High land prices may be causing unemployment

Could overcrowding and the rising cost of land be one of the causes of unemployment?
High rents and high costs of living are driving many businesses to places with lower costs.
When rents and housing are higher, it means that workers need to be paid higher incomes to afford rent. Higher land prices also tend to mean higher costs of living overall, as businesses pass the increased costs of rent to consumers.

http://en.scientificcommons.org/59292453

Another effect is that higher population densities can lead to higher efficiencies. The businesses that exist can serve many more people, resulting in lower ratios of the number of jobs available to the number of residents. A supermarket in a crowded city, for example, can serve many more customers per each supermarket employee than a small grocery store can in the country.

Higher costs of land can also mean less money available to be spent. Higher rents and higher mortgages leaves families with less money available to spend on other things. Higher rents make it more difficult for businesses to hire more employees. Families must work more to afford mortgages, and all this wealth becomes tied up in the value of the house. Many apartment dwellers take out an extra job to afford the high cost of rent, but this can mean fewer jobs available for other job seekers. Increased cost of housing can also lead to less job mobility for young adults, who might not be able to leave their parents house.

Of course, there is a positive correlation between land prices and employment prospects in general, because job opportunities typically result in an increase in the price of surrounding land. In other words, while job opportunity can initially increase the cost of land, the increased cost of land can, in turn, result in decreased job opportunity.

 

Your usual unthought through giggle thinking .
Prices fall as demand declines -- sorry you missed that cutting edge finding , Anders .Or if you wish to argue , Price declines track demand decreases .
And as land and housing prices are still falling , and will do for the foreseeable future , why are you interested in rising land prices and their effects ?
Anders , when you cut and paste , it is better to know more about topics than hack journalists who write space fillers .

 

Just because land prices are "falling" does not mean that land prices are not already high. Many workers are finding housing unaffordable, in large part due to the cost of land near the places they work. Is this because wages are too low, or because land is too expensive? How would an increasing population affect land prices?
Is it really a good thing when the price of land goes up? Obviously it is good for some people (owners), bad for everyone else.

 

If you were to bother to embed your argument within economics (rather than being tricked into the Georgist prance) you'd go for the Oswald hypothesis. Here, we have a reduction in labour mobility (due to transaction costs associated with moving home) and therefore an increase in equilibrium unemployment. The only problem? A lot of the empirical evidence rejects it (with home ownership crucially linked to reservation wages and therefore impacting on underpayment)

 

Remember, correlation does not necessarily imply the obvious cause-and-effect relationship. Likely it is homeownership that is a result of obtaining a good job, rather than the other way around. Being tied a single location, either because a young adult is stuck in his parents house, or for whatever other reason, can no doubt be detrimental to finding a decent job, if one has not already been able to obtain steady employment. Probably much of the unemployment amongst minority youth is a result of the more limited job opportunities near where their parents live, and their reduced mobility since their parents often cannot afford to give them a car.

 

High land prices are the primary reason for unemployment. Ultimately all wealth must come from the application of labor to natural resources. When speculation drives the prices of natural resources above what producers can reasonably afford to pay, then people must be laid off.

“Therefore, when people of all trades cannot find opportunity to work, the difficulty must arise in the occupations that create demand for all other employment. It must be because labor is shut out from land.” -- Henry George -http://www.henrygeorge.org/pchp22.htm

Was Henry George right? Albert Einstein seemed to think so:

"Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice. Every line is written as if for our generation." — Albert Einstein (1879 - 1955)

 

This shows complete ignorance of labour economics. Where does, for example, efficiency wages come into your land obsession?

 

The Oswald Hypothesis is at least, through analysis into labour mobility, using pertinent labour theory. We can't say the same about the Georgists.

At least 50% of Britain's poor are home owners. We also know that home ownership tends to be higher in countries with higher poverty.

 

When land speculation drives the prices of land above what producers can pay, then layoffs are inevitable … quite obvious really.

Efficiency wages are irrelevant in a geoist economic system -- there can be no such thing as involuntary unemployment in a society where the natural right to use land is guaranteed. A right to use land guarantees a right to work.

 

This is just repetition of your failure to understand the labour market. It amuses me that you fellows think you can explain unemployment when your understanding of that market is zero.

This shows ignorance of how efficiency wages operates, be it the shirking model (actually supported by both Marxist and neoclassical schools) or variations such as the sociological modelling of fairness.

 

Higher prices are not caused solely by increased demand. Money inflation is the main cause of rising prices. Inflation is an increase in the money supply which results in higher prices for all goods and services, including land. The US economy is a debt based monetary system, thus the money supply must increase and prices with it. Inflation is baked in the cake.

