Pages

Monday, 10 February 2014

Walking the Talk

Land price is a major factor governing my decision to buy land. My concerns are thus:
1.   There is no economic rationale for price of any agricultural land to be valued beyond a threshold. How does one arrive at this threshold? Let us say that one family of 4 can manage not more than one acre of land. If a person can earn a gross revenue of 1 lac from an acre and net revenue of 80 thousand, the net revenue should cover his cost of living (including a reasonable saving) and the cost of capital (interest cost on investment in land). If his cost of living is pegged at 60,000 pa, he cannot service more than 20000 of interest pa. The land price for an agricultural land then cannot exceed 2 lac per acre. One may re-calculate this threshold by modifying the assumptions of how much land can a family manage and how much gross revenue can one make from the amount of land he can manage.
There may be other methods of arriving at the threshold. But, this has to be a factor in price determination.
2.   Senseless rise in land prices are pushing people away from agriculture and even further from natural farming. At the market prices, in most areas, a farmer cannot even cover the interest cost through farming revenues. Given the market prices, it makes sense for almost every farmer to either sell his land or use it for non-agricultural purposes. This will result in everyone monetizing all the land and there being no food to eat. Quite a scary scenario.
3.   Non-farmers buying land at market determined prices is only pushing up prices astronomically. If I buy land at such prices, just because I can afford to, I’m directly causing a rise in future deals, thus aiding the systemic catastrophe directly.
These are macro concerns. Agreement at macro level is quite easy to get. More so from people who’re not involved and even more from people like me for whom agreeing to the rationale saves money.

At the level of individual decision making, the thinking process is quite different. Plastic bags choke drains, thus aiding the possibility of floods in cities. But plastic bags offer a convenience and I think that just by my refusing to use a bag will not avoid floods if others continue to use. Similarly, if I’m a seller of agricultural land, I will agree with the rationale above, but think that my singular contribution to the systemic catastrophe is insignificant. But if I am a buyer, I will vehemently support the theory with a complete conviction that I’m fighting the cause of saving humanity from a disaster.

There is a phrase in hindi / urdu, “Sau chuhe khake billi chali haj ko.”I’ve sold real estate at market prices and am sitting in possession of real estate, which is valued very high at market prices and at market determined prices, it is sure to rise astronomically as well. I’ve contributed to the catastrophe as a seller and am opposing contribution to it as a buyer.

Rise in all kinds of real estate (agricultural, residential and commercial) without any relation to its productive utility is one of the biggest causes of an eminent systemic economic catastrophe. This is leading to a social, cultural and environmental destruction. It is resulting in dilution of values amongst younger population. Quite conveniently we blame the education system, western countries and philosophies, but refuse to look within. All this damage is directly impacting me and I need to stop contributing to the systemic mess, whether I’m buying real estate or selling it.

Therefore, I must reverse the unfair gains I’ve made on real estate and also refrain from making unfair gains in times to come. This is what I can possibly do to reverse the unfair gains. I give myself the liberty to earn 10% return on investment in my real estate. This percentage can be debated. It can also be debated that if I’m staying in the house, I should not earn capital gains. After calculating, it works out that half of my networth needs to be reversed. This is a real test. 

How do I reverse it is another question. Not easier than accepting the fact that half the networth is unfair. One option is that I buy land at high market price, since I’ve gained due to high market prices. But this will still aid the systemic catastrophe. The other is that I buy agricultural land from someone at fair price and sell my house at fair price. I can think of more options. What I must consider is that if I need to create a systemic impact, I should create a fair system and not an isolated fair deal. It is far too important to address the core issue of fear we’re facing today. Fear manifested as greed, exploitation, degenerating values, widening gap within the society. People like me, who have been on the benefiting side of the unfair exchange are the only ones who ought to act.  


There is a dire need for creating a fair exchange mechanism and a fair price determination system. I'd like to invite comments on this subject. 

5 comments:

  1. I think the concerns you have raised are very much valid and you have really artuculated them well. However these concerns r nt only wth land prices but wth entire economic system. We may take anything from cost of cloths to pizzas to movie tickets. ..we r blinded to rationale, there is a senseless rise n we all being in it, is creating systemic problem.
    I cannot agree more to your last paragraph...indeed there is a dire need..but frankly I am quite hopeless that much will change. Even if 1% of us can try to be fair in dealing. ..I think thats more than what is practical.

    ReplyDelete
  2. Evolution is in play here. When one looks at the effects of evolution, one needs to look at it as whole. The so called progress is as much giving perceived benefits as causing perceived issues. Bringing about a reversal or macro change in the evolution process is fruitless and not required. If the effects of the current evolutionary process are unsustainable, it will correct itself. Some people will feel that they have gained, some will perceive a loss its all part of the game!! (Touche)

    Dont know if you are thinking this way but its high time we look at the valuation of money. What is the money that you have earned from the system worth to you? There will never be scarcity of land for food and if the stage ever reaches, agriculture will suddenly become economically attractive .

