Legalize Land Ownership

A Column appeared in the Kyiv Post a while back arguing the criminalization of selling agricultural land to non-Ukrainians should remain in place. My response was going to appear as an op-ed, but it seems they decided for this one instead, so I’ll post it here.

You can read the original column “Business Sense: Nation should not be in rush to lift moratorium on sale of farmland” by Michael Lee here. I also saved a copy here.

My reply:

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I was disappointed to read Michael Lee’s column last month in support of the national moratorium on the sale of farmland. I am always saddened and amazed to see that even analysts who readily reject central economic planning quite happily centrally plan once they seize the reins of government or a journalistic platform.

We should remember that there is no law without punishment. Every law, statute, regulation is backed, ultimately, by force or threat of force. The use of force to restrict peaceful, voluntary activity, like the sale of land by an “owner,” should always be viewed with extreme suspicion. “Owner” bears quotation marks, because one doesn’t truly own something whose usage is severely restricted by the state.

Throughout history, restrictions on peaceful, voluntary activity have been justified in various ways. Mr. Lee echoes one of the most popular — security for the incompetent. Because he believes some land owners will squander the money they receive, any land owner who sells his property must be considered a criminal.

His column bears the same pretense of knowledge assumed by history’s many glorious central planners. He knows, for example, that the current practice of landlords receiving “their annual rental income in cash or in a combination of cash, seeds and straw” is superior to the lump-sum profit from a sale of land because of its reliability, and that land value as well as rents and the landlords’ income will increase as the global population increases. I’m not sure how he’d reconcile this argument with Ukraine’s crashing population (which I’m certain has nothing to do with the countless, arbitrary restrictions over the lives of Ukrainians) and even if it were true, it assumes all land owners will prefer more income tomorrow instead of less income today. What if an 85-year-old land owner wants to see the world for the first time in her life? Is she condemned instead to wait for tomorrow’s supposedly higher income?

The column presumes these rental increases (driven by a nonexistent population growth) may be the difference between a “village thriving or dying a slow death,” and that leasing land coupled with “some initiative from the state” will “lead to a wider renaissance in rural communities.” No doubt many will feel reassured to hear the great planners not limiting their genius to economics.

He presumes that land ownership and renting is “an efficient way to filter foreign investment directly to where it can have the greatest impact,” as if anybody knows where that is. He knows too that for companies forced to rent instead of buy, “not having to find huge amounts of capital to pay for land is advantageous. . . it can be put into equipment, inputs and infrastructures where it will have a greater impact on the return on investment.”

If the case for the superiority of renting, both from the perspective of owners and agri-businesses, is so obvious, one wonders why the selling of land even needs to be criminalized. Are we to believe businesses are so stupid they need to be forced into the most beneficial course of action?

The fact is, neither Mr. Lee, nor any technocrat, nor I know which specific business practices are best. The only way to discover it is to respect property rights and allow the capitalist process to work.

Those who consider Ukrainians not ready to manage the property they supposedly own are mistaking the poison for the cure. It is precisely because the capitalist process here has been so mutilated for so long, that there is less competence, innovation, and discipline than in more capitalistic countries. In Ukraine those who posses such virtues have had less opportunity to receive rewards or accumulate capital, and those who don’t, little reason to learn them as one’s success in this economy seems determined too much by obtaining the political connections necessary to navigate arbitrary restrictions like the ones Mr. Lee supports.

Yes, letting capitalism work means allowing people to fail. I would remind those who seek to compromise property rights in the name of security for the incompetent that throughout history and without exception all levels of society, rich and poor, have been better off when property rights were upheld, and restrictions of peaceful, voluntary activities were minimal.

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