Henry Plottre was an English boy who went to magic school to become a wizard. He was a brilliant student and mastered how to make rabbits appear, how to make buildings disappear, and how to say “abracadabra!” whenever he whisked off the handkerchief.
During his studies, Henry heard that there was a wizard who could make land grow. The wizard knew how to magically expand land, something that both physicists and economists thought was impossible, even with magic.
Nobody knew where this land wizard lived, but it was rumored that there was a leprechaun named Oldvar who lived in the forest and knew where the land wizard lived. Henry trekked into the forest and used his magic wand to sense where Oldvar was, and found him hiding under a mushroom. At first, Oldvar claimed he knew nothing about the land wizard, but Henry offered him a rare amber stone enclosing a fossilized eye of a salamander. Oldvar told Henry he had to go through the Valley of the Economists and then up the Xylitol Mountain to the very peak.
As Henry trekked through the Valley of the Economists, he came upon David Ricardo. “Land is fixed in supply,” said Ricardo. “Even magic cannot expand land. Go back, you fool!”
Henry then came to a fellow with a big red beard. “I am Karl Marx,” said the economist, “and there is a specter haunting this valley. It is the specter of expanding capital!”
Henry replied, “But I am seeking the secret to expanding land, not capital!”
“Land is for peasants,” said Karl.
Henry did not understand, and kept going forward. He came upon Adam Smith. “An invisible hand will take you through this valley,” said Smith, “but the secret to expanding land will also be invisible.”
The invisible hand carried Henry to Xylitol Mountain. It was tiresome climbing up, and Henry tried to skip his way to the peak with his magic wand, but it was not working here. After many days, eating only mushrooms and miner’s lettuce, Henry came to the peak. There sat a man with a thick white beard - the land wizard!
“Oh, land wizard,” Henry explained. “I have come all this way because I was told that you know how to make land grow!”
“Yes,” said the wizard. “There is a way you could make land grow.”
“How?” asked Henry. “I will give you a precious amber if you tell me.”
“I need no amber,” said the land wizard. “I will tell you. There is high above a very large comet coming near the earth. With your magic, you could alter its course so that it will strike the earth. The earth will then grow bigger. You will then have expanded land.”
“But,” said Henry Plottre, “that collision would kill most life on earth!”
“Yes,” said the wizard. “But you asked me how to make land grow. That is how.”
“But you are a great land wizard,” replied Henry. “Surely you would know how to expand land without destroying life.”
“Surely,” said the wizard. “But I would have thought the economists in the Valley would have told you.”
“No,” said Henry. “They said land was fixed, it is for peasants, and the answer is invisible.”
“Well,” said the wizard. “Actually I too am an economist. I will tell you the secret to expanding land. Come closer.”
Henry came up close to the wizard.
Henry’s put his ear by the wizard’s mouth.
“I can’t come any closer!” said Henry.
“Just joking!” said the wizard. “Now I will tell you. But you must promise!”
“Not to tell anyone?”
“No! To tell everybody, you silly boy!”
“OK, I promise,” said Henry.
“Tax the land,” said the wizard.
“What?” said Henry. “How will land expand by taxing it?”
The wizard sighed. “Sit down.” Henry sat.
“When you collect the land rent like a bear collects honey, then those holding land idle will put it to good use so that it is worth paying the rent. If they need to keep providing honey to keep the land, they will work like bees. When idle land becomes well used, it is like growing more land.”
“But that does not expand land,” said Henry. “That just puts land to better use.”
“It has the same economic effect as creating more land, no?”
“I guess so,” said Henry.
“You guess?” huffed the wizard.
“I know so, now” Henry corrected himself.
“So land does expand when it is taxed?”
“Yes,” said Henry. “By George, yes!”
“And what did you promise?”
“That I would tell everybody.”
“So go!” said the wizard.
Henry ran down the mountain. “We can so expand land!” he cried as he went through the Valley of the Economists.
“We can grow land! We can expand land!” he told his fellow students back in magic school.
“With magic?” they asked? “No, with economics!” exclaimed Henry.
“We don’t have time for economics,” the other students replied. “We have enough to do learning magic.”
So Henry Plottre realized that he could not save the world with magic, but rather with economics, but only if people were willing to listen. Unfortunately, most are too busy trying to learn magic.
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FRED E. FOLDVARY, Ph.D., is an economist and has been writing weekly editorials for Progress.org since 1997. Foldvary's commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and currently teaches at San Jose State University.
Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary's areas of research include public finance, governance, ethical philosophy, and land economics.
Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.