    Micro issues need to be addressed at micro level. Be fair to the seller, the buyer of your property wilfully paid the price and surely he valued the property more than the money he gave to you. Go on in your journey because that is what is more important.

    ReplyDelete
  3. dear shantanu - my wife and i moved to point return (www.pointreturn.org) in 2010. i maintain(ed) a blog (www.csm-fanaa.blogspot.in/).
    we are in north TN. blog has location details
    friends of ours (dev/hema)-devandhema.blogspot.in/ are also in north TN. they moved about a couple of months ago.
    there are land options in both our area meeting most of your criteria, except land price :-)
    but we should talk/chat. email is sriramskd AT gmail DOT com and cell is 94455 60811.
    with love,
    sriram

    ReplyDelete
  4. Dear Shantanu,
    Yes you have articulated the problem very well....and you have understood the complexity as well.
    HERE IS WHAT I BELIEVE
    The reality(what is) has always been different from the wish(what ought to be)....now as well as in the past.....AND POSSIBLY WILL ALWAYS BE IN FUTURE....i guess this endevour or eagerness of ours to bridge that gap closer is in a way futile because we do not understand and possibly cannot understand 'THE WHOLE'.....having said that our actions arising out of this eagerness to bridge the gap are in themselves helping us grow....and that is the good news!
    If we can just watch our inner growth that has happened thru our external actions which in turn is driven by an eagerness to close this gap.....we will be fine. We need to remain invested in watching our inner growth and not in closing the gap. Human beings have this bizzarre ability to be irrational most of the time and therefore such a rational and logical conclusion such as predicting a catastrophe or otherwise is being too logical to be true!
    HERE IS WHAT I EXPERIENCED
    Shantanu your stay in Barkheda and how each of us behaved is a classic story of what i just described above.
    You had solved the problem(at least for yourself) of buying land. Your biggest concern that you wanted to be in a secure place was taken care of...u wanted to just be yourself....all was well but guess what a Rajesh Gupta and a Rajinder Raina screwed it up.
    For Rajinder Raina and for Rajesh Gupta it is the same story each one of us is telling to ourselves....."I was doing what i wanted but the 'other' stopped me"......isn't this amusing, ironic and pitiable......but i guess each of us are invested too deeply in bridging the gap....we see the gap, make efforts to bridge it and when we see others are not doing or are spoiling your efforts you get upset and either try to correct the other guy(read Rajesh Gupta) or run away(read Rajinder Raina)
    If only 3 of us could stay put together.....do individually what we think will bridge that gap and not get bogged down by others efforts which seemingly at times will appear to be working against our objectives....we possibly would be better off than where we are today individually.
    You trying to get it right in some other place alone or with other people is not the solution that would satisfy you at the end.....but as i said we are all bunch of irrational zoombies....believing that we are rational and intelligent beings!!
    Good Luck to all of us

    ReplyDelete
  5. Rajinder .. I see the wisdom of what you and to some extent what Shantanu is also saying.

    But I disagree to this statement of yours:
    "We need to remain invested in watching our inner growth and not in closing the gap."

    The way I would like to respond, Shantanu and Rajinder is this:

    We must make the ending of all conflict the fundamental (which is what you call inner growth! - tho' it is beyond growth and decay- it simply is seeing the dream as it is).

    In the context of ending of all conflict as the fundamental exploration.. all other earthly and human explorations are welcome. But if we make the resolution of the human dilemmas as the fundamental journey, we are barking up the wrong tree.

    The human is broken perfectly and perfectly broken. Seeing this brokenness, is being whole. We are human beings. Which is the beautiful and painful paradox. Seen from the being perspective, nothing needs to be done in a sense. And its only from that location of love and truth that anything of meaning can ever be done.

    Only when the movie is seen as a dream.. can we then go about beautifying it, correcting it. Its simultaneous actually but the ending of all fear, conflict and the sense of a separate self that is at war with the world, trying to resolve 'problems' is the issue.

    There is no problem to be solved in a manner of speaking, Only creation to be enabled. Problem solving is such a limiting way of looking at life. And its fine. There are problems to be solved. But the questions that you grapple with, dear Shantanu require you to move beyond just a problem-solving orientation to honoring all that is emerging.

    AND above all committing to the ending. More as we meet in half hour at Wadeshwar! Wish I had more time today.. But at least we will exchange a hug.. and who knows what a hug can do! Haha..

    ReplyDelete