--- In LandCafe@yahoogroups.com
, Harry Pollard <harrypollard0@...> wrote:
> The monopolist achieves his high return by refusing to supply demand.
That is simply false. He is happy to supply all the demand there is at his most profitable price.
> In the case of land, or more specifically locations, he has the added
> advantage that people must have access or they do not survive. So he can
> run up the Rent until paying more is impossible for the prospective user.
No, he can't, or he would, and he doesn't. If he tries to charge more than the economic advantage his location affords the user, the user will just go elsewhere. Almost all land users could in fact pay more than they are paying, and their landlords are powerless to charge them any more.
> Rent is supposed to be a measure of the advantage that attaches to a
> location. The payment of Rent does not come from wages. You get $100 a week
> advantage to your location and you pay $100 a week in Rent a zero-sum.
> However, the landlords ability to keep running up the price
That ability is imaginary, as proved above.
> means the extra
> paid which I call rack-rent comes from wages. As we know, this pressure
> on wages drives them down until those at the bottom are surviving at
> subsistence levels.
No. The pressure on wages comes from the Law of Rent, which implies that in an advanced and densely populated society, those at the bottom -- i.e., those least able to use land productively -- are relegated to sites where their wages are well _below_ subsistence.
> But then we collect the full rent from every location.
> A large amount of urban land is vacant or underused. Perhaps the underused
> amount slums and suchlike is more important than the vacant. In any
> event, many landholders will be unable to continue holding their land with
> the land rent payment pressing on them. So, they will have to build or
> abandon. The once highly restricted market for land will become open and available.
It's true that the land market will become more liquid, but that does not imply that rents will crash, because the land market will still be a monopoly market. Rent is economic advantage. Replacing taxes that burden economic activity with land rent revenue will increase the economic advantage of productive use. Yes, producers will have more good land available to use. But the economic advantage they can obtain by using it will be correspondingly greater, too. And when ordinary working people's real disposable incomes double and triple, one of the things they are going to want to enjoy more of is land. Working families with young children who currently can't afford a SFD house with a big back yard close to schools, infrastructure, employment opportunities and other societal benefits will be able to afford one easily.
> This will be particularly noticeable as one gets away from the city center. The emptiness in the city center will tend to fill up first.
Increasing the advantage obtainable by using each site, and thus their rents.
> Modern cities tend to spread in all directions as entrepreneurs search for
> cheaper land. With Rent collection the city will contract although its political boundaries will remain.
Not so. There will just be less vacant and underused good land. People who currently can't afford to support idle landowners as well as themselves, their families, and government will be able to afford to use the amount of land they want to use.
> Rents in the center will naturally soar while the outer parts of the city will become marginal
No, they will not, because more than one person will be willing to pay to use them.
> - important because these marginal areas will set
> Rents across the city.
No, they will not. Rent is set by the economic advantage obtainable by using each site.
> It should be noted that this marginal land is likely
> to be quite productive.
Marginal land will not be very productive, and will typically be remote from cities.
> The major result of so much land becoming available will be to end the practice of rack-rent.
The practice of rack-rent is today effectively non-existent in advanced economies.
> One cannot hold out for exorbitant Rents with lots
> of competitive locations available.
Rents are affordable by definition, and it is precisely the competition FOR locations that sets their rents.
> This competition will ensure that
> location Rents will soon equal the actual advantage provided by the
> surrounding community.
They already do.
> Although central Rents will soar as downtown land is fully used, they will
> also be reduced by the margin moving toward the center. As you know, rent is measured from the margin.
The margin will not move towards the center. If anything, it will move outward as productive use of land is relieved of the burden of taxation.
-- Roy Langston