Economics of land value Part 5

Part 5. Wendell Fitzgerald with Peter Melton discuss the history of how land comes to have a market value and the implications for the economics of land, public policy and environmental concerns. Simply stated land gets its market value from society as a whole. Population and what people are able to produce on, in or from land with ever more productive tools and technology result in the increase in the market value of land, i.e. what people are willing to pay in rents or purchase price for access to land. The little appreciated fact is that land value is NOT created by landowners who are only responsible for creating the value of improvements and goods and services produced on the land. Historically landowners are allowed to collect land value as if they had created it via rents and in purchase prices. That practice is at the expense of society at large and non-landowners in particular who pay rent and then are forced to pay taxes to provide community services all of which increase land value (and their rents). Private collection of community created land value is not merely an economic justice and free lunch to landowners but the prime motivation for land speculation and most if not all environmental abuse. Exclusive use of land for purposes of protecting producers is correct policy but private ownership of land value is not. A tax on land values ex improvements would solve this basic flaw in the system.

Wendell is a longtime member of the Henry George School of San Francisco. HenryGeorgeSF.org. Produced by DanShaw.com.

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[ourearthhome]

mozidigital: thank you for the encouragement. I always got enormous value out of any time I spent delving into the land issue. The money issue is equally worth of attention. I recommend googling anything to do with Henry George and land value taxation. I especially recommend googling the website for Prof. Mason Gaffney who has written extensively and profoundly on the issue. For the money question I recommend Richard C. Cooke. Also Steven Zarlenga's Lost Science of Money.

[mozidigital]

Thankyou, it has been a real eye opener! I'm doing a thesis on "Market and Policy impacts on Land Use decisions"... it is clear now where this whole poverty issue arises from now. Any sites and links would be greatly appreciated : ) Keep up the good work and all the best!

[ourearthhome]

mozidigital: the theory is correct but this is only the base value, the "real" market value of land, and then because this value increases and because it is wholly unearned by the "owner" of land and can be pocketed upon sale of land, speculation occurs which drives the market value of land way beyond its "real" value. Land price speculation is then subject to collapse when it gets too high and people can no longer afford to buy as we have recently seen in the so-called housing price bust.

[mozidigital]

"In theory the price of land should reflect the discounted stream of returns from its most productive/valuable use."

[ourearthhome]

mozidigital: what I mean by land having no value when there is no community is that it would have no market value, no cost of purchase because there is o one there to purchase it. That is merely stating the obvious although it was not obvious to me until it and its implications were pointed out to me years ago. The value you are talking about is "use" value and that value always exists even only as a potential until people/community show up and begin to make "use" of the land.

[mozidigital]

"if the community wasn't there the land wouldn't have any value" What about resource value? mining, use for agriculture???