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To be clear, it's not house prices that are the problem—it's land prices. The problem and its solution were identified by Henry George in his book Progress and

To be clear, it's not house prices that are the problem—it's land prices. The problem and its solution were identified by Henry George in his book Progress and Poverty (1879). Seriously, look him up. It's a shame that his work is not better known. https://en.wikipedia.org/wiki/Progress_and_Poverty https://en.wikipedia.org/wiki/Progress_and_Poverty

baud147258 8y ago
But the land price will dictates the price of the house built on the land, no?
- IshKebab 8y ago
  You can't usually buy just a house - you buy the land too (or at least a lease for the land).
nerdponx 8y ago
Is it land price, or land scarcity in desirable locations? There's only so much land in the New York metro area. There's plenty of land in the Adirondacks.
- nwah1 8y ago
  True. And the constantly varying price of land in response to the desirability of the location means that land has this inexorable tendency to push down real wages regardless of almost any kind of technological, social, or political artifices meant to raise wages. Having a car, when it was uncommon, made it possible to engage in a bit of "geo-arbitrage" but as soon as that became common, the ability to commute was fully factored into a location. When having a dual income household was uncommon, that could get you ahead. When that became common, it was factored into land prices, and having a dual income became necessary just to not fall behind. All technological and social improvements follow this same pattern, and it is why the naive futurist conception of a world without work is never going to happen as long as our land system remains unchanged. That is precisely the paradox of Progress and Poverty that Henry George was explaining.
  - nerdponx 8y ago
    Don't you think remote work could help break the cycle, at least for certain (e.g. white-collar) work?
    - nwah1 8y ago
      People like to live near amenities, transportation hubs, and so forth. And many types of jobs fundamentally cannot be remote. And even if hypothetically everywhere became equally viable to live, then rents would adjust to take that into account. Of course, those with special skills will always do better. And geo-arbitrage opportunities exist during interim periods for early adopters of new folkways and new technologies.
      - vorg 8y ago
        Don't forget both the carrot and stick are at work here. Not only do new paradigms get factored into the price of land (as demand-side forces), but also laws backed by land owners arise that resist those paradigms from becoming mainstream (as supply-side forces). So car ownership and urban roads are heavily regulated, dual incomes are taxed at a higher rate, social security will never become a universal basic income, and security/privacy and OHS legal requirements will affect the viability of remote work.
conanbatt 8y ago
One of the best economic history books. I was convinced 100% on this argument and have never found anyone able to criticize it ,other than "it wont be as good as he claims". Funny thing: Henry George is complaining about poverty and homelessness in California in 1895. Funny thing 2: Land Value Tax is recognized as a great tax both by right/left win economists (Kruger, Milton Friedman, etc).
- kspaans 8y ago
  I'm also a fan of LVT, and have only ever found one reasonable rebuttal (at least from the perspective of municipal financing in Canada): https://seekingalpha.com/article/4176102-principles-canadian-municipal-finance-land-value-tax-inferior https://seekingalpha.com/article/4176102-principles-canadian...
  - conanbatt 8y ago
    Very interesting read! I disagree intuitively with his "Rebuttals". 1- he claims its hard to know the value of land. It is not: there is a big market for land and you can absolutely appraise it. 2- He claims they are regressive, and puts two examples: a young man in a mcmansion vs an old man in a bungalow. Well, the old man is taking more space than the young man. It is most obvious in a place like the bay area where 6 figure salary people live with 2+ roomates while old timers have a single family home and pay reduced prop taxes. His second argument is that old people that have homes would be hit most by this tax, and that is bad. I say hell no: they have a house they can sell. Why does a 19 year-old minimumn wage worker pay taxes to subsidize an old person that has a home? 3- Ideologically he introduced also the issue with the capacity to pay. Of course taxes have to be payable and counter-cyclical, but that is not fixed by a sales tax or VAT which is super cyclical. Second, the payable part implies that taxes have to be levied based on capacity, not on value. So its ok to not tax a poor robber, but it is ok to tax a rich productive person. This ideology seeps into the previous argument of "old people dont produce, so they shouldnt pay taxes, while young renters do produce and should pay taxes".
    - ABCLAW 8y ago

baud147258 8y ago

But the land price will dictates the price of the house built on the land, no?

