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> Anything questionable about these things? Yep, always :) I mostly buy your argument about central banks creating demand. But I think the phrase "The central

> Anything questionable about these things? Yep, always :) I mostly buy your argument about central banks creating demand. But I think the phrase "The central bank can print arbitrary amounts of money" is ambiguous enough to warrant questioning. It'd be more convincing to say "The central bank can print arbitrary amounts of money, subject to political constraints". Because I do think those political constraints are non-trivial. But fair enough. Your other claim was that land could be taxed "without disturbing the economy". I'm not sure I'm convinced. A land tax would undoubtedly modify land use, which would change how the economy operates. So maybe you meant it could be done without adverse consequences? In general I think a land tax is a good idea: it would encourage efficient use of land. It would also mean that people pay their fair share for infrastructure improvements that they benefit from. On the other hand, I don't think it's fair to say that a land tax can't have adverse consequences. Consider what might happen if a very high land tax was imposed. It might incentivise people to move to lower-value areas, pushing up urban sprawl and commute times. It might also increase the risk of starting up certain types of small business (will my city centre coffee shop go under because I can't afford the tax payments?). So I don't think it's fair to say there would be no unintended consequences.

eru 10y ago
At this rate, we will hit the (soft) limits on HN's reply-thread depth. ;) I am happy to continue via email and publish any results in a blog, if you want to. The common fears were always that fiat money would get inflated away, if we are not careful. And that politicians would be the ones pushing for inflation. Instead, major (fiat) currencies have been experiencing below-target price level growth; and politicians like PM Theresa May have been asking the Bank of England to stop the money printing, instead of asking for more. What a topsy-turvy world. Yes, there are clear political constraints on the central banks---whether real, anticipated or just imagined. Perhaps an average nominal wage level target could help. Instead of talking about inflation (`the cost of living') growing too slowly, the central bank could talk about wages growing too slowly. About land taxes: I meant to specifically talk about `deadweight loss of taxation' (https://en.wikipedia.org/wiki/Deadweight_loss https://en.wikipedia.org/wiki/Deadweight_loss). You are right, that in some aspects land tax will have `negative deadweight loss' and thus is even better than a tax that has no effects: it has good effects. I assume we are always talking about a land _value_ tax, and not by area. Taxed by area, a very high tax could have lead to people abandoning ownership when taxes exceed rents they receive. Taxed in proportion to value, that will not happen: the market value of the land will just drop until the tax is bearable. As a simple mathematical model we have: yearly land rent = land value * (prevailing interest rate + land value tax) Often, we can't observe the yearly land rent directly especially for owner-occupied housing. For a given rent, interest rate and tax rate, there's always a land value that will work out. But yes, right now a landowner can subsidize their own grossly inefficient use of land, by just using the land himself sub-optimally instead of making more money by renting it out to the highest bidder. (And that subsidy would not be visible, as it never hits the market to get explicitly valued in terms of dollars.) Under a land value tax system, that implicit subsidy would need to be made explicit---since mere land-ownership doesn't provide an implicit income.

eru 10y ago

At this rate, we will hit the (soft) limits on HN's reply-thread depth. ;) I am happy to continue via email and publish any results in a blog, if you want to. The common fears were always that fiat money would get inflated away, if we are not careful. And that politicians would be the ones pushing for inflation. Instead, major (fiat) currencies have been experiencing below-target price level growth; and politicians like PM Theresa May have been asking the Bank of England to stop the money printing, instead of asking for more. What a topsy-turvy world. Yes, there are clear political constraints on the central banks---whether real, anticipated or just imagined. Perhaps an average nominal wage level target could help. Instead of talking about inflation (`the cost of living') growing too slowly, the central bank could talk about wages growing too slowly. About land taxes: I meant to specifically talk about `deadweight loss of taxation' (https://en.wikipedia.org/wiki/Deadweight_loss https://en.wikipedia.org/wiki/Deadweight_loss). You are right, that in some aspects land tax will have `negative deadweight loss' and thus is even better than a tax that has no effects: it has good effects. I assume we are always talking about a land _value_ tax, and not by area. Taxed by area, a very high tax could have lead to people abandoning ownership when taxes exceed rents they receive. Taxed in proportion to value, that will not happen: the market value of the land will just drop until the tax is bearable. As a simple mathematical model we have: yearly land rent = land value * (prevailing interest rate + land value tax) Often, we can't observe the yearly land rent directly especially for owner-occupied housing. For a given rent, interest rate and tax rate, there's always a land value that will work out. But yes, right now a landowner can subsidize their own grossly inefficient use of land, by just using the land himself sub-optimally instead of making more money by renting it out to the highest bidder. (And that subsidy would not be visible, as it never hits the market to get explicitly valued in terms of dollars.) Under a land value tax system, that implicit subsidy would need to be made explicit---since mere land-ownership doesn't provide an implicit income.