“UNDER ALL IS THE LAND…”

In celebration of the 75th, Diamond Anniversary of the MANILA BOARD of REALTORS, I wish to share some inputs, Ideas, the History, Significance, Meaning and some Practical Applications of the Realtor Motto: “UNDER ALL IS THE LAND, at its HIGHEST ad BEST USE, and Ownership of WIDEST DISTRIBUTION”.

JOIN US IN CELEBRATING OUR 75 years of Service to the Philippine Real Estate Industry : DIAMOND REALTORS ARE FOREVER..

JOIN US IN CELEBRATING OUR 75 years of Service to the Philippine Real Estate Industry : DIAMOND REALTORS ARE FOREVER..

The MANILA REALTY BOARD Inc. — founded on Nov 7, 1938—was later re-named the MANILA BOARD OF REALTORS in 1952 by such distinguished pioneers namely:  Colin McCrae Hoskins, Federico (Pipo) Calero, Jose Araneta, Jose Felix, Rosendo Subido,  J.Perez de Tagle  and Tomas de Vera.

Formation of Manila Board of Realtors with Colin McCrae Hoskins, Federico (Fipo) Calero, Ramon F. Cuervo Jr. and representatives of the National Association of Realtors, U.S.A. (1948)

Formation of Manila Board of Realtors with Colin McCrae Hoskins, Federico (Pipo) Calero, Ramon F. Cuervo Jr. and representatives of the National Association of Realtors, U.S.A. (1948)

Under all is the Land, a basic economic concept, were we Realtors are familiar with and the raw matter. From which we render our services.

Basically, land is for the human race, were life grows and sustains itself. Land is one of the most important Economic Factors and a measurement of wealth. It is a place where people inhabit, settle, live,work and enjoy.

From the 19th to the 21st  century, historical theories on Land Use and Economics were develop. These theories are undeniably hard to change. Because the basic principles of Land use remain constant .

However, with the fast growth of Technology, creation of computers, robots and other “intangible ” Economic Inputs , the Idea that Land as a resource became less important. New economic theories have developed, stating that Land is no longer a major economic factor.

Currently, the wealthiest nations, persons, Corporations and Enterprises are not Land owners like Donald Trump, but whiz kids turned entrepreneurs of technology like Bill Gates and the late Steve Jobs.

It is undeniable that the technology experts re-shaped the lives of millions of people in the world. But is we are going to trace history, Microsoft or Apple will not succeed because it needs silicon chips, wires and most of all electricity. So Bill Gates and company owe it to our pioneering inventors like Thomas Edison, Ben Franklin and the rest.

It is not the question of who’s rich and the brightest. All of them can be categories as “marshaller of resources”; the person or group that marshals resources in the production of finals goods.

Among the economic resources, Land is considered by experts as distinct from the rest and the 1st and most important resource among labor, capital and entrepreneurship.  Technology, which is a new economic factor, will always change and get obsolete.

But land is real and will continue to exist. We take a portion of it and mould it into useful things for the use of man. Without land man cannot live; without access to it man cannot labor; men cannot find a place to sleep, or build an office, house, warehouse factory, where gadgets are produced and stored.

In early economic theory, Land holdings were the basis and the measure of Wealth, Power, Economy and Civilization. Land has been the subject of wars, building of nations, feudal power, family disputes and division of Great Empires and Civilizations.

It used to be that Land, and its People, Culture, and Social- Political Structure created Kingdoms, Empires, Civilizations and Nations.  Land holding was essential, and the protection of its territorial boundaries and resources was the main reason of the formation of Tribes, Communities, Societies, States and Countries. The People of different races, ethnic groups, religion and color were identified by their Land.

Landownership imparts superior bargaining power.  Labor starves, in contests of endurance; land endures.

Economist Hernando de Soto source:bulatlat.com

Economist Hernando de Soto
source:bulatlat.com

In the 90’s Land Economist Hernando de Soto came to the Philippines and discussed the issues of Land and Land Ownership Rights.

He said, first, that Private Ownership is needed otherwise we cannot go past the stage of a substensious economy.  Developing countries mostly have informal ownership or we all call “informal settlers or squatters in the Philippines”. He suggested that we follow the U.S.A., which has a system for owning property, by giving land certification.

Second, Government bureaucracy is bad for the economy. It greatly hinders the ability to hold private property. Entrepreneurs are driven to form underground economics. Furthermore, extra legal businesses are taxed by the lack of good property land and continuously having to hide the operations from the authorities.

Because they are not incorporated, extralegal entrepreneurs cannot lure investors for setting shares, getting get low interest and formal credit because they do not even have legal addresses. They cannot also reduce risks by declaring limited liability obtaining insurance coverage.

Hernando in this book called “The Mystery of Capital” studied the relationship between property rights and poverty”. He claimed that $9 trillion of “dead capital” was locked up in land, homes and businesses belonging to poor people who did not technically “own” them, since there are no deeds or titles. Thus, the poor people all over the world cannot earn or sell, or have any leverage at all.

