The Threat Coming by Land | Hacker News Reader

The Threat Coming by Land

bloombergview.com

72 pointsbpolania82 comments

Essentially, a Land Value Tax is a property levy with exemptions for development.

So let's say you buy a house, not because you are a speculator, but because you want a home. You live there for 50 years, raise your family there, and are enjoying your retirement. Someone over that time period, your property happens to become more valuable, as say a city expands.

Then along come some carpetbagger in a shiny suit and says, your home is not a "productive" use of this land, and he's going to tax you more than your pension is worth if you want to stay there, you should make room for his new development of "executive apartments" or whatever. No normal person would think that is just or right.

This scenario of yours is used to justify policies such as California’s Prop 13.

But realistically, the primary beneficiaries aren’t retired middle-class homeowners on fixed incomes, but large corporations who own commercial property that now have their property taxes permanently frozen at 1970s levels, costing local governments huge amounts of money and encouraging poor land uses.

I love when people pretend that money not taken in in taxes is lost money, as if the government has default claim to it and is missing out by not confiscating it.

In this case, the losers are local roads, public transit, public utilities, schools, police and fire departments, social services, emergency management, parks, libraries, museums, street sweeping, garbage collection, food inspectors, building inspectors, city planning, other city hall offices, election infrastructure, etc.

Or, at the county level, judges and court officials, district attorneys, public defenders, the county sheriff’s office, county fire department, animal control, emergency rooms, county parks, public health officials, etc.

In this case, the losers are local officials

FTFY.

In the kinds of places we’re talking about in this thread, dense urban areas where land is scarce and expensive, and extensive public infrastructure is required for basic survival, that’s pure horseshit. Go look up the budget for any city or county you like.

You clearly aren’t interested in a respectful or intellectually honest discussion. Why are you here?

"Clearly", eh, well we are all talking on a thread I started, no?

This "corporations" thing that you have come up with is a completed red herring. A government exists to serve its people, not some abstract notion of "productivity". If it's your home and your property, why should you be forced to give it up so that someone else - be they a property developer, or a local government - can profit? Every transaction requires a seller as well as a buyer and if the seller doesn't want to sell for any reason then the deal is off.

But your position is that people can be compelled to sell for what reason exactly?

> your position is that people can be compelled to sell for what reason exactly

Now you’re putting words in my mouth. I never advanced this position.

An intellectually honest person could give serious consideration to your argument while also acknowledging the possibility that higher revenue to local government won't necessarily be used in ways the residents expect. Just look at the City of Bell scandal[1].

As it relates to your earlier comment "This scenario of yours is used to justify policies such as California’s Prop 13," you should consider that Prop 13, which amended the California constitution, was adopted overwhelmingly by voters in California in 1978. If Californians don't like it today, they can repeal or change it. That's how our system works.

Why haven't Californians done away with or amended Prop 13? Polls consistently show that the majority of Californians continue to support Prop 13's limits and interestingly, even proposals that would eliminate Prop 13's tax treatment for non-residential properties are losing steam[2].

[1] https://en.wikipedia.org/wiki/City_of_Bell_scandal

[1] http://www.latimes.com/local/political/la-me-ln-support-prop...

I think Prop 13 will be difficult to partially roll back, and nearly impossible to entirely repeal. Plenty of thought and effort has gone into such efforts, with very little to show for it.

It’s a big mess: because they can’t reliably raise money through property taxes, local governments have turned instead to sales tax, fees for various public services, long-term debt, sale of public assets, money handed out by the state government, and various budget shenanigans. School bonds in particular require only a 55% majority to pass, and then can be paid back via property taxes, so those have been popular in most CA cities, even when they probably aren’t the most sustainable way to raise money to fund school facilities.

The politics are complex, because Prop 13 bundles together several loosely related provisions. “Low taxes” and especially “make sure the legislature can’t raise taxes whenever they want” is a generally popular message, but there are demographic/political reasons that it has stronger support than just that. For instance:

(1) Freezing tax rates at purchase time is a net transfer away from renters, new people moving to the state, young people, new home buyers, etc. and to older, richer homeowners (as well as corporations and very large land owners). For obvious reasons, the latter more often have the right to vote, more often vote in practice in elections at all levels, have more money to spend on lobbying and campaigning, etc.

