How Much “Rent” (the money we spend on the nature we use) is There?
You can go to official sources to find out how much wages (the money society spends for each other’s labor) there is, and how much “interest” or “profit” (the money society spends for borrowing others’ capital or savings), but you can’t go to any official source and be told how much “rent” there is, how much society spends for land, resources, EM spectrum, ecosystem services, and even for privileges like utility franchises and banking charters which, like land, don’t take any labor or capital to create (unless you consider lobbying to be labor and campaign contributions to be capital). To estimate how much rent is spent, you really have to dig around.
We dug and did not find a total but did find some academic estimates based on official sources. As you know, government statistics are prone to being politicized and hence not totally reliable, like how if they didn’t change their definition of unemployment, the official figure would usually be twice the figure that officials now give out. Same for inflation. And GDP has its problems, too. Check out Shadow Stats for alternative and quite possibly more realistic data. But we did find some numbers for residential land value, and even from the in-the-box number crunchers below, it’s comes to nearly half the total value of a property (land + building); see lucky #13 below.
Lately (2013), Americans spend about $1.5 trillion on their mortgages (Fed Rsrv). About 50 million households pay mortgages (Census Bureau). There are bout 75 million household. So if all were paying mortgages and the ratio held, mortgage payments would be about $2.25 trillion. If half is rent — a safe bet — then homesite rent is $1.125 trillion. Not much, but there’s still other land uses: commercial, industrial, agricultural, sylvan, mineral, spectral, etc. Then there’re privileges like patents/copyrights, utility franchises, corporate charters, bankers’ sovereignty, etc. Seems like you could fund all “levels” (breadths) of government if you wanted to, but why would you want to? Wouldn’t you rather lose the wars and bailouts and bridges to nowhere and get a dividend instead?
Look over the sources below, let us know what you think, and if you have even more sources to add, let us know.
An annotated bibliography
of articles and sources that have attempted to estimate
the total value of rent or capitalized rent for land (“land value”)
in the US and also abroad
by Jeffery J. Smith
President, Geonomy Society (a 501c3)
5805 SE 41st Av, Portland OR 97202 USA
503/281-6690; jjs at geonomics.org
Thanks to the Robert Schalkenbach Foundation for their support during the compilation of these sources and composition of these remarks.
People need to know that rent exists before they can contemplate a different use for it other than lining the pockets of speculators and lenders (even homeowners speculate). A good way to show something exists is to measure it. If the resulting measurement is sizable, especially surprisingly so, then people take cognizance of the phenomenon.
These articles and sources are found by following Georgist email, keeping up with the daily press, both mainstream and alternative, googling, and searching thru academic databases such as Worldcat, Lexis-Nexis, etc.
These sources, I presume, do not include the value of land that is off the property tax rolls, such land beneath roads and public buildings and some charity buildings like churches, schools, and hospitals. In US cities, half the surface is devoted to automobiles, which, if calculated, could double urban land value. A metropolitan government could recover the rental value of car ways via mileage charges, congestion charges, and parking charges – an untapped source of billions annually.
These sources usually bundle up prices of land with capital, typically the building upon the location. To separate the two, yielding a rough estimate for land (and later rent), one can divide the total in half. While a fraction of properties have location and structure of equal value, halving is still a useful rule of thumb. Property values are high in settled areas like the Bos-Wash Corridor, higher in metropolitan areas like New York, and highest in urban centers like Manhattan where locational value can exceed 80% of a penthouse price. In the rest of the country, there are acres and acres of land but not so much land value. In desolate areas, the building can exceed 80% of the price, but that price will be very low, well below average. Plus, half is what a couple of Fed researchers came up with (see # 13 below).
Here are the articles and sources one can turn to:
Government collectors of data:
1) Bureau of Economic Analysis, www.bea.gov. To find the GDP sectors, each year you may have to hit a different button. Look for “Gross Domestic Product (GDP) by Industry” and/or “Annual Industry Accounts.” The sector most relevant to rent is FIRE (Finance, Insurance, Real Estate). Of course, half of FIRE or some portion is the value of buildings, forever depreciating, not of locations, forever appreciating. That said, FIRE is one fifth of GDP, by far the largest sector in the US economy, almost doubling the second biggest and former number one, and still number one in the hearts and minds of the left, manufacturing. Manufacturing would be an even more distant second if not for chemical products and food processing (the line between the two grows blurred). It’s hard to think of food as a manufactured good but given factory farming… Food processing contributes nearly double the value of farming.
