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.”
- 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:
- 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.
- 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.
- 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.