Friday, April 2, 2010

What happens when you go for a job interview?

What goes on when you interview for a job? I think the first thing the interviewer has in mind is: "What can this person do for our company?" They size you up and guess that you can contribute a value to the company that they convert to dollars per hour. Then, assuming that they calculate a positive value, they have to figure out what it will cost them to hire you. Some of the costs will be the furniture you need, the share of the building you will need, and the share of the land that building occupies that you will need, and the additional taxes they will need to pay if you are hired. All of these things can be calculated in term of dollars per hour. They then have to figure: this person is worth, say, $20 per hour to our company; it will cost about $1 per hour for furniture, $3 per hour for building and tool rent and $3 an hour for land rent (including parking) and $3 an hour in extra taxes our company will pay. So that means that the most I can offer this person is ($20 - $1 -$3 - $3 -$3) or $10 per hour, and not lose money on them. See the graphs here and here. Now, what if, the government collected the land rent as tax, rather than taxing work activities. That would mean that the employer would pay the land rent and the tax concurrently. (kind of like serving a two jail sentences concurrently) This is possible because the person who is now collecting land rent is not producing anything, he is just a title-holder, an idle noble. So if the government takes over this function, it can not only give you back more of the benefit of your work, but will reduce the burden on this person who is thinking about hiring you. In that case the employer can offer you $20 - $1 -$3 - $3 or $13 per hour.

Often the person or organization which owns that land is also the one that owns the building and the tools, but the effect is the same as if it were two people: as building owner he is receiving compensation for something he has provided or has traded his labor with someone for, but as land owner he is getting something for producing nothing, since land is a gift of Nature/God/Higher Power, not the result of any human effort.

If you think that the fact that land value is close to building value seems inaccurate, I took the numbers from the relative value of an office building in Cameron Village in Raleigh: the building is valued at $1.7 million, the land at $1.5.

What you produce belongs to you; what no human produces belongs to everyone.

The graph can be downloaded as Powerpoint or Open Office (Simpress) so you can slide the Tax and Land-rent parts together. Open Office is free, available here.