With FIRE, other rent-relevant sectors are farming (not even one twentieth the size of FIRE), mining (twice the size of farming), and broadcasting (nearly three times the size of farming); all are considerably bigger than either motor vehicles or education. Yet there are untold portions of rent in other sizeable sectors, such as lawyering, which enshrouds many real estate transactions, and utilities, which enjoy free right-of-ways and monopoly franchises, and computers and medicine, which get nearly free patents, and software, which gets nearly free copyrights, etc. The rents in the non-real estate sectors of the GDP could probably easily replace, even exceed, the value of buildings.
2) “Table 2.3.5. Personal Consumption Expenditures by Major Type of Product”, a BEA table that lets one contemplate rent from the spending side. Housing, which contains much site rent, comes in second to medical care and just ahead of food. Both of those expenditures will have rent in them, as will durable goods and energy. The portions of rent are hard to know but the size of the flows shows the potential of rent to be as major a return as wages or interest.
Quoting the site, “Contact a subject matter expert by phone or by email. Industry Economics / Current industry accounts: current industry at bea.gov”
3) “Estimates of State and Metropolitan Price Levels for Consumption Goods and Services in the United States, 2005” by Bettina H. Aten of the BEA, April 17, 2008. Despite the title (land gets consumed then discarded?), it dealt mainly with housing costs, which are mainly location costs. It used Census Data (below). Most striking was the disparity in conventional (building) “rents” across geographic areas. Since the costs of labor and materials are roughly comparable from region to region, what accounts for the greater divergence is location; the higher site values are almost purely land rent.
4) Bureau of Labor Statistics Data. To derive rent, or some proxy for rent, from total income from a sector like FIRE, one could subtract the labor costs for employees or the number of workers times their average salaries. One could also subtract capital costs, as long as they represent acquisition of tools and materials and not loans. One cannot subtract servicing debt since so much of borrowing is for land.
Once the profit from snaring rent shrinks, then people would drop out of such fields as all the middlemen in real estate transactions, i.e., fewer brokers. The savings would, like any other, eventually be absorbed into the value of land. Further, making cities more compact would shrink the sector of transportation while losing smog would shrink the medical sector, leaving more savings that would ultimately find their way to higher site values.
US Census. Within the Census are Economic Reports, some relevant to ferreting out rent.
5) “2002 Economic Census / Real Estate and Rental and Leasing / Industry Series”, gives revenue and labor costs. Consider “lessors of residential buildings and dwellings; their revenue, without all businesses reporting, for the most recent year, 2002, was $56 billion while their payroll was only $6 billion. The entire difference cannot all be rent, but there is a lot of play in there for rent to be substantial.
6) “2002 Economic Census / Real Estate and Rental and Leasing / Subject Series”. Two data jump out. One is, owners without employees are not counted, which would leave out at least some rent. And two, broker fees are well over half as much as rental income. Those sort of middle-men fees would likely fall away as brokers found real work to do if the rent were socialized via a tax or other levy rather than privatized by leasing or selling.
7) To try to find wages per sector, one could wade thru:
As do other sites, the Census Bureau, too, tries to be user-friendly and posts a page, “Ask Dr. Census”:
8) The USDA’s Economic Research Service has its National Economics Division (NED) in Washington DC where simpatico Gene Wunderlich worked and found 3% of the population own 95% of the privately held land, a finding so unsettling and potentially career-derailing that he had to put it in a footnote. In 1982 they published a NED staff report, “The value of agricultural land in the United States: some thoughts and conclusions,” by John P. Doll and Richard Widdows, Paul D. Velde, editor, ERS staff report no. AGES 820323; even back then, they noted over-valuing of farmland leads to over-concentration of farmland. The division that presently keeps track of total value of cropland (farm, pasture, but not forest) is the National Agricultural Statistics Service which produces such titles as “Agricultural Land Values and Cash Rents Annual Summary” at
Questions can be directed to their researchers at
Quasi-Government collectors of data:
The National Bureau of Economic Research, while private, is venerable, still delivers its annual report to the president of the US, enjoys the role of officially pronouncing a recession, and cranks out many “Nobel” laureates (the prize is actually paid for by global bankers, not the Nobel fund; see The New Yorker back in 1996, December 2 issue, “The Decline of Economics” by John Cassidy). NBER offers the most thorough, far-reaching, and dazzling website of everything under the economic sun imaginable – except for the value of land.
