A land tenure thought experiment

Imagine a town and some surrounding farmland.  Let’s call this place Jubilee.  In Jubilee, no-one permanently owns any of the land.  Instead, every 17 years, everyone living in Jubilee is allocated land in a way that ensures everyone has land of roughly equal value.1

What effect does this have on the people of Jubilee? How would they see our system of land tenure?

Well, every able-bodied adult in Jubilee has the opportunity to grow their own food and make themselves a living that way. Note that they have the opportunity to do so, but not the obligation. People not skilled in agriculture are free to rent or lease their allocation to someone who is skilled; they can then use the proceeds to rent a smaller patch of land to live on, and use anything left over as they see fit.

Notice that the redistribution of land every 17 years isn’t really a redistribution of wealth. What I mean is that wealth isn’t confiscated from the rich to give to the poor. Someone who leases large areas knows that they are buying only temporary use of the land, and they pay accordingly; when the land is reallocated, it’s no surprise, and they don’t lose anything they paid for or worked to produce.

Alternatively, think of it this way. An area of land can be thought of as an asset. But we can conceptually break this asset up into sub-assets: the use of the land this year, the use of the land next year, the use of the land the year after next, and so on. These assets can all be allocated to the same person (as is the status quo in New Zealand), but in Jubilee, only 17 of them are allocated at a time, leaving the rest to be allocated to the future generations who will more directly benefit from them.

So in Jubilee, the land allocations aren’t a redistribution of wealth; they’re a series of initial distributions of wealth whose allocation was previously deferred. It’s not social justice for the poor at the expense of the rich; it’s social justice for rich and poor alike.

Now, how might a resident of Jubilee see our system of permanent land ownership? To them, it’s as if we started from their system, and then the government decreed that all present allocations would be made permanent, ending all future reallocations of land. Of course, this would have been a massive boon for the people who received permanent allocations, but it came at the expense of future generations.

After some time, everyone who benefited from the permanent allocation will have died. Most of the present land-owners will have bought their land at a price that reflects the permanency of ownership. There’s no reason to expect that they’re better off than if they had invested that money in another way; if land investment was better than other kinds of investment, more people would invest in land, pushing up the prices, and therefore reducing the expected returns.

And if we tried to abolish permanent land ownership and establish a system like the one in Jubilee, it would be unjust to confiscate the permanent rights that so many people had worked to pay for. It’s not easy to get out of this situation.

In summary, the residents of Jubilee might see our system of permanent land ownership as a kind of transitional gains trap. The only difference I see is that there is a naturally limited amount of land, whereas the Canadian dairy supply management system, for example, introduces an artificial limit on the number of cows that can be milked in each province. But it is still the case that one cohort of land managers is given permanent rents, making it much harder and more expensive for others in future to enter the land management game.

1. Don’t worry for now about the mechanism for allocating land. I hope to talk about this later, and when I do, I’ll probably change even the few specifics I’ve already given.

3 thoughts on “A land tenure thought experiment

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