Hammer's Law

Mason Gaffney: Canada's System of Revenue Sharing

Hammer's Law

At the same time, in both countries you find something I will call Hammer's Law. This is not a carpenter's tool but again the name of a man, an economist in Missouri, who observed in 1935 that if you compared population to land values in the different counties of his State (in the very poor counties of the Ozarks the land was hard scrabble land of very little value, with the very rich lands in the north-western part of the State, which resembles Iowa) you found that the population density was much greater on the very poor land of the Ozarks than it was on the very rich land of the northwest. He took this to be a sign of market failure. Three years later the Establishment got to him and he said, well maybe I can rationalise this after all. But actually it's the American counterpart of the familiar pattern in the less developed countries where the flat land, the good flat land, is used for grazing cattle at a very low level of productivity, and the mass of the people in their minafundia are found on the hard scrabble land on the steep hill sides. I call it Hammer's Law of Market Failure where, because of the operation of the land market, whose evils we are so familiar with, you do not get the population distributed over the land in an economically rational manner, because of the tendency of the better land to be agglomerated into large holdings which are not optimumly developed. Comparing States, this results in the fact that a poor State like West Virginia has large numbers of people living on very poor land, and a wealthy State like Iowa (speaking now just of farming) has a small number of people on very good land. And this results in inter-jurisdictional equalisation problems. In Canada this takes the form of the Maritime provinces in the east being densely populated like the Ozarks and the wealthier, in a sense, western provinces being underpopulated. ... read the whole article