7 ms·

And then what? All other houses are doubled. Does he cash out his "money for nothing" and live elsewhere or realise that the gap between his 2 bed and a 3 bed i

And then what? All other houses are doubled. Does he cash out his "money for nothing" and live elsewhere or realise that the gap between his 2 bed and a 3 bed is now also twice as large. Property speculation is utterly engraved into Western society now and it's killing it. EDIT: it's interesting how people upvote this as they can see it's a truism, but downvote my post attacking land speculators. NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others. EDIT: don't have time to reply now as i've got a prod issue to debug. Read up on Henry George or don't. If you think making money from doing nothing then using the same money to consume goods is fine, well to hell with you.

jMyles 11y ago
I'm largely a believer in private property (and mostly libertarian even), but I really don't think that this dividing up the earth into tiny little squares and pushing everyone out of them in order to make money is defensible.
- branchless 11y ago
  You're damn right it's not. We are effectively asking young people to join a game of monopoly that's been going for 2 hours. Would you play under those conditions? Well actually you have no choice thanks to the banks and their landlord foot-soldiers. As many economists have noted, land is not applicable to the general laws of economics because it is finite in supply. We need land value tax to squash speculators who add nothing to the world, right now.
  - fapjacks 11y ago
    This is one of the most astute and coherent metaphors I have ever read about the subject.
    - branchless 11y ago
      It's not me. Read the history of the game monopoly, it's the polar opposite of the final product. http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-history-monopoly-capitalist-game-leftwing-origins http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-h... Based on the work of Henry George.
    - mrfusion 11y ago
      I concur. That's a really concise sound bite that really captures the idea. Good job!
- msellout 11y ago
  Both "private" and "property" have changed meaning frequently over time, both legally and as social constructs. One American judicial philosophy is "pragmatism" -- that a judge should rule however is best for society, then explain why the law should be interpreted that way afterwards. In this fashion, the law can keep up with the times. It's likely that most judges follow this pragmatism, even if they claim to believe in a different, more idealized philosophy. It's hard to falsify that hypothesis. We'd have to find several cases where the judge admitted that the ruling was worse for the world and yet must be enforced as the best interpretation of the law or precedent.
- paulddraper 11y ago
  Then I think you missed the point of libertarianism.
  - branchless 11y ago
    No he didn't. Presently private banks issue fiat money ahead of wealth creation due to a govt granted monopoly on money issuance. If that didn't exist (small 'l' liberal) then in 2008 the banks would have gone to hell and many a lesson would have been learned. Also land is a natural monopoly - you can't make more. Small 'l' liberal economists have said this time and again.
    - deleted 11y ago
      [deleted]
    - paulddraper 11y ago
      > land is a natural monopoly There is no shortage of land. There is a shortage of land in urban areas or areas with easy road access.
      - branchless 11y ago
        Agree with the sentiment, but it's not simply a matter of sprawling. In practice there will always be a need to live in close proximity. The community creates value.
aianus 11y ago
> NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. You don't sit on it, you rent it out to people who can't afford or don't want to buy their own homes. Where are those people supposed to live if there were no landlords? I'm very happy and grateful I can pick any city in the world, move there, and find someone with an extra home willing to let me live in it in exchange for some cash.
- branchless 11y ago
  Most people making money on real-estate are doing so not on yield but on capital gains. The rise in land prices make the cash. With proper taxes discouraging speculation, like land value tax, income taxes could be far lower and we'd have a world where working actually got you somewhere instead of leveraging up on land to build a property mini-empire. Would love to know how many people made very little from their failed SF startup but overall made out good due to land prices appreciation. HN is full to the brim with people complaining about high rents. You are not the common case.
  - jackcosgrove 11y ago
    "Most people making money on real-estate are doing so not on yield but on capital gains." If this were true, why would you have a problem with landlords in general? They are providing a service at cost. If a landlord is not buying land in a speculative market, what is your criticism of them?
    - branchless 11y ago
      It's a huge game played by the banks to extract economic rent. Landlords are taking a slice and providing a risk buffer for the banks. I find the whole practice, which as you noted in SF is taking up all spare income, disgusting. Your comment is worded strangely also - I'm saying they are speculating on land. If they are buying and making a little just by providing a service I have less of a problem with them, but this simply isn't possible in the current environment of unlimited fiat issuance. The bank lending and endless speculation means wealth producers are squeezed to the limit.
ken47 11y ago
NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others. Is that entirely true? If you're willing to take on the responsibilities of being a landlord, and rent out your property, you are providing utility to those renting from you. I think more people would agree with you if you were talking about those CREATING scarcity, by arbitrarily raising prices in a real estate market that has an inherent cap on supply.
- branchless 11y ago
  Landlords are the banks footsoldiers, looking for an easy gain. In the finance world this is the definition of "good business" is it not? Nothing expended and lots of electronic money to show for it.
- kqr2 11y ago
  In Palo Alto, it's easy to speculate with empty plots of land. Example: http://www.zillow.com/homedetails/2240-Columbia-St-Palo-Alto-CA-94306/19504874_zpid/ http://www.zillow.com/homedetails/2240-Columbia-St-Palo-Alto... The owner of this plot was able to hold onto a huge empty lot (with weeds) for ~$1000 a year in property taxes until 2014 when it was sold for more than $2 million with an original purchase price probably under $30 thousand. In less than one year, it was flipped for $3.3 million. 06/01/15 Sold $3,300,000+56.0% 08/15/14 Sold $2,115,000+41.5% 07/21/14 Listed for sale $1,495,000