Long ago, however, they did once look into the question.
9) In 1970, they published “Estimates of the value of land in the United States held by various sectors of the economy, annually 1952 to 1968: Preliminary report” by Grace Milgram of Columbia (a student of Lowell’s?). Her study was quite thorough, not only looking at all sectors but also she compared her findings to earlier studies. She also expressed her frustration with the quality of official data. Her totals may seem low – three quarters of a trillion for all land in 1969 – especially for today’s readers accustomed to the figures for the 2000s. She concluded land accounted for a fifth of all wealth. Today, all wealth would be over $50 trillion, land over $10 trillion, rent a trillion. Her percentages were interesting; the value of land grew faster not for private ownership but for public ownership, which ties in with Kansas below, #38.
Milgram prepared her report for the Flow of Funds and Balance Sheet Study, National Bureau of Economic Research. It’s no longer available in the NBER site. Compiling the flow of funds has been taken over by the Fed.
The Federal Reserve. Within the Fed are reports, some relevant to ferreting out rent.
10) The Fed’s “Flow of Funds Accounts” strikes me as an oxymoron (as so much does in econmese) since “flow” is a motion and a fund can be a sink, where motion comes to rest. Within this massive report is “D.2 Borrowing by Sector / Billions of dollars; quarterly figures are seasonally adjusted annual rates / Domestic nonfinancial sectors / Households Business State and Domestic / Home Consumer local Federal financial / Total mortgage credit / Total Corporate governments Foreign“. Seeing those trillions in debt is one of my favorite charts, since much of that could be converted into a Citizens Dividend, and as debt grows, making the economy too top-heavy, it heralds the turning of one complete cycle, from the old to the new.
11) The Fed’s data release, “Assets and Liabilities of Commercial Banks in the U.S. – H.8”, shows the total of home loans, which in part is a flow of rent, that for home sites. For another ballpark figure for rent, one could multiply that by the number of homes not for sale and divide by half to subtract the value of homes themselves.
12) The Fed’s data release, “Household Debt Service and Financial Obligations Ratios”, offers another snapshot of the rent flow for housing sites, paid by all households, but bundled up with other debts, too.
However, the Fed could only release the total by first having the components. The relevant components are outstanding mortgage, rental payments on tenant-occupied property, homeowners’ insurance, and property tax payments. One could use basic algebra to compare to the number of homes not being bought to approximate a total value and divide by two to subtract the value of buildings. The Fed may show one how much these components are. Every page at the bottom does have a button for contacting them.
13) The Fed also publishes other periodicals. The Board of Governors of the Federal Reserve System Finance and Economics Discussion Series published “The Price and Quantity of Residential Land in the United States” 2004-37 by Davis, Morris A., and Jonathan Heathcote, later republished 2007 in the Journal of Monetary Economics 54, no. 8 (November): 2595-620. The earlier version concluded that residential land amassed a value (a stock) equal to the GDP (a flow) as of 2003 Q3 and that housing investment leads the price of residential land by three quarters. If rent flow is about a tenth of price stock, that figure would equal half of FIRE, which is a bit over a fifth of GDP. The 2007 version of the article estimated the value of residences to be $24.1 trillion, or 1.43 times greater than the stock market. They give greater weight to the structure, using replacement cost and residual value for location. That method does not reflect reality since buildings depreciate; it’s like saying the value of my driveway plus ten-year old Toyota is the driveway plus price of a new car fresh off the lot (ludicrous). If the buyer tears down the existing building, then the site value is all of the price plus the cost of demolition, not replacement. Yet they still conclude land equals 46% of total property value, so our 50/50 split as a rule of thumb is at least in the ballpark if not conservative. They also estimated farmland at a bit under one fifth of home sites.
14) One of the authors above teamed up with another academic to co-author a less ambitious study but perhaps more relevant since density generates land value, “The Price of Residential Land in Large U.S. Cities” by Davis, Morris A., and Michael G. Palumbo in the Finance and Economics Discussion Series, no. 2006-25, June.
