Jubilee in equilibrium

When I wrote about how to establish Jubilee, I appealed to a comparison between Jubilee and another hypothetical town called Stolypin, initially assumed to be like Jubilee in all relevant respects except that land ownership in Stolypin is permanent. I argued that market forces would tend to cause Jubilee to grow in circumstances when Stolypin wouldn’t; essentially, I argued that Jubilee and Stolypin weren’t in equilibrium, so changes would occur to push them closer to equilibrium.

So what would the world be like if Jubilee and Stolypin were in equilibrium? We might try to imagine a situation where residents of each town prefer to stay where they are, rather than move to the other, but such decisions would be influenced by the costs involved in moving, as well as the relative attractiveness of each town. So, we could also keep in mind an immigrant choosing between Jubilee and Stolypin; under what circumstances would the average immigrant be indifferent as to which of the two towns to choose?

Well, first recall that Jubilee has one major advantage: residents of Jubilee (let’s call them Jubilants) have a guaranteed minimum income in the form of tradable land use rights. In order to balance this advantage, what advantages might Stolypin have, or what disadvantages might Jubilee have?

First, because every Jubilant has a guaranteed minimum income, they’re likely to be more reluctant to work, or to work as many hours, as Stolypinites, since Jubilants aren’t so desperate for the money. As a consequence, they’ll demand higher wages, pushing up the prices of goods and services in Jubilee.

But the prices of goods in Jubilee can’t rise that much higher than the prices of those goods in Stolypin; if the difference becomes too great, then someone would import goods from Stolypin and sell them at a profit.

Similarly, if the cost of a service (such as hairdressing) in Jubilee rises too much higher than it is in Stolypin, then Jubilants would travel to Stolypin to receive the service, and then travel home; alternatively, the higher wages that can be obtained in Jubilee by people who provide that service will simply make Jubilee even more attractive.

One advantage Stolypin might have is lower rents. If Jubilee’s rents rise sufficiently high, then this will encourage owners of leases to build more accommodation, in order to profit. (It should be noted, though, that local regulations can often effectively ban such provision of extra accommodation, as in Christchurch and London, for example.)

This extra construction might be slowed by rising costs of construction in Jubilee, but again, this should be limited by the possibility of importing materials from Stolypin, and the fact that higher wages for construction workers will attract more such workers to Jubilee.

If rents are low enough in Jubilee that little extra accommodation is being built, but still high enough that Stolypin, without a guaranteed minimum income, is equally attractive to an average immigrant, then rents must be very low in Stolypin — probably low enough that no extra accommodation will ever be built there again.

There are several other reasons that one town might be more attractive than another — more job opportunites, higher wages, less crime —, but many of them seem unlikely to apply to Stolypin, when compared to Jubilee. As discussed above, job opportunites and wages are likely to make Jubilee more attractive than Stolypin, not less; and it’s hard to see why a guaranteed minimum income would make people more likely to resort to crime.

One more plausible disadvantage for Jubilee is that it might become uncomfortably over-crowded. Let’s distinguish between two types of over-crowding:

  1. where too many people are squeezed into too few houses, or
  2. where too many people (perhaps with adequate accommodation) are squeezed into too small an area of land

The first type of over-crowding should be limited by the fact that it provides an incentive for those with land-leases to build more accommodation, as discussed above.

The second kind of over-crowding is more of a problem. If Jubilee didn’t start out with sufficient land, then when it becomes over-crowded, the cost of land around its edges will probably have risen greatly, because of its proximity to a population centre. In this case, it may be prohibitively expensive for Jubilee to acquire permanent rights to this land in order to bring it into Jubilee’s system of long-term leases.

On the other hand, if the second kind of over-crowding is likely to be a problem, then this is a sign that the initial entrepreneur is likely to make very large profits indeed. If such profits are possible, and especially if they’re demonstrated by the first such entrepreneur, then other entrepreneurs will establish similar towns, looking for similar profits; this will take pressure away from Jubilee.

So perhaps this is the way that growth of the first Jubilee-like town will be checked: its success will prompt the establishment of similar towns, possibly even using already populated land in towns like Stolypin, where competition from Jubilee has forced a drop in land prices.

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