  - prostoalex 11y ago
    > it's easy to speculate with empty plots of land. It's easy once you pony up the cash (land loans are generally in 70-75% range, 80% is an exception, so one needs to have the 25-30%), have a credit history that's good enough for the bank to approve the other 70-75%, willing to take a hit on the property tax (~1% annual), and will generally be okay and have other sources of income if the market were to cool down or take a dive.
imgabe 11y ago
> buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others. I disagree that this is leeching. For one thing, there's no guarantee the speculator's land is going to go up in value. It could just as easily flatline or decrease. For another thing someone has to own the land. Whether it's another person or a government. A speculator can't force anyone to sell their land. On the other side of the purchase, there was a previous landowner who wanted to sell. The speculator created a market in which that seller can sell their land. Are you suggesting it should be incumbent upon the seller to discern the motives of every buyer and only agree to sell to someone who's not speculating? How could they? Also, why would they artificially limit their pool of potential buyers? They don't gain anything from that. The buyer presumably created some value at some point in the past in order to have the wealth to buy the land in the first place. Owning it and maintaining it in a salable condition until someone needs it is a useful service.
- branchless 11y ago
  Land value tax would see the govt effectively own the land and you own the right to build on it (and to capture the gains made by the building). They keep the value they create, but they pay for the location which has it's value added to by society and the state. This is where the distinction is. Most people think their "house" is worth $2MM - no it's the land, the wood and bricks are easily replaced.
  - HeyLaughingBoy 11y ago
    Depends on where you live. My house is worth far more than the land it sits on. I know people who've bought a couple acres for under $25k just so they can put a mobile home or an RV on it.
vonklaus 11y ago
I see your point and agree rampant speculation is a problem but most societies do this. it is problematic for example that 3/4 of the Chinese stock market is owned by regular people IF (and many were) they buy on speculation and borrow capital to do it. Regardless, in the land example you raised it is not neccessarily true you are a "leach". * someone living/working there would of course need a place to stay, and owning something that increases in value would be intelligent. * it may have been non-obvious in 2000ish to be buying. * while it is likely you are capturing much of the value from external input, it is also from demand. Sf/sv is finite and as societal resources concentrate into urban areas (as it has been for decades) the issue is supply. That previous statement agrees with you however, it isn't clear birthrate/deathrate ratios will fall enough to stabalize total pop. So to some extent you are capturing value from buying an asset that is scarce while more people will be born who need it. Ideally this can force correction in that SF may build more resedential housing or that another place does and engineers relocate there. So yes, in a black/white I buy 2 housing blocks and literally rent collect, choosing to have no tenants rather than lowering prices, I would consider that unethical. This happens. It isn't phenomenal for society. However, there are many other factors where people own homes or assets and some degree is speculation, some is need and some is risk minimization. Bitcoin is good example. Some people buy in, this creates the value as it is externally valued. Then more adopters come in and buy. Some more come in and begin trading. Etc. In your land example, this land initially had limited value (way way back). It isn't particularly clear SV/SF couldn't have existed 50 miles south or north. Who are the speculators? * the settlers * the originsl chip manufacturers * people coming in 90s * companies buying real estate in 2000s when some of the above went bankrupt * people coming pre 2010 * people coming post 2010 This is a continuum and also it is driven by complex factors. There are many people/actors and it isn't clear that you can call 1 sector/type of market action objectively "bad" or a "leach"
6502nerdface 11y ago
A Land Value Tax would tend to reduce the appeal of land speculation, by encouraging land owners to do something productive with the land, rather than just speculate on it. A Georgist might say that wealth is actually created in the scenario you describe, but that it's created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and that the speculator's current ability to capture all of that increase via his untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.
- branchless 11y ago
  Exactly right. There is wealth being created but it's captured by people doing nothing for it. Redistribute this via land value tax and discourage speculation, all for one.
  - jsprogrammer 11y ago
    Isn't it possible that they (speculators) prevent possible frivolous usage due to low prices? Speculators can serve to raise prices over time so that, presumably, more worthy owners can make better use of a property than a much lower bidder would have done several years prior?
    - branchless 11y ago
      I've never heard this argument before, no. Land value tax in fact would force people to realise the true value of the land by taxing them whether they use it or not. If they don't use it to full potential they either hemorrhage money or sell up ASAP. EDIT: knock yourself out: http://www.henrygeorge.org/rent1.htm http://www.henrygeorge.org/rent1.htm
      - jsprogrammer 11y ago
        I didn't realise land has a true value. How is it determined? What does it mean to use land to its full potential? I could build a petrol station, or I could build a mini-market/strip-mall on the same land; is one better?
dang 11y ago
Please stop posting uncivil comments to Hacker News. We detached this subthread from https://news.ycombinator.com/item?id=11197849 https://news.ycombinator.com/item?id=11197849 and marked it off-topic.
- solipsism 11y ago
  Is it within a mod's power to forcibly edit a comment? The comment's good, there's just a small part of it that's uncivil.
  - dang 11y ago
    Good question. No, we don't do that. I think I've sometimes broken that rule to fix a typo or two while in an obsessive mood, but rarely, and that's it.

