Iftheaggregatesupplyoftenantlabortofarmingisupwardsloped,theincreasedfarmingintensitywillbidupthewagerate,,,
oftheannualyield,tureasawhole,thetotalagriculturaloutputwillrise.[2]Butthediscrepanciesinthemarginalproductsofresourcesinthevarioussectorsimplyeconomicallyinefficientuseoftheexistingresourcesofthesociety.
[1].Notethataslongasthelawofdiminishingreturnstotenantlaborholds,rentalineforthelandownerundertheshareconstraintwillneverbeashighasitwasinitially.
[2].Thisimpliesthatthepricesoffarmproductswillfallrelativetothoseofothergoods,,however.
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Beforeweproceedtotesttheimplicationofincreasedfarmingintensityinthenexttwochapters,itisessentialtopointoutthat,underthesharerestrictioninTaiwanfrom1949to1951,thereexistednolawprohibitingthelandownersfromreducinglandsiz,however,therentalrestrictioninTaiwanwasafixedandnotapercentagerestriction,whichwouldmeanthatthelandownersincentiveforincreasingtenantinputsoverlandwaseliminated.[1],letusturntoSidneyKlein:
Theincentivesamongtenantstoinvesttheirhard-earnedpreciousinesweregreat.…Undertherentreductionstatutes,ed,sothatwhentheysoldtheharvestabovethestandardyieldtheycouldkeepalltheproceedsforthemselves.[2]
Kleinisessentiallysayingthatthelandownersrentalreceiptwasfixedaccordingtosomestandardafterthesharereduction,andt,anyincreaseintenantinputwillnotpay,sincetheinitialrentalpercentageimplie,ifrentwerereducedtoafixedtotal,thetenantwouldnotinvestmoreintheexistingfarm;andeventhoughheiswillingtomitmoreinputtoacquiretheleaseright,nputsunderpetition,sinceitwillbetothelandownersinterestthathedoso.
Klein,likeseveralothers,confusestwodifferentlaws:(1)thenew1951RentReductionAct,versus(2)theenforcementof
,,notofastandardyield.
Beforeweturntothelawproper,letmequicklyd,ChengChenstated:
Theenforcementoftheprogramtookonlyaperiodofthreemonths,fromApriltoJune1949,whennewcontractsweresignedItwasalmostincrediblethattheprogramwassosmoothlyputintoexecution.…Themostimportantfactorwasthatriceproductionincreasedby20percentin1949paredwiththepreviousyear,therebyinmostcasespreventingthelandlordsfromsufferinggreatlossesastheyreceivedapproximatelythesimilaramountoffoodstuffsasrentasbefore.[3]
Furthermore,accordingtotheofficialreport,inaparisonofthefirstphaseofTaiwanlandreformwithasimilarreformmeasurewhichbeganearlierinafewprovincesinmainlandChina,itisdiscernedthatthebasicdifferenceliesinthepercentagerateofreduction:InmainlandChinaitwasa25percentreductionoftheoriginalcontractualrentrates;”[4]Also,theenforcementofthesharerestrictioninTaiwanwasconductedbyinspectingtheyieldatharvesttime.[5]Iftherentalrestrictionwereindeedonafixedandnotapercentagebasis,theyieldneednotbecheckedatall.
Letustracecarefullyhowthisrentalsharer,wefind:
Beforethelandvalueisassessedaccordingtolaw,theleaseofallprivatefarmlandshallconformtotheorder…datedMarch29,1947,,;,itshallremainunchanged.
Themaincropsreferredtointheprecedingparagraphshallbechieflythecropscustomarilyacceptedaspaymentofrent.[6]