Land: The Foundation of Global Capital
Land has ceased to be the backdrop of the economy, becoming its lead actor. As a finite, immobile, and indestructible asset, it represents nearly one-third of global wealth. In developed countries, its share of private assets has risen to 25% this century, debunking the myth of the dematerialization of the digital economy. This article analyzes the "land trap" mechanism, global land management models, and the specific situation in Poland, where a lack of transparency regarding the assets of ecclesiastical institutions creates a gap in state oversight.
The Land Trap and Collateral Monoculture
The modern financial system has fallen into a land trap: banks, in their search for safe assets, have made land the primary foundation for credit. This collateral monoculture has resulted in mortgages making up over 60% of banking portfolios. Credit inflates land prices, allowing for further debt expansion; however, a drop in asset values triggers a snowball effect. Scandinavia and Japan are prime examples where high mortgage debt has threatened systemic stability. Metropolises are becoming arenas of financialization, where land serves as a vehicle for speculation rather than a factor of production.
The solution could be a Land Value Tax (LVT), as advocated by Georgism.
Frequently Asked Questions
What is a ground trap?
This is a phenomenon in which modern financial institutions link their stability to the value of land, which amplifies business cycles and the risk of a rapid price decline throughout the system.
Why is land a key asset in the banking system?
Because it is durable, indestructible and immovable, which makes it an ideal physical collateral for loans, as opposed to risky investments in technology.
What was the paradox of development according to Henry George?
George noted that technological advances and public investment automatically increase land values, allowing owners to capture profits without any work of their own.
How did Singapore solve the problem of high property prices?
The state took over most of the land and separated the residential function from speculation, offering citizens apartments on a 99-year lease while maintaining public ownership of the land.
What is the impact of mortgage loans on economic innovation?
The dominance of mortgages means that the credit energy of the system flows mainly towards financing land ownership rights rather than supporting productive innovation and new businesses.
Why was land reform crucial to the success of Asian countries?
It enabled the redistribution of capital, created a broad class of owners and eased social tensions, creating the foundation for stable industrialization.
