This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit Progress.org/Counting-Surplus

Surpassing Comprehension

Big numbers are eye-catching. But can our brains grasp them? Nope.

We humans like things big—dinosaurs, the world’s tallest buildings, great whites, Donald Trumps, etc. We like big numbers, too.
*  The oldest person lived to 121.
*  Your dog can smell 1000 times better than you, and a moth 1000 times better than a dog.
*  A cheetah can hit 70 mph.
*  On mountain tops in the days before industrialization, Spanish explorers in the Southwest saw a few hundred miles into the distance. And …
*  You spend more for nature—land, oil, airwaves—directly and indirectly than you spend for another’s labor or capital.
This spending stream called “rent” is the single biggest flow in the GDP, at least 40%, probably much more. That’s trillions of dollars cascading into the pockets of whoever control land and resources, each and every year. It’s the worth of Earth in America. And it a surplus, a bounty.

Such big numbers are eye-catching. But can our brains grasp them? Nope. They all sound alike—million, billion, trillion. But the difference is huge. A stack of a trillion quarters would reach to the moon and back with change leftover. A million quarters? That would elevate you to a high-rise in Denver—still very Earthbound.

However hard it is to grasp big numbers, it’d be best if we do. That piece of information refers to things that effect us all, like this economy, in which we’re all trying to make a living.

Real Big Numbers?

Back when Japan was booming in the 1980s, you could hear that if you could afford to buy the center of Tokyo you could afford to buy all of America four times. That outlandish appraisal of Tokyo’s land value did not last long. It was an inflated figure, resting on a bubble, that soon burst.

Back when Japan was booming in the 1980s, you could read or hear on NPR that if you could afford to buy the center of Tokyo—the grounds of the royal palace—you could afford to buy all of America four times. That outlandish appraisal of Tokyo’s land value did not last long. It was an inflated figure, resting on a bubble, that soon burst.

While that particular figure was an exaggeration, many astronomical evaluations for land or locations are not. The going rate for a square foot of space in Tokyo is still sky-high, as would be a tiny area in any major world-class like London or New York. Developers pay $1,000 per square foot and upwards.

To believe a big number is accurate, we have to hear it from an authoritative source. But what if authorities are not telling? The phenomenon remains, its size remains, but its audience never gathers.

Dizzying

Interestingly, while the size of the US economy is published regularly, the size of the largest spending stream within the US economy is not. That would be our spending for things that nobody ever produced—land and resources. That number is not known and not officially knowable—yet.

Interestingly, while the size of the US economy is published regularly (now $18 trillion), the size of the largest spending stream within the US economy is not. That would be our spending for things that nobody ever produced—land and resources. That number is not known and not officially knowable—yet.

Many of us can’t wait to find out. The worth of Earth in America must to be huge. It’s all our spending for downtown locations, for farmland, forests, for oil and other minerals, for the electromagnetic spectrum, even for ecosystem services. How could such spending be less than several trillions in the US annually? We’d be much better off knowing “rent”. Such spending drives the ups and downs of the business cycle. Both individuals and governments should like to know when to shift their portfolios. Further, if the electorate so decided, natural value could fund a dividend, as it does in Alaska and Singapore.

Many of us can’t wait to find out. The worth of Earth in America must to be huge. It’s all our spending for downtown locations, for farmland, forests, for oil and other minerals, for the electromagnetic spectrum, even for ecosystem services. How could such spending be less than several trillions in the US annually?

We’d be much better off knowing “rent” (the jargony term). Such spending drives the ups and downs of the business cycle. Both individuals and governments should like to know when to shift their portfolios. Further, if the electorate so decided, natural value could fund a dividend, as it does in Alaska and Singapore.

Singapore, along with Hong Kong, is often rated as the best city in the world for doing business and the freest city. The people doing the ratings tend to be capitalists who have their own ideas of freedom and justice. Those raters note both cities levy fewer and smaller taxes yet leave out that both places recover lots of socially-generated land value.

In Singapore, all the land is private, owned by the building owners, but taxed at a high rate. In Hong Kong, all the land is owned by the public and leased to the owners of buildings. Semantically, there’s a difference, but functionally the two policies are pretty much the same. And the benefits are laid out for all to see—prosperity, big middle classes (now shrinking in places like America and Germany), and enough public revenue to afford quality public services, including the dividend in Singapore.

