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A San Franciscan figured it all out over one hundred years ago http://www.henrygeorge.org/pchp23.htm http://www.henrygeorge.org/pchp23.htm > THE GREAT PROBLEM

by rcpt 7y ago

A San Franciscan figured it all out over one hundred years ago http://www.henrygeorge.org/pchp23.htm http://www.henrygeorge.org/pchp23.htm > THE GREAT PROBLEM IS SOLVED. We are able to explain social phenomena that have appalled philanthropists and perplexed statesmen all over the civilized world. We have found the reason why wages constantly tend to a minimum, giving but a bare living, despite increase in productive power: > As productive power increases, rent tends to increase even more — constantly forcing down wages. > Advancing civilization tends to increase the power of human labor to satisfy human desires. We should be able to eliminate poverty. But workers cannot reap these benefits because they are intercepted. Land is necessary to labor. When it has been reduced to private ownership, the increased productivity of labor only increases rent. Thus, all the advantages of progress go to those who own land. Wages do not increase — wages cannot increase. The more labor produces, the more it must pay for the opportunity to make anything at all.

throwaway156503 7y ago
As much as I appreciate some historical commentary on the matter, none of this is revolutionary thought, and the concept is widely understood by the most common everyman. There's nothing left here to ponder nor any insight to extract. I'll try add to this, though. Yes, rent and land forces down wages, but it's not just your fellow countryman doing it anymore (in so much as a citizen who is not a proprietor of a real-estate driven capital venture), it's companies like Progress Residential and other REITs that are fueled by the financial world to purchase homes and be your new neighbor. Yes, soon capital structures invested in such companies will mean that organizations like McDonalds and Starbucks will, in the grapevines of their institutional accounts, own a share of an REIT that owns homes in your neighborhood. They will be your new community, and soon your new landlords. I think the developed worlds should do as New Zealand and other nations caught on to, and protect their citizens from unscrupulous investors, foreign and domestic, looking to prey on the common man looking for a home to purchase. If a new wave of residential economic folly were to come upon us, the people waiting in the shadows are not individuals with deep pockets looking to become your future rent seeker, but entire institutions looking to purchase neighborhoods wholesale. I think we owe it to our children and those around us to push for non-partisan legislature that prevent such cancers from overtaking our countries.
- erentz 7y ago
  > ...the developed worlds should do as New Zealand... The NZ foreign buyer ban is incredibly weak. For one it’s only on existing homes. Foreigners can still buy land and buy newly built homes with the land under them. There are also plenty of ways around it buying through third parties, etc. On top of this NZ has failed to introduce a capital gains tax on houses. House prices there are some of the most expensive in the world.
  - throwaway156503 7y ago
    It certainly sounds like they need to do more. I wasn't aware of these loopholes. Thanks for pointing that out.
deleted 7y ago
[deleted]
simplecomplex 7y ago
Sounds nice but the devil is in the details. Land value tax would be determined arbitrarily not by the market. It’s sounds great if you ignore the problem of actually assessing unimproved land value. Of course we know “value” is just the amount of money someone traded for something, so Georgism can’t be implemented practically. When you stop thinking about how awesome LVT is and think about how to calculate it, the whole theory falls apart.
- rcpt 7y ago
  This sounds like an argument to abolish all property taxes. No? Land value assessments should be easier than typical property assessments (which take into account land value already), cf https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment/appraisal https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment/ap...
  - simplecomplex 7y ago
    Pretty much. An assessor can write down any assessment they want. All assessed value taxes have this problem. The value I attribute to something can only be objectively defined by a market transaction. And more importantly, people attribute different values to the same thing. This is simple to illustrate by example: Three people are willing to buy the same property at different maximum prices. Person A is willing to buy at $35k, person B at $30k, and person C at $25k. Any value an assessor writes down will necessarily be different than one of the three people. There is no dollar value intrinsic to the property itself.
    - rcpt 7y ago
      So, because land value assessments are easier than property assessments, we should get a smaller margin of error by switching to a LVT. This is good. Your other point seems to be that no margin of error is acceptable and we should therefore ditch the whole thing. It's not clear that the societal pain from somewhat inaccurate tax assessments is great enough that we should just set everything to 0. We have lots of data that 0 property tax leads to housing shortages and rampant speculation (cf. Malta for an example) and if you don't tax land ownership you often end up taxing something productive, like income.
DoreenMichele 7y ago
Our current issues in the US are partly due to tearing down a million SROs and largely zoning out of existence the ability to create the type of housing being called "Missing Middle" housing. In the 1950s, the average new house was 1200 sqft and held 3.5 people. Today, the average new house is about twice that size and holds one less person. We simply no longer build or even allow small spaces in a walkable urban fabric where you can live without a car. The few that have been grandfathered in tend to be very expensive because it's such a wonderful quality of life and we don't build like that anymore.
baybal2 7y ago
This is called rentierism, and there are rentierist societies - where the entire societal fabric has been shaped for the benefit of a rentier class, and protection of their rents. Usually people in the West associate the later with some banana republics or petrostates, but... I believe it is intellectually dishonest to omit Western idolisation of rentier lifestyle. Compare a desert tribe jealously protecting their oil derrick, and how, say, IP lawyers protect their patents, real estate hoarders protect their turf, and high finance people protecting their regulatory watering holes. The most high societal class in US are the people who master the manipulation of artificial scarcities: securities, permits, licenses, legal patents, royalties, copyrights, and etcetera. And this is pretty much the shopping list that well off, and well connected give to their children by mid thirties.
xivzgrev 7y ago
So what’s the alternative? Suppose we banish all private land ownership in San Francisco. What then? It seems like demand for space is so high people would fight each other to carve out their space. And if you build a house what would stop someone else from tearing it down and building their own while you are on vacation? Alternatively the government turns into the only landlord, deciding who can build what where.

