Re: The monopolization of the air and Georgism

ruetheday_at_outgun.com
Date: 01/25/05 

Date: 25 Jan 2005 10:46:47 -0800

>Wrong. Read the quotation from Marx again. This is not what he is
>saying. He is saying landowners form a monopoly.

Please quote the line where he says anything about landowners getting
together to "form" a monopoly.

>>Much like modern economists use the term
>> "monopolistic competition" to reference markets with product
>> differentiation (a weaker use of the term).

>Monopolistic competition could be a good explanation of land. You have

>many buyers and sellers, the good is differiated, and there is free
>entry and exit in the long run(few restrictions on who can buy land).
>This is not a monopoly

Except land goes way beyond this since not only is every parcel unique,
but in the aggregate the supply is fixed.

>nor is this what Marx was saying. Marx was saying
>that the landed class formed a monopoly in that they were the only
>sellers. He failed to see that the landed class competed with each
other
>in the land market. He assumes they would collude.

Again, please post the exact quote where he says this.

>> They also use the term
>> monopoly to refer to situations where the government enforces a
barrier
>> to entry as in the case of copyrights and patents (a stronger use of
>> the term).

>Sort of. You can have a monopoly over your own product and still be in

>monopolistically competitive market. A patent does not imply the
MARKET
>STRUCTURE will be monopoly.

Nonsense. How many producers of Microsoft Windows are there? There is
only one. Why? Copyrights and patents.

>> George may not have been familiar with the term, but he was
certainly
>> familiar with the concept. He wrote extensively about why the land
tax
>> would fall wholly on the landlord and not the renter.

>The assumption has to be perfectly inelastic supply of land. This is
the
>only way George's idea will happen.

And his assumption was correct.

>> Nonsense. Do you understand how a supply curve is derived?

>Very well it represents the seller's willingness to sell the good in
>question.

Willingness doesn't mean a whole lot in the real world, as is evidence
by the annual sales of Viagra.

>> It's just
>> a function showing how much of something will be produced given a
set
>> of assumptions about marginal cost and marginal revenue.

>Balderdash. This is only for produced goods. Goods like labor or land
>that can not be produced also have supply curves. In these cases, it
is
>based on the willingness to sell. Landowners like workers will have
>reservation prices. That is a minimum price they will sell for. Go
below
>the minimum price and people will not sell. As price rises more people

>are willing to sell. Land nor Labor is inelastically supplied at all
>price ranges. One could argue that at a certain high price that land
is
>inelastic but this does not imply an elasticity of 0 across all
prices.

Labor is different than land. Labor has to be expended. A human can
choose to expend or not expend his labor. Land, on the other hand,
always existed in its present quantity and nothing humans do can alter
that quantity.

>There is absolutely no empirical evidence to support land prices
>operating in a perfectly elastic range. In fact Roy's "evidence" for
>perfectly inelastic actually said the demand curve had some
elasticity.

No empirical evidence? Other than the fact that the amount of land in
existence is fixed and therefore the supply curve is by definition a
vertical line?

You remind me of that joke about the economist trapped on the island
with the physicist and engineer whose solution to the inability to open
the can of food is to simply "assume" a can opener. Let me guess, you
didn't get the punchline the first time you heard it.

>> However, land
>> is not a produced good.

>Neither is labor that does not mean they do not have reservation
prices.
>Would you sell land if price were 0?

Whether or not I would has no impact on the total amount in existence.

>Would you work for $.50 an hour? I
>think not.

Whether or not I would DOES impact the total amount of labor expended.
Hence, the supply of labor is price elastic (to the limit of 24 hours
per day) whereas the supply of land is price inelastic.

>>There is no marginal production cost. When
>> economists draw a supply curve, they are attempting to represent the
>> quantity of something that will be produced at various prices (based
>> upon the cost of producing it).

>Complete misunderstanding of what a supply is. It is how much people
are
>willing to sell this does not imply that anyone is producing.

Ok, we'll play it your way. What is the marginal cost of producing one
additional unit of land?

>> You are trying (incorrectly) to apply
>> that analysis to how many people would be willing to sell an
existing
>> good at a particular price.

>You are incorrectly applying supply curves to production only.