(2) The current demographics of statewide popular elections are different than the demographics of the whole population of citizens or residents, as represented by the state legislature. Seats in the legislature are apportioned by population, which means that urban areas which make up most of the population of the state and tend to vote for Democrats are favored. By contrast, conservative voters tend to vote more often in statewide elections. By forcing supermajority legislative support for tax increases, Prop 13 gives folks in the conservative minority a sort of veto power, which they are loath to give up.

Seattle has a more extreme flavor of the voting problem. We can't build urban mass transit because suburban/rural voters prevent Seattle from raising local taxes to support transit.

All of which could be much more efficiently provided by private enterprises competing in a free market.

Strangely enough, bureaucrats just aren't particularly prudent when they are using our money.

> All of which could be much more efficiently provided by private enterprises competing in a free market. (Emphasis in original.)

That's one, ideological view. Another view is that the so-called free market is very focused on the short term, which isn't conducive to providing public goods [1].

Moreover, the "free" market seldom actually is, because more than a few of the players work at least as hard on amassing market power and excluding competition as they do on competing.

[1] https://en.wikipedia.org/wiki/Public_good

It's not "an ideology", by the way. It's simple truth, and I pointed to one element of why it's obvious:

>> bureaucrats just aren't particularly prudent when they are using our money

> Another view is that the so-called free market is very focused on the short term, which isn't conducive to providing public goods

I can't decipher what potential problem you're pointing to. Apparently even "knowledge" is a "public good".

But whatever your complaint there is, it's based on the flawed premise that there is some One True Way <X> should be, and that central planning intervention is necessary to make it so.

> It's not "an ideology", by the way. It's simple truth, and I pointed to one element of why it's obvious:

That fallacy is called ipse dixit, roughly translated as I say so, therefore it is.

> bureaucrats just aren't particularly prudent when they are using our money

And that's the fallacy of the excluded middle. Just because (some) bureaucrats aren't particularly prudent when using our money, it doesn't follow that (as you alleged before) the free market is always better.

> But whatever your complaint there is, it's based on the flawed premise that there is some One True Way <X> should be, and that central planning intervention is necessary to make it so.

I actually happen to think the opposite of the two assertions that you claim constitute my premise.

> That fallacy is called ipse dixit, roughly translated as I say so, therefore it is.

That's not what happened though. I pointed out that bureaucrats aren't prudent when spending other people's money, and that's self-evidently true.

For example, you know would not be prudent with other people's money either, or with $1000 you found on the street.

> And that's the fallacy of the excluded middle. Just because (some) bureaucrats aren't particularly prudent when using our money, it doesn't follow that (as you alleged before) the free market is always better.

I was hinting at the fact that since everyone uses someone else's money less prudently than his own, using someone else's money results in 'waste' compared to using one's own, and therefore, all public spending results in 'waste'.

So it's clear that the free market actually is 'always better' in that sense. It's better in all other senses too.

For example, you'd be hard pressed to argue that a state-maintained monopoly or cartel is better for us than no such thing.

> I actually happen to think the opposite of the two assertions that you claim constitute my premise.

Quote the two assertions I claimed constitute your premise.

> That's not what happened though. I pointed out that bureaucrats aren't prudent when spending other people's money, and that's self-evidently true.

It's also a sweeping generalization, both:

-- as to what counts as a "bureaucrat" (of whom I know more than a few); and

-- as to what counts as "prudent" --- a public servant must take into account more than your, or my, personal preferences.

> you know would not be prudent with other people's money either, or with $1000 you found on the street.

Evidence, please. (I happen to think I'd be prudent in each case.)

> since everyone uses someone else's money less prudently than his own, using someone else's money results in 'waste' compared to using one's own, and therefore, all public spending results in 'waste'.