15) The Fed’s most important branch – where global banks and Wall St are – the New York Branch published “The Price of Land in the New York Metropolitan Area” by Andrew Haughwout, James Orr, and David Bedoll in the branch newsletter, Current Issues In Economics and Finance: Second District Highlights, Volume 14, Number 3 April/May 2008. In less stilted, not fully academic language, it makes some excellent Henry Georgist points about location, location, location, about the appreciating part of property being the land, not so much the building, and that the supposed saving buyers money, as by lowering the mortgage rate, merely translates into higher land prices – all of which lead one to conclude that location accounts for the bulk of property price. (Interestingly, the Fed authors do not use the word “location” so much but use the word “land”, perhaps for their readership, perhaps “land” for New Yorkers no longer conjures up images of farms and homesteads, an image that makes the proposal to tax land so repellent to so many.)
Fed data gets regurgitated by others. Fannie and Freddie (below) get their data from the Fed. But it’s always good to have another pair of eyes to interpret the data.
16) Fannie Mae offers its “Annual Report & Proxy Statement”. For 2007 (as in previous years), it offers such totals as “Home sales” and “Single-family mortgage originations” and “Residential mortgage debt outstanding”. Dividing originations (a dollar figure) by home sales, one gets an average that might extend to houses not being sold that year. Similarly, some simple algebra lets one derive an estimate for rent home not being paid off (about half as many as those being paid off).
As with all these sites, they make it easy to ask questions, and might help distinguish classical rent from classical interest.
resource_center at fanniemae.com
17) Freddie Mac’s Annual Report offers insider discussion on hedge funds and others uses of derivatives. Having been caught in multi-billion dollar scandals in recent years, the discussion is perhaps less opaque and jargonistic than usual. Some relevant data they publish (much like their sibling, Fannie Mae) are: “Home sale units” and “Single-family originations” and “U.S. single-family mortgage debt outstanding” and “U.S. multifamily mortgage debt outstanding” (this last category I did not find in Fannie’s AR).
As with the above, they make it easy to ask them questions, and might help one distinguish classical rent from classical interest.
18) Also by Freddie, “Revision Bias in Repeat-Sales Home Price Indices”. Repeat-sales home-price indices are widely used measures of changes in home values. These indices use repeated valuations of the same properties over time to gauge the average change in home prices and suffer from “revision volatility,” a tendency of previously estimated values for prior quarters to change with a new release. We examine the sources of the revision volatility and reject a theoretical correction in favor of a methodological fix that was adopted on the basis of this research in both the Conventional Mortgage Home Price Index and the OFHEO House Price Index, the two most widely cited repeat-sales indices.
Authors: J.S. Butler, Yan Chang and Amy Crews Cutts
19) OFHEO, Office of Federal Housing Enterprise Oversight, issues the House Price Index (HPI) Statistical Report” which strives to capture the ongoing changes in prices and the averages, but not the total. Yet it does provide some of the best charts of any site.
Quoting the site, “Economists, policy analysts, and other researchers within OFHEO’s Office of Policy Analysis and Research (OPAR) engage in a wide array of research activities… Research efforts also aim to improve the tools OFHEO uses to monitor the safety and soundness of Fannie Mae and Freddie Mac and to enhance the value and reliability of the information OFHEO provides to the public… OPAR researchers field questions from other government agencies, industry practitioners, and members of the general public.”
OFHEO Office of External Relations _Phone: (202) 414-6922 _E-Mail: ofheoinquiries at ofheo.gov
Private industry collectors of data:
20) The Mortgage Bankers Association offers a relevant statistic, “Debt Outstanding”, which they get from the Fed (but where does the Fed get the data if not from their members who’d get it from mortgage bankers?) then massage in various ways to yield more insights, so they say.
With this number, one can compare it to the number of dwellings not being bought and employing simple algebra arrive at a ballpark total for housing plus land value.
Now that we’ve left sites of government agencies for sites of business groups, we’re finding buttons that offer predictions in a prominent way. MBA offers both “Research and Forecasts”. One could imagine someone there being interested in data substantiating the 18-year land price cycle. They can be reached at:
21) NAR, the National Association of Realtors, keeps current right on the front of their research page the latest median house price for existing houses (which includes land, the part actually fluctuating in value).
