I do appreciate your all tolerating and tutoring me as the non-economist.  Some additional observations follow. 

  ----- Original Message ----- 
>  From: Deirdre McCloskey 

>  Dear David,

>  I read with alarm your proposal to return to feudalism, in which all 
>  land is held, as they said, "of" the king!  


  SC In the feudal model, the sovereign granted some tenure of use, perhaps ownership, to loyal lords and lesser vassals in return for services, principally military.  This seems quite analogous to outright sale or lease for money. But carrying forward to US history, initially colonists bought land from native Americans (even if the grantors did not understand the concepy of perpetual grant and might have considered them more in the form of leases) even while the sovereign doled out grants more or less in perpetuity with little thought to the native holders.  But as the US came to be and a sovereign monarch was replaced with a sovereign republic, existing colonial fee ownerships were unchanged (with the possible exception of lands siezed from or abandoned by fleeing torries).  As we pushed West and generally outward and land was held by the sovereign (by purchase or war from other sovereign monarchs, by conquest and siezure from Native Americans or amalgamation with other republics) was there a consistent pattern of revenue to the sovereign republic  in consideration for granting perpetual land title?  Or was the stronger pattern to establish ownership by dint of effort and occupancy with no money revenue to the sovereign?  The power to tax was granted to the territories and states.

  SC (As an historical aside there were anecdotally parcels in New England states that well into the 20th century were in the same family ownership that had received a land grant from the sovereign monarch and were thus exempt from local property tax.)

>  I suppose the power to tax 
>  is the power to destroy, and so the difference might not be great, but 
>  I'd prefer a land-taxing authority run by politicians in mortal fear of 
>  voters than a literal ownership of land by the state, even if i the 
>  land-owning state was also beholden to voters.  The difference would 
>  indeed be negligible if the state consisted of politicians, kings, 
>  judges, and bureaucrats who approximated in rectitude the average 
>  Swedish civil servant.  But economists need to include the actual 
>  behavior of Our Friend the State in their analyses, yes?  Your 99-year 
>  lease point for China rather makes my point.  


  SC  Picking up the historical thread, if the new US sovereign republic had determined to hold all land in perpetuity and lease it out (assumably with lease payments approximating and replacing property tax payments) for long terms, I see a few problems at least.  The existing fee ownerships would have to have been recovered by the sovereign republic.  Either by purchase or force-majeure.  In the first alternative it is unclear where the purchase money would have come from.  This new fledgling soverign republic hardly had the creditworthyness to borrow against future tax revenue.  And what would have been the point?  Buy the land to tax it to pay back the loans used to buy it?  Assume some profit margin on the loan?  Why would the current owners sell into that deal  when they could sell into the market and walk away with the cash? Ah, there was no market becuase the new sovereign republic is buying all the fee interests back.  That very quickly leads to force-majeure just to impose the involuntary buy-back.  Or just seize the land.  That's what the whole war was just fought to eject.  The whole notion seems flawed on historical grounds.  So let's say the exiting fee ownerships remain but all the new lands to the West are granted for limted lease tenures.  Assume that Fred's observation is correct and that long term leases sell for approximately the same as fee ownerships in perpetuity.  But we now have this patchwork of perpetual fees and some leases in the original thirteen colonies and all leases in the rest of the expanding nation.  The owned parcels always sell for the PV of perpetual future benefits and the leased parcels always sell for the PV limited tenures.  They may approximate each other with remaining lease term at 100 years, less so at 50 and 20 and dramtically less at 5 and 10.  At  0 years the lease holder walks away or goes back into a market to lease it again for lease payments that would capitalize a purchase of a similarly productive fee parcel.  That seems to create two classes of ownership.  The perpetual fee class somewhat like the feudal lords of the earlier age and the lessees like lesser tenants.  I'm not clear how tax policy creates equality in that system unless it somehow confiscates the perpetual fee parcels over time which hardly seems equitable.  Sorry if that rambles, but does it make sense?

Scott Cullen