jMyles 11y ago

I'm largely a believer in private property (and mostly libertarian even), but I really don't think that this dividing up the earth into tiny little squares and pushing everyone out of them in order to make money is defensible.

branchless 11y ago
You're damn right it's not. We are effectively asking young people to join a game of monopoly that's been going for 2 hours. Would you play under those conditions? Well actually you have no choice thanks to the banks and their landlord foot-soldiers. As many economists have noted, land is not applicable to the general laws of economics because it is finite in supply. We need land value tax to squash speculators who add nothing to the world, right now.
- fapjacks 11y ago
  This is one of the most astute and coherent metaphors I have ever read about the subject.
  - branchless 11y ago
    It's not me. Read the history of the game monopoly, it's the polar opposite of the final product. http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-history-monopoly-capitalist-game-leftwing-origins http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-h... Based on the work of Henry George.
  - mrfusion 11y ago
    I concur. That's a really concise sound bite that really captures the idea. Good job!
msellout 11y ago
Both "private" and "property" have changed meaning frequently over time, both legally and as social constructs. One American judicial philosophy is "pragmatism" -- that a judge should rule however is best for society, then explain why the law should be interpreted that way afterwards. In this fashion, the law can keep up with the times. It's likely that most judges follow this pragmatism, even if they claim to believe in a different, more idealized philosophy. It's hard to falsify that hypothesis. We'd have to find several cases where the judge admitted that the ruling was worse for the world and yet must be enforced as the best interpretation of the law or precedent.
paulddraper 11y ago
Then I think you missed the point of libertarianism.
- branchless 11y ago
  No he didn't. Presently private banks issue fiat money ahead of wealth creation due to a govt granted monopoly on money issuance. If that didn't exist (small 'l' liberal) then in 2008 the banks would have gone to hell and many a lesson would have been learned. Also land is a natural monopoly - you can't make more. Small 'l' liberal economists have said this time and again.
  - deleted 11y ago
    [deleted]
  - paulddraper 11y ago
    > land is a natural monopoly There is no shortage of land. There is a shortage of land in urban areas or areas with easy road access.
    - branchless 11y ago
      Agree with the sentiment, but it's not simply a matter of sprawling. In practice there will always be a need to live in close proximity. The community creates value.