Multiply that figure by the number of existing houses for an estimate of total capitalized value of 80% of houses with their land (newly built houses are the other 20%), then divide by half to cut away the built value.
NAR likewise offers forecasts and has a National Center for Real Estate Research whose mission is to generate knowledge with practical applications to the real estate business, real estate markets, and public policy and has a State and Local Fiscal Research Institute which provides information on how tax policies impact the real estate industry.
For further information, contact Paul C. Bishop, Director, National Center for Real Estate Research, NAR, 202/383-1246 or NCRER at realtors.org.
22) NAHB, the National Association of Home Builders, reports on new home sales and prices, as well as existing home sales and prices, monthly and annually.
Again, the price of houses for sale can shed light on the value of homes not for sale. One could combine the two for a total. They also offer the data by state and provide housing starts for knowing trends and construction costs for deducting that component from prices to leave a figure closer to pure rent. To contact their researchers directly, one must be a member, but to contact the group in general one can use the on-site form:
The NAHB, which also offers predictions, often more optimistic than the data warrant, was quoted in an article by CBS MarketWatch (2006 Sept 13), titled, “Housing decline to bottom out in mid-2007”, calling a widespread housing price bust unlikely in testimony before the Senate Banking Committee. Perhaps NAHB, the Senate, and MarketWatch would all like to know about the more scientific land-price cycle. Or, maybe not, since there’s no penalty for getting it wrong, unlike other fields where privilege does not rule and too many mistakes can bankrupt one.
23) NCREIF, the National Council of Real Estate Investment Fiduciaries, publishes an index that again does not give price totals, a stock, but does give yields, a flow, which is more akin to rent, what it is we’re after. Broader than some other indices, they also include farmland and forests.
They also seem willing to field questions at
24) Moody’s will sell you up-to-date prices of real estate in total and residential vs commercial and break it down by state and metros. A couple other outfits including MIT and Capital Analytics swear by Moody’s data, but of course they must get it from some source above.
A cordial and curious request was met with a kind attachment. It seems the commercial properties they track (sales of over $2.5 million) peaked in 2006 December at $9 billion from 350 sales and fell to 225 sales and $3 billion in 2008 March. A huge drop overlooked by all the media focus on residential, admittedly a much bigger market, but commercial real estate should reflect the state of commerce.
University collectors and massagers of data:
25) MIT has a CRE, Center for Real Estate:
offering news articles, some based on Moody’s Commercial Property Index (CPPI; yes, two “P”s) and research at
which claims to tackle affordable housing and provide up-to-date data on commercial real estate, using Mood’s numbers and working with other partners
They give percentage changes, not totals, but must know totals to derive percentage changes. They also don’t include properties priced under $2.5 million. They’ll give a part of the pie, a busy part, the part that REITs delve into, but overlook the rest of the pie, the vast prosaic part. But knowing the value of the pricey end can help know the value of the total of all commercial properties and from there, all real estate. They listed one title of interest to land-price cyclists, “Stocks Are From Mars, Real Estate Is From Venus: An Inquiry into the Determinants of Long-Run Investment Performance “, Readable on line at
26) Harvard (down the street from MIT) has its Joint Center for Housing Studies, supposedly providing leaders in government, business, and the non-profit sector with the knowledge needed to develop effective policies and strategies. One thing those groups of people could usefully know is the value of all land, how much all of us pay for all of it, and would pay if all of it were rented each year.
Under publications they list some titles relevant to the Georgist analysis, such as, “Why Do House Prices Fall?” Short answer, not given, is that they sit on land. Short answer, given, is that there are cycles (can you say, “tautology”?). Another title is, “Growing Wealth, Inequality, and “Housing in the United States” which noted, “The rapid growth of household wealth in the United States has been accompanied by drastic growing inequality.” Not above re-inventing the wheel, but above citing Progress and Poverty. What the Center is best known for is its annual, “The State of the Nation’s Housing”. Its very legible charts give housing aggregates, percentage changes, and different categories. Knowing the price of homes+sites that sold could help know the price, thence rent, of all sites.