 

Why do you think monetarism has as much life as the dodo?

 

Population increase is certainly going to effect the availability of and cost of land. And increased cost of living, where that living arrangement is not an investment, causes more unemployment in the long run.

A little history is needed. Houses get larger instead of smaller than Grandma's at the same time to prevent the "principle of regression." House that is too big is sold to CNN's Bernita with an Adjustible Rate Mortgage because she has no business buying that size house. The builder gets his money, then too many of such houses are built and bad loans made too keep the economy going. Inevitibly the economy cannot be based upon flipping houses or babysitting a housing bubble, so houses become vacant. Fair Market Value goes down, and too many people cannot sell without a loss. Banks get bailed out for their irresponsible lending. If people cannot sell and at least get out what they put in, home ownership is worse than rent.

People then want to rent instead of own their living space.

Rent is not an investment. {period} Renting only benefits a fewer number of people, and when the cost of land goes below where it was a house is less of an investment if it must be sold. If one can pass on to offspring a home that is paid for they all do not have to pay rent; the more people who do not have to pay rent the more people have to invest in the economy.

In conclusion, lowering costs of land so rents are cheaper for a growing population means more people pay rent and less people have money to invest in the economy.

*****

All of that is simply one Nation, no others exist, ignoring jobs going elsewhere and wages being lower or less jobs for the population.

The price of land must constantly go up, as population increases, because of increased costs to improve the land Greenly. If costs do not go up it becomes less of an investment for many homeowners and more lucrative for a few sardine can (apartment) landlords. An aristocracy is formed, and we are right back to France and a Jefferson saying:

"Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise." (Thomas Jefferson to James Madison, 28 Oct. 1785)

And he was not talking about Real Estate Property tax; and we do not have a vast frontier to expand to cheaply to prevent it. It then forms a cycle where increased taxes are needed for entitlements, higher rents are needed to develop the land Greenly, and less investment in the economy happens.

All structures depreciate eventually, so increasing efficiency of maximizing land use for sardine cans, where the sardine can occupant has no investment to be realized by their offspring, cannot increase job opportunity. The sardine can occupant must realize some increase, from tenants in common, when the structure must be destroyed, the land must be worth more with a growing population.

If population can be held steady, what goes in comes out, the cost of land does not need to increase. If the cost of land does not increase with increased load, a slow decline in economy is inevitible.

Job opportunity for a growing population with limited resources must increase the cost of land, and the increased cost of land is not what results in decreased job opportunity; increased load without increased investment return creates decreased job opportunity: it is the growing population with less resources, lower rent free growth for more people, more aristocracy, and less investment overall available to get off this rock or find growing room and more resources on it.

It is increased load, without increased land prices and return on investment for many, that will cause increased unemployment.

 

This doesn't take into aaccount growth theory and how population growth also generates economic growth

 

I tend to think that globalization is causing unemployment.

Land prices seem to always go up. Even when home prices go down.

 

You'll struggle tto support that opinion with anything of note. The best you have is the Keynesian analysis into the possible macroeconomic spillover effects in a country already experiencing mass unemployment.

 

Tell it to that tribe that cuts down a tree in a coming of age ceremony, and the old fart who lamented that the tribe had to run for days more to find a tree to cut down. Tell it to the woman in Jacques Cousteau's "Haiti - Waters of Sorrow" who had 15 children and one on the way, and dead coastline to feed it.

If "population growth also generates economic growth" then both of those civilizations should be rich.

If the amount of land needed for one man to survive was one acre, and the Earth had ten acres and ten people, they make one more and you better build a parking garage hanging garden on one acre or work harder to get more from one acre. Every single time you add one, improvements have to be made, and the cost of land goes up.

 

There is not really an 'if' available. You've made comment that isn't based on any sound economic footing, ensuring that any conclusion over unemployment is dodgy to the extreme. You could make remark over sustainable development, but that is more suited to analysis into living standards (and therefore the wonky nature of proxies such as GDP), rather that directly to unemployment

 

An "if" is aways available when dealing with a theory. A law, or a set program such as an "if" interactive fiction, has no more available ifs.

Conclusions over unemployment are always dodgy, that is why we call it rhetoric.

One man can plow an acre in a day, and we do not do that anymore. Simply making more people does not provide jobs plowing.

When the Artificially Intelligent Robotic Principle Means of Production exists, population growth does not generate economic growth, there is no economy, unemployment is 100%; the parasite, as in Stephenie Meyer's "The Host," simply walks into the store and walks out with their food, only a scan is made so inventory can be replenished. The standard of living, and whether or not there is rationing, is only dependant upon available resources to the principle means of production and whether the AIRPMP cares about the parasites. As it is now China is the first stage AIRPMP.

