“He who defines the terms, wins the argument.” — Confucius
Officials do post a number for the worth of Earth in America. It’s so microscopic, you’re left wondering, what country are they referring to? The one with the biggest economy on the planet? Really?
While in colloquial usage “rent” refers to payments for temporary use of a building, in classical economics it means payment for impermanent use of land. You might expect specialists to use the classical definition, not the colloquial one. Everything else at official sites is in jargon.
Occasionally, government statisticians do allude to land, so by supplying a figure for buildings, that’s the old bait-and-switch.
Fig Leaf or Figure?
Your publicly funded Bureau of Economic Analysis’ figure for rent is not technical; it bundles buildings and land. Further, they don’t give the cumulative total but a net. Crazier still, they base it not on accounting but on responses from owners who pay less tax by reporting a lower figure. Furthermore, it’s only for persons. Yet however much is rent paid to nonpersons—to corporations, foundations, governments, etc—it can’t be much, since officially total corporate profit was only about 1/8th of total income.
Anyway, playing with the cards we’re dealt, BEA rent in 2017 Q3 was $0.7 trillion. Total income was $16.7t, so their rent was about 4%. As paltry as 4% is, some years they tell the public rent is even paltrier. In 2000, it was more like 2%. They didn’t put their stat on the bottom line but beneath it in an inconspicuous footnote. That’s their story and they’re sticking to it—or not. At another BEA table for the same year it's smaller.
People’s returns from the other two factors in production—wages to labor and “interest” to capital—are huge. How could rent for land be exponentially smaller? Not be one third of total income but some years one thirty-third? That defies common sense.
For the statistics our number-crunchers want you to take seriously, they pull out all the stops.
- Weekly reports on GDP.
- Reams of articles in journals on inflation.
- Conferences and prizes on unemployment.
Yet none of their pet stats predict the business cycle. Or reveal the economy’s bounty. Rather they hide the pea under the shell.
A negligible number deprives society of the realistic worldview it needs in order to progress. There’s no measure of a gathering storm. Nor one of enjoyable surplus. Whether incompetence or intentional fudging, neither justifies our public servants’ huge public budget.
Rather than inform the curious, the minuscule figure trivializes the notion of spending for land and resources. If rent’s so tiny, why bother paying it any attention? Non-critical laypeople just go with the flow—if it’s official, assuredly it’s accurate, right?
Academics take their cue and leave unanalyzed an insignificant figure. (Economists are not the boldest people in the world. None would be the first to say something like a physicist saying space-time is curved.)
The actual statisticians who purvey unimportance, how do they feel about it? If they are also professors, would they teach their students to distort? If a student had done that unbidden, what grade would the professor have given for such sloppy, misleading work?
You never want to think poorly of others, but what’s going on here? All this is so brazen, it’s hard to swallow. It’s like public statisticians knew the answer they wanted before they did the research.
Money does make that happen.
- The FDA approves a risky pill for a pharmaceutical.
- The NRC issues a nuclear plant permit for a utility.
- Clinical doctors prove smoking was healthy.
Not incompetence, just misleading.
What gives our bureaucrats the chutzpah? Siding with the rentiers, the ruling elite, those powerful enough to call the shots? Probably land is so remunerative, it motivates the recipients of rent to discourage number-crunchers from whipping out their calculators.
As Shakespeare said, “All’s fair in love and war,” and Timothy said, “the love of money is the root of all evil.” Evil might be a stretch, but certainly not all is fair. It’s disturbing. Either our public servants are flawed, or my power of reason is flawed—or both.
Say we had a reliable figure for society’s spending for the nature it uses. If it’s hefty, we could see why present beneficiaries would prefer a trifling figure and let their wishes be known. Plus we could see how economies actually work, how they bestow bounty—and sometimes not. If only our BEA would furnish the stat.
This article is Part 5 of a series highlighting the forthcoming book, “Bounty Hunter: a gadfly’s quest to know the worth of Earth,” by Jeffery J. Smith. To date, the experts have not risen to meet the challenge. Indeed, some have even stood in the way. Yet the payoff for knowing this datum is huge.
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