Another sweeping generalization. It also depends on your definition of waste. Is it waste for "bureaucrats" to spend money on, say, enforcing traffic laws that prevent you from going as fast as you want through a school zone? (Feel free to pick another example; I really don't like the "but think of the children!" argument, or rather, so-called argument.)

> So it's clear that the free market actually is 'always better' in that sense. It's better in all other senses too.

I used to think that way. I assume you know about "negative externalities" [1]. If you remember the days before the Clean Air Act and Clean Water Act, then recall what the air and water were like in the U.S. when "the free market" allowed businesses to dump their wastes in the air that the rest of us breathe and the water that the rest of us drink.

Some key limiting factors of "the free market":

1. People tend to have tunnel vision --- they want what they want, and they want it now. (This, I suspect, is a trait developed by natural selection [2].)

2. In a so-called free market, we assume that buyers of goods and services will individually make rational choices that, in the long term, will promote the common good. But that assumes two facts not in evidence:

First, it assumes that people will take the time to investigate the choices available to them. That doesn't always happen. For example, I don't know a lot of people who study the terms of click-wrap agreements and decide whether they want to proceed. Most people simply click on "I agree" and hope that they aren't giving away their first-born; they also unconsciously count on the legal system not to enforce terms that are too onerous.

Second, it assumes that people are rational in their choices. That assumption is increasingly being challenged in behavioral economics [3].

> Quote the two assertions I claimed constitute your premise.

Okay --- what you said was this: "But whatever your complaint there is, it's based on the flawed premise [A] that there is some One True Way <X> should be, and [B] that central planning intervention is necessary to make it so." I don't believe either of these things a priori, but neither do I rule out the possibility that in a particular case one or both of them might be true.

[1] https://en.wikipedia.org/wiki/Externality

[2] http://www.questioningchristian.com/2006/03/good_news_bad_n.... (a self-cite)

[3] https://en.wikipedia.org/wiki/Homo_economicus

I've debated lots and lots of other psychopaths, going through variations of those bullshit distractions, so I'll just not bother now.

Check the mirror first, noob. And while you're at it, note the number of downvotes you've attracted in your first few days here.

It's not pretending, it's truth. You never own your land; you're just renting it from the local government with ownership entailing a bit more control over what you can do while it's "yours".

But so what? If you start to reject the concept of ownership, you may as well go one more step deeper, and realize that it is only held by the government via threat of force. Unless you are advocating for staging a revolution, you may as well just be a willing participant in society. You could even run for you local city council and become part of the decision making process for the government, being an active participant in it.

> You could even run for you local city council and become part of the decision making process for the government, being an active participant in it.

This is the only way to ensure your goals or objectives are realized; constant vigilance.

Even basic ownership of small objects comes through force. Otherwise you'd drop them.

Cute, but where would you draw the line?

"You see, the government owns your car too, because you're driving on roads built by the government"

"Oh but you see, clearly, based on the government deciding under what conditions you're allowed to leave the country, the government owns your body too, and is therefore within its rights to torture and kill you on a whim."

Do you really see no problem at all with the idea that governments own everything and are just graciously "renting" things to us?

Do you sincerely see nothing as your own legitimate property? When you buy a new phone, is that actually the government's property instead of yours?

Where did gaius state or imply that his comment was related at all to commercial property

He didn’t: I was talking about Prop 13, which is not about land value taxes, but was sold to voters using an equivalent scenario as a rhetorical frame.

However, the same is generally true for land value taxes. The people who stand to lose most from land value taxes are large land owners who for whatever reason are sitting on unimproved or under-improved property.

Often, property just sits because the owner expects the value to continue rising, and wants to make sure to flip the property for as high a price as possible. There’s no pressure to immediately do anything useful with the property, so in extreme cases you end up with 50% parking lots. This image of Denver in the 70s would never occur with a proper land value tax: http://1p40p3gwj70rhpc423s8rzjaz.wpengine.netdna-cdn.com/wp-... A hard core libertarian might argue that all those property owners should have the right to build parking lots if they want to, and it’s nobody else’s business. In my opinion though, a city where blanketing downtown in parking lots is the rational behavior has a pathologically broken city planning / tax system.

