Friday, April 21, 2006
“You have meddled with the primal forces of nature!” warned a capitalist in Paddy Chayevsky’s screenplay for the classic film Network 30 years ago. Today, libertarians warn us that if law meddles with market forces, it is likely to create unintended, and unhappy, consequences.
If law subsidizes something, we not only help those who get the assistance, economists tell us; we also encourage more people to do the things that get subsidized. This may be good for subsidizing solar-power generators, but bad for subsidizing the unemployed.
Consider Florida’s venerable Greenbelt law, which gives tax breaks to owners of “agricultural land.” The law is touted as helping farmers stay farmers and to slow the transformation of farms into built-up land. But for land speculators, it is also a way to reap tax benefits while waiting for development. The Disney Corp., which owns many acres of land in central Florida, reportedly leases land to farmers and gets more than $1 million in tax breaks. Other “farmers” may be even cleverer in taking advantage of the law. A member of the Florida legislature introduced a bill last month to revamp the law, asserting that some speculators in effect use a “rent-a-cow” service to fulfill the loose requirements of "agricultural land." Not surprisingly, the bill seems to have died for this term.
If the idea is to help the traditional farmer, a law surely could be crafted more tightly so as to subsidize only resident farmers who make most of their income from farming. Drawn as broadly as it is leads to the suspicion that the motivation may be less about helping farmers and more about simply slowing development. If so, subsidizing "agricultural land" seems like a rather arbitrary and costly way of limiting new construction.
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- Jesse Richardson on New Arkansas law requires local governments to pay for a "takings" where certain "regulatory programs" reduce FMV by at least 20 percent
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- Space and the City - Special edition of The Economist
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