Tuesday, December 29, 2015

All lands should be owned by the State ( Part I )

All lands should be owned by the State ( Part I )

Maybe we can re-examine the economic doctrine which states that all lands belong to the state.  After all, we have been partially adopting the Regalian Doctrine, and they are provided in Section 1, Article XIII of the 1935 Constitution, in Section 8, Article XIV of the 1973 Constitution and Section 2, Article XII of the 1987 Constitution.   Our adherence to that Doctrine means that all lands shall from thereon belong to the state, except those lands that have been classified as disposable lands of the public domain.  By that, lands of the public domain are owned by the state and are considered inalienable or cannot be disposed by sale or exchange.

Our suggestion for the full implementation of the Regalian Doctrine is not motivated to advance the socialist or communist ideology, but a suggestion having in mind to help develop our vast lands that lie idle either because they are purposely left unattended for speculative purposes or that people interested in developing them could not afford the rent set by the property owners.  It is only by having highly developed agricultural, industrial and commercial lands could we generate sufficient capital to transform this country to full industrialization, and thereby promote employment which is the bedrock of the nation’s prosperity.    
Unlike the classic socialist formula of nationalizing the lands, with the state taking the initiative of capitalizing, developing and cultivating to make them productive, the new formula allows the state to retain ownership of all lands, but could lease them to any person or corporation interested in making them productive.  This approach has been proven to be successful in countries that once observed the regimented system of socialism.  The old socialist models of collective and state farms in the former Soviet Union and the communal farming system under Mao’s China resulted in dismal crop failure and even caused widespread famine.  

The new approach is a total departure from the orthodox dogma because the leasing of lands to private individuals or corporations has nothing to do with the basic tenet of communism —that all the means of production should be owned by the state.  Reform-minded socialists no longer treat the lands as a means of production.  Machines in factories are the means of production to mass produce goods up to five or more times the value of what the workers can produce to earn their day’s worth.  The excess retained by the capitalists called “surplus value” is legalized and justified by their ownership of the means of production.
With respect to land, it merely became a means of production when the landlords appropriated them as their private property.  This is after they saw the value of cultivation to produce food in vast quantities to earn profit.  The serfs were treated as property upon which the landlords could impose their will to work as slaves. The means of production was amplified by the building of factories with machines, and the conversion of the farmers to urban workers to accumulate capital, while agricultural lands, on the other hand, antedated capitalism.  It was the appropriation by the landlords that converted those lands as means of production to mass produce food, not to feed people but to make profit.   Land is a God-given gift means of production upon which no man could appropriate to himself.  The landlords made money on what God intended to be shared and enjoyed by mankind.
Since capital was used by the capitalists to mass produce goods, the concept of private property ownership was reinforced and soon spread to land ownership.   However,  the new concept of “State Capitalism” as practiced in China, Russia and in many of the former socialist states, including Cuba, have opted to lease most of the lands, keeping only those portions considered as strategic and vital to their  national interest.  Since it is the state that leases the land, technically, it retains control and ownership of the land, and that includes the right to fix the cost of rent that would be beneficial to both the state and to the people.
The decision to have the lands rented relieved the state of the most difficulty tasks of capitalizing for the cultivation and in making them productive.  The rent which the state is able to collect is in turn reverted to providing more benefits and welfare to the people.  It was most economical and advantageous because the state is able to earn rent from those leased lands while relieving it of the tedious task of paying the workers more than the amount they produce.  The socialistic assurance that guaranteed employment resulted in costly subsidy caused by declining productivity that in the end bankrupted socialist states until it finally caused the system to collapse.    
Since the state only collects the minimum amount of rent, investors find no difficulty in setting up factories, commercial and business establishments. Such arrangement is mutually advantageous.  Investors could continue in accumulating capital which they could use to create new industries and invariably provide more employment.   In other words, the low cost of land rent gave the entrepreneurs the crucial competitive advantage to sell their products.  Here, it is not only their profit that is being eroded by the cost of rent, but capital itself is being depleted, which reason why many of our products remain uncompetitive to foreign imports even in our own turf. As industrialization progresses, the low rent that is being collected is compensated even more by an increased number of taxpayers due to the proliferation of businesses and from the high employment generated as a result. Taxes collected from business are far greater than the amount of rent collected from land.    
 Here, many of our lands remain idle despite our low agricultural output and lack of factories where workers could be employed.    Most landowners are able to own vast tracts of land mostly through land grabbing and influence peddling to secure titles to public lands decreed to be disposable, and at times displacing the original settlers.  The high cost of rent has often been pointed as the cause of the economic sclerosis that is preventing capitalists from investing.  There is no assurance of getting back the amount they invested to corollarily allow them to reinvest their income in developing further idle lands to become productive. The high cost of rent renders investment prohibitive.  Rent is already competing with their income such that it is the landlord that is making the killing and businessmen pushing their workers to work even harder to just obtain their marginal profit.

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