6 ms·

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block

Road networks are a great example. Just assume the hypothetical position of a competitor. Where are you gonna build a competing road in, say, NYC? Each block only has 4 sides, and each of them already has a street. You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it. Build a competing water supply network to each house? Another set of sewers? Electricity distribution? Hell no. IMHO all of these things should be communal property & development. The preconditions for free market are not met, it's not possible to compete; so the whole market equation falls apart. Hand the operation & maintenance out to some company or whatever, there it's possible to compete. But not the actual physical infrastructure.

ethanbond 6y ago
What about housing itself? There is only one building that can exist at 100 1st Ave, and its location is entirely unique/entirely monopolized.
- snidane 6y ago
  That's actually land monopoly problem. Ie. whoever came first to claim the land has exclusive use rights on it forever, or as long as his descendants go. It's yet another monopoly problem even though it doesn't look like it at first glance. Each house basically sits on a piece of mlonopoly for the parcel below it, preventing others from use. It's not much of a big deal in general, but in congested big cities, it is a problem. It's the cause of high rents (by Ricardo's law od rent). The solution is also a kind of monopoly tax - land value tax (LVT). You pay yearly percentage of the market value. Achieving almost optimal allocation instead of current hereditary one.
  - yourapostasy 6y ago
    > You pay yearly percentage of the market value. Establishing "market value" is the rub. Texas for example, does not make real estate sales prices public. This has a lot of perverse effects, one of which is deep-pocketed commercial interests have pummeled public assessors until commercial property is tacitly way undervalued for tax purposes, yet is openly sold for much more than the purported tax basis. I've heard of a system I found interesting (but alas, can no longer find a reference to link) to competitively establish tax basis on commercial real estate (I wouldn't want this on natural person owner-occupied residential). You claim whatever tax basis you want. It gets published in the open. Whoever can put up completely unencumbered cash over the barrel for that basis + 7% or more though, can purchase the property. And by unencumbered, I mean not even investor syndication. Real, natural person, outright first and only lien on the cash, absolutely no liens tolerated against the property tied directly or indirectly to the cash. Cash goes into government-controlled escrow. Current owner has one year to pay difference on one year's worth of new imputed tax basis represented by the escrowed cash, and continue from that point forward with the new basis. If the owner comes up with it, the bidder loses 6% of the cash (or whatever the real estate industry commission structure is at that time in that locality) to the local government as commission to facilitate the price discovery. Bidder can increase bid at any time by adding to escrow account, until either current owner "sells" to bidder (and escrow releases 100% to the current owner, no commission), or bidder walks. I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use.
    - imtringued 6y ago
      Isn't it possible to just make assessments for the entire block? Count the population density, commercial density, foot and car traffic and base the land value tax on those indicators.
    - mschuster91 6y ago
      > I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use. There is one major consequence: investor/VC backed/mega-rich major chains would instantly drown out family owned and small businesses that can't compete with gentrification. This is already a plague with Walmart and Amazon absolutely flattening local economies, your proposal would make it an epidemic of yet-unimaginable scale.
      - yourapostasy 6y ago
        Whoever I found this from, they put in the "natural person" and "unencumbered" parts for exactly this reason I suspect. Bidders cannot even have any debt. Zero whatsoever. I'm guessing the one year waiting period is also for creditors to discover and nullify any potential conflicting use of cash they might want to attach? I remembered it as they wanted to zero out as much as possible all leverage from the price discovery. Like I said, I found the entire idea of a competitive market in price discovery to establish tax basis fascinating, not the specific implementation details.
    - rout39574 6y ago
      Is there more "game the system" necessary than to say I have no right not to sell? This strategy is just privatizing, and then trivializing, eminent domain.
- eqvinox 6y ago
  The fact that it's unique/monopolized doesn't mean that competition is hampered. The building (or land parcel) at 100 1st Ave does not provide a service that is ubiquitously needed by almost the entire populace. If anything, this strengthens the argument. You can buy/rent/... a different parcel nearby, and this only affects you and your planned use of the building. But you can't switch to a different road network, and this affects everyone in their daily life. That said, I also agree with the sibling post that this is also a problem, just of a different kind.
- imtringued 6y ago