How about we say "bringing into being" as opposed to "producing" since
you seem to be hung up on the colloquial association of production with
manufacturing.

>Two
>simple questions proves it. Would you sell your land if price is 0?
>Would you sell your land if prices was $10 billion? If the answer is
no
>to 1 and yes to 2 then price affects the Quantity supplied and the
>supply curve is NOT perfectly elastic. The supply curve exist because
>people have different reservation prices for selling. It takes a
minimum
>price for a person to part with their land. This minimum price is
>different for different land holders. Perfectly elastic along all
price
>ranges means there is no reservation price and landowners would give
>away as much land at 0 price as they would sell when price is $10
>billion an acre. This is not empirically true.

Supply curves were never intended to represent individual preferences
and subjective value (that is handled by the utility component of the
demand curve). A supply curve is simply a function showing that a
rational firm will generate output (since you don't like the term
produce) in a manner that maximizes revenue subject to the constraint
of costs.

>>If I draw a supply curve for television
>> sets, I can say that at a price of $100, TV set manufacturers would
>> produce 10 televisions; at a price of $200 they would produce 15.
You
>> can't apply the same analysis to land.

>Of course you can. The land has value to the owner. To buy the land
you
>have to offer him enough money for him to want to sell. If that were
not
>true all I would have to do is walk up to your house and say I want
you
>to give it to me and you would say ok. Even if I offer a $1.00 you are

>unlikely to sell the land. I must offer what you perceive the value of

>the land to be. I must make a high enough bid for you to be willing to

>sell. What you imply defies all logic.

You are ascribing all manner of properties to supply curves that they
do not have. A good Intermediate Micro text should set you straight
(although Vienneau will certainly have something to say about that ;-)
).

>> Whether the price of land is
>> $1/acre or $1,000,000/acre, the quantity of land on earth will be
the
>> same.

>Yes but few people will be willing to sell their land at $1.00 than $1

>million so less land is supplied on the market at $1 than $1 million.
It
>is not perfectly elastic.

Again, go back an read up on HOW a supply curve is derived, and then
you will understand why your argument makes no sense in the case of
land.

>> People may be more or less willing to part with what they
>> already have,

>Exactly which is why the Quantity supplied responds to price. To say
>that land is perfectly inelastic says people will part with the same
>amount of land or rent the same amount regardless of the price
recieved
>for the land. Again if you are a landowner and you want to rent your
>land would you let someone use it for free? Would you let someone use
>for $1 million? If the answer to 1 is no and the answer to 2 is yes
then
>the Quantity supplied on the rental market responds to price.

Except that the math that goes into the derivation of a supply curve
says nothing about an individual's willingness to part with something.
I'm starting to understand why so many people have become frustrated
with and abandoned all of neoclassical economics.

>>but the total amount of land (the coordinate on the X
>> axis of your supply curve) will be unchanged, hence the vertical
supply
>> curve Samuelson referenced.

>No it is the total amount of land that PEOPLE ARE WILLING TO SELL on
the
>X axis not how much is out there. Take the example of Monet paintings.

>There will never be another produced. Does this mean supply is
perfectly
>inelastic? No.

Yes.

David Ricardo even wrote about this very issue. The classical
economists believed that prices were determined by costs. According to
the marginalists, they were half right - cost determines the supply
side, utility the demand side. Back to my point about Ricardo - he
observed that in the case of collectibles, cost could not be a
determinant of price because cost was an irrelevant metric for
something that only existed in fixed supply.

>Why? Because at different prices, different amounts of
>owners are willing to part with their collection. It does not matter
how
>much of the good exist. It is how much people are willing to that
>determines supply. If I inhereit a family farm and want to be a farmer

>because my family have been farmers and do not want to sell my land at

>any price then I DO NOT TAKE PART IN THE LAND MARKET AND MY LAND IS
NOT
>PART OF THE SUPPLY CURVE.

Now let me see the equation that shows a supply curve being derived
from what you just described.

>You completely misunderstand what a supply is and how it is derived.
By
>your analysis the supply of labor would be perfectly elastic because
>there is a fixed number of people at any given time.

Labor is not synonymous with people. Labor is something people expend.

Relevant Pages