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Comment by FredPret | Hacker News Reader

There's tons of good speculation. Speculators are not buying and selling land, or corn futures, or what have you.

They're trading risk.

Sell to a speculator and you turn an uncertain future into cash right now.

Buy from a speculator and you get to enter the market at the moment of your choice.

It unlocks specialization - house builders can focus on building houses, and corn farmers can focus on growing corn. As soon as they're done with a house / harvest, either a consumer or a speculator buys it and they can focus on producing the next house/crop. Without speculators, they'd have to not only do their value-add, they'd also have to predict the market and hope enough customers show up in future. With speculators, this is significantly mitigated.

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> As soon as they're done with a house / harvest, either a consumer or a speculator buys it and they can focus on producing the next house/crop. Without speculators, they'd have to not only do their value-add, they'd also have to predict the market and hope enough customers show up in future. With speculators, this is significantly mitigated.

Sounds like a great way to over or undershoot demand leading to market inefficiencies which the speculators have a perverse incentive to increase. It may be useful for a market like agriculture where production is variable and the produced goods are perishable - the loss from speculators may be less than the inefficiencies of noise. However, we've all seen how broken the real estate market has been despite the continued presence of land being one of the least variable things we encounter.

The real estate market got borked by the fact that municipal authorities answer to incumbent owners, who ~universally acted to limit new building. This breaks the mechanism by which some speculators go out of business.

If you can build anywhere, and a speculator is blocking development of a prime piece of land, you'll simply build elsewhere, making that land less prime with each passing moment, and eventually driving the speculator out of business.

Buy from a speculator and you get to enter the market at a price of their choice.

Vacant land is land that somebody could have built a home or a restaurant or a storefront or an apartment complex on, except it's being hoarded by speculators, who often refuse to sell at a loss.

> could have built [something] on

In order to build a home / restaurant / storefront on that land, you first have to buy it. Buy it from whom? Ban speculators, and now you have to buy that land from the original owner, who is obligated to hold on to it even though he may want to use his capital for something else.

> refuse to sell at a loss

Speculators who won't sell at a cash loss are a real problem, but it's a problem that can easily solve itself. As the land value fluctuates up and down, the speculators' investment also goes up and down, whether he sells at that price or not. Carrying a piece of land on your books at a loss inflicts economic damage on the speculator.

In a free market, bad investors getting wiped out is just as important as useful ones getting rewarded.

Simply make the "default setting" to allow building things everywhere, and stupid speculators will go out of business more or less instantly. Useful ones will continue to quite literally make money for themselves and society.

No need to ban speculators, just tax them fairly as the article suggests.

> Buy it from whom? ... now you have to buy that land from the original owner, who is obligated to hold on to it even though he may want to use his capital for something else.

There's no obligation to "Own" land, if you want to put your capital elsewhere then either use your existing land as collateral for a loan or otherwise sell it. Technically everyone is actually leasing land from a government, it's not a commodity and it has a finite supply, so unlike corn or even housing, what is a speculator even speculating on?

I also want to be clear I think it would be very silly to ban speculators, the act of speculation is something that we all do when we own literally anything, but speculating on limited finite ground space that no one actually owns doesn't make any logical sense. Just properly tax speculation into a space that is unprofitable to hoard.

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