I’ve always wondered why land isn’t just capital like any other capital, once it is properly valued. If we agree to assume the risk-free rate truly is zero...
This has never, ever been the case in the history of humanity. The risk-free rate of land is the one thing we actually have very good records for and ways of calculating over human history. It’s not zero, nor has it ever been close to zero. Somewhere around 3-5% on average is a reasonably good estimate without getting into specifics of region and era.
But if you’re basing your argument on land having a risk free return on zero, we’ll that’s something that can be quite easily looked up and disproven.
(This will be my last word in this thread, as I do think replying to this can be helpful in creating clarity, then I’m done here.)
The argument here is not based on ’there was a time and place, or is a time and place, where this scenario took place. It is an argument that given the assumptions, this is what would happen. It definitely hasn’t happened in the past.
Agreed that the rate of return on land has never been zero until at least recently because returns to capital have not been zero until recently if ever.
But if returns to non-land capital are zero, and returns to land capital are positive, and land is alienable, then people bid up land until the returns equalize. If it’s not alienable, as it sometimes isn’t, asking what it is worth is weird but I’d assume you want to value it as if it was alienable anyway.
This brings me back to not understanding the land vs. non-land division absent laws about land ownership. Land is a capital good like any other, its return must be the same as all the others unless something is out of equilibrium.
All right, that’s it. I sincerely wish I’d been able to convey the points in ways that didn’t lead to these confusions, or found ways to skip over the confusing things and still get where I want to go, but what’s done is done.
This has never, ever been the case in the history of humanity. The risk-free rate of land is the one thing we actually have very good records for and ways of calculating over human history. It’s not zero, nor has it ever been close to zero. Somewhere around 3-5% on average is a reasonably good estimate without getting into specifics of region and era.
But if you’re basing your argument on land having a risk free return on zero, we’ll that’s something that can be quite easily looked up and disproven.
(This will be my last word in this thread, as I do think replying to this can be helpful in creating clarity, then I’m done here.)
The argument here is not based on ’there was a time and place, or is a time and place, where this scenario took place. It is an argument that given the assumptions, this is what would happen. It definitely hasn’t happened in the past.
Agreed that the rate of return on land has never been zero until at least recently because returns to capital have not been zero until recently if ever.
But if returns to non-land capital are zero, and returns to land capital are positive, and land is alienable, then people bid up land until the returns equalize. If it’s not alienable, as it sometimes isn’t, asking what it is worth is weird but I’d assume you want to value it as if it was alienable anyway.
This brings me back to not understanding the land vs. non-land division absent laws about land ownership. Land is a capital good like any other, its return must be the same as all the others unless something is out of equilibrium.
All right, that’s it. I sincerely wish I’d been able to convey the points in ways that didn’t lead to these confusions, or found ways to skip over the confusing things and still get where I want to go, but what’s done is done.