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Comparing land to capital misses some important differences, that economists have recognized. Land is a scarce resource with a fixed supply. If I want to rent

Comparing land to capital misses some important differences, that economists have recognized. Land is a scarce resource with a fixed supply. If I want to rent land in SF, I don't too many options. And the demand is increasing, since everyone needs land to exist, and the population (at least in cities) is increasing. This gives the landlords a monopoly (see the law of rent: https://en.wikipedia.org/wiki/Law_of_rent https://en.wikipedia.org/wiki/Law_of_rent). In the case of loans, if I don't like your rate, I can simply go to a different lender. Secondly, can you point out what we lose if the landlords doesn't exist? If lending doesn't exist, there's businesses that would have started, but can not anymore, since they may not have enough capital to get off the ground. If landlords don't exists, the land is still there, and we lost nothing, since land can't be created or destroyed. > Let me introduce you to some landlords who went bankrupt in 2008. My point is not that being a landlord has no risk. Rather, I'm saying that the returns from land do not come at all from the value that the landlord provides, which is not the case for lending, or other productive activities.

refurb 6y ago
If landlords don't exists, the land is still there, and we lost nothing, since land can't be created or destroyed. If landlords don't exist, people couldn't have a place to live unless they could purchase themselves. I think landlords are great - I can get a nice place to live and have none of the risk the landlord does. Property prices go down? I don't care. House burns down? I don't care. If I want to pick up and leave in a year? Great, here's notice. No real estate fees, paperwork, etc. I think landlords offer a fantastic service.
- neilparikh 6y ago
  Two points I want to make. > House burns down? I don't care. You're conflating land rents and building rents. The "landlord", in their position as the building owner clearly provides a valuable service: the upfront capital/labour to construct the building and the maintenance. I'm not saying this shouldn't exists; it definitely should. They should capture all the profits that come from the rent you pay because of the building. My point is simply that they shouldn't be able to profit from the landownership itself. > people couldn't have a place to live unless they could purchase themselves. > Property prices go down? I don't care. The only reason land has a purchase cost in the first place is because you can extract a rent from it indefinitely. If land did not allow you to extract a rent from it in perpetuity [0], the purchase price would go to zero. [0] - we can achieve this through a land value tax equal to the rent you could extract from the land.
  - imtringued 6y ago
    You don't seem to understand what the term rent means. It's the act of giving someone temporary access to something and charging based on the amount of time it has been used. That's a pretty useful service if you don't have enough money to outright own your house or apartment.
    - neilparikh 6y ago
      Do you really think I don't understand what rent means? I pay rent every month, I better go figure out what it is I'm actually paying... I'm not proposing we do away with rent as a concept. In the current situation, when you pay rent, you're really paying two rents combined. The first rent corresponds to renting the land the building is on. This rent is why an equivalent apartment has a higher rent in SF than it does in Detroit or Houston. The second rent corresponds to renting the building/unit itself. This rent is why a 2 bedroom apartment has a higher rent than a 1 bedroom apartment. Now, the first rent is entirely uncorrelated with the value the landlord provides. It is essentially paid due to the landlord owning a monopoly on scarce good, which is only valuable due the community and government putting the effort to make the area valuable. Someone who owns land in downtown NYC didn't make it valuable, it became valuable because the government built the infrastructure to make the city livable, and the other residents made the city into a place where people want to live. Therefore, it's only fair that this rent goes to the commons rather than the landowner, where it can then be used to fund the government, rather than through other taxes. What I propose is a land value tax equal to this land rent, so it is returned to the commons. The owner is still free to keep the rent from the building. This ideology is https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism, and is pretty well supported from both an economic and fairness perspective.
      - kamaal 6y ago
        Unless you can magically bring a home into existence, you will always pay for it in some way: Taxes, Interest, Rent. And any one issuing any money to build anything won't be doing it unless it is profitable. What you are against is basically profit. Unfortunately there is no way to arrive here(even with taxes) unless you can arrive at 0 inflation.
imtringued 6y ago
>Secondly, can you point out what we lose if the landlords doesn't exist? You now need a $1.4 million loan to live in an apartment.

refurb 6y ago

If landlords don't exists, the land is still there, and we lost nothing, since land can't be created or destroyed. If landlords don't exist, people couldn't have a place to live unless they could purchase themselves. I think landlords are great - I can get a nice place to live and have none of the risk the landlord does. Property prices go down? I don't care. House burns down? I don't care. If I want to pick up and leave in a year? Great, here's notice. No real estate fees, paperwork, etc. I think landlords offer a fantastic service.

neilparikh 6y ago
Two points I want to make. > House burns down? I don't care. You're conflating land rents and building rents. The "landlord", in their position as the building owner clearly provides a valuable service: the upfront capital/labour to construct the building and the maintenance. I'm not saying this shouldn't exists; it definitely should. They should capture all the profits that come from the rent you pay because of the building. My point is simply that they shouldn't be able to profit from the landownership itself. > people couldn't have a place to live unless they could purchase themselves. > Property prices go down? I don't care. The only reason land has a purchase cost in the first place is because you can extract a rent from it indefinitely. If land did not allow you to extract a rent from it in perpetuity [0], the purchase price would go to zero. [0] - we can achieve this through a land value tax equal to the rent you could extract from the land.
- imtringued 6y ago
  You don't seem to understand what the term rent means. It's the act of giving someone temporary access to something and charging based on the amount of time it has been used. That's a pretty useful service if you don't have enough money to outright own your house or apartment.
  - neilparikh 6y ago
    Do you really think I don't understand what rent means? I pay rent every month, I better go figure out what it is I'm actually paying... I'm not proposing we do away with rent as a concept. In the current situation, when you pay rent, you're really paying two rents combined. The first rent corresponds to renting the land the building is on. This rent is why an equivalent apartment has a higher rent in SF than it does in Detroit or Houston. The second rent corresponds to renting the building/unit itself. This rent is why a 2 bedroom apartment has a higher rent than a 1 bedroom apartment. Now, the first rent is entirely uncorrelated with the value the landlord provides. It is essentially paid due to the landlord owning a monopoly on scarce good, which is only valuable due the community and government putting the effort to make the area valuable. Someone who owns land in downtown NYC didn't make it valuable, it became valuable because the government built the infrastructure to make the city livable, and the other residents made the city into a place where people want to live. Therefore, it's only fair that this rent goes to the commons rather than the landowner, where it can then be used to fund the government, rather than through other taxes. What I propose is a land value tax equal to this land rent, so it is returned to the commons. The owner is still free to keep the rent from the building. This ideology is https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism, and is pretty well supported from both an economic and fairness perspective.
    - kamaal 6y ago
      Unless you can magically bring a home into existence, you will always pay for it in some way: Taxes, Interest, Rent. And any one issuing any money to build anything won't be doing it unless it is profitable. What you are against is basically profit. Unfortunately there is no way to arrive here(even with taxes) unless you can arrive at 0 inflation.

imtringued 6y ago

>Secondly, can you point out what we lose if the landlords doesn't exist? You now need a $1.4 million loan to live in an apartment.