27) Within Penn (another Ivy Leaguer) is the Samuel Zell and Robert Lurie Real Estate Center at Wharton, http://realestate.wharton.upenn.edu/
Despite being funded by big developers (speculators?), being located in Philadelphia someone there should have at least a slight interest in Pennsylvania’s experience with the property tax shift. Staffer Anthony Downs has written favorably about our favorite shift (in the Washington Post, being also with Brookings). Edward L. Glaeser and Joseph Gyourko also work out of the NBER and get lots of press, and so would our reform were they to cover it. The Center publishes the Wharton Real Estate Review, which they describe as a thoughtful and provocative forum to introduce new ideas, offer hypotheses, and clarify thinking. Living up to that intent, perhaps the editors might include some Georgist analysis. Under research, they list some intriguing titles at
One was: “Is U.S. Real Estate Over-Priced?”, Working Paper # 553 by Jacques N. Gordon, William J. Maher. To answer that, first they must know what is its price. Whether or not they knew real estate’s price, their answer, delivered earlier in this decade, was “no” (back when the cheerleading was loud and ubiquitous).
Reports and articles massaging the data in chronological order:
28) In 1962 appeared “The national wealth of the United States in the postwar period” by Goldsmith, R, published by Princeton University, and often cited in subsequent articles..
29) The 1968 report on land values prepared for the National Commission on Urban Problem (House Document No. 91- 34. U.S. Government Printing Office, 1968. Pp. xi, 504, $4.50) had an estimate of urban site values which by now is 40 years out of date. But for those interested in the growth of rent over a couple cycles, it is revealing.
30) In 1969 appeared “The value of urban land” by Edwin S. Mills, who credited Mason Gaffney, in the anthology, “The quality of urban environment: essays on ‘New Resources’ in an urban age”, edited by Harvey S. Perloff. Rather than give a total figure or any figure, he gives a historical tour of the literature on rent, debates what factors contribute to it, how to measure it, constructs a theoretical mathematical model for calculating a site’s rent then a metro’s aggregate rent, then applies it to Chicago, citing Homer Hoyt but not cranking out any numbers. He concludes with a complaint about the reliability of data; have they improved any over the last 40 years?
31) In 1970 appeared “Adequacy of Land as a Tax Base” by our own Dr. Mason Gaffney in The Assessment of Land Value, edited by Daniel Holland, in Madison, published by the University of Wisconsin Press. As I recall, it was more theoretical than empirical.
32) In 1980 February appeared “Urban Land Markets: Price Indices, Supply Measures, and Public Policy Effects” by J. Thomas Black, presented at a symposium held in Washington, D.C., hosted by the Urban Land Institute (which distributes my earlier bibliography on value capture for mass transit) and the U.S. Department of Housing and Urban Development. The book(let) is no longer available from ULI but it is available in the web. What ULI can do for you is their Customized Research Center. Its professionally trained staff is available to assist you with your unique information needs. “We have access to information you can’t get anywhere else, plus magazines, books, governments reports, specialized databases, and Web sources that provide the most current information available on a wide range of real estate- and business-related topics. In addition, when necessary, industry experts can be consulted. All it takes to utilize this valuable service is a phone call to one of ULI’s information specialists. Each request is discussed in detail to determine your exact information needs. Once your request is defined, the staff will then outline all available options and associated costs before beginning the search. The first time you call, the first 15 minutes of research time is free. Call 866-637-9347.”
33) In 1985 appeared “How Much Revenue Would a Full Land Value Tax Yield? Analysis of Census and Federal Reserve Data” by Steven Cord in the American Journal of Economics and Sociology 44 (3) (July): 279-293. Then in 1991 he updated his research to conclude , “Land Rent is 20% of U.S. National Income for 1986,” published in his Incentive Taxation. July/August, 1991.
34) In 1989 appeared “Costing the Earth”, edited by Ronald Banks of the UK; he estimates land rent for GB at at least one third of GDP. To demonstrate the practicality of their argument, the authors have valued the land and natural resources of Britain – the first authoritative assessment since William the Conqueror’s Domesday Book. They claim that, given a similar valuation, any country could develop a sustainable framework for the complex interactions of social, economic and ecological variables. They compare the unreliability of statistics in the United States with the comprehensive valuation available in Denmark.