  Housing isn't the problem here but as you said correctly, it's the land ownership that is problematic. If we assume that house owners merely rent the land then it's perfectly fine to build a private housing market since housing needs can differ drastically between citizens. Some need a big house for a large family with lots of children, others only need a studio apartment. Some people want a home workshop or a home office. The market finds a satisfying solution for everyone. Land ownership is problematic because neighborhood improvements can be extracted via land ownership. The most effective policy against this extraction is to simply tax the land itself and thus turn it into a liability if the value of the land grows. Ideally, property taxes would be replaced with land value taxes. If land is a liability the only reason why people would purchase it is to improve the value of the land and make it available for productive uses like renting it out to a large number of people.
bko 6y ago
I don't know if NYC infrastructure is a good example. The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo > The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world Similarly, the fare only covers around 50% of the operating costs which hardly seems fair for NY state taxpayers that pick up the expense despite receiving no benefit. The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways. For getting into/out of the city, you have a number of bridges. For instance, I can take Lincoln tunnel, Holland Tunnel or ferry. It would be great to have more options and obviously its not easy to build tunnels, but private ferry and water cab services could be expanded [0] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-... [1] https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-fair-fare-transit-experts-talk-proper-pricing https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-...
- rocqua 6y ago
  Its an interesting example, subways seem to have some minor room for competition, so the argument against privatization based on "there cannot be competition" does not quite apply. Even here though, there is a coordination problem to ensure various companies remain mutually compatible.
  - eqvinox 6y ago
    Competition on public transport is limited by the fact that you often need a cohesive network to get from A to B via C & D. If multiple companies cooperate on crossover ticketing and align their schedules, yes, it can work. Even more likely to work is a model where a central authority opens tenders for specific services, and transport companies can compete on that. Then again, I don't think it's viable to build subway tracks and tunnels to compete. Even if you have space under the earth, there may not be space for more stations, and good station locations are important too.
rini17 6y ago
Bore a tunnel!
m4rtink 6y ago
Seems to work fine in Japan for railways - there are three different rail connections from Tokyo to the Narita International Airport for example, each run by a different company (at the same time, we have 0 rail/subway connections to the Prague Airport:P). Same thing in many other places - in Kyoto there is big and nicely build station by JR and, Transport Tycon style 200 meters from it another big station by IIRC Kintetsu. Or in the middle of Tokyo, the Minami Senju station is effectively three station - One on the JR Joban line, one on Tokyo Metro and deep bellow another one on the Tsukuba express line. So its definitelydoable, even in the most densely populated of places, at least with rail. Also when you compare with places that have little to no competitionon the rail network you can clearly see the lack of service quality resulting from that. Well, if you get any service at all. :P
- hinoki 6y ago
  I just found this [0] paper about the development of the Tsukuba Express, one of the more recent train lines into central Tokyo. Land owners whose land is taken away are given new plots of land that are smaller, but closer to stations. These smaller plots are worth more than the original land because they are now near (future) train stations. [0] http://www.wctrs-society.com/wp-content/uploads/abstracts/rio/selected/2800.pdf http://www.wctrs-society.com/wp-content/uploads/abstracts/ri...
  - m4rtink 6y ago
    That's really clever idea, no wonder they can get it to work, thanks for the article! BTW, that's something else I noticed in Japan - train stations are almost always hubs of commercial and often also cultural activity - there are shops, hotels, good restaurants and often also galleries, event spaces, monuments and even the buildings themselves are often architectonic masterpieces (for example JR Kyoto station, just check it out!). This definitely helps with passenger numbers and keeps the whole thing sustainable not to mention profitable. In comparison Czech & Slovak railway stations (Prague, Brno, Bratislava) are often run down, dirty, fregvented by questionable people who aren't going to ride the trains and any shops or food places are cheap low quality ones. As a result one tries to spend as little as possible on these train station, let alone spend there any money for the few sub-par amenities available. It's really strange why it is like this, given the missed commercial opportunities, seems to be much better in other european countries (Vienna, Eindhoven, etc.).
mschuster91 6y ago
> Hand the operation & maintenance out to some company or whatever, there it's possible to compete. Oh no. Construction, operation and maintenance of electricity and other vital networks (water, gas, sewage, telecommunication) should be done by the government as a government agency with a quality of service mandate and not in form of a profit-oriented company no matter if government owned or private owned / publicly traded - because "competition" and/or a focus on costs is always going to end in price and wage dumping, cutting corners and sometimes in deathly disasters (California fires caused by cutting costs on maintenance, Flint water scandal, Texas infrastructure collaps due to un-hardened systems, ...).