Yeah, it’s too bad that under a land value tax some individual homeowners who really like the tiny house they bought 40 years ago for $50,000 now need to sell it for $1,000,000 because they can’t afford the tax anymore. But these folks are actually pretty rare, and they just received a giant cash windfall, so they probably won’t get too much sympathy. If they really want to stay, they can surely take out a loan against the property, as evgen suggested.

There are plenty of other folks in our society who get screwed much worse, and are more worthy of public attention and concern.

There is more to the issue than local politics in California.

What's the connection between this:

> A hard core libertarian might argue that all those property owners should have the right to build parking lots if they want to, and it’s nobody else’s business.

.. And this:

> In my opinion though, a city where blanketing downtown in parking lots is the rational behavior has a pathologically broken city planning / tax system.

You might also want to consider whether a property owner would "blanket downtown in parking lots", if there were no reason to believe that would be a good investment.

If someone makes a bad investment, that's his problem.

If there are way too many parking spots operated by a private enterprise, some of them will be removed to make way for more productive uses of the land.

Great logic!

If mass deforestation was so bad, no one would do it! /s Or production/mining with extreme environmental havoc

Or hundreds of other examples where there are METASTABLE, yet SUBOPTIMAL uses or resources.

I find it terrifying that intelligent people assume that there is only one "godly" state, with no metastable traps, where it will always converge.

Try setting up a simpleton PID feedback loop - neither overdoing or underdoing values will give you a desirable outcome

> If mass deforestation was so bad, no one would do it! /s Or production/mining with extreme environmental havoc

How is that analogous to what I said?

What is that "METASTABLE" nonsense? :P

Thats exactly analogous - both oversized parking lot and burning down forests for few years worth of farming are profitable, yet highly undesirable.

If you'd stuff european cities with low density parking lots it would make car owners life not FUCKING SUCK At the cost of ruining the "ecosystem" - everything is spaced out by parking lots, so more and more people are using cars in turn needing more parking lots, hardly desirable outcome for a city, which would be better served by good public transport, which would be made less desirable if everything was distanced by parking lots

A simple metastable suboptimal state example is extreme income inequality - it took years to get out of another metastable state - more sensible income distribution. Now, it would take a lot of effort/change/work/whatever to switch the states.

> Thats exactly analogous - both oversized parking lot and burning down forests for few years worth of farming are profitable, yet highly undesirable.

I specifically talked about an oversized parking lot getting reduced due to it not being a good investment, so no, not exactly analogous.

The point is that the allocation of anything that's privately owned and used in/for some sort of production will get adjusted as necessary, purely out of its owner's self-interest.

But for starters, burning down a forest would not be a productive endeavour, and as such, not in its owner's interest. Already we can see you're not quite clear on what the problem is.

On the other hand, cutting down a forest to make room for a farm might well be a good idea, but probably not for only "a few years worth of farming".

Why would someone operate a farm for only a few years when it could produce him wealth indefinitely? Again, it's not clear what problem you're seeing here.

> everything is spaced out by parking lots, so more and more people are using cars in turn needing more parking lots

Here you're assuming that people will buy more cars if there's more parking space. I can't see how that would be the case.

If people notice that there are more bicycle parking spaces, will they buy more bicycles? If someone brings you an extra coat hanger, will that make you buy a new coat?

I don't see the connection. Can you point out a real problem related to any of this?

> hardly desirable outcome for a city, which would be better served by good public transport

Now you're talking about something that's not determined by market forces, but by government. Public transport is irrelevant to the earlier discussion. If bad decisions are made in that sphere, blame it on the government.

> A simple metastable suboptimal state example is extreme income inequality - it took years to get out of another metastable state - more sensible income distribution

"Metastable" sounds like a term some academic self-proclaimed philosopher might use. That means it's probably nonsense (or pointless).

> Now, it would take a lot of effort/change/work/whatever to switch the states.

I'm not sure what sort of effort you're imagining, but all it would take is for governments to not dictate what currency we're allowed to use.

