An Even Deeper Look at the Law of Rent

Now let's suppose (as is entirely likely) unemployment is a part of our economic model here -- and that society uses some of its tax revenues to ease the burden of poverty. Let's assume that instead of 450 workers as in our earlier chart, there are 500 workers in this economy, but 50 of them can't find jobs. Let's further assume that the return to labor and capital at the lowest-quality land in the chart (1 per day) equals the payment to "welfare" recipients. Thus, 50 units per day will have to be taken in taxation and redistributed to the unemployed.

(Does this raise further questions? Click here for a few of them.)

4 plots of each grade of land	5 units per worker/day; 50 workers per plot	4 units per worker/day; 40 workers per plot	3 units per worker/day; 30 workers per plot	2 units per worker/day; 20 workers per plot	1 unit per worker/day; 10 workers per plot		Unemployed workers: 50
1.	50 x 5	40 x 4	30 x 3	20 x 2	10 x 1
2.	50 x 5	40 x 4	30 x 3	20 x 2	10 x 1
3.	50 x 5	40 x 4	30 x 3	20 x 2	10 x 1
4.	0	0	0	0	0		Totals
workers employed	150	120	90	60	30		450
wealth output	750	480	270	120	30	Welfare cost	1650
infrastructure cost	200	160	120	80	40	50	650

Now let's see what happens if we put those unemployed workers to work -- but without land speculation:

	5 units per worker/day; 50 workers per plot	4 units per worker/day; 40 workers per plot	3 units per worker/day; 30 workers per plot	2 units per worker/day; 20 workers per plot	1 unit per worker/day; 10 workers per plot
1.	50 x 5	40 x 4	30 x 3	20 x 2	free
2.	50 x 5	40 x 4	30 x 3	free	free
3.	50 x 5	40 x 4	30 x 3	free	free
4.	50 x 5	40 x 4	30 x 3	free	free	Totals	Change
workers employed	200	160	120	20	-	500	+ 50
wealth output	1000	640	270	40	-	1950	+ 300
infrastructure cost	200	160	120	80	-	560	- 90

Notice that by using the land efficiently and eliminating unemployment, the community can afford to provide infrastructure and services where the land is free, even while spending less public revenue than before!