Re: Smith: ground rents and land rents

royls@xxxxxxxxx wrote:

On Fri, 19 Aug 2005 03:45:46 GMT, Les Cargill <lNOcargill@xxxxxxxxxxx>
wrote:


royls@xxxxxxxxx wrote:


On 18 Aug 2005 17:13:53 -0700, "ruetheday@xxxxxxxxxx"
<ruetheday@xxxxxxxxxx> wrote:


When Adam Smith wrote, "Both ground-rents and the ordinary rent of land are
a species of revenue which the owner, in many cases, enjoys without any care
or attention of his own."
what precisely did he mean by "ground-rents" and "ordinary rent of land."?


"Ground rent" means the land rent.  The "ordinary rent of land" means
rent in the vernacular sense which includes improvements.


IMO the ordinary rent of land would be rent received from tenants in
return for use of the land net of improvements, while ground rent is
the economic rent of the land, which can also be captured by the owner
directly -- e.g., a plantation owner can collect the ground rent by
employing an overseer to run his plantation rather than letting the
land to tenants.


I am skeptical of just how helpful this is in enabling those who do
not understand rent, to understand rent.



I was just trying to clarify what (I suppose) Smith meant.



Certainly! Rent is more from Ricardo's work, though. It's not
an easy concept. I don't think *I* have it, quite yet :)

If I may, rent is simply gain from sources other than those
which can be commonly agreed on as "earned".



IMO that is highly misleading.  Lottery winnings are not rent.
Inheritance is not rent.  Robbery is not rent.


Right.

There is a big difference between the income of a bandit who robs
people passing through a forest and the income of a holder of a royal
license to collect tolls from the very same travelers: if you assert
your rights against the depredations of the former and overcome him by
force, the government will give you a pat on the back, whereas if you
do likewise against the latter, it will hunt you down and forcibly
deprive you of your liberty, assets and/or life.  Likewise for the
contrasting cases of unauthorized foreign land appropriators (i.e.,
invaders) and officially approved domestic ones.


But this distinction may be described by 'some rob with a gun,
some with a fountain pen'.


But this is also problematic, as it requires a rigorous
definition of "earned". We might define "earned" in terms
of "rent".

But that would be circular. 


Why not define "earned" as "obtained in return for commensurate
contribution"?


But commensurate how? Land rent would appear to be a measure of
value in that it's traded.

There's the Ricardian version, in which location is an independent
variable to a (not necessarily continuous ) productivity function.

Land rent is the economic value of this difference. And even though
Ricardo stated this in terms of agriculture, it generalizes.

-- Roy L 

--
Les Cargill
.

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