35) In 1990 appeared “What Is the Value of all U.S. Real Estate?” by Mike Miles in Real Estate Review 20 (2) (Summer): 69-75. His figure, $15 trillion, is useful since it occurred at the nadir of the last cycle; it’s a solid conservative estimate from which the total can only go up.
36) In 1999 appeared “Myths and Realities of Public Land Leasing: Canberra and Hong Kong” article by Yu-Hung Hong in the newsletter Landlines, 1999 March, by Lincoln Inst. Of Cambridge, MA. His data show that the Chinese city leaves lots of site rent on the table (60%), yet still funds most of its budget (80%) with what it collects. Revealing a surplus suggests the potential for a dividend, which many voters may find attractive, as once they did Social Security and the original farm subsidies for poor farmers.
37) In 2003 appeared “The Taxable Capacity of Australian Land and Resources“ by Terry Dwyer who sometimes teaches at Harvard. His work also shows a surplus, and like Hong Kong’s government does, his Australian government has much better – accurate and current – data than commonly in the US.
38) In 2003, the Inman Report of January gave a total value of housing at $23 trillion dollars. That’s just homes, not apartments, shops, offices, factories, vacant lots, farms, fields, forests, oil, minerals, airwaves, etc. Now in 2008, housing has not yet dropped back to its 2003 total selling price, but it could. However, such drops rarely exceed 50% off, so the 2003 figure, about 25% off the 2007 peak, could represent a likely bottom and useful figure for trying to tabulate total rent.
39) In 2005 appeared “The value of public land “ by Mike Miller, published by the Kansas Dept. of Wildlife & Parks in their magazine, Kansas wildlife & parks, Vol. 62, no. 6 (November/December 2005). Other than noting that his state ranked 49th in area owned by the public, he gave no other stats, but many examples of how public land pumps up surrounding economic values, even noting that a college coach used huntable public land as a lure for recruiting athletes. He concluded Kansas’ economy suffers from a lack of public land open to everyone for recreation and urged the closing of private well used for irrigation; even in Kansas, farming can be a lowered value use compared to hunting and bird watching.
40) In 2006 appeared “The Ultimate Tax Reform: Public Revenue from Land Rent” by Fred E. Foldvary, a CSI Policy Study of the Civil Society Institute at Santa Clara University in January. An excellent Georgist economist, Dr. Foldvary writes, “the U.S. housing stock alone amounts to $15 trillion24 and research that indicates geo-rent is about 20 percent of GDP… Land value taxation would result in a substantial reduction in the cost of government. Total land values or land rents are not reported in national statistics. The U.S. national income accounts have a number only for the “rental income of persons,” which excludes rent obtained by corporations and the rental value of government land. This “rental income” is after all expenses, including property taxes, and so includes only a tiny fraction of the geo-rent.40 The national rent in the United Kingdom has been estimated at 22 percent of national income, which exceeds the amount raised in that country by the income tax.41 Steven Cord42 estimated the annual economic rent of land in the U.S. in 1986 at $680 billion, 20 percent of national income, while Mike Miles (1990) arrived at a similar figure using data from the Bureau of Economic Analysis.43 The totals include government lands but do not include the increase in geo-rent that would occur with the elimination of market-hampering taxes. Making up about one-fifth of national income, land value taxation would provide about 60 percent of current U.S. federal, state, and local government revenue, which would be more than adequate for government spending if it did not include transfer payments. The taxable value of the land in the economy would increase over time for two reasons. First, a shift from taxing production to taxing land values would eliminate the lost output due to taxes—about $1 trillion per year.44 One-fifth of that would be rent, thus increasing rent by $300 billion. Secondly, the economy would grow faster, which also would increase rent over time.
In 2007 appeared “Land Policies and their Outcomes”, edited by Gregory K. Ingram and Yu-Hung Hong (same guy as above), published by Lincoln Institute of Land Policy. One section had two relevant articles:
41) “Urban Land Rents in the United States” by David Barker. Building on his 2004 article co-authored with J. Sa-aadu, “Is real estate becoming important again?”, he reviews the previous literature on the topic. Using the usual replacement costs for buildings, he estimates of the price of land in the United States for the year 2005 to be $23.9 trillion, lower than his book mate below, and its rent to be $1.43 trillion, or 13.6% of all personal income, even 15% to 27% in major cities, enough to fund much of urban budgets, softening the criticism of Henry George whom he cited by name.
