Posted: 2/29/2012 6:53:41 PM
Land, in an economic sense, is defined as the entire material
universe outside of people themselves and the products of people. It
includes all natural resources, materials, airwaves, as well as the
ground. All air, soil, minerals and water is included in the
definition of land. Everything that is freely supplied by nature, and
not made by man, is categorized as land.
Land holds a unique and pivotal position in social, political,
environmental and economic theory. Land supports all life and stands
at the center of human culture and institutions. All people, at all
times, must make use of land. Land has no cost of production. It is
nature's gift to mankind, which enables life to continue and
Land's uniqueness stems from its fixed supply and immobility. Land
cannot be manufactured or reproduced. Land is required directly or
indirectly in the production of all goods and services. Land is our
most basic resource and the source of all wealth.
Land rent is the price paid annually for the exclusive right (a
monopoly) to use a certain location, piece of land or other natural
resource. People receive wages for work, capital receives interest
for investment, and land receives rent for the exclusive use of a
location. Equity and efficiency require that the local general
public, who created land value, should be paid for the exclusive use
of a land site. That Payment is in the form of a land tax.
When considering world-wide economics, most people think that land
rent contributes only a small insignificant portion of value. But as
societies progress, land has become the predominant force in
determining the progress or poverty of all people within a community.
Land in major or cities is so costly that people are forced to move
further away and travel great distances in order to get to work and
social attractions. In the more developed countries of the world,
land rent represents more than 40% of gross annual production.
Since land is fixed in supply, as more land is demanded by people
the rent will increase proportionally. Demand is the sole determinant
of land rent. Changes in land rent and land taxes have no impact on
the supply of land, because the land supply is fixed and cannot be
significantly expanded. Labor and capital are variable in supply. A
higher price for commodities causes more labor and capital to make
itself available. Labor and capital are rewarded for their work. A
high price is an incentive to work harder and longer, while a low
price is not an incentive to work harder and longer.
click - good read, for anyone interested