Years back, a wealthy lumberman came into a small western valley and decided here would be a good place to start a large cattle ranch. There being no large cattle ranches in the area, he decided to buy up small farms. He proceeded to do this and built a ranch big enough to be noticed but not big enough to be self-perpetuating. Today the ranch is being subdivided for housing. Part has been sold back to the state for wildlife enhancement.
This lumberman's efforts were not universally appreciated. First of all, his efforts raised the average price of land and attendant taxes. There was little, if any, change in productivity of the land acquired so product prices were not impacted. Some took advantage of the opportunity to sell at very good prices and some stayed put, suffering through the higher taxes.
Noticed by economist, there was a social shift away from several local land-owning producers to be replaced by employees working for an absentee owner. Prospective land buyers found themselves forced to rethink their aspirations. This local area had enjoyed/suffered an economic shockwave.
The sudden infusion of a large block of money (from outside the area) into a small economic system had large and lasting effects. Some people enjoyed immediate benefits; some people had long term, arguably less beneficial, impacts.
If we found time to think about it, we could draw parallels between this event and what the Federal Government is doing today.
Under free market capitalism, the lumberman was simply exercising his freedom to use his wealth as he saw fit. Under a more socialist market system, he either would have never achieved the wealth or would have had oversight committees to work past (maybe both).
The actual event began roughly 70 years back.
This real life shockwave began with a monetary event--the arrival of outside/new money. If we cared enough to look today, we could trace an ancestry tree back to this one common money source.
The sole sustained negative effect comes from the proportional property tax levy.ReplyDelete
A single economic shock does what it does but, being single, would smooth out as time passed. Even the tax levy should return to normal should it be true that it was but a single shock.ReplyDelete