As technology increases and population, unemployment simply must increase or make work WPA or CETA raking leaves in the forest must increase.

You need to take a big hammer and break up that sound economic footing; as structures get higher you need a better footing.

Sustainable development depends upon sustainable resources, and simply lowering the price of land does not make more land or resources; people who are resourceful do not grow on trees, one apple is not the same as another apple, and if there are more apples on a tree they do not just become better apples.

 

I haven't referred to theory. If we did? we'd start with the likes of the neoclassical growth model and compare it with the Malthusian approach. We'd then consider the likes of endogeneous growth models. We'd be open to critique and acknowledge the different insights from the 'sometimes competing, sometimes complementary' schools of thought. But no, I've just referred to the error on your comment: that population growth will generate economic growth is a basic premise (supported by of course empirical evidence) that you ignored to make bogus comment about unemployment.

Nope. Unemployment is one of the most researched topics. This isn't surprising given how easy it is to find appropriate data to tests specific hypothesis.

You cannot understand the macroeconomy by referring to a field. Its not a difficult aspect to have an eureka moment over: more people will create more economic opportunities which then can multiple through the economy.

Bobbins! Technology creates opportunities such that any unemployment is frictional and therefore purely short term in duration. We can refer to how a mature economy will see deindustrialisation, but this refers to how technology growth (coupled with income growth) generates vibrant tertiary sector opportunities.

And I can stop you right there. Sustainable development is a red herring for the thread. It can be used to attack the use of standard proxies providing estimates of living standards. It cannot be used to understand unemployment. And please note, there has been no labour economic analysis in your approach to the topic

 

Nah...

The problem is too many workers in the market place since 1960.

Once women enteredthe Job Market, wages were cut because the supply of lAbor doubled.

This is just the economic LAW of supply and demand at work.

To adjust for this, the government has always doubled the Min Wage every ten years.
This is done because prices double every ten years.


Prices double every ten years because 7% inflation is inherent in a paper money system.


What the politicians can do to get the economy back on track is raise the Min Wage to double, immediately.
It oughtto have been $14/hour today, but since 1960, the flood of women have depressed the wage increases.

 

Efficiency improvements in agriculture, manufacturing, transportaion, mining, etc, combined with advancements in medical technology and availability has resulted in an undeniable fact: there are way more people in the world than there are jobs for them.

I think everything else is illusion and distration. If the economy improves, there will be an uptick in consumer purchasing, which will create more jobs, but limited to a small portion of the world.

Just how many new jobs will be created in Bangladesh, Ethopia, Chad, Yemen, Egypt and several dozen other countries when the worlds economy improves? My guess is pretty close to zero.

 

I generally agree. But what one has to realise is that inflation is just an augmentation to regular taxation. So while you can talk about money and debt, the root cause is taxation (including the looming future of necessary taxation to service government debt obligations). I by no means am against taxation, but politicians and economists need to take the effects of taxation much more seriously.

Much, or most, of the value of paper money is as a means to pay taxes. If there was no taxation, much of the value of money would suddenly dissappear. It is through money, that governments are able to tax the produce of the labor and capital of its citizens. And also to add, that governments are able to tax the land, either directly, or more often indirectly through all the residential mortgages being held by the Federal Reserve. The central bank just prints money to use to buy mortgages to back the new money. No wonder more and more people are in debt, with so much of the equity in houses being snatched up by the Federal Reserve. People will not be able to pay back all their debts without a severe contraction of the money supply.

So what is the solution? Help create jobs in these other countries? Let all the poor masses come as refugees into our countries where the jobs are? Or put up high walls to keep them all out?

 

There is no such 'law' in the labour market. To have such a law we'd necessarily have to see wages reflecting productivity criteria (labour demand is of course supposedly the marginal revenue productivity of labour). Instead we find that underpayment is the norm and 'supply & demand' is incapable of understanding wage and employment result.

The minimum wage should never be exaggerated. Its merely a measure that can be used to marginally reduce underpayment and shift resources away from production of good with low income elasticity of demand.

 

Whoa! I do not have any answers to the problem, all I did was state that a substantial segment of the worlds population has absolutely zero probability of seeing any sort of economic opportunity in the foreseeable future.

The historical record shows that these people have been limited to three alternatives;

1. Live and die in utter poverty.

2. Hope for some sort of industrial or technical development that enables them to move up the ladder. (May really be a sub-segment of #1.)

3. Take up arms and attempt to redistubute the wealth concentrated elsewhere.

I'm open to additional suggestions.