ethanbond 6y ago

What about housing itself? There is only one building that can exist at 100 1st Ave, and its location is entirely unique/entirely monopolized.

snidane 6y ago
That's actually land monopoly problem. Ie. whoever came first to claim the land has exclusive use rights on it forever, or as long as his descendants go. It's yet another monopoly problem even though it doesn't look like it at first glance. Each house basically sits on a piece of mlonopoly for the parcel below it, preventing others from use. It's not much of a big deal in general, but in congested big cities, it is a problem. It's the cause of high rents (by Ricardo's law od rent). The solution is also a kind of monopoly tax - land value tax (LVT). You pay yearly percentage of the market value. Achieving almost optimal allocation instead of current hereditary one.
- yourapostasy 6y ago
  > You pay yearly percentage of the market value. Establishing "market value" is the rub. Texas for example, does not make real estate sales prices public. This has a lot of perverse effects, one of which is deep-pocketed commercial interests have pummeled public assessors until commercial property is tacitly way undervalued for tax purposes, yet is openly sold for much more than the purported tax basis. I've heard of a system I found interesting (but alas, can no longer find a reference to link) to competitively establish tax basis on commercial real estate (I wouldn't want this on natural person owner-occupied residential). You claim whatever tax basis you want. It gets published in the open. Whoever can put up completely unencumbered cash over the barrel for that basis + 7% or more though, can purchase the property. And by unencumbered, I mean not even investor syndication. Real, natural person, outright first and only lien on the cash, absolutely no liens tolerated against the property tied directly or indirectly to the cash. Cash goes into government-controlled escrow. Current owner has one year to pay difference on one year's worth of new imputed tax basis represented by the escrowed cash, and continue from that point forward with the new basis. If the owner comes up with it, the bidder loses 6% of the cash (or whatever the real estate industry commission structure is at that time in that locality) to the local government as commission to facilitate the price discovery. Bidder can increase bid at any time by adding to escrow account, until either current owner "sells" to bidder (and escrow releases 100% to the current owner, no commission), or bidder walks. I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use.
  - imtringued 6y ago
    Isn't it possible to just make assessments for the entire block? Count the population density, commercial density, foot and car traffic and base the land value tax on those indicators.
  - mschuster91 6y ago
    > I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use. There is one major consequence: investor/VC backed/mega-rich major chains would instantly drown out family owned and small businesses that can't compete with gentrification. This is already a plague with Walmart and Amazon absolutely flattening local economies, your proposal would make it an epidemic of yet-unimaginable scale.
    - yourapostasy 6y ago
      Whoever I found this from, they put in the "natural person" and "unencumbered" parts for exactly this reason I suspect. Bidders cannot even have any debt. Zero whatsoever. I'm guessing the one year waiting period is also for creditors to discover and nullify any potential conflicting use of cash they might want to attach? I remembered it as they wanted to zero out as much as possible all leverage from the price discovery. Like I said, I found the entire idea of a competitive market in price discovery to establish tax basis fascinating, not the specific implementation details.
  - rout39574 6y ago
    Is there more "game the system" necessary than to say I have no right not to sell? This strategy is just privatizing, and then trivializing, eminent domain.
eqvinox 6y ago
The fact that it's unique/monopolized doesn't mean that competition is hampered. The building (or land parcel) at 100 1st Ave does not provide a service that is ubiquitously needed by almost the entire populace. If anything, this strengthens the argument. You can buy/rent/... a different parcel nearby, and this only affects you and your planned use of the building. But you can't switch to a different road network, and this affects everyone in their daily life. That said, I also agree with the sibling post that this is also a problem, just of a different kind.
imtringued 6y ago
Housing isn't the problem here but as you said correctly, it's the land ownership that is problematic. If we assume that house owners merely rent the land then it's perfectly fine to build a private housing market since housing needs can differ drastically between citizens. Some need a big house for a large family with lots of children, others only need a studio apartment. Some people want a home workshop or a home office. The market finds a satisfying solution for everyone. Land ownership is problematic because neighborhood improvements can be extracted via land ownership. The most effective policy against this extraction is to simply tax the land itself and thus turn it into a liability if the value of the land grows. Ideally, property taxes would be replaced with land value taxes. If land is a liability the only reason why people would purchase it is to improve the value of the land and make it available for productive uses like renting it out to a large number of people.