So since your home, which by your own admission is primarily a domicile and not an investment vehicle, is now worth more you can take out a loan based on the increase in value over what you paid for the house and use that to pay the additional taxes. You are being taxed on the appreciation in value to your home that you basically had nothing to do with and therefore have a very weak claim regarding a just right to this increase in value.

tl;dr is "boo hoo, cry me a river"

That is clearly nonsense; why should anyone be forced to monetize their assets? The increase in value is entirely "on paper".

As much as I understand, that "forced monetization" can exist, such as in the case of stock options - those can incur tax right away (alternative minimum tax), and usually will have to sell some of your just got stocks to be able to pay for that (if you don't have other assets to cover it).

For example, point 2 at http://www.forbes.com/2010/03/10/10-tax-tips-stock-options-p...

Well that is why the USA's laws on taxation of options need to be reformed.

So you're basically saying it's ok to tax people on gains, that are entirely theoretical and over which they had no control themselves?

You might have a point if you consider a home something that is entirely fungible - but for a lot of people it is not.

If a house drops in value, is it also the government's responsibility to refund the difference?

Since tax is tied to the value of the property when the house loses value taxes go down.

There shouldn't be property taxes at all. It's asinine. Taxes for goods and services is more than enough. Not owning property, or the privilege of employment.

Wouldn't that be really regressive? A poor person's spending on goods is going to be a larger proportion of their income than a rich person's.

Admittedly, rich people could buy fancier goods which could be taxed more, but would that make up the difference?

You're missing the real root cause here, which is the deep subsidy of mortgages. Housing prices would be 1/3 of current levels without tax exemptions, direct loan subsidy and various guarantees.

There should be limits on these things to prevent the type of situations we see in SFO, Boston, etc.

There hasn't been a mortgage tax exemption in the UK for decades.

Buy to let landlords have enjoyed 100% tax relief on mortgage interest for decades and only now, well in April 2017, are they finally about to start losing some of that unfair advantage over would be owner occupiers.

I'm not sure that it is unfair - since if a landlord's property is empty, they are liable for the council tax on it. It's a risk/reward scenario.

Consider a world with no landlords. You live with your parents until you can afford to buy, or you wait in line for social housing, which won't magically appear from nowhere...

Land is a finite resource, always in demand. I have zero sympathy for rent-seekers, and the government shouldn't be subsidizing the value of their assets.

And "emergency" low interest rates for 7 years or so. I imagine a fair fw of those would need to be sold if interest rates were at 5%.

Gaius, you could defer the payment of the tax until the sale so that the homeowner retains the right to stay there as long as they wish.

We have that already in this scenario; inheritance tax.

The reason land is so valuable is that when new money is created in our financial system it is created as loans. Naturally, banks want to lend against valuable collateral, which is primarily represented by property and large businesses, thus the new money goes to holder of land and large business first and then slowly spreads out to the rest of the economy. This time lag in the distribution of money and that there is a smaller class of land and business owners is the main source of inequality.

This is one of the main criticisms that Hayek and Von Mises have of Keynesianism: that "raising aggregate demand" via monetary policy does not raise prices evenly but instead tends to create asset bubbles because the new money enters the system through loans against assets.

Unconvincing. So the explosion in modern communication technology and advanced worldwide transportation has led to this?

Many jobs are now shipped round the world. Xrays are read overseas. iPhone parts are procured from multiple nations. People work from home--some teams of software developers are scattered over thousands of miles.

Meanwhile, there is a growing prospect of transportation becoming even cheaper and more efficient. We've already seen this for goods--containerized shipping was a revolution. Now the Uber-like services and driverless cars hold potential to remake cities.

A piece like this needs a rebuttal--or at least a mere mention!--of these developments. Instead the reader is left to figure out how innovations like a video phone in everyone's pocket and worldwide next day shipping have had the exact opposite effect that one would expect?

Of the few hundred people I know, who work across many industries including health care, automotive and aerospace engineering, and software development, I can think of 3 who are able to work from home full time. What you experience in your particular area might not be the norm in another part of the world (or even just the US).

