By Andrea
Some mainstream economists argue that there is no incentive for self-interested individuals to participate to the production of a public good. According to this argument, in a market-driven economy and society, the private sector and individuals produce outputs and make decisions with efficiency and profit-making in mind. However, as Ostrum (2000) points out, this assertion is in direct contradiction of “observations of everyday life. After all, many people vote, do not cheat on their taxes, and contribute effort to voluntary associations.” She finds that individuals regularly organize themselves to gain benefits from trades, provide mutual protection from risks, and protect natural resources (137-138).
With finding this in mind, I turn to one of the examples of unproven or faulty market failure analysis presented by Zerbe and McCurdy (1999). The authors introduce the long accepted finding that land tenancy is inefficient because both landowner and tenant are dis-incentivized from maximizing the productivity of the land because neither party is motivated to make the needed investments. In counter to this, the authors find that “there is no evidence that the market value of lands under tenant cultivation were lower than the values of land under owner cultivation” (568). Although Zerbe and McCurdy examine this issue in a rural context, specifically examining agricultural land production in China and Taiwan, this finding about productivity in tenant-occupied land can be recalibrated and applied to the contemporary urban context, globally, and also particularly in the United States.
Let’s briefly frame this: As the “back to the city” movement continues to take hold in the first decades of the 21st century, increasing numbers of well-educated, upwardly economically and social mobile young people, continue to migrate to cities. Most cities in the United States, both successful cities with strong, diverse economies (New York, Washington DC), and struggling cities that experienced decline in the post-manufacturing era (Baltimore, Philadelphia), suffered economic and social challenges in the later decades of the 20th century. Neighborhoods suffered as public services (sanitation, public schools) decreased in quality and property values declined; in many places, people with higher incomes moved away from the city center. What we now call the “inner city” was born, as increasingly disenfranchised lower-income populations battled the challenges of inadequate services and general public neglect. Now, the narrative is reversing as people return to the city, once again pumping economic life into previously disinvested areas.
This story is familiar; the standard postmodern urban tale: gentrifiers are bringing neighborhoods back. But what seems to be underreported is the fact that in many changing neighborhoods, the gentry are tenants not property owners. They are a mobile, temporary population. In neighborhoods like Williamsburg, Brooklyn, and Shaw, Washington DC, young urban professionals (yuppies) are moving into middle- and working-class neighborhoods and changing the commercial and civic face and functionality of them without being landowners.
It may seem like a crude jump from rural sharecroppers to yuppies renters, but the principles of their respective situations are in some ways the same. Returning to the traditional economic framework queston: What is the incentive for them to contribute to the livelihood (the maximum economic and social production value) of the neighborhood, the land, etc.?
Here, we return to Ostrum (2000), who found that “cultural evolution” gives groups of individuals the “propensity to cooperate based on the development and growth of social norms” (154). For both sharecroppers and gentrifying renters, despite their non-landowner status, there exist significant incentives to maximize efficiency and production potential; each group has invested their own resources, and in the most literal sense, livelihood, into the place of their tenancy. Despite the fact that as tenants they may not be long-term beneficiaries of improved land productivity or property values, they are incentivized to maximize quality of life in the community, a component of cultural evolution that contributes to the public good.
Some mainstream economists argue that there is no incentive for self-interested individuals to participate to the production of a public good. According to this argument, in a market-driven economy and society, the private sector and individuals produce outputs and make decisions with efficiency and profit-making in mind. However, as Ostrum (2000) points out, this assertion is in direct contradiction of “observations of everyday life. After all, many people vote, do not cheat on their taxes, and contribute effort to voluntary associations.” She finds that individuals regularly organize themselves to gain benefits from trades, provide mutual protection from risks, and protect natural resources (137-138).
With finding this in mind, I turn to one of the examples of unproven or faulty market failure analysis presented by Zerbe and McCurdy (1999). The authors introduce the long accepted finding that land tenancy is inefficient because both landowner and tenant are dis-incentivized from maximizing the productivity of the land because neither party is motivated to make the needed investments. In counter to this, the authors find that “there is no evidence that the market value of lands under tenant cultivation were lower than the values of land under owner cultivation” (568). Although Zerbe and McCurdy examine this issue in a rural context, specifically examining agricultural land production in China and Taiwan, this finding about productivity in tenant-occupied land can be recalibrated and applied to the contemporary urban context, globally, and also particularly in the United States.
Let’s briefly frame this: As the “back to the city” movement continues to take hold in the first decades of the 21st century, increasing numbers of well-educated, upwardly economically and social mobile young people, continue to migrate to cities. Most cities in the United States, both successful cities with strong, diverse economies (New York, Washington DC), and struggling cities that experienced decline in the post-manufacturing era (Baltimore, Philadelphia), suffered economic and social challenges in the later decades of the 20th century. Neighborhoods suffered as public services (sanitation, public schools) decreased in quality and property values declined; in many places, people with higher incomes moved away from the city center. What we now call the “inner city” was born, as increasingly disenfranchised lower-income populations battled the challenges of inadequate services and general public neglect. Now, the narrative is reversing as people return to the city, once again pumping economic life into previously disinvested areas.
This story is familiar; the standard postmodern urban tale: gentrifiers are bringing neighborhoods back. But what seems to be underreported is the fact that in many changing neighborhoods, the gentry are tenants not property owners. They are a mobile, temporary population. In neighborhoods like Williamsburg, Brooklyn, and Shaw, Washington DC, young urban professionals (yuppies) are moving into middle- and working-class neighborhoods and changing the commercial and civic face and functionality of them without being landowners.
It may seem like a crude jump from rural sharecroppers to yuppies renters, but the principles of their respective situations are in some ways the same. Returning to the traditional economic framework queston: What is the incentive for them to contribute to the livelihood (the maximum economic and social production value) of the neighborhood, the land, etc.?
Here, we return to Ostrum (2000), who found that “cultural evolution” gives groups of individuals the “propensity to cooperate based on the development and growth of social norms” (154). For both sharecroppers and gentrifying renters, despite their non-landowner status, there exist significant incentives to maximize efficiency and production potential; each group has invested their own resources, and in the most literal sense, livelihood, into the place of their tenancy. Despite the fact that as tenants they may not be long-term beneficiaries of improved land productivity or property values, they are incentivized to maximize quality of life in the community, a component of cultural evolution that contributes to the public good.
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