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It's no surprise that we're seeing more and more anxiety coalesce around land: this is the classical economic expectation of what would happen as automated outp

It's no surprise that we're seeing more and more anxiety coalesce around land: this is the classical economic expectation of what would happen as automated output starts to outperform labor, and capital can be automatically produced. When this happens, scarce natural resources (such as location) increase in value. Henry George saw this nearly 140 years ago, with his "Fool's Paradise" thought experiment.[0] As efficiency rises and rises, can the cost of living ever approach zero, or will the landlords (in their many forms) be able to extract what they will? This is a very important question we need to answer. [0] http://www.econlib.org/library/YPDBooks/George/grgPP15.html#III.V.13 http://www.econlib.org/library/YPDBooks/George/grgPP15.html#...

graeme 9y ago
Please don’t encourage the Toronto housing bubble. (Or Vancouver, OP is surely in one of the two) I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Meanwhile, Toronto and Vancouver are in the midst of a speculative housing mania. House prices have far outpaced rents. OP is correct not to buy. (Especially now, the bank regulator has just announced restrictions on mortgage lending. These are likely to reduce home prizes as average mortgage eligibility will shrink) Long run, you may be right, but re: the canadian markets OP is referring to you’re commenting on a situation of short term mania. Note: I’m referring chiefly to your “it’s no surprise” line. I’d say the cause of the immediate anxiety is the housing mania I described, rather than a longer run trend.
- jacobolus 9y ago
  If we had land-value taxes plus more permissive zoning, that would add some negative feedback when land prices start rising, and discourage (or tax) speculation and rent-seeking, while encouraging productive land uses like higher-density housing which help to keep cost of living in check.
- bufordsharkley 9y ago
  This is quite fair. No message to "put all your money in land!" was intended, and indeed we see many cases of localized manias, the galloping of irrational exuberance. Land bubbles come and go, but the underlying cause is the same. What's productive about bidding up the price of land, after all?
  - graeme 9y ago
    Indeed. Also, I should say I was commenting more for Canadians reading, rather than because I thought you were for putting money in land. I’ll have to read up on Georgism. I’m very interested in alternatives to an income tax; it seems counterproductive to tax something we want to have. There are so many things with externalities we could replace it with.
- lmm 9y ago
  > I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Georgists would expect housing (or rather, land) prices to rise in places where productivity is increasing, and not in places where productivity isn't increasing, which seems to align with what we're seeing - economic growth is largely happening in the cities, and much less in the suburbs or countryside.
  - graeme 9y ago
    Yeah, i think in a broader sense that’s true. In Toronto and Vancouver though, prices have fast outstripped economic growth. Vancouver and Toronto aren’t particularly high income cities, relative to, say, Montreal.
- abandonliberty 9y ago
  >These are likely to reduce home prizes as average mortgage eligibility will shrink I think that's unlikely for the following reasons: - Most wealthy people own land, contribute to politicians, and have political power (think seniors). Anything done to slow or reverse property values will negatively impact this class of people who have political power and free time - The very organizations responsible for fixing this situation benefit financially from it continuing or even getting worse. - All political parties rely on campaign contributions. How much disposable income do renters in Vancouver/Toronto have? Until the negative effects tangibly outweigh the benefits in the near term (ie unlike global climate change) for the kingmakers I would be very surprised to see an intentional reversal. Any political party doing this would be taking a huge risk. Sadly I think we're down to hoping for a global cataclysm.
deleted 9y ago
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graeme 9y ago

Please don’t encourage the Toronto housing bubble. (Or Vancouver, OP is surely in one of the two) I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Meanwhile, Toronto and Vancouver are in the midst of a speculative housing mania. House prices have far outpaced rents. OP is correct not to buy. (Especially now, the bank regulator has just announced restrictions on mortgage lending. These are likely to reduce home prizes as average mortgage eligibility will shrink) Long run, you may be right, but re: the canadian markets OP is referring to you’re commenting on a situation of short term mania. Note: I’m referring chiefly to your “it’s no surprise” line. I’d say the cause of the immediate anxiety is the housing mania I described, rather than a longer run trend.

jacobolus 9y ago
If we had land-value taxes plus more permissive zoning, that would add some negative feedback when land prices start rising, and discourage (or tax) speculation and rent-seeking, while encouraging productive land uses like higher-density housing which help to keep cost of living in check.
bufordsharkley 9y ago
This is quite fair. No message to "put all your money in land!" was intended, and indeed we see many cases of localized manias, the galloping of irrational exuberance. Land bubbles come and go, but the underlying cause is the same. What's productive about bidding up the price of land, after all?
- graeme 9y ago
  Indeed. Also, I should say I was commenting more for Canadians reading, rather than because I thought you were for putting money in land. I’ll have to read up on Georgism. I’m very interested in alternatives to an income tax; it seems counterproductive to tax something we want to have. There are so many things with externalities we could replace it with.
lmm 9y ago
> I’m sure Georgianism has its merits, but housing generally hasn’t been a great investment in most of north america, especially once maintenance costs are factored in. Georgists would expect housing (or rather, land) prices to rise in places where productivity is increasing, and not in places where productivity isn't increasing, which seems to align with what we're seeing - economic growth is largely happening in the cities, and much less in the suburbs or countryside.
- graeme 9y ago
  Yeah, i think in a broader sense that’s true. In Toronto and Vancouver though, prices have fast outstripped economic growth. Vancouver and Toronto aren’t particularly high income cities, relative to, say, Montreal.
abandonliberty 9y ago
>These are likely to reduce home prizes as average mortgage eligibility will shrink I think that's unlikely for the following reasons: - Most wealthy people own land, contribute to politicians, and have political power (think seniors). Anything done to slow or reverse property values will negatively impact this class of people who have political power and free time - The very organizations responsible for fixing this situation benefit financially from it continuing or even getting worse. - All political parties rely on campaign contributions. How much disposable income do renters in Vancouver/Toronto have? Until the negative effects tangibly outweigh the benefits in the near term (ie unlike global climate change) for the kingmakers I would be very surprised to see an intentional reversal. Any political party doing this would be taking a huge risk. Sadly I think we're down to hoping for a global cataclysm.

deleted 9y ago

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