Econ 362, Lecture 15

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In an economy where land markets would clear in the same way that markets for labor and capital goods clear, the general condition would be that the demand for workers would always be greater than the supply. Thus, those who sought to employ the labor of others would -- because of competition for labor -- offer wages equal to the added wealth to be produced by the laborer. Institutionalized rent-seeking means that those who control land (including urban land parcels) and natural resources are in a position to claim a significant portion of what others produce. All of the social, political and economic reforms ultimately fair because rent-seeking has not bee eliminated from the system.