How do land, labour, capital, and property rights affect prices and urbanisation?

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How do land, labour, capital, and property rights affect prices and urbanisation?

 

Author: Constantini, Aldo
Title: How do land, labour, capital, and property rights affect prices and urbanisation?
Degree: M.Sc.
Year: 2012
Subject: Urbanization -- Economic aspects.
Rent charges.
Wages.
Inflation (Finance)
Real property -- Prices
Hong Kong Polytechnic University -- Dissertations
Department: Dept. of Building and Real Estate
Pages: x, 117 leaves : ill. (chiefly col.) ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2554583
URI: http://theses.lib.polyu.edu.hk/handle/200/6885
Abstract: Land, Labour, Capital and Property Rights are the four ingredients of all economic recipes. The manner in which they are put together and administered may yield constructive or adverse results for the economy itself and people. The Case Study presented in the dissertation is a point in case; showing that Rent-Seeking behavior in development of Second Houses (SH) and Land speculation affected the local economy and made it highly reliant to the wider national one. Whether the short term gains of this speculative behavior and policy offset the long term harms is debatable, however as a matter of fact, prices kept rising unrelated to local incomes creating problems of affordability and migration. Because prices are the only indicator people do understand, the question asked in this dissertation is how Land, Labour, Capital and Property Rights affect Prices and how could these factors be combined in order to bring prices in relation to incomes. The literature review adds further insight on the nature of Second Houses and their impact on the economy. Since the characteristic of SH is their high price, low level of occupancy (less than two months a year), environmental damage, population migration and infrastructure provision, two debates arise. The first one centers on taxation arrangements for the provision of the extra infrastructure and services. The second debate centers on the relationship between SH and Rent-seeking in Land, in fact, SH are both a strategy for investment and consumption. The investment part involves property or land speculation. The conclusion of the review is that house affordability is a problem of income due to Rent-seeking in the economy. The review also points out the high spread of SH can be symptomatic of a poor residential environment in cities. and clarifies the relationship between Rent-Seeking and Property Rights.
A four factor economic model comprising: Land, Labour, Capital and Property Rights is developed to provide a coherent whole of the economic system for explaining the house affordability problem. Each link between the four factors is explored and derived. The key mechanisms of consumer-demand, debt-creation, monetary policy, fiscal policy, inflation are explained and linked to one another and in relation to prices. Prices in the model have to limits: an upper one determined by the disposable wage and a lower one determined by the cost of production. Since prices and wages are dispensed by the same mechanism of production it is obvious the impossibility of balancing wages with prices. An attempt is made to balance consumption with production by introducing debt against present and future capital. However, it still remains an impossibility to balance the two because increases in production may not come through increases of kind of production (useful production), which would reduce the cost of production through improved technology, but through increases of degree of production (wasteful and rent seeking productions) which have the effect of increasing Rents and lowering Wages. Besides with the introduction of Debt, Interest is introduced too, as an element of price. In order to obviate the problems of the above model three normative measures are suggested: i) developing a framework for Land Rent Taxation, which aims at capturing Rent and eliminate it as an element of price ii) imposing a limit to public Debt and the consequent elimination of the fractional reserve system with a hundred percent full reserve system iii) the institution of a national scheme for dispensing dividends to consumers upon consumption and proportionally to the cost of production. The measures are aimed at shifting the stress from policies of growth to policies of balance without compromising development and the incentives for development. The conclusion stresses that in order to understand contemporary society one has to consider urbanisation and its sprawling. It is the only one that cannot be hidden! To understand urbanisation and Land uses, one has to understand the economic system and the logic of Capital movements in the built environment. Land is limited and the role of Land under the institution of private Property Rights is crucial for the control of the social and spatial organization of the economy. Whether Land, Labour, Capital, Property Rights can be arranged so that prices are in relation to wages and useful production is a problem of characters, of morals and of aesthetics to be solved on the political stage.

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