aianus 11y ago

> NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. You don't sit on it, you rent it out to people who can't afford or don't want to buy their own homes. Where are those people supposed to live if there were no landlords? I'm very happy and grateful I can pick any city in the world, move there, and find someone with an extra home willing to let me live in it in exchange for some cash.

branchless 11y ago
Most people making money on real-estate are doing so not on yield but on capital gains. The rise in land prices make the cash. With proper taxes discouraging speculation, like land value tax, income taxes could be far lower and we'd have a world where working actually got you somewhere instead of leveraging up on land to build a property mini-empire. Would love to know how many people made very little from their failed SF startup but overall made out good due to land prices appreciation. HN is full to the brim with people complaining about high rents. You are not the common case.
- jackcosgrove 11y ago
  "Most people making money on real-estate are doing so not on yield but on capital gains." If this were true, why would you have a problem with landlords in general? They are providing a service at cost. If a landlord is not buying land in a speculative market, what is your criticism of them?
  - branchless 11y ago
    It's a huge game played by the banks to extract economic rent. Landlords are taking a slice and providing a risk buffer for the banks. I find the whole practice, which as you noted in SF is taking up all spare income, disgusting. Your comment is worded strangely also - I'm saying they are speculating on land. If they are buying and making a little just by providing a service I have less of a problem with them, but this simply isn't possible in the current environment of unlimited fiat issuance. The bank lending and endless speculation means wealth producers are squeezed to the limit.

ken47 11y ago

NEWSFLASH: buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others. Is that entirely true? If you're willing to take on the responsibilities of being a landlord, and rent out your property, you are providing utility to those renting from you. I think more people would agree with you if you were talking about those CREATING scarcity, by arbitrarily raising prices in a real estate market that has an inherent cap on supply.

branchless 11y ago
Landlords are the banks footsoldiers, looking for an easy gain. In the finance world this is the definition of "good business" is it not? Nothing expended and lots of electronic money to show for it.
kqr2 11y ago
In Palo Alto, it's easy to speculate with empty plots of land. Example: http://www.zillow.com/homedetails/2240-Columbia-St-Palo-Alto-CA-94306/19504874_zpid/ http://www.zillow.com/homedetails/2240-Columbia-St-Palo-Alto... The owner of this plot was able to hold onto a huge empty lot (with weeds) for ~$1000 a year in property taxes until 2014 when it was sold for more than $2 million with an original purchase price probably under $30 thousand. In less than one year, it was flipped for $3.3 million. 06/01/15 Sold $3,300,000+56.0% 08/15/14 Sold $2,115,000+41.5% 07/21/14 Listed for sale $1,495,000
- prostoalex 11y ago
  > it's easy to speculate with empty plots of land. It's easy once you pony up the cash (land loans are generally in 70-75% range, 80% is an exception, so one needs to have the 25-30%), have a credit history that's good enough for the bank to approve the other 70-75%, willing to take a hit on the property tax (~1% annual), and will generally be okay and have other sources of income if the market were to cool down or take a dive.

imgabe 11y ago

> buying land and sitting on it to exploit scarcity creates no wealth. Therefore if you buy lower and sell higher that money comes from wealth created elsewhere, making you a leech. If you buy somewhere to live in, fine, but more than one place to speculate: you are leeching off of the labour of others. I disagree that this is leeching. For one thing, there's no guarantee the speculator's land is going to go up in value. It could just as easily flatline or decrease. For another thing someone has to own the land. Whether it's another person or a government. A speculator can't force anyone to sell their land. On the other side of the purchase, there was a previous landowner who wanted to sell. The speculator created a market in which that seller can sell their land. Are you suggesting it should be incumbent upon the seller to discern the motives of every buyer and only agree to sell to someone who's not speculating? How could they? Also, why would they artificially limit their pool of potential buyers? They don't gain anything from that. The buyer presumably created some value at some point in the past in order to have the wealth to buy the land in the first place. Owning it and maintaining it in a salable condition until someone needs it is a useful service.

