Andrew Petcoff Colton J.R. Noll Quick History What is Land Reform? Inequality Benefits Costs Examples Conclusion The Americas were discovered in 1492 Discovery of valuable minerals lead to encomiendas -Ecomienda is when large tracts of land where granted to Conquistadors for exchange of a portion of the output Few people hold the majority of land Also known as Agrarian Reform is a process which the government takes land and then distributes the land to the land workers Provide small landowners access to land, agricultural credit, housing, education, warehouses, and technical assistance. Three letter word affects the economy as a whole…TAX. Def: The branch of economic theory concerned with the social desirability of alternate economic states. Pareto Efficient: An allocation at which the only way to make one person better off is to make another person worse off. All the points on the contact curve are Pareto efficient (A,B). C is not efficient. With A or B it is not possible to move the point along the contact curve without making either the small or large farmer worse off. With C it is possible to increase the resources to make one farmer better off without Welfare Theorem 1: A competitive economy automatically allocates resources efficiently without the need of help from the government. Welfare Theorem 2: If society determines that current distribution of resources is unfair, it only needs to transfer resources in a way to be deemed fair. Then let the market work and it will be efficient. Pareto efficient is not the same as socially acceptable. Redistributes land from wealthy to poor Leads to “political” stabilization • Breaks political power of wealthy Ex. Less than 10% of agricultural holds contain 77% of the Brazil’s farmland Ex. 1% of landholdings encompass 80% of agricultural land in Paraguay Threat of land reform makes inefficient farming by latifundistas become more efficient. Farmers have stronger incentive to work harder. -Can employ family members and avoid having to hire seasonal labor at a low wage rate with low human capital. Chance to own their own plot of land. Give illusion of equality. Higher tax rates. Lives. Redistribution of land costs. (i.e. Economies of Scale.) Does not help the poorest of the poor. Does not work in democratic systems. Cash cropping to subsistence farming. Environmental costs. Land Reform was included in the 1917 Constitution Nothing really happened until the 1930s during the Cardenas administration At this time almost half the farm land was affected Slowed down until the mid 70s Land was divided into what were called “ejidos.” Communal property rights on land from large estates Land could be farmed collectively or by individuals of the community Access passed through families but remained in the community Each Ejidos was between 1 – 10 hectares of land Made investments ineffective 85% of the land given to peasant farmers from 1962-1982 was not suitable for crop producing. The government pushed irrigation reforms (1946) but only to large scale farmers because the economies of scale farming. Large Farms still produce 70% of Mexico’s marketable foods The small farmers depend on what they produce for food. Some are able to sell crops for cash. Land Reform policy considered a success (did not hurt agriculture growth) Established by a militant government under the leadership of Juan Alvarado. Reform motivated by desire to: 1) calm rioters and 2) break political power of latifundistas. Government broke-up successful plantations in coastal regions. CAPs., sharecropping & renting were forbidden. ISI controls: discriminate against the agricultural sector through exchange rate policy, imposing price controls, subsidizing food importers, all which reduced the profitability of farmers. Land Reform policy was a failure Land Reform is a Political tool It needs more than land redistribution to be successful Amount of underused land is in short supply Poorest of the poor are not better off http://www.youtube.com/watch?v=saEU l9F8VjY&feature=PlayList&p=B38919C698 989D9E&playnext_from=PL&playnext=1& index=2 Latin America’s Economy: Diversity, Trends, and Conflicts. Eliana Cardoso and Ann Helwege (1992). http://en.wikipedia.org/wiki/Land_reform#L atin_America http://www.peruexplorer.com/land_reform.htm http://www.cato.org/pub_display.php?pub_i d=1016 http://internationalbusiness.wikia.com/wiki/ Agrarian_Reform_In_Peru http://en.wikipedia.org/wiki/Agrarian_land_ reform_in_Mexico http://www.landreform.org/wp3.htm Rosen, Harvey S., and Ted Gayer. Public Finance. New York: McGraw-Hall/Irwin, 2008.