A Conversation With David Friedman - part 4: Private vs Public Land Ownership

Conversation with Dr. David Friedman about some of the solutions and potential issues of anarcho-capitalism, as well as possible ways of advancing ideas of free society and turning them into reality.  Part 4: Private vs Public Land Ownership.

Interview by Jadranko Brkic, Managing Director at Freedom and Prosperity TV: libertarian network of alternative media in Western Balkans.  Hong Kong, May 21st, 2014.

(see video at the bottom of transcript)

Transcript:

Freedom and Prosperity TV:

Private property is one of the central tenets of anarcho-capitalism. Here in Hong Kong, as we discussed earlier, the government owns all land. Could anarcho-capitalist society perhaps operate without private land ownership? Could land management be passed onto private agencies?

David Friedman:

That's a little complicated. Private agency is usually private, so it would need private ownership. You could certainly imagine a system where most land belonged to firms, and they leased it rather than selling it. In existing capitalist societies after all, some people live in houses on land they own, and some people live in apartments on land that they rent. Some people live in houses on land they rent. So there are a lot of possible property arrangements in a market system. But if there is no government, there can't be a government to own the land.

Freedom and Prosperity TV:

...to make is so that society actually owns it, but it is used by the most efficient users in the market.

David Friedman:

But what does society owns mean? It sounds as though you're getting towards the view some people refer to as geolibertarianism, which comes out of the work of Henry George, who was a nineteenth century economist. Who in general was a libertarian, but his argument was that land, because it was not produced by human effort, was a suitable thing to tax. And therefore he wanted a society in which the only thing that was taxed was the site value of land, what land would be worth without development. You are it seems to me making argument along those directions, and there are some libertarians who make those arguments. But it's hard to see how you can implement them if you don't have a government. And it seems a whole lot simpler to have a system in which land belongs to individuals. They can sell it, they can rent it, they can lease it, and so forth.

Freedom and Prosperity TV:

I was just thinking in terms of Hong Kong, because the land is so scarce, and I guess the government owns it, I guess if we had private property …

David Friedman:

It would be less scarce, because you would have multiple owners, and there would first be an incentive to make more land – which has happened in Hong Kong, of course. Noticeable parts of Hong Kong are …. land, where they filled in the water. And in addition to that if you add people competing for land, you would tend to get more efficient uses of land, and so forth. I don't know much about Hong Kong, but you were telling me earlier that in practice almost all the development is done by a small number of firms that worked together and have an effective cartel over the industry. And if that's right, it's unlikely that they are using the land in its most efficient fashion.

In particular, in a situation where the government has control over land, it is in the interest of land owners to keep other land off the market. So that one pattern you get for example in England, is green belts, where you have a city where land is very valuable, and there is a ring of land around the city where you are not allowed to build housing. And I suspect, though I've never researched it, that those restrictions are supported by the land owners inside the city, because the value of their land would fall if people could build on it. And I suspect that much the same is true where I live in Bay area of California, the area where San Francisco and San Jose and such cities are. I have at lest been told that between 80 and 90 percent of the land there is unavailable for development. Some of it is state parks, some of it is zoning restrictions of various sorts and so forth. And my guess is that those rules are in part maintained by existing owners of the land you can develop, which is quite expensive. Not as expensive as land in Hong Kong, but more expensive than most places, in part because the supply is held down.

Link to Google map on green belts in England: http://www.telegraph.co.uk/earth/greenpolitics/planning/9708387/Interact...