bko 6y ago

I don't know if NYC infrastructure is a good example. The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo > The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world Similarly, the fare only covers around 50% of the operating costs which hardly seems fair for NY state taxpayers that pick up the expense despite receiving no benefit. The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways. For getting into/out of the city, you have a number of bridges. For instance, I can take Lincoln tunnel, Holland Tunnel or ferry. It would be great to have more options and obviously its not easy to build tunnels, but private ferry and water cab services could be expanded [0] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-... [1] https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-fair-fare-transit-experts-talk-proper-pricing https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-...

rocqua 6y ago
Its an interesting example, subways seem to have some minor room for competition, so the argument against privatization based on "there cannot be competition" does not quite apply. Even here though, there is a coordination problem to ensure various companies remain mutually compatible.
- eqvinox 6y ago
  Competition on public transport is limited by the fact that you often need a cohesive network to get from A to B via C & D. If multiple companies cooperate on crossover ticketing and align their schedules, yes, it can work. Even more likely to work is a model where a central authority opens tenders for specific services, and transport companies can compete on that. Then again, I don't think it's viable to build subway tracks and tunnels to compete. Even if you have space under the earth, there may not be space for more stations, and good station locations are important too.

rini17 6y ago

Bore a tunnel!

m4rtink 6y ago

Seems to work fine in Japan for railways - there are three different rail connections from Tokyo to the Narita International Airport for example, each run by a different company (at the same time, we have 0 rail/subway connections to the Prague Airport:P). Same thing in many other places - in Kyoto there is big and nicely build station by JR and, Transport Tycon style 200 meters from it another big station by IIRC Kintetsu. Or in the middle of Tokyo, the Minami Senju station is effectively three station - One on the JR Joban line, one on Tokyo Metro and deep bellow another one on the Tsukuba express line. So its definitelydoable, even in the most densely populated of places, at least with rail. Also when you compare with places that have little to no competitionon the rail network you can clearly see the lack of service quality resulting from that. Well, if you get any service at all. :P

hinoki 6y ago
I just found this [0] paper about the development of the Tsukuba Express, one of the more recent train lines into central Tokyo. Land owners whose land is taken away are given new plots of land that are smaller, but closer to stations. These smaller plots are worth more than the original land because they are now near (future) train stations. [0] http://www.wctrs-society.com/wp-content/uploads/abstracts/rio/selected/2800.pdf http://www.wctrs-society.com/wp-content/uploads/abstracts/ri...
- m4rtink 6y ago
  That's really clever idea, no wonder they can get it to work, thanks for the article! BTW, that's something else I noticed in Japan - train stations are almost always hubs of commercial and often also cultural activity - there are shops, hotels, good restaurants and often also galleries, event spaces, monuments and even the buildings themselves are often architectonic masterpieces (for example JR Kyoto station, just check it out!). This definitely helps with passenger numbers and keeps the whole thing sustainable not to mention profitable. In comparison Czech & Slovak railway stations (Prague, Brno, Bratislava) are often run down, dirty, fregvented by questionable people who aren't going to ride the trains and any shops or food places are cheap low quality ones. As a result one tries to spend as little as possible on these train station, let alone spend there any money for the few sub-par amenities available. It's really strange why it is like this, given the missed commercial opportunities, seems to be much better in other european countries (Vienna, Eindhoven, etc.).

mschuster91 6y ago

> Hand the operation & maintenance out to some company or whatever, there it's possible to compete. Oh no. Construction, operation and maintenance of electricity and other vital networks (water, gas, sewage, telecommunication) should be done by the government as a government agency with a quality of service mandate and not in form of a profit-oriented company no matter if government owned or private owned / publicly traded - because "competition" and/or a focus on costs is always going to end in price and wage dumping, cutting corners and sometimes in deathly disasters (California fires caused by cutting costs on maintenance, Flint water scandal, Texas infrastructure collaps due to un-hardened systems, ...).