Just because they are not able to work from home does not mean that technology has not affected their work. More importantly for the purposes of this article, technology may still affect the importance of proximity in land uses. A call center worker may not be able to work at home. But thanks to cheap communications the job can be moved overseas, thus reducing the value of land in rich countries. A health care worker may not be able to work at home. But if someone overseas can read the x-rays, there's less need for land in the rich country. Moreover you say you know only three who can work from home full time. Others may be able to work from home part time, which gives them freedom to live farther from work and commute.

These are obvious arguments in an age of blanket 4G coverage but this piece doesn't even address them.

When it comes to the advances in modern communication technology, more money is thrown at building it in one mid-sized, low-rise and incredibly expensive US city than in most of the rest of the industrialised world put together.

When even the people trying to "disrupt" traditional bricks and mortar business and supply chains see "miles from Sand Hill Road" as a major factor in their startup's potential to raise revenue and exit, it's hardly surprising that the effects of technological progress haven't been sufficient to counteract the effect of massive population and income increases on the value of an essentially fixed supply of land.

Given the weight of evidence of what actually happens to land prices over time, I think the burden of proof is very much on the futurists to make the argument that people owning land where globalised world business is increasingly centred aren't going to continue to cream off significant percentages of productivity increases they generally haven't contributed to.

LMAO! I love how Bloomberg (voice of the financial sector) stirs up shit and then suggests that taxation is the solution. This is great propaganda at work here, so study it well. They want desperately to steer the world away from financial sector reform (debt amnesty, bank regulation, prohibition of currency speculation, etc.) and blame it all on the government. Why? Because the US government is leading criminal proceedings against the leaders of the financial sector for their crimes during the collapse of the financial sector in 2008. http://www.bloomberg.com/news/articles/2014-11-03/jpmorgan-f...

Yeah, Bloomberg View has no idea how real people in real world live and work. I remember reading an article a few weeks ago with the premises that income - equality is okay because we have these superman productive individuals.

They also love china/japan/asia bashing which is okay but after a while it gets old.

I still read it the same way I find fox news to be interesting.

The article is a bit strange. In my opinion it accurately describes a problem, but then totally fumbles on the reason and the solutions.

The real reasons are described by narrator and kephra in this comment thread. They've got to do with how land is scarce and getting scarcer, and how banks leverage the demand almost without risk and in perpetuity. If you don't really get the economics of it, it comes down to this: property owners negotiate with you one (important) aspect of your life (where/how you live) for a percentage of all income you ever make. Imagine the scale of that nationally, it's really not surprising to learn that property is the largest share of income for capital.

I've been thinking about this reason a lot since I've started reading Piketty and perhaps more so now I'm looking to buy a house in one of those super scarce places. An interesting point Piketty makes at some point that this form of capitalism is fundamentally un-American, or at least, against the idea of the U.S. in its forming years, but you'll have to read the book for that. I promise you he's not a socialist ;)

The solution that came to me, even though it would screw me if it were implemented, is capping mortgages even stronger. In the Netherlands we are moving to a 100% home value cap in the coming few years, and gave them a max duration of 30 years, that fixes one side of it. But it should also enforce lower limits on mortgage relative to salary.

Perhaps those values are already closer to what's right in The Netherlands than they are elsewhere. In Amsterdam you pay 220k for a small 2-bedroom apartment or small house on the edges, which costs you about 35% of your income (if you maxed out).

Those regulations give way to another problem though, and that's rent. They definitely should be regulated the same way. At the moment that same apartment in Amsterdam rents for about 1300, almost twice to what a mortgage would cost. And I know for a fact that people who aren't allowed the mortgage do rent those places instead, that's just draining capital.

Maybe some (amateur) economist can poke a hole in my plan (reduce mortgages and rents through regulations). I have a feeling there is a right level of regulation that will make mortgages comfortably profitable for banks without it squandering the publics spending power.

The article doesn't make a convincing case that there's a problem.

Given such a ridiculous premise they need to back their theory up with data.

We are living denser than we ever have, and getting denser but somehow that's going to just stop because land owners will do what and why?

Stop building up? Stop subdividing? Because why? they hate money?

