You hear a lot about the 1%, raking in most of the income, claiming most of the wealth, wielding most of the power. What you don’t hear a lot about is the source of their success. And that is the factor that most modern humans have a total blind spot towards.

This being the modern era, we think things have changed. But that source has not. As the French say, the more things change, the more they stay the same. So celebrated French economist Piketty really should know better.

Two centuries ago, first Chief Justice of the US Supreme Court, John Jay, said,“Those who own the country ought to govern it.” Whether they ought to or not, they do, with ease.

Concentrated Capital Comes From What? (Hint: Don't Ask Piketty)

You’ve heard 10% own 90% of stocks and bonds. But what do you hear about the other “fixed asset”, the other inert factor in producing wealth—land? It, not capital, is actually the driver in growing fortunes, something Georgists have known forever and the rest of the world is catching up.

Look at land's link to stocks. Publicly-held corporations can pay dividends largely because they rake in rent, or land value, or the money we spend for the nature we use. Oil companies are the obvious example, but look at chains like fast foods and supermarkets. They profit hugely from the locations they own which they lease out to their franchise owners.

Look at land’s link to bonds.

Who owns US bonds? Not the debt that other parts of the government own (which is most of it), but the part that non US agencies own. While you hear a lot about China, actually Japan owns more, and way more than Japan are major corporations who are almost exclusively FIRE—Finance, Insurance, & Real Estate (yet the historical economist who did the research refers to Marx, not George! go figure).

Who owns private bonds? Mostly other corporations. And they, as noted above, are in part major landholders, and, as you’ll see below, are major corporate welfare mamas.

The Landed Gentry

Who owns land itself? Millions own land beneath a house; even more are paying a bank for the site. Yet add all those home sites together and it does not amount to much area; vast amounts of America are leftover. That vastness allows a few to own much, as the many own little. The actual numbers are hard to swallow. The guy who owns the most of America, John Malone, owns 2,200,000 acres (bigger than a small state). Gene Wunderlich of the USDA in the 70s calculated that 3% of the US population own 95% of the privately held land.

Gene Wunderlich of the USDA in the 70s calculated that 3% of the US population own 95% of the privately held land.

Those numbers are in league with places like Brazil where peasants struggle to become landowners and the massive landowners kill them. There, they have class violence against the landless. Here, we have widespread indifference toward the homeless.

To express concentration of ownership, Corrado Gini came up with his quotient in which 1 equals total ownership of everything by one person and 0 equals everybody getting a piece of the pie. In the 80s, the US is about three quarters of the way to a monopoly on land, in a tie with Uruguay, another Latin American nation better known for corruption than prosperity, and inequality has not gotten any better here since then.

Absentee Owners and other Elite Squatters

The concentration of land acreage matters if you want to have a middle-class and no coup d’etats. Yet more impactful is the concentration of land value. Take pricey Manhattan. How many—or how few—own it? Or own any downtown, where the value per acre is hundreds of times higher than out in the boondocks.

And who are those owners? Often, they’re not locals, or even individuals, but investment trusts. Elaine, the character in Seinfeld, is one of the few owners of downtown Portland OR, by birth, as a member of the Dreyfus family. She’s not an outlier. She typifies her class.

You don’t need to own land to have it make you rich. You could invest in a REIT. Or in a bank. They get mortgage payments continuously; homeowners on average last about 6 years in one home before taking a mortgage on another, and there are refis.

Bankers are not alone. Ranchers get to use federal pastureland as if it were their private property. Loggers get federal forests.

Bankers are not alone. Ranchers get to use federal pastureland as if it were their private property. Loggers get federal forests.

Expand the meaning of “land” to “all natural resources”. Miners and drillers get federal ores and oils. All of them get to pay way below market rates. So do the telecoms using the publicly owned airwaves. TV networks even get their frequencies for free. These free rides are so lucrative, actual ownership would be a liability.

While ownership of land matters, even more important is ownership of rent (the money we spend for the nature we use)—if you want to have a middle-class and no coup d’etats.

Pay the Piper, Call the Tune

Remember Finance, Insurance, & Real Estate from above? FIRE is the biggest contributor to political campaigns. By far—nearly twice as big as second place “Other”, and nearly four times as big as third place “Miscellaneous”. Investing in government (bribing?) pays off astronomically. Politicians hose public dollars into the private coffers of the already super wealthy. For example: Congress subsidizes agri-business, routinely overpays contractors, such as weaponeers, and grants tax refunds to corporations and millionaires for taxes they never paid!

Besides giving away public dollars to insiders, government does not collect from insiders the money owed to the public:

  • lenient enforcement of the law such allowing oil companies to underpay royalties,
  • charters and other limits on liability that save corporations from having to buy insurance, and
  • patents and copyrights that don’t protect inventors but prevent newcomers from exploring fenced off fields of knowledge.

So their fortunes made by owning nature or charging tolls to others get magnified many times over by government-granted privileges. For the rest of us, though, their policies worsen pollution, illness, war, overwork, and alienation.

Some Pay Taxes, Some Receive Shares

You might be satisfied getting by, but when you leave trillions on the table for others to grab by hook or crook—as they will—you corrupt them. They don’t thank you or respect you for not claiming your fair share of the value of nature and privilege.

All of us need land, none of us made land. All of us—the populace—do give locations their value. Yet we make a gift to a very few what rightfully belongs to all.

You are a citizen. Demand a Citizen’s Dividend. Become a “share-receiver”.

Do you govern your nation? Or does someone else own it?
© Text Copyright Jeffery J. Smith rights reserved.
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