Land and Justice -- Part 2
by Lindy Davies
Last week, I made the (perhaps surprising) statement that treating land, the opportunities freely supplied by nature, as a private asset is the root cause of poverty and environmental degradation. That's because treating land as an asset creates incentives for land "owners" to pursue profits that are, in most cases, perfectly detrimental to the overall well-being of the community. Here are some examples:
Treating land as an asset leads to no end of problems. In the United States, it brings urban blight and suburban sprawl, which disrupt communities, and waste energy and resources. You don't think under-use of land is that big a deal? Consider the fact that in the five boroughs of New York City, 7.5% of its land, or 18.6 square miles, is vacant. That's buildable land, not parks or streets. And, of course, a great deal more land in New York, as in every other city, is used somewhat, but far less than the local economy would support. New York City has about 80 people per acre of residential land. That means that New York's vacant land could house another 956,000 people at current density levels, without even starting to use its vast stock of under-used land. Source: NYU, Furman Center for Real Estate and Public Policy
Even though downtowns are underbuilt, people want to move away from the high prices and high crime rates they often find there -- so development leapfrogs, using far more land than is necessary, jacking up the price of farmland near the city -- so that local farms are no longer viable. All this sprawl creates more and more need for roads -- provided by tax dollars, of course. With all these roads, and all these cars, public transportation systems become less popular and harder to finance. This chokes the cities with even more traffic, making them even less desirable places to be. Meanwhile, all these subsidized highways are just great for the big trucks, burning subsidized fuel, carrying imported merchandise to all the big-box stores and franchise restaurants of suburbia. In other words: land speculation is at the root of two of the hugest problems that progressives in the United States are trying to address -- the decay of communities and the rise of the corporate big box.
It's all about treating the land as a private asset. This gives too much power to the banks, for land is by far the greatest source of collateral for loans, everywhere. The more money we have to pay for land, the more power we give to the banks. Although 66% of American families own their homes, the overall net equity of American home "owners" is only 18%.
In "developing countries" the question of land and justice leads to a terrible vicious circle: peasants lose their land to one of two groups: first, to land-baron cronies of corrupt regimes -- who hold land idle for the specific reason of not allowing peasants to use it, thus making sure they have no place to go, and are willing to work for subsistence wages -- or, second, to multinational corporations, who run huge plantations to grow crops for export. The foreign exchange thus gained goes for debt service, which allows the ruling regime to keep playing by the IMF's rules, and stay in power.
Meanwhile, the peasants gravitate to the cities, seeking nonexistent jobs, and end up in shantytowns that lack clean water and sewers.
We are told that two billion people live on less than two dollars a day. That statistic bugs me -- not because I want to deny the terrible extent of poverty in our world -- but because it doesn't make any sense. Two dollars a day? Consider your own basic needs, and ask yourself how far two bucks will go toward satisfying them. Nobody can survive on just the buying power of two dollars a day. Why haven't those two billion people just keeled over by now?
This sort of paradox led the Nobel prize-winning economist Amartya Sen to the studies described in his book, Development as Freedom. Sen contends that the true measure of economic welfare -- and therefore of development in any meaningful sense -- can't be a matter of GDP and other conventional measures of "growth". Any true measure of economic welfare must have to do with freedom: with the degree to which each person can set and achieve his or her own economic goals.
Economic freedom for the world's poorest people is unquestionably all about the land. Let's say a peasant family has a goat and a garden, and, working carefully, can grow enough to feed itself. Occasionally a good harvest will yield some surplus which can be sold -- there isn't much of that, but let's say it brings in an average of two dollars a day. With thrift, enough for school clothes, maybe even books.
Now, let's imagine that the family loses their land -- perhaps an injury or some other disaster makes it impossible to keep farming it -- and they have to go to the city, where they manage to find a combination of odd jobs, yielding an income of $10 per day. Now, they must somehow buy their food and every other necessity out of that $10, and they have to live in a miserable shack, with open sewage running in unpaved streets.
Yet, in terms of development numbers, their income has increased by $500%.
In which case did the family have more freedom? Which scenario is more conducive to development?
Next week: How can we solve the problem?
Lindy Davies is the Program Director of the Henry George Institute.
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