Building up isn't affected by a land value tax, since the tax value is on the unimproved land. If anything it encourages building up.

One negative outcome, in the absence of a land value tax, is empty lots. Leaving a lot derelict may be the wisest option for those that don't hate money, as it can be held as an investment and quickly sold after it appreciates in value. No building to demolish, or tenants to evict. Of course in the meantime it's just a placeholder in the middle of a bustling city that's looking for new houses and/or commercial property.

With the land value tax they'd need to pay more to keep it empty as the area became more desirable, encouraging them to use it for some purpose or sell it to someone who intends to use it.

it starts promising with:

> Landlords are eating the world.

but it then falls short, by only pointing to the tip of the iceberg, the rising prices in city centers. But the problem is much bigger in the rural, in 2nd and 3rd world, where former small farms are replaced by big agriculture corporations.

> To understand why, we have to look at the reasons land has value in the first place.

And he totally fails here. He fails to explain, that land ownership depends on the state monopoly on use of force, and legalization of murder, rape and genocide during the time the state acquired the land. He fails to explain that money equals debt, debt is often preferring land as security, and therefore land prices are doomed to rise globally.

I do not expect a Marxist analysis in Economist, but I would at least expect some in deep comparison of how different countries cope with this problem. Point to massive buyout of agricultural land in eastern Europe, point to the housing bubble in Spain, point to how Hartz IV stabilized the German housing market, ... but this article is only pointing to the iceberg in front of the unsinkable.

From the article:

"When it becomes more important, it also becomes more scarce, and when it becomes more scarce, it puts a brake on growth, just as if oil became more expensive."

Oil got more expensive. Did that put a brake on growth? Does it follow that land becoming more expensive will put a brake on growth? Land got more expensive, did that put a brake on growth.

I don't mean to sound repetitive, but land has been getting more expensive for the past 300(?) years, and yet here we are.

That other thing the article says about land becoming an increasing percent of GDP, does that really mean anything? Are the right metrics being considered and the right data being used to come to the right conclusions?

I'm not sure I got the point of the article? Economists know what to do but interest groups get in the way? Does that make any sense? Sounds like the economists models don't match reality then. Economists shouldn't try to predict the future, they do a bad enough job of predicting the past.

I'm not really sure what I'm getting at either. I think I'm just disappointed the article ended right when I was getting in to it.

Oil got more expensive. Did that put a brake on growth?

Have you paid much attention to what happened to Western economies following the 1973 OPEC embargo?

Surely this is something that should unite both ends of the political spectrum?

For the right - it's about improving market efficiency and rewarding economically useful behaviour over 'rent seeking'.

For the left - it's about social justice and avoiding yet another way for wealth to accumulate wealth.

The simplest way to counter this problem is for the Fed to raise rates this week.

If the land tax increased, wouldn't the landlords just increase the rent? Thus making life more expensive for non-homeowners? Disregarding what the government does with the extra tax revenue.

Feel free to correct me.

According to economic theory they would not as the supply of land is fixed.

How does a fixed supply of land preclude raising the rent?

If the supply is fixed, the price will fluctuate only with demand.

(But no, the supply isn't really fixed.)

The land value taxers' argument generally works the other way round, arguing that the supply of rental properties actually is artificially constrained by landowners, and that tax on the undeveloped value of the land would push landowners into developing and letting property on their land or selling up to developers, implying more price competition in the rentals market and thus less ability to pass on the tax costs to the end occupant.

The fixed supply of land is important only inasmuch as it provides a reason why landowners can be pretty confident their land will appreciate in value in the first place (and in some cases, to a sufficient degree to make the additional revenues achievable from development/rentals in the short term appear relatively trivial). Moreover, if land ownership is highly concentrated then releasing very little of that land for rentals and gradually selling off the highest-value parcels probably is the most effective way of maximising the value of one's dynasty's land portfolio.

The argument isn't so much that rents would never go up at all as that the effects of more efficient land use and competition in the rentals market mean that individual occupants of the land wouldn't pay the full value of the tax (and would tend to benefit from commensurate rate reductions on other taxes)

How well that argument explains or even fits the facts of land ownership varies hugely by geography.