IshKebab 8y ago
You can't usually buy just a house - you buy the land too (or at least a lease for the land).

nerdponx 8y ago

Is it land price, or land scarcity in desirable locations? There's only so much land in the New York metro area. There's plenty of land in the Adirondacks.

nwah1 8y ago
True. And the constantly varying price of land in response to the desirability of the location means that land has this inexorable tendency to push down real wages regardless of almost any kind of technological, social, or political artifices meant to raise wages. Having a car, when it was uncommon, made it possible to engage in a bit of "geo-arbitrage" but as soon as that became common, the ability to commute was fully factored into a location. When having a dual income household was uncommon, that could get you ahead. When that became common, it was factored into land prices, and having a dual income became necessary just to not fall behind. All technological and social improvements follow this same pattern, and it is why the naive futurist conception of a world without work is never going to happen as long as our land system remains unchanged. That is precisely the paradox of Progress and Poverty that Henry George was explaining.
- nerdponx 8y ago
  Don't you think remote work could help break the cycle, at least for certain (e.g. white-collar) work?
  - nwah1 8y ago
    People like to live near amenities, transportation hubs, and so forth. And many types of jobs fundamentally cannot be remote. And even if hypothetically everywhere became equally viable to live, then rents would adjust to take that into account. Of course, those with special skills will always do better. And geo-arbitrage opportunities exist during interim periods for early adopters of new folkways and new technologies.
    - vorg 8y ago
      Don't forget both the carrot and stick are at work here. Not only do new paradigms get factored into the price of land (as demand-side forces), but also laws backed by land owners arise that resist those paradigms from becoming mainstream (as supply-side forces). So car ownership and urban roads are heavily regulated, dual incomes are taxed at a higher rate, social security will never become a universal basic income, and security/privacy and OHS legal requirements will affect the viability of remote work.

conanbatt 8y ago

One of the best economic history books. I was convinced 100% on this argument and have never found anyone able to criticize it ,other than "it wont be as good as he claims". Funny thing: Henry George is complaining about poverty and homelessness in California in 1895. Funny thing 2: Land Value Tax is recognized as a great tax both by right/left win economists (Kruger, Milton Friedman, etc).

kspaans 8y ago
I'm also a fan of LVT, and have only ever found one reasonable rebuttal (at least from the perspective of municipal financing in Canada): https://seekingalpha.com/article/4176102-principles-canadian-municipal-finance-land-value-tax-inferior https://seekingalpha.com/article/4176102-principles-canadian...
- conanbatt 8y ago
  Very interesting read! I disagree intuitively with his "Rebuttals". 1- he claims its hard to know the value of land. It is not: there is a big market for land and you can absolutely appraise it. 2- He claims they are regressive, and puts two examples: a young man in a mcmansion vs an old man in a bungalow. Well, the old man is taking more space than the young man. It is most obvious in a place like the bay area where 6 figure salary people live with 2+ roomates while old timers have a single family home and pay reduced prop taxes. His second argument is that old people that have homes would be hit most by this tax, and that is bad. I say hell no: they have a house they can sell. Why does a 19 year-old minimumn wage worker pay taxes to subsidize an old person that has a home? 3- Ideologically he introduced also the issue with the capacity to pay. Of course taxes have to be payable and counter-cyclical, but that is not fixed by a sales tax or VAT which is super cyclical. Second, the payable part implies that taxes have to be levied based on capacity, not on value. So its ok to not tax a poor robber, but it is ok to tax a rich productive person. This ideology seeps into the previous argument of "old people dont produce, so they shouldnt pay taxes, while young renters do produce and should pay taxes".
  - ABCLAW 8y ago