5 ms·

“Every increase in the real wealth of the society, every increase in the quantity of useful labour employed within it, tends indirectly to raise the real rent o

“Every increase in the real wealth of the society, every increase in the quantity of useful labour employed within it, tends indirectly to raise the real rent of land.” -Adam Smith, “The Wealth Of Nations”

ajmurmann 7y ago
Yes, that's why we need to get more bang out of the same land.
- epistasis 7y ago
  And perhaps tax away those ground rents, removing the hugely inefficient speculative drive: https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
  - noobermin 7y ago
    I did some digging into this at some point seeing it mentioned on a Strong Town's article. It looks like a city that tried to do it had it repealed because it didn't work as a merely city level tax[0], amongst other issues. [0] https://www.washingtonexaminer.com/the-short-life-of-pennsylvanias-radical-tax-reform https://www.washingtonexaminer.com/the-short-life-of-pennsyl...
    - zzzzzzzza 7y ago
      there's many more examples of lvt than just altoona https://www.reddit.com/r/georgism/comments/68mvkh/examples_of_success_under_a_lvt/ https://www.reddit.com/r/georgism/comments/68mvkh/examples_o... not all the examples listed were permanently successful, e.g. both pittsburg and taiwan allowed their property valuations to fall far behind the true value of the land (in pittsburgs case once they reassessed the value of the land to reflect market value, the lvt ended up being repealed; in taiwan this behavior has contributed to a huge property bubble) other examples are missing, e.g. possibly the best historical example of lvt (since it was the only tax levied), is kiatschou/tsingtao, the germany holding in china prior to ww1.
cheriot 7y ago
Maybe I'm misunderstanding the quote, but home prices aren't going up because of an "increase in the quantity of useful labour employed within it". These are just dumb city planning decisions: Hey, I'm going to permit an increasing number of offices in this downtown and not allow denser housing. Drive until you qualify, millennials.
- oceanghost 7y ago
  Forgive me for being obtuse. You said: > As housing prices and commute times go up so does the price of everything that involves human labor. Which in my estimation was a restatement of the Adam Smith quote. You approached the issue from a different direction... but it all works out in the end. Housing prices cannot increase without the capital to drive them up. I was merely agreeing with you in quote format.
  - dredmorbius 7y ago
    Different mechanisms. The Smith quote is a demand-side dynamic: increased wealth > increased activity > increased demand. Sprawl is a supply-side dynamic, increasing the minimum viable cost floor: greater sprawl, greater frictions, transport and commute delays, congestion and travel costs. For a given unit of labour you're incurring a greater overhead in (dead) travel time. Efficiency is decreasing, but labour demands its minimum viable wage.
- momokoko 7y ago
  Can you then explain why many cities where the population is declining in the US are seeing housing prices go up? For example Buffalo, Pittsburgh and Cleveland?
  - dsfyu404ed 7y ago
    Are they going up substantially more than inflation over the same time period? Housing stock tends to shrink with population since in a renters market there's less incentive for landlords to keep properties in rent-able condition. For example, an apartment remodel that might have been sub'd out for $10k and done in a month instead takes $5k and is done over the course of a year. When some % of all landlords start doing this to some % of properties it takes a chunk out of available supply and rents stay the same-ish.

ajmurmann 7y ago

Yes, that's why we need to get more bang out of the same land.

epistasis 7y ago
And perhaps tax away those ground rents, removing the hugely inefficient speculative drive: https://en.m.wikipedia.org/wiki/Land_value_tax https://en.m.wikipedia.org/wiki/Land_value_tax
- noobermin 7y ago
  I did some digging into this at some point seeing it mentioned on a Strong Town's article. It looks like a city that tried to do it had it repealed because it didn't work as a merely city level tax[0], amongst other issues. [0] https://www.washingtonexaminer.com/the-short-life-of-pennsylvanias-radical-tax-reform https://www.washingtonexaminer.com/the-short-life-of-pennsyl...
  - zzzzzzzza 7y ago
    there's many more examples of lvt than just altoona https://www.reddit.com/r/georgism/comments/68mvkh/examples_of_success_under_a_lvt/ https://www.reddit.com/r/georgism/comments/68mvkh/examples_o... not all the examples listed were permanently successful, e.g. both pittsburg and taiwan allowed their property valuations to fall far behind the true value of the land (in pittsburgs case once they reassessed the value of the land to reflect market value, the lvt ended up being repealed; in taiwan this behavior has contributed to a huge property bubble) other examples are missing, e.g. possibly the best historical example of lvt (since it was the only tax levied), is kiatschou/tsingtao, the germany holding in china prior to ww1.

cheriot 7y ago

Maybe I'm misunderstanding the quote, but home prices aren't going up because of an "increase in the quantity of useful labour employed within it". These are just dumb city planning decisions: Hey, I'm going to permit an increasing number of offices in this downtown and not allow denser housing. Drive until you qualify, millennials.

oceanghost 7y ago
Forgive me for being obtuse. You said: > As housing prices and commute times go up so does the price of everything that involves human labor. Which in my estimation was a restatement of the Adam Smith quote. You approached the issue from a different direction... but it all works out in the end. Housing prices cannot increase without the capital to drive them up. I was merely agreeing with you in quote format.
- dredmorbius 7y ago
  Different mechanisms. The Smith quote is a demand-side dynamic: increased wealth > increased activity > increased demand. Sprawl is a supply-side dynamic, increasing the minimum viable cost floor: greater sprawl, greater frictions, transport and commute delays, congestion and travel costs. For a given unit of labour you're incurring a greater overhead in (dead) travel time. Efficiency is decreasing, but labour demands its minimum viable wage.
momokoko 7y ago
Can you then explain why many cities where the population is declining in the US are seeing housing prices go up? For example Buffalo, Pittsburgh and Cleveland?
- dsfyu404ed 7y ago
  Are they going up substantially more than inflation over the same time period? Housing stock tends to shrink with population since in a renters market there's less incentive for landlords to keep properties in rent-able condition. For example, an apartment remodel that might have been sub'd out for $10k and done in a month instead takes $5k and is done over the course of a year. When some % of all landlords start doing this to some % of properties it takes a chunk out of available supply and rents stay the same-ish.