Private Property - And Public Roads

Abheek Bhattacharya, formerly of Mint and now with The Asian Wall Street Journal, has written a blog post on the recently concluded elections in West Bengal - in which the Commies were trounced by the Trinamool party. The post is titled "Property Rights Fuel Indian Politics" – and concludes thus:

Trinamool's rise is a story not just of how Indian Communism was felled by its internal contradictions. It shows that property rights occupy a pre-eminent place in Indian politics today. The country's eminent domain laws give the state too much power, while constitutional protection for property is weak. This means, barring reform, conflict is inevitable as India industrializes faster.

 

This month, Congress Party scion Rahul Gandhi was arrested in Uttar Pradesh—the state that sends most legislators to Parliament—for agitating against land acquisition. A leader of India's other national party, the Bharatiya Janata Party, went on a fast last week in support of these farmers. Clearly, both parties have learned the lesson from Trinamool's victory: If Communism's bastion in Bengal could fall, no party can afford to be on the wrong side of the land issue.

I am in full agreement with Bhattacharya - but I would like to add a point that has been missed: and that is, roads raise the price of land. Connect Village X to Town Y with a good, motorable road - and the price of land in the village will inevitably rise, while the overall price of land in the city will tend to decline because the supply of urban land has increased.

With more and more Indians owning automobiles, these people will be able to live a little distance away from the city – that too, with more space and open air – and commute to work and back.

The fact that roads raise the price of land is brought out in two stalled “expressway” projects: the first, which was mooted in the late-90s (and is yet to be completed) is the Mysore-Bangalore Expressway; and the second, of course, is the Yamuna Expressway, over which landowners are now battling the Mayawati  government in UP. In both cases, politicians have been hogging up land adjoining the expressway – which will rise in value the most once the road has been completed.

Therefore, one question that needs to be urgently addressed is: How are farmers going to be paid for the land they sell for building these roads? The Land Acquisition Bill now being discussed contains a provision that farmers owning “agricultural land” will be paid according to the prevailing price of agricultural land – and not the price of commercial land, which is what that land will end up becoming. This is cruel; this is also cheating.

If Wal-Mart buys up some mustard fields in the vicinity of Nude Elly, surely they will pay the mustard growers a price for their land that reflects its new use as a supermarket – the mustard farmers will demand it. Road builders must do the same. This applies moreso if the roads are to become “public roads.”

In the case of these expressways, this must apply all the more, because both are going to be tolled, private expressways. Thus, the new use of the land makes it many times more valuable than agricultural land. The project-affected landowners would therefore rejoice over their good fortune – instead of sabotaging the project.

Look at it this way: What is the price of land adjoining the expressway? Let us say it is Z rupees per square foot. In which case, the land on which the road is built must be worth much more – because without the road, all the adjoining land would be practically worthless. Thus, deliberately not paying farmers commercial rates for agricultural land that is to be used for other purposes is fraud – and our The Predatory State is committing this fraud; that too, with great deliberation. The bastards!

Whereas highways, expressways and truckways must be private and tolled, country roads will most probably have to be funded by taxes: local taxes on land and property. Building these roads must be the constitutional duty of the local government – and if landowners have clear titles, if property is inviolable, then these roads will add to the value of all agricultural land.

This is the direction in which we will have to proceed: make Private Property Inviolable by all, including The State; and second, make it the constitutional duty of local governments to connect all properties in their jurisdiction with a pucca, motorable road. It is these local governments who will collect property taxes, award titles in exchange, maintain up-to-date land records, and build, own and maintain local roads.

I conclude with an interesting anecdote: I have a friend who entered the USSA illegally and spent some 15 years there, during which time he took up various occupations, including that of a lumberjack. He tells the story of one forested state in which he worked felling trees, where “homesteading” was The Law.

Once he had got his job, he was told to select a site upon which he wanted to build his house, after which he was to inform the local authorities of his selection, so that they would build a road right up to his residence. The state favoured this policy as it would lead to increased settlement in their underpopulated state.

My friend selected a site a little distance away from the existing road, next to a river. The authorities then cut a swathe through his property in order to build a road right up to his door. In the process, they cut many trees – which were the Property of my friend, because they were on his homestead. He sold the trees – and with the money, built a house. So he had land, house and road completely free. He stayed there a few years, after which he sold the place for a fortune!

Get my drift? Let’s do that on the Western Ghats!