branchless 11y ago
Land value tax would see the govt effectively own the land and you own the right to build on it (and to capture the gains made by the building). They keep the value they create, but they pay for the location which has it's value added to by society and the state. This is where the distinction is. Most people think their "house" is worth $2MM - no it's the land, the wood and bricks are easily replaced.
- HeyLaughingBoy 11y ago
  Depends on where you live. My house is worth far more than the land it sits on. I know people who've bought a couple acres for under $25k just so they can put a mobile home or an RV on it.

vonklaus 11y ago

I see your point and agree rampant speculation is a problem but most societies do this. it is problematic for example that 3/4 of the Chinese stock market is owned by regular people IF (and many were) they buy on speculation and borrow capital to do it. Regardless, in the land example you raised it is not neccessarily true you are a "leach". * someone living/working there would of course need a place to stay, and owning something that increases in value would be intelligent. * it may have been non-obvious in 2000ish to be buying. * while it is likely you are capturing much of the value from external input, it is also from demand. Sf/sv is finite and as societal resources concentrate into urban areas (as it has been for decades) the issue is supply. That previous statement agrees with you however, it isn't clear birthrate/deathrate ratios will fall enough to stabalize total pop. So to some extent you are capturing value from buying an asset that is scarce while more people will be born who need it. Ideally this can force correction in that SF may build more resedential housing or that another place does and engineers relocate there. So yes, in a black/white I buy 2 housing blocks and literally rent collect, choosing to have no tenants rather than lowering prices, I would consider that unethical. This happens. It isn't phenomenal for society. However, there are many other factors where people own homes or assets and some degree is speculation, some is need and some is risk minimization. Bitcoin is good example. Some people buy in, this creates the value as it is externally valued. Then more adopters come in and buy. Some more come in and begin trading. Etc. In your land example, this land initially had limited value (way way back). It isn't particularly clear SV/SF couldn't have existed 50 miles south or north. Who are the speculators? * the settlers * the originsl chip manufacturers * people coming in 90s * companies buying real estate in 2000s when some of the above went bankrupt * people coming pre 2010 * people coming post 2010 This is a continuum and also it is driven by complex factors. There are many people/actors and it isn't clear that you can call 1 sector/type of market action objectively "bad" or a "leach"

6502nerdface 11y ago

A Land Value Tax would tend to reduce the appeal of land speculation, by encouraging land owners to do something productive with the land, rather than just speculate on it. A Georgist might say that wealth is actually created in the scenario you describe, but that it's created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and that the speculator's current ability to capture all of that increase via his untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.

branchless 11y ago
Exactly right. There is wealth being created but it's captured by people doing nothing for it. Redistribute this via land value tax and discourage speculation, all for one.
- jsprogrammer 11y ago
  Isn't it possible that they (speculators) prevent possible frivolous usage due to low prices? Speculators can serve to raise prices over time so that, presumably, more worthy owners can make better use of a property than a much lower bidder would have done several years prior?
  - branchless 11y ago
    I've never heard this argument before, no. Land value tax in fact would force people to realise the true value of the land by taxing them whether they use it or not. If they don't use it to full potential they either hemorrhage money or sell up ASAP. EDIT: knock yourself out: http://www.henrygeorge.org/rent1.htm http://www.henrygeorge.org/rent1.htm
    - jsprogrammer 11y ago
      I didn't realise land has a true value. How is it determined? What does it mean to use land to its full potential? I could build a petrol station, or I could build a mini-market/strip-mall on the same land; is one better?

dang 11y ago

Please stop posting uncivil comments to Hacker News. We detached this subthread from https://news.ycombinator.com/item?id=11197849 https://news.ycombinator.com/item?id=11197849 and marked it off-topic.

solipsism 11y ago
Is it within a mod's power to forcibly edit a comment? The comment's good, there's just a small part of it that's uncivil.
- dang 11y ago
  Good question. No, we don't do that. I think I've sometimes broken that rule to fix a typo or two while in an obsessive mood, but rarely, and that's it.