Inquiring Indians Needed to Know

Among other uses, the figure for land value is needed in order to settle certain court cases; contesting parties often squabble over land in court. To reach a settlement, they must know how much the land is worth. While government does not keep the totals for the value of land at its fingertips, a plaintiff with standing might be able to get government to dig down and ‘fess up.

In 1996, Elouise Cobell, a Native American businesswoman from Montana, sued the government for underpaying royalties for more than 100 years. She won. In 2009, Congress and the president approved a settlement—$3.4 billion for land that was held in trust by the government and never reimbursed in full.

While billions, that sum is a fraction of what oil companies were supposed to pay for ruining various ecosystem in places like Louisiana and Alaska, and what Wall Street financiers were supposed to pay for fraudulent lending to buyers of homes plus homesites, and what tobacco and pill companies were supposed to pay their consumers. All those settlements might have been the exactly fair amount. But some aren’t.

Unsuspecting Indians May Want to Know

Long ago, some Indians on Manhattan accepted beads for the island. However, they did not sell the land. They couldn’t. Their definition of property differed. Law professor G. Edward White saw the Indians “not relinquishing the island, but simply welcoming the Dutch as additional occupants.” Since the Indians did not sell Manhattan but merely “leased” it, and ours is a litigious society, imagine descendants of the original inhabitants trying to collect in court many trillions due.

Long ago, some Indians on Manhattan accepted beads for the island. However, they did not sell the land. They couldn’t. Their definition of property differed. Law professor G. Edward White saw the Indians “not relinquishing the island, but simply welcoming the Dutch as additional occupants.” For example Massasoit, leader of the Wampanoag when the Pilgrims arrived at Plymouth in 1620, said "What is this you call property? It cannot be the earth, for the land is our mother, nourishing all her children, beasts, birds, fish, and all men.” (BTW, the tribe who dealt with the Dutch, the Canarsee, actually lived in Brooklyn and probably were happy to accept hi-tech art for an island that belonged to others.)

Thou shalt not own the land forever, for the land is Mine, you are My tenants.” (Leviticus 25:23) And wise Solomon claimed that "the profit of the earth belongs to all." (Ecclesiastes 5:9). Further, the New Testament quotes Jesus saying, "the meek shall inherit the earth.” (Matthew 5:5)

The Dutch should’ve known better. As good Christians, they were prohibited from buying land. In their Bible, their God said, “thou shalt not own the land forever, for the land is Mine, you are My tenants.” (Leviticus 25:23) And wise Solomon claimed that "the profit of the earth belongs to all." (Ecclesiastes 5:9). Further, the New Testament quotes Jesus saying, "the meek shall inherit the earth.” (Matthew 5:5) On the meekness scale, those accepting trinkets from intruders surely are the more deserving.

Since the Indians did not sell Manhattan but merely “leased” it, and ours is a litigious society, imagine descendants of the original inhabitants trying to collect in court many trillions due. There’d be a pre-trial deposition when the attorneys for the Indians could demand a precise accounting of the worth of that corner of the earth. Once they’re told the totals, the numbers would become public knowledge, satisfying the curiosity of some, even if not righting the wrongs of suffered by others.

Since government doesn’t tally the data, private parties must take a stab at it. Three researchers have estimated the selling price of Manhattan. At $1.4 trillion, the rate of return since the Dutch settlement in 1626, 388 years ago, would be 6.4%. Since land price is a cumulative projection of land rent, the actual value might be $700 billion annually.

On the other side of the Pacific, modern descendants of aborigines in Australia are trying to collect the rent. An Aussie rock group, Midnight Oil, wrote a song about the issue—“Beds Are Burning”. There too, it’s private researchers who ferreted out the total value.

Oversize Me

Everyone needs land and/or some compensation, and everyone in a region generate its rent. Perhaps that entitles all residents to a share—a la Singapore. If officialdom gets on the ball and shows the worth of Earth to be immense, then there’ll be plenty to go around. Court cases could become a thing of the past. The swings of the business cycle would not come as huge shocks. And we all might get a handle on those shockingly huge land value numbers.

This article is part of a series by Jeffery J. Smith on the surplus—also known as “economic rent”—that exists in the economy. Currently, this surplus is hoarded; yet once shared, this surplus could generate undreamed of possibilities for the entire human population. To see the entire series, visit Progress.org/Counting-Surplus

© Text Copyright Jeffery J. Smith rights reserved.
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