I’m not sure I used the search function correctly but I couldn’t find anything on this topic so I’m starting a new thread.
I’m reading Man, Economy and State (Scholar’s ed. with Power and Market) right now and on ch.8 Production: Entrepreneurship and Change - 5. The Adoption of a New Technique, pp. 545. he writes something pretty surprising. First he writes
“Thus, there undoubtedly would have been far less investment in railroads in late ninteenth-century America if investors had foreseen the rise of truck and plane competition.33”
Then there is a footnote:
“And if there had been fewer land grants and other governmental subsidies to railroads!”
Am I mistaken if I interpret him as saying that land grants are governmental subsidies? Is he correct in any way regarding this? This accepts the government as the rightful owner of all unused land. And in my view, it isn’t. Anyone should be allowed to build a railroad on any unused land without asking any authorities for permission. A land grant is just as much a subsidy as a tax cut is, i.e. not at all. As a non-native English speaker I may have misunderstood the concept of land grants. What are your views on this topic?
Its not a matter of government being the rightful owner but rather the de facto owner. Ultimately, the state decides whether a railroad can or can’t be built on unused land, regardless of what is “right.”
Land grants in this case are subsidies because the land that was previously witheld from homesteading, or possibly already homesteaded, was transferred directly to the rail companies. Absent government intervention, the rail co.'s would have had to compete with settlers or buyout the land from natives (which did happen in many cases).
The problem I have with this terminology is the same problem I have with people calling tax cuts subsidies though. But I guess it’s just a matter of how you define a subsidy. I find it strange of Rothbard to use this as an example of governments promoting “entrepreneurial error” though, since in the absence of government it would be free for all to build a railroad through unused land.