9 Landed Property
The previous consideration of property included most articles that are produced or gathered by human labor, and it is generally accepted by most that the effort of producing something is the basis of the right of ownership of that thing - just as we have dominion our bodies and the will the moves them, so do we have ownership over the product of our work. However, the concept of land is a special problem - it exists, and is not produced, so by what right may it be claimed as a specific person's property?
Politically, land ownership has been contentious because the owner of land often lived without working. He would lease the land he owns to others and demand a share of their product in compensation for the use of his land. This causes some consternation among those who want land, and must give a portion of their labors to another person who performed no work while collecting a share from theirs. In essence, they resent that the landlord receives "something for nothing."
We can generally observe the necessity of having an arbiter to determine the use of land and to reserve it for certain purposes. It would be impractical to suggest a plot of land is available to anyone at any time, such that the moment one person plowed it, a second came along and planted a crop, a third came along and uprooted the crop to plan his own, and a fourth came along and grazed his cattle on it. There can be little argument that to be useful to anyone, land must be devoted to a single purpose and those who have other intentions must be prevented from interfering.
However, by what right does a specific individual claim dominion over a specific plot of land? Bastiat explores the various arguments for sorting this out, but it's mostly posturing and is largely moot to economics - land is owned, and its owner must be contended with to obtain its use. (EN: the arguments are convoluted because it comes down to one thing - land is taken by violent means, after which it is assigned as its captor wishes. The ideas of logic and fairness are entirely fictitious. But again, it's largely moot as ownership of virtually all land has been established, and the question is seldom raised in practice except in unusual instances, such as disputes over ownership, changes in political regimes, discovery of new land, etc. This was of interest in the author's time because of the westward expansion of the US, and the land-grabbing that took place then, but America has become settled and there is not presently much chance of the discovery of a new continent over which to bicker.)
A few random points are made about the value contributed by the landlord, which justifies the rent he collects:
- He may have made improvements on the land (drained, leveled, and prepared for farming)
- He acts as an arbiter against many people who would use the land, preventing violence in the selection of which party gets to use it
- Once a tenant has been selected, the landlord defends that tenant against others who would encroach
- The value of his land is diminished by use (the soil is depleted by crops, trampled by animals, polluted, etc.)
There's a bit of fussing about ownership of natural forces such as wind, river currents, and the bounty of the sea. It is essentially correct to say that a landlord does not own the water that flows across his land, as it cannot feasibly be contained. However, he does have the right to control whether others may tread or build upon his land to gain access to the river from a location on his plot. A problem only arises when his use of the water harms those whose land is located downstream (he dams the river, or pollutes it) - in which instances his downstream neighbors may sue for compensation. Such instances are rare and idiosyncratic, and are left to be decided on an individual basis by the courts.
The manner in which land is assigned to the use of any particular individual is the same as any other good. In a free market, its use is claimed by the person who has the greatest need of it (as evidenced by their willingness and ability to pay a higher rent). It is only when a politician or other interloper meddles in the free market that land is improperly assigned to those who cannot make productive use of it.
The division of profit between land and labor is likewise the result of a negotiation between landlord and tenant. The tenant is willing to pay a certain rent for the land, and this rent is what he considers to be the fair portion due to the landlord. It is a voluntary agreement between landlord and tenant and it is no-one else's business to interfere.
Conflict may arise when a tenant makes improvements to land, such as draining a marsh to provide a field, with the expectation he will reap the benefits of his labor for longer than the term of his contract with his landlord. Again, it is the tenant's responsibility to negotiate a long-term lease to ensure that he reaps these future benefits, and is no-one else's business to interfere.
He criticizes the suggestions that all land be nationalized and a central committee decide who may use it. This does not abolish property ownership, as those who determine who may use it are the de facto owners of the land. If this committee were to purchase the holdings of landlords in voluntary transactions, this could be accomplished ethically - but proposals of this nature generally involve seizure by force and without compensation, which is clearly unethical.
Another long diversion considers the unnecessary debate over whether the customer should pay a price for the use of land. This is entirely irrelevant, because the customer pays for the good according to his need, regardless of the costs of the producer. A producer may wish to charge more for the use of his land in making a product, but the buyer is indifferent: he pays according to his need and in comparison to alternate methods of meeting his need.
The argument over what a tenant ought to pay for improved land follows in the same manner: he is not concerned with the pains undertaken by the landlord, only in a fair market value for the land in comparison to other plots that he may choose to rent.
The balance of power also exists between tenants and landlords. A landlord can only charge as much as a tenant is willing to pay for the use of his land. When there are many competing for little land, rents increase; and when there is less demand than supply, they fall. Neither tenant nor landlord can compel the other to accept a price that is unfair. This is entirely similar to any commodity in a free market.
The value of land is not fixed - it is based on the purpose for which people imagine it might be used. So a single plot of land may have a different value for farming one crop or another, its value may diminish as the fertility of the land decreases, then the value may increase if mineral ore is found on the soil, and decrease when those minerals are depleted, then increase again if a town grows to encompass it, then decrease if the area of town in which it is located becomes a slum, etc.
He also dismisses as meaningless the distinction of land-owners as a given "class" of men, simply by virtue of their ownership of land. Anyone may become a land-owner by purchasing it, or lose land-owner status if they sell their land. To suggest that land-owners are a specific class with any special entitlements is as foolish and arbitrary as suggesting a person's political rights depend on whether he is a horse-owner or a chair-owner. However, it may be observed that land-owners may collude against the market, just like the suppliers of any good, agreeing to fix the price of rent for any land. But such collusion is often short-lived because those whose land is worth less than the artificial price will have no tenants, and will invariably break ranks to rent at fair value in order to gain any rent at all.
There is brief consideration of the Malthusian argument - that man will continue to breed until he has overpopulated and it is not possible to produce food given the limited amount of arable land. This is entirely theoretical. It ignores that population waxes and wanes over time, and it ignorer's man's efficiency in producing more food from less land. In any case, the dystopia he describes does not seem to be a problem that will show itself for thousands of years.
Having gone so far afield, he then retraces his steps to reiterate the major points of this chapter, and throw a few stones at specific critics of property rights.