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Land is not a fixed in supply economically
From Donald J. Boudreaux.
"Here’s a letter to a correspondent:
Mr. Chap Oxley
Dear Mr. Oxley
Thanks for your e-mail. I don’t share your worry that “land’s
natural fixed supply” means that population growth poses a “grave
hazard.”
While I agree that efforts to create land out of water-covered areas
won’t yield much extra land, I disagree that land is fixed in supply.
It is not fixed, at least not economically.
Most obviously, skyscrapers and other multi-storied buildings
increase land’s economic capacity. On the mere two acres of land
occupied by the Empire State Building, the number of people who work simultaneously is upwards of 3,400 – roughly 100 times the number of people who could work on only the surface of those two acres of Manhattan.
Land’s economic capacity expands also in other, less obvious ways.
The same acre of land that in 1950 annually yielded 25 bushels of wheat
has, economically, become two acres of land by today annually
yielding 50 bushels. So the creation and improvements of tractors and
other farm machines increase the supply of land. Likewise with the
creation and improvements of fertilizers, pesticides, and genetically
modified seeds and livestock.
Yet another innovation that effectively increases the supply of land
is refrigeration: by preserving food longer, refrigeration turns any
given physical yield from land into an increased economic yield - which
is economically identical to increasing the physical amount of land.
Ditto for transportation improvements that get food to consumers faster
(and, hence, fresher) and with less damage and loss.
One more example: modern computers. By keeping the demand for paper
lower than otherwise, computers increase the supply of land relative to
the demand for pulp-yielding trees. And by enabling people to meet by
teleconferencing, the amount of land devoted to supplying surface
transportation effectively grows relative to the demand for land used
for surface transportation. (Of course, the supply of land is also
increased by affordable air travel.)
The economic supply of land, like that of any other resources you can
name, is not a physical phenomenon. As long as people are free and
inspired to innovate – and as long as input and output prices are free
to adjust to changes in supply and demand – the economic supplies of even the most ‘fixed’ and ‘nonrenewable’ resources will expand.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030"
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