of land is rightfully claimed, then all is capital and all rent minus expenses are interest, and there is no economic rent. If a piece of land isn't rightfully claimed, then an individual shouldn't be able to charge rent, economic rent or not.

 

How and why land can be claimed as capital and personal property I've already talked about.

 

3) Selling to the highest bidder

That's Rand talking about something that's ALREADY claimed by government and is currently in use, the airways. She's talking about the best practical method of transferring from public ownership to private ownership things that's currently in use. This is another topic entirely.

 

Principles similar to the Homestead Act are concerned with land that is UNCLAIMED and how can an individual claim such land.

 

​Objectivism does not regard unclaimed land to be publicly owned. There is no mixture of views here.

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So to summarise,

1. You disagree with the argument that our fellow Objectivist gives us. He is not arguing from principle

2. You haven't grasped the concepts and principles of the distribution and redistribution of wealth

3. The two conditions our fellow Objectivist are HIS, not mine as you incorrectly allege

4. You are repeating what the Objectivist view of land ownership is. But evading the issue that this reasoning is what is being subjected to challenge - as I clearly stated in the previous post

5. You are confusing the concepts of economic rent and rent and have provided no reasoning to link the earned income from improving the land to the unearned income he appropriates coercively from producers

6. You do not address the question about WHY the government should be paid to give private ownership of the airways - it presumes the government legitimately owns it and should receive the money. By what right?

7. You make an arbitrary distinction between government owned land and the unowned land the government is the custodian of. How did that Government establish either? On what principle? The government was not the cause of the airways nor the cause of surface land. The law of causality is being completely ignored but you accept this fully

8. You keep muddling up the concepts of capital and rent. Although repeatedly explained to you, you are still not using the same terms with the same meanings.

9. You are reverting to straw man arguments by implying I am arguing, for instance, that a man who builds a factory but then doesn't use it himself, loses the right to his factory. More proof you have failed to understand the concepts here.

I have shown, until now, as much patience as I can in the hopes of finding one mind capable of seeing the implications of George's work. I have not suceeded in finding it. Some day such a mind may come across this discussion and they are welcome to contact me.

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2. More like you have not or will not grasp what I have said.

Wealth is redistributed everyday in every financial transactions. When we talk about the evil of redistribution of wealth we are talking about those redistributions enacted forcefully by a party when they have no right to do so. In this topic it boils down to whether or not the individual have claimed the ownership of that land he is renting. If he can't own the land, then the portion of rent minus expense he collects is immoral. If he can, then it isn't.

 

3. Then you should have communicated that fact more clearly.

 

4. There are only 2 challenges you offered in all your posts towards objecting landownership and in support of your community re-compensation

  • Land value benefits from community improvement not of an individual's own making
  • Land value benefits from natural potentials not of an individual's own making

These two are the central spine of your entire argument. I have already replied my argument to both, none of which you have replied back.

 

5. I don't think I have. If he can claim land as part of his capital, then he is well within his right to demand a rent for the permission to others for using what is his. But you have conveniently ignored my entire post concerning why an individual is able to claim land as part of his capital back during the discussion concerning the orchard.

 

6. Maybe they shouldn't be. But the point is the reason you brought this up is under the assumption that it is an alternative principle on claiming unclaimed land competing with principles similar to Homestead Act, it isn't. Rand was talking about how best to transfer ownership of something already wrongfully claimed by the government to private ownership. She wasn't talking about the best principle for an individual to claim unclaimed items.

 

7. Why is that distinction arbitrary? Government owned land means those land government claimed exclusive usage to and no private individual may own (which by principle they shouldn't be able to). Unowned land the government is the custodian of are those unclaimed land once claimed by individuals that the government is willing/able to mobilize military & police to protect their property rights against enemies foreign and domestic.

 

8. Again, the only difference between your economic rent and interest is whether or not the source can be owned as a captial. If the source can be, then whatever rent is charged minus expense is interest. If the source cannot be owned as capital, then whatever's charged minus expense is this economic rent of yours.

 

I've already argued why land can be owned as capital and made reply to both of your central arguments. You not only have not replied back to my arguments, all you have done is bringing up arguments from another Objectivist and asking me to justify what he said.

 

9. That's your own miscommunication. But again, I would make the same criticism I have stated of those points whether it be from you or another self-proclaimed Objectivist.

 

 

Patience is definitely in short-supply at this stage. I myself am running short the moment you decide since you have nothing to reply to my counter-argument to your 2 central-points, to ask me instead how I should justify what was said by another self-proclaimed Objectivist.

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