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Land has power

Friday, March 17, 2023   /   by Kris Lucas

Land has power

The Power in the Land” by Fred Harrison is a controversial book about the causes and consequences of the boom and bust cycles in the economy, particularly in the housing market. Harrison argues that the root cause of these cycles is the way land is treated as a commodity and used as collateral for loans. Controversial and yet an interesting look at how land is valued and capitalized.

According to Harrison, the rising value of land creates a “wealth effect” that encourages people to borrow money and invest in real estate. This leads to a cycle of speculation and inflation that eventually results in a bust when people can no longer afford to pay their debts. Harrison argues that this cycle is not caused by natural market forces, but rather by government policies that favor landowners and speculators.

Harrison’s proposal for the “economic rent” presents a radical and compelling solution to the problems caused by the current treatment of land as a commodity. By treating land as a common resource, the value of the land can be collected as a tax and distributed to the public, thereby eliminating the incentives for speculation and creating a more stable and equitable economy.

One of the main benefits of this proposal is that it would reduce the boom and bust cycles that are currently prevalent in the housing market. By collecting the value of the land as a tax, the government would be able to regulate the amount of speculation that occurs and prevent the creation of speculative bubbles that inevitably burst, causing economic turmoil. This would also prevent the exploitation of natural resources and ensure that they are used in a sustainable and responsible manner.

Another key benefit of the “economic rent” proposal is that it would lead to a fairer distribution of wealth. Currently, the rising value of land benefits landowners and speculators, who can profit from the increasing prices. By collecting the value of the land as a tax and distributing it to the public, everyone would benefit from the increase in land value, rather than just a select few. This would help to reduce inequality and promote a more just society.

Moreover, the “economic rent” proposal would also have positive environmental impacts. By treating land as a common resource and collecting the value of the land as a tax, there would be a greater incentive to use land in a sustainable manner. This would encourage the conservation of natural resources and the protection of the environment.

While Fred Harrison’s proposal of the economic rent as a solution to the problem of boom and bust cycles in the housing market may seem appealing at first glance, there are several arguments against it:

    • Implementation Challenges: Implementing the economic rent would require significant changes to the current tax system, which could be challenging and time-consuming. It would also require a new system of valuation to determine the value of land, which could be difficult to establish.

    • Impact on Property Owners: The economic rent proposal would result in a significant increase in taxes for property owners. This could lead to resentment among property owners who may feel that they are being unfairly targeted by the government.

    • Impact on Housing Affordability: The economic rent could increase the cost of housing, particularly in areas with high land values. This could make it more difficult for people to afford to buy a home, particularly those on lower incomes.

    • Potential for Corruption: The collection and distribution of the economic rent could be subject to corruption and mismanagement, particularly if the process is not transparent and accountable.

    • Uncertainty for Investors: The economic rent proposal could create uncertainty for investors, particularly those who have invested heavily in real estate. This could lead to a decline in investment, which could have negative consequences for the economy as a whole.

In conclusion, while the economic rent proposal may have some merits, there are several significant arguments against it, including implementation challenges, impact on property owners and housing affordability, potential for corruption, and uncertainty for investors. Overall, “The Power in the Land” is a thought-provoking analysis of the role of land in the economy and the need for a fundamental shift in how we treat this precious resource.


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Kris Lucas - eXp Realty
Kris Lucas
#202-15388 24A
Surrey, BC V4A-2J2


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