EDITORIAL: It's the Land, Stupid!

Yes, it's the economy, stupid. But to understand the economy, you have to understand land

“It’s the land, you idiot!” I yelled at some poor freshman after he guessed that “inflation” and “high gas prices” caused the last recession.

As I let go of his shirt collar and he sprinted towards campus security, I realized there must be better ways to get people to see that land is the key to fixing the economy.

While I continue to refine my public relations and outreach skills, I have learned that I will not get very far by trespassing on private property and yelling at people on the streets. The kids these days all seem to be using the inter-webs, so I decided to upload my knowledge about the economy into cyberspace. 

Bill Clinton’s 1992 campaign strategist James “the Ragin’ Cajun” Carville famously coined the phrase ‘It’s the economy, stupid’ to drive home the point that ignoring the underlying economic issues in political discourse is a mistake.

So, when somebody asks what’s wrong with society or the government, one can say: “it’s the economy, stupid!” But that fails to answer the next logical question: what’s wrong with the economy? 

As I told that freshie: “It’s the land, stupid!” 

He couldn’t figure out that the cause of and answer to the most pressing socio-economic problems of our time were under his dangling feet as I continued to hold onto his collar.

I do not own any land (I am the homeless economist after all), and more than likely neither do you. I also happen to be broke, and I’m assuming you are not a millionaire reading this either. Coincidence? I don’t think so, pal.

Landless and Impoverished

The man who I consider to be the OG homeless economist, Henry George, figured out the connection between not owning any land and being broke a long time ago. He said it best in his 1879 book Progress and Poverty: 

“The great cause of inequality in the distribution of wealth is inequality in the ownership of land. The ownership of land is the great fundamental fact which ultimately determines the social, the political, and consequently the intellectual and moral condition of a people.” 

Now time for the fun part: learning the definitions of the factors of production! 

You know how the vowels are A, E, I, O, U and sometimes Y? The factors of production are land, labor, capital and sometimes entrepreneurship. For simplicity, entrepreneurship or the “brains” of a business can be classified as labor because it is a form of human exertion and work. 

The Three Parts of the Economy

So that brings us to just three factors: land, labor and capital. These are the three essential elements in order to have any kind of economy whatsoever. 

Land, in economic terms, includes the ground we stand on, but also any and all natural resources you can think of. If it happens to exist naturally in the universe without humans having anything to do with it, it is “land”. 

Oil, water, space rocks, the tree in that one yard I saw last night that looked like a scary skinwalker, the sun, the moon and the whole natural Earth minus human labor and anything man-made are all land.

So, the artificial grass on the soccer field in Carroll Stadium at IU-Indianapolis is not really “land,” but the ground the stadium is built on is, in fact, land. 

Labor, as mentioned previously, is any form of human exertion and work. Human activities from thinking, to digging, to writing and making ASMR mukbang videos can all be considered labor. 

Finally, we have capital, or all man-made creations. Really, human beings don’t actually “create” anything, we more or less recreate what is already created by nature. But of course we are allowed to take credit for cars, buildings, the internet, weed bongs, ketchup, spaghetti and crocs because all of these things would not exist without the application of human labor to the natural material.

Where Mainstream Economists Get it Wrong

Already this is where mainstream economists screw everything up. Can you believe there are numbskulls out there who think that land and capital are one in the same? How can what is naturally occurring and not the result of labor be classified the same as things made through labor? The answer is it can’t.

From this small and simple misconception, there sprang up all these busted up economic theories and even entire industries. The real-estate industry, for example, treats buildings and the land they sit on as all the same property value. This is also why corporate landlords get away with calling themselves “productive capitalists” even though their money is from hoarding land and collecting rent, not investing in capital and making profit. 

Remember kids: love them or hate them, capitalists at least contribute to GDP and wage growth, landlords do not.

Complex systems depend on each other. The complex system of politics and culture, i.e. the society, is sustained by the complex system of extraction, production and distribution, or the economy. Below the economy is the complex system of the natural environment. 

I like to understand it as three distinct yet interdependent and interconnected systems we may broadly call “society”, “economy” and “ecology”. Each layer sustains what’s above it and maintains what’s below.

The ideology and culture of a society can shape the way they run their economy, but the economy is what puts the paper in those fancy intellectuals’ and academics’ books and puts the gas in politicians’ cars so they can drive to work and do nothing. 

And the economic system shapes the environment. A small agrarian economy in a village in Mauritania will have little to no impact on its surrounding environment whereas the coal-hungry advanced industrial economy of the United States has West Virginia mountain ranges looking like half eaten piles of mashed potatoes from Golden Corral. 

To summarize: Land is special. It sustains the economy and the society and it is shaped and managed by the economic system. Land can and often will exist without capital and labor (see abandoned buildings and empty lots in the middle of cities) but capital and labor cannot exist without land. Therefore the capitalist and the laborer are both beholden to the land owner, as we all depend on the land.

This article appeared in The Collegiate Commons.