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Friday, April 10, 2015

The Value of the Land

The redbud in full bloom

Everything is blooming right now, not just the fruit trees. The redbud, that only a few days ago had closed buds now is attracting bees.

The redbud before the buds opened

The liquidambar tree is sporting both yesteryear's spent seed pods and this years new pollen.

Liquid ambar with spent seed pods and new green growth

The service berry bushes in the woods are flowering.

In the bare woods, the service berry is blooming

Last year its blooms tricked me into thinking it was a fruit tree.

And maybe it is a fruit tree -- just not a cultivated one. It gives fruit, just very small fruit, that as a civilized human I don't feel is enough to eat, because it is barely worth the trouble of picking. But other animals eat it, and if I were starving, I would eat it, too.

By the lagoon, we can see the bright yellow forsythia right next the purple redbud, in a juxtaposition that seems almost too pretty to be real.

In the backyard, the dogwood tree is already in bloom, although its blossoms are still green.

Everything is working so hard to produce! Or maybe not working. It depends on your perspective. In her recent blog post "Eat the Rich" Leslie Fish suggested that labor was more important than capital, that picking a fallen peach off the ground is worth more than the ground that allowed that peach to grow, which is why we need to soak the rich and outlaw moneylending. Usually, Leslie Fish and I agree on a lot of things, but she lost me there!

The land is worth more than any of us working combined, because without the land we could not live at all! It's the land that produces the peaches, not the people or the chimps, and unless you own land -- or trade with other people who own land  -- you have nothing. You're dead.

Labor is important, too, of course  Labor has value, but not all fruit picking is work. Some of it is pure consumption! The fruit that goes straight from the ground into a hungry chimp's mouth is not really worked for, though it may have to be fought for!

Does everybody have to work? What is work?. And what about Bow, is he working?

Bow in the outer pen, bouncing off the ground -- who needs a trampoline?

Bow refuses to work, but this does not mean that he is not expending energy. He can jump very high, even without a trampoline. If he were living in the wild, he would be expending this energy on picking fruit that grew from trees that he did not cultivate. He would also spend his energy on enforcing his own little tribe's right to pick that fruit, and would work extra hard to prevent chimpanzees not in his tribe from picking any of it. Chimpanzees in the wild know the value of the land and realize it is the natural resources that are worth defending, more than any other labor involved. This is also why the alpha male gets the top pickings. Because he contributed the most to defending the land.

Bow wanted to watch this video free on Youtube, but he was not willing to be interrupted by a commercial to pay for that "free service." Isn't  that just like a chimp?

Whether the land is worth more or improvements on the land are worth more is a related question. The answer is market-based, and it depends on location. In rural locations, improvements to the land are worth more than the land itself. But in urban places where population density is high, people are cheap and the value of their labor is negligible, compared to every square inch available.

People forget that the value of land versus that of human labor shifts depending on the circumstances, so that's why we get absolute statements such as Leslie's:

Now territory, usually land, is almost worthless except in its potential to produce useful raw materials; a howling wilderness may produce wild game and useful plants, but these are useless to humans unless they go hunt that game and gather those plants -- in other words, put in labor.  The wilderness does produce clean air to add to what we breathe, but that's it;  everything else is potential, not actual.
Tell me how anything can be of value to any human if he does not first have air to breathe?

My father wrote about the shifting value of people's labor versus  natural resources, here:

He concluded that as population density goes up, the market value of people goes down. That's why we lose our freedom in more populated areas, where the resources are everything and the contribution of individuals are less important.

When I was in law school, we read a lot of old English common law cases, where it was drilled into us that the value of the land is greater than the value of improvements to the land. Most of my American colleagues just memorized it without comprehending it, because their instincts about their own economy told them that improvements to the land had more value than the land itself. But it was not so in Britain, from which we got our common law. From their case law we learned that if there was an executory contract for the sale of land, and the house on it burned down before closing, the buyer still had to pay full contract price, because the value of the land was primary. In the United States, though, this is isn't actually true in most locations, because we still have a lot of unused rural land. Still, as conditions change, the value of the land goes up and the value of the people who live on the land goes down.

I have a tenant at Orchard House.who wants to buy both the house and the land. He has offered me a price that is worth it to me, and since he is a veteran, he applied for a VA loan. The VA evaluated the property -- but it looked only at the house, ignoring the land. They will only loan him what the house is worth, though the land comes with woods, open fields and a fruit bearing orchard.

I have not been at Orchard House in a long time, but this is an old video I took a few years ago of the fruit that grows there.

Just like Leslie Fish, the Veterans' Administration thinks that territory is worth nothing and labor is everything. But are they right? Is the Orchard House orchard really worthless? My tenant does not think so. He told me himself he would not buy the house without the land. So we are working out a deal, and I may lend him the difference between the value of the house and the land -- in a promissory note with contitnuously compounded interest that is higher than what I can get at the bank.

Should we outlaw such transactions? Should only people who can prove they can run a business successfully have the right to lend money with interest?

The value of the land -- and of the capital necessary to purchase the land -- is important. People who underestimate the significance of this issue are running our economy into the ground,


  1. To me the land is always worth more than the house. The house might fall apart, and can be repaired. However, you could never buy the house without the land to place it on. The trees also could be an investment. I would definitely buy a house now, but it is just not economically viable for me here in California. The sad thing is I save money renting rather than owning a home, but I choose to live here, so I guess I have to wait until one day I can afford something.

    1. Hi, Julia. I agree that the land is really what counts.

      Real estate prices are completely unaffordable for most people in California. My tenant lived in California before he moved here, and he is really pleased with both the beauty of the place and the reasonable prices.

      I hope you are eventually able to find a house you like that you can afford.