No. They will try, but it doesn't work because of an often overlooked quirk of the market which only affects land.

Land is unique because it can't be manufactured or moved, so when it comes to supply and demand, the normal mechanism of the consumer playing off suppliers against each other to get the cheapest price can't happen. Each piece of land is unique because of it's location, so other bits of land won't do. For example, starting a business on the high street. You can't just get a cheap piece of land elsewhere and move it to the location you want it to be in, whereas you can do this with all of the other supplies you need. This makes land a de facto monopoly. The consumer has no choice and allowing people to own more than they need is damaging to capitalism.

What really happens instead is that the consumer is left competing with other consumers to get the bit of land they need. Each location is effectively an auction for a unique item. In starting a business, rival entrepreneurs will continue to outbid one another until they are left with only just enough profit for it to be worth it. Bidding less means a rival will outbid them and they won't get the land they need. Bidding more means the business is not viable. In this way, the landlord does not and cannot set the price themselves. The market decides. They can try to raise the rent, but the business owner will then not be making enough profit for it to be worth it, so they will either refuse or shut down.

The is counter intuitive, but well researched. Google for Ricardo's law of rent https://en.wikipedia.org/wiki/Law_of_rent or read Churchill's rather good speech on the matter here: http://www.landvaluetax.org/current-affairs-comment/winston-...

Here in the U.K. our right-wing government are planning re-introduce a scheme whereby those in government-owned social housing have the right to buy the property cheaply after a set period. This has always been a very controversial idea: it does increase home-ownership rates fantastically, especially in poor areas, but it also destroys the social housing programme (an attractive outcome to the nasty British right).

Rent limits, related to local earnings, are one way to increase home-ownership by making landlording less profitable. Our new opposition leader, Jeremy Corbyn, goes further and suggests we should actually extend this "right-to-buy" idea into the private sector. I only just discovered the idea this morning and I think it's pretty interesting.

They're doing more than that. People in government-owned social housing have had the right to buy the property cheap for about three and a half decades now in the UK, thanks to the previous right-wing government, and it's already destroyed that social housing program. In the long term, most of the houses ended up in the hands of private landlords, including government ministers. Some of them were even bought up directly by investors through agreements that made use of loopholes in the right-to-buy rules

The current government is extending this to housing association homes, which are owned and let by private non-government charitable organisations. They're now forced to sell their homes off, and local councils are forced to subsidise this by selling off yet more of their housing stock.

You say "nasty right" then go on to appear to support the idea of forcing property owners to sell. Nasty left!

I'm only half joking. P.J. O'rourke's has a chapter called 'Why I'm Right' in his book 'Don't Vote! It just encourages the Bastards', I found it helped with a similar attitude I used to have.

I do indeed. We have a problem in this country; there is a shortage of homes, so being a landlord is extremely profitable, so house prices are astronomical and its very difficult to get on the ladder.. leading to all the homes being concentrated in the hands of a few rich people. I want to see that trend reversed and homes distributed more evenly.

Still though, it's a pretty extreme manoeuvre, I'd like to read an expert's analysis of the idea.

Most "land" or real estate is actually held by banks or other financial conglomerates through a proxy called a home "owner".

Banks enjoy a cut from the interest rate but it is also the people who deposited money in those banks who earn money that way. And noone is forced by financial institutions to take 40 years long home loan.

Deciding between buying and renting depends on many things, like the different costs, interest rates, inflation, tenant rights etc.

Traditional mortgages do not transfer any of the externalities mentioned in the article to the banks. The sense in which the banks "own" the property does not detract from the argument.

Yes, because the mortgagor (banks / etc) don't own the property. They just have a lien on it.

Land should be from the country not owned by a private entity. This fixes a lot of issues.

Despite overwhelming evidence of such failed policies in the past and the "let's try failure again" crowd, you probably don't even like the reality of your suggested policy.

You end up with a small group of people owning everything. It's like what the left complains about now with wealth inequality, but orders of magnitude worse.

I wish you would think these things threw.

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