Well, in my opinion, De Soto was mistaken here. Because in the Philippines, squatters have rights, they can earn from land they don’t own, they sell rights,  rent out, and get paid for relocating.

His theory is considered controversial as mentioned by Mike Davies in his book “Planet of Slums”. It promoted neo-liberal populism promoting “individual land titling”. Davis said that the intention is good but titling is incorporation into the formal economies of cities. It is double standard since it will benefit wealthy squatters but is disastrous for poorer squatters and especially tenants who simply cannot afford incorporation into formal economy.

Housing movements, e.g. Brazil, have strenuously argued against individual titling and for communal and democratic systems of collective land tenure because this offers protection to the poorest and prevents ‘downward raiding’ in which richer people displace squatters once their neighborhoods are formalized.

The theory of Hernando de Soto speaks well of the “informal settlers” or the “squatting problems of the Philippines, since it has evolved into an ” illegal institution” and protected by Philippine Laws.

In relation to classical economics, there are two distinguish gentlemen whose contributions greatly affected our

Adam Smith, Father of Classic Economics
Adam Smith, Father of Classic Economics

Adam Smith 1723  –  1790),  Scottish moral philosopher and a pioneer of political economy is best known for two two classic works: The Theory of Moral Sentiments (1759), and An Inquiry into the Nature and Causes of the Wealth of Nations (1776) or simply known as the The Wealth of Nations, considered as the first modern work of economics.

He is a classical economist, creator of the modern free market, division of labor and invisible hand.

Smith is cited as the “father of modern economics” and is still among the most influential thinkers in the field of economics today.

In The Theory of Moral Sentiments, Smith critically examines the moral thinking of his time, and suggests that conscience arises from social relationships.  His goal in writing the work was to explain the source of mankind’s ability to form moral judgments, in spite of man’s natural inclinations towards self-interest (The Wealth of Nations). Smith proposes a theory of sympathy, in which the act of observing others makes people aware of themselves and the morality of their own behavior.

The Wealth of Nations focuses on the role of self-interest. Rather than viewing The Wealth of Nations and The Theory of Moral Sentiments as presenting incompatible views of human nature, scholars regard the works as emphasizing different aspects of human nature that vary depending on the situation.

David Ricardo, the father of rent, the theory of Comparative Advantage.

David Ricardo, the father of rent, the theory of Comparative Advantage.

David Ricardo was one of the most influential of the classical economist. His contribution includes Ricardian equivalence, labor theory of value, law of diminishing returns, economic rent and the most important is the “theory of comparative advantage”.  It is a theory where all nations should abandon industries in which it is internationally competitive to concentrate solely on those industries in which it is most competitive.

In essence, Ricardo promotes the idea of extreme competitive specialization by nations, to the point of dismantling competitive profitable industry for this purpose.

Donald trump, Julian and Carlos Slim Helu of Mexico, Murdock, all listed as the top richest men by Forbes, got their wealth mainly from real estate. Real estate industries are ranked 1st by Forbes Billionaires. Technology is on 6th. In Asia-Pacific, Billionaires credits their wealth in Real Estate.

Carlos Slim Helú, Donald Trump and Rupert Murdoch

Carlos Slim Helú, Donald Trump and Rupert Murdoch
Real Estate Tycoons

The emergence of the Smartphone’s, IPods combined with Internet, social media software’s like Facebook had made searching and communication, faster and reliable especially in the real estate business.

NAR President Gary Thomas  said “More buyers than ever are taking advantage of the latest technology and online tools to search for a place to call home. Technology has transformed the way Realtors® do business”.

However, he added that in real estate, high tech doesn’t come at the expense of high touch,” Real estate is still grounded in relationships, as 80% of buyers considered their agent’s honesty, integrity, knowledge of the purchase process, responsiveness, knowledge of the real estate market, and communication skills to be more important characteristics. Technology allows Realtors® to better serve their clients by providing them with information and resources quickly and efficiently.”

At present, NAR is forming a “Predictive Analytics Group” and they will be responsible in gathering and analyzing huge amount of real estate data from members and customers. This technology is also known as data mining and warehousing.

Henry George (1881) summarizes why land is very important.

“I merely wish to correct that impression which leads so many people to talk and write as though rent and land tenures related solely to agriculture and to agricultural communities. Nothing could be more erroneous. Land is necessary to all production, no matter what be the kind or form; land is the standing-place, the workshop, the storehouse of labor; it is to the human being the only means by which he can obtain access to the material universe or utilize its powers. Without land man cannot exist. To whom the ownership of land is given, to him is given the virtual ownership of the men who must live upon it”.

It is this power that gives land its value; this is the power that enables the owner of valuable land to reap where he has not sown – to appropriate to himself wealth which he has had no share in producing. Rent is always the devourer of wages.

With the years of experience of the Cuervo clan in the real estate and my professional point of view, I have come up with my theory on Economics of Land Use.

all land

source:

Wikipedia

National Association of Realtors®

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