Dividing Land Like Wealth

Dividing Land Like Wealth October 4, 2012

I reposted this image that came my way on Facebook, and it generated a significant amount of discussion.

I find it interesting for a number of reasons, besides the striking illustration of the distribution of wealth in the United States.

It helps make the point that, just as one cannot simply produce more land as a means of addressing the problem of allocation of space, so that everyone can have a state to themselves, the idea that wealth measured in dollars can be infinitely increased is similarly problematic. If, as a result of their hard work or willingness to invest what they have, the government were to print more money so that all became wealthy, it would not work – printing more money decreases the value of that money and results in inflation. But the impossibility of wealth being endlessly created may go unnoticed until one begins to think of wealth not as something abstract but in real terms.

And since it requires an investment of wealth and resources to generate wealth, to the extent that doing so is possible, it is clear that the playing field is not at all level.

The image also got me thinking about the law in Leviticus 25 concerning the Jubilee year. In ancient Israel, a largely agrarian society, land was the crucial commodity. And whoever penned that law came up with a creative solution – one that is neither capitalism nor communism in anything like the modern form. It doesn’t protect personal property rights, except in the sense that your property could not be sold in perpetuity, but that is precisely the opposite of the meaning in the United States today, where the new owner becomes the owner in perpetuity. But it allowed the “market” to follow its natural course freely for the duration of the stipulated 70 years, so that hard work could potentially have a reward. It thus sought to avoid destitution without collectivization. Would that some today would find such creative solutions to our economic and social ills. It does make you wonder – if the writer of that law had lived in our time, when money rather than property was the crucial commodity, how might they have written the law differently? And back then in ancient Israel, if the law was ever put into practice, would there have been people who objected to the implementation of that law as unfair “confiscation” and “redistribution” of their personal property?

Economics is not my area of expertise, and I continue to learn from friends and acquaintances who take the time to comment on things that I share which touch on those topics. I look forward to hearing thoughts from readers of this blog!

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  • Gary

    For those that follow Leviticus, Native Americans get all their land back.

  • Straw Man

    “the idea that wealth measured in dollars can be infinitely increased is similarly problematic.”

    That comment reveals a fundamental economic fallacy: the concept of “wealth measured in dollars” is inherently contradictory. We talk about our “net worth” in dollars, yes, but that measure is only useful at the moment in time it’s made–which is precisely why, when we compare Andrew Carnegie with Bill Gates, we’re forced to say things like, “In 2003 dollars…”

    In an economy with stable money, the net trend over time is for prices to go down. Measuring your wealth in dollars would conceal the fact that a given quantity of money has more purchasing power today than it did ten years ago. This is easily seen in the computer industry: my first Pentium tower, purchased with a graduate school loan and loaded with an early Linux release, cost me about $3,000–more than $4,200 in today’s dollars. A laptop with equivalent power was hard to find, but could be had for about $5,000–or about $7,000 today. My Macbook Air today cost $1,000 in today’s dollars, and has 8,000 times the processing power. If it were priced by the megaflop, the price has decreased by a factor of 56,000 in real terms, and a factor of about 40,000 measured in “dollars” which were meantime losing their value.

    Other goods are not so dramatic, but the trend is the same: things generally become less expensive over time.

    As a side note on “stable money,” it’s interesting to compare biblical prices with today’s prices, based on the value of the gold or silver exchanged. The cave of Machpelah cost Abraham roughly $100,000 in today’s dollars–a bit steep for a rural location, illustrating that prices do go down over time, but not terribly out of line with today’s prices. A silver denarius would be worth something like $3.60 today for the silver content, which is just a bit less than a farm laborer’s wages in 1830 in Virginia of $5.57, also in today’s dollars. The industrial revolution led to an explosion in wages: the “slave labor” we decry in 19th century factories paid roughly double the wages of farm labor, and although no fun by our standards, was also less arduous. But from Jesus’ day to about 1830, wages didn’t really change all that much, in a somewhat vague but quantifiable sense.

    The upshot of all this is that “wealth” simply can’t be “measured in dollars.” Under stable money, dollars remain fairly constant, but purchasing power continually increases. Under fiat money, dollars constantly increase, while purchasing power generally goes down. In principle, dollars could decrease and purchasing power increase, but governments are never motivated to DEflate their currency.

    And the upshot of the upshot is that it’s possible for actual wealth to increase, for all intents and purposes without limit, by making things people need and want more abundant and cheaper. The poor once owned a single set of clothes, and probably nothing else including shoes. Now, in the US, the poor have lots of clothes and more than one pair of shoes, almost certainly have a TV, and often two, usually have an air conditioner in the window, and often (outside urban settings) own at least one car. The US also has the distinction of having the most overweight poor people in the world; we may scoff at the quality of the food they eat, but most of America’s poor do have plenty of it. Our poor are better off than “kings” in Abraham’s day, poverty being a relative concept. This is a substantial increase in wealth, that simply can’t meaningfully be measured in dollars.

    • Thank you for your comment! I think that it makes an important point – that those concerned with social justice might better focus on what we would call “standard of living” rather than “wealth.” Does it seem to you that such terminology might be more useful in directing attention where it belongs?

  • Psiloiordinary

    I understand that recent evidence shows that the American dream is dead too i.e. the US culture is one in which it is very very hard to move up the economic/social scale compared to other comparable economies. Is this widely known about over there?

    • No, alas, largely people press on with the belief that individual acts of will and entrepreneurship can lead everyone up the socio-economic ladder.

  • Fedup

    So some people have more drive and initiative then you, resulting in them having greater wealth. Well boo-hoo. You whining liberals make me sick. People like Bill Gates legally built an empire that employs tens of thousands, and he deserves every penny he has. Do you think you could have done it? I doubt you’ve achieve much at all. This is not India. Until Obama, we had a classless society. For the most part, people get what they deserve.

    • I can only assume that the above comment is not intended seriously. I personally have no problem with those who create and innovate profitting. But are we to allow a system in which people whose role is just as crucial – educators and other public servants, for instance – are poorly paid? Should no one teach, and everyone try to innovate in computer technology or other such areas? If everyone pursued that path, where would our society be?

      But as I said, comments like “Until Obama, we had a classless society” make me think that the comment was a joke, and I just didn’t get it. Either that, or it was written by someone who didn’t live in the United States before the time of Obama, or did but was so insulated by their wealth from the realities other people confronted that they know only that vast open space occupied by the wealthy, and not the tiny dot occupied by the vast majority of their fellow-citizens.