Full Employment Requires Land Reform
|January 9, 2007||Posted by Mike OMara under Progress Report, The Progress Report|
Full Employment Requires Equal Land Rights
All job creation requires the use of land. Every job involves production of products and services, which all require inputs from land: land area, energy, water, and mineral resources. No job can be created without land.
If some people hold land out of use for speculation, that makes less land available for job creation. It raises the price of land, making it more expensive to start a business. As a result, fewer jobs are created. With more unemployed people chasing fewer jobs, that makes wages go down, and means that less favorable working conditions will be offered. The higher land prices also raise the cost of producing housing and consumer products.
Land is essential for producing all wealth – machinery is not. Even if a small percentage of people somehow happened to own most of the machinery, that would not cause permanent poverty for others, as long as land prices were not too high. If land prices were not too high, those who owned no machinery could easily obtain land and natural resources to eventually produce their own machinery, at affordable costs. But the higher the land prices are, the more there is permanent poverty in society, because high land prices mean less job creation, and higher prices for machinery and consumer goods.
When the first person reached North America, did that person have the right to claim the entire territory, and make everyone else pay high prices for the right to use the land and natural resources? If not, then how much land does one person have the right to own? The only fair answer seems to be that each person has an equal right to land, since no person produced the land (i.e., natural resources and spatial locations). Land is different from machinery, because machinery is produced by human effort, and therefore should be privately owned and untaxed, as an incentive for productivity and job creation.
The only practical way to provide equal access to land is to treat it as a resource that we have all inherited, as joint stockholders. Any title to land should require an annual rent to be paid to the community, according to the market rental value of the location (not the buildings). Some of the revenue can be used for essential community services, and any remainder could be divided equally as a citizen land dividend, similar to the oil dividend in Alaska. However, land should be privately owned and controlled, because that allows better feedback and incentives than government control of land.
The land rent paid to the community can be used to replace many of the taxes on production (income tax, sales tax, building tax, etc.). All such taxes on production harm the economy by punishing productivity. They raise the cost of goods and services. But collecting a user fee on land does not raise costs, because no person produced the land (area and natural resources).
In fact, a user fee on land lowers the price of buying and renting land, because it removes the profit from land speculation and hoarding, and provides an incentive for land speculators and hoarders to put idle land to better use. With more land on the market, the price of land is lower.
Studies of the 700 cities that are collecting community land rent show that it leads to affordable housing, and more job creation. Community land rent takes away the profit from holding urban land out of use for speculation. As a result, there is an incentive to put vacant or underutilized land into better use. With more land on the market, this lowers the price of land. With lower land prices, and with consumers having more money left, more people and groups could afford parkland, too. Also, with lower land prices available to businesses and consumers, along with lower taxes on production, and with consumers having more money left to spend on other consumer goods, more jobs are created. The result is full employment.