by rcpt 7y ago

throwaway156503 7y ago

As much as I appreciate some historical commentary on the matter, none of this is revolutionary thought, and the concept is widely understood by the most common everyman. There's nothing left here to ponder nor any insight to extract. I'll try add to this, though. Yes, rent and land forces down wages, but it's not just your fellow countryman doing it anymore (in so much as a citizen who is not a proprietor of a real-estate driven capital venture), it's companies like Progress Residential and other REITs that are fueled by the financial world to purchase homes and be your new neighbor. Yes, soon capital structures invested in such companies will mean that organizations like McDonalds and Starbucks will, in the grapevines of their institutional accounts, own a share of an REIT that owns homes in your neighborhood. They will be your new community, and soon your new landlords. I think the developed worlds should do as New Zealand and other nations caught on to, and protect their citizens from unscrupulous investors, foreign and domestic, looking to prey on the common man looking for a home to purchase. If a new wave of residential economic folly were to come upon us, the people waiting in the shadows are not individuals with deep pockets looking to become your future rent seeker, but entire institutions looking to purchase neighborhoods wholesale. I think we owe it to our children and those around us to push for non-partisan legislature that prevent such cancers from overtaking our countries.

erentz 7y ago
> ...the developed worlds should do as New Zealand... The NZ foreign buyer ban is incredibly weak. For one it’s only on existing homes. Foreigners can still buy land and buy newly built homes with the land under them. There are also plenty of ways around it buying through third parties, etc. On top of this NZ has failed to introduce a capital gains tax on houses. House prices there are some of the most expensive in the world.
- throwaway156503 7y ago
  It certainly sounds like they need to do more. I wasn't aware of these loopholes. Thanks for pointing that out.

deleted 7y ago

[deleted]

simplecomplex 7y ago

Sounds nice but the devil is in the details. Land value tax would be determined arbitrarily not by the market. It’s sounds great if you ignore the problem of actually assessing unimproved land value. Of course we know “value” is just the amount of money someone traded for something, so Georgism can’t be implemented practically. When you stop thinking about how awesome LVT is and think about how to calculate it, the whole theory falls apart.

rcpt 7y ago
This sounds like an argument to abolish all property taxes. No? Land value assessments should be easier than typical property assessments (which take into account land value already), cf https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment/appraisal https://en.m.wikipedia.org/wiki/Land_value_tax#Assessment/ap...
- simplecomplex 7y ago
  Pretty much. An assessor can write down any assessment they want. All assessed value taxes have this problem. The value I attribute to something can only be objectively defined by a market transaction. And more importantly, people attribute different values to the same thing. This is simple to illustrate by example: Three people are willing to buy the same property at different maximum prices. Person A is willing to buy at $35k, person B at $30k, and person C at $25k. Any value an assessor writes down will necessarily be different than one of the three people. There is no dollar value intrinsic to the property itself.
  - rcpt 7y ago
    So, because land value assessments are easier than property assessments, we should get a smaller margin of error by switching to a LVT. This is good. Your other point seems to be that no margin of error is acceptable and we should therefore ditch the whole thing. It's not clear that the societal pain from somewhat inaccurate tax assessments is great enough that we should just set everything to 0. We have lots of data that 0 property tax leads to housing shortages and rampant speculation (cf. Malta for an example) and if you don't tax land ownership you often end up taxing something productive, like income.

DoreenMichele 7y ago

Our current issues in the US are partly due to tearing down a million SROs and largely zoning out of existence the ability to create the type of housing being called "Missing Middle" housing. In the 1950s, the average new house was 1200 sqft and held 3.5 people. Today, the average new house is about twice that size and holds one less person. We simply no longer build or even allow small spaces in a walkable urban fabric where you can live without a car. The few that have been grandfathered in tend to be very expensive because it's such a wonderful quality of life and we don't build like that anymore.

baybal2 7y ago

This is called rentierism, and there are rentierist societies - where the entire societal fabric has been shaped for the benefit of a rentier class, and protection of their rents. Usually people in the West associate the later with some banana republics or petrostates, but... I believe it is intellectually dishonest to omit Western idolisation of rentier lifestyle. Compare a desert tribe jealously protecting their oil derrick, and how, say, IP lawyers protect their patents, real estate hoarders protect their turf, and high finance people protecting their regulatory watering holes. The most high societal class in US are the people who master the manipulation of artificial scarcities: securities, permits, licenses, legal patents, royalties, copyrights, and etcetera. And this is pretty much the shopping list that well off, and well connected give to their children by mid thirties.

xivzgrev 7y ago

So what’s the alternative? Suppose we banish all private land ownership in San Francisco. What then? It seems like demand for space is so high people would fight each other to carve out their space. And if you build a house what would stop someone else from tearing it down and building their own while you are on vacation? Alternatively the government turns into the only landlord, deciding who can build what where.