42) “The Value of Land in the United States: 1975–2005” by Karl E. Case, partner of Shiller in calculating their index of housing site prices. Using many sources but mainly Census Bureau stats, he figured real estate including farms in 2005 was $35.8 trillion and land was $11.9 trillion. However, he, too, uses replacement cost for capital improvements. So if the 50/50 rule is more accurate (or conservative), land price is more like $19 trillion and land rent $2 trillion, not enough for the federal government but enough state and local, and even they waste a lot when expending public funds to accommodate sprawl, building prisons instead of de-criminalizing those mood alterants which are less harmful than a stay in prison, etc.
43) In 2007 appeared “As Certain as Death: A Fifty-State Survey of State and Local Tax Laws” by Susan Pace Hamill, U of Alabama Public Law Research Paper No. 1027922, published by Carolina Academic Press. It provides a picture of each state’s tax and revenue sources, public school funding, and other characteristics, including population. Since taxes diminish price, and price is what most use to calculate total value, that turns out to be a subtotal until added to it are the land taxes collected (the land portion of the property tax). And if all taxes come from rent, then taxes need to be added to land value, too, to get the total of land rent.
44) In 2007 appeared “UK Private Housing Stock valued at £4.0 Trillion in 2007” by Halifax, part of the HBOS group, whose data come from Communities and Local Government (CLG). If half is rent, that’s $4 trillion dollars, higher than most estimates for the US. With a UK population of 60 million on a landmass smaller than Oregon having 3 million, it shows you what density can do to location values. Also shows the feasibility of both axing counterproductive taxes and yet paying citizens a dividend.
45) Accepted for publication in the International J. of Social Economics, Summer 2008 is “The Hidden Taxable Capacity Of Land: Sixteen Elements” by Mason Gaffney (above), composed in November, 2007. Whatever total officials sources come up with, it can be augmented once these factors are applied.
46) EM spectrum: “The Citizen’s Guide to the Airwaves”, J.H. Snider, New America Foundation. July 2, 2003. He found frequencies used for TV, radio, phones, etc, worth conservatively only $800 billion. He did not make clear if his value was price or rent, which usually means it’s price, since most people do not think in terms of ongoing partnerships but in terms of absolute, outright control. However, as people each year put more phones and TV channels into use, increasing demand for a limited supply, spectrum’s rental value rises.
47) Patents & Copyrights, which stake out another aspect of nature – fields of knowledge: In “Economic Effects of Intellectual Property-Intensive Manufacturing”, authors Robert J. Shapiro and Nam D. Pham wrote, “Today, some two-thirds of the value of America’s large businesses can be traced to the intangible assets that embody ideas, especially the intellectual property (IP) of patents and trademarks. If the value of large businesses is the value of those in the stock exchange, then that value is $50 trillion. Two-thirds of that is about $33 trillion. That rent, then, might be $3.3 trillion.
48) Patents & Copyrights: McKinsey & Company, which gets coverage in the Wall Street Journal (e.g., Jan 10, 2007) for tracking financial assets worldwide (totaling $140 trillion in 2005), estimate that as much as 80% of stock value is accounted for by those little pieces of paper allowing monopolies on knowledge. That comes to $40 trillion and rent of $4 trillion. Either figure – or even half as much – is too high for Georgists to continue to ignore.
In sum, looking at everything from land to fields of knowledge, it is probably safe to say that “rents” – all the money that people spend for the nature and privileges they use – easily totals a third of an economy’s GDP, possibly as much as two-fifths. Thus this spending for land probably exceeds the returns to labor, or wages, and the returns to capital, “interest” or “earned profits”. As time passes and technology advances, the value of raw land should increase (witness Silicon Valley) as should the spending for raw materials (witness oil, platinum, rare earth, etc). These increases in demand (i.e., the willingness of people to spend more for nature) can be a blessing for humanity if society adopts a rent-share, a la Alaska’s oil dividend. This immense flow of spending, reflecting not what any individual owner has done but what society en masse has done, offers itself as the ideal candidate for a people’s common wealth, a bounty to be shared, equitably, for the benefit of all.