7 ms·

> This is unsurprising. Take a step back and squint enough and you can see any wide-scale fiscal stimulus will be absorbed by land rent. This is the inverse of

> This is unsurprising. Take a step back and squint enough and you can see any wide-scale fiscal stimulus will be absorbed by land rent. This is the inverse of the Georgist observation that "all taxes come out of rent." All stimulus is absorbed by rent. So fiscal stimulus should be paired with some kind of rent control/regulation, then?

R0b0t1 5y ago
Multiple options: 1. Stimulus given faster than it can be absorbed into rents. 2. Progressive taxes on dwellings that are not primary residence. 3. Decrease the cost of new housing. Of those, I think the last is the most realistic. It is the only one that does not lead to a housing shortage.
- sooheon 5y ago
  Option 4, which is unrealistic due to entrenched interests, but economically and socially ideal: a higher tax on the unimproved value of land, a.k.a. ground rent, in return for a lower tax on improvements, labor, capital gains, sales, and everything else.
  - CalPointBreak 5y ago
    Something you guys are all ignoring: Taxes on primary residences. Constantly adjusting property tax has already lead to many people losing their property over the years. A better compromise might be that primary residences be either exempted from this new land value tax, or have it fixed to the time of purchase, not unlike Prop 12 used to (still does?) cover in California. The reason for this is that many people wish to settle down in one place. Some even take pride in living in the same location generation after generation. While many modern digital age people either forget, or don't understand that, variable property values could easily lose someone on fixed, little, or no income their property, livelihood, etc. As far as commercial, corporate owned, and high density residential, along with non-homesteaded agriculture properties go, this might not be the worst idea. But at the same time it is just as likely to favor corporations and venture capital over individual owner/operators and their scrimp and save. Efficiency only matters if the rewards of said efficiency lift up the collective populace of society. If they simply consolidate an every larger slice of the pie into fewer hands, they will inevitably return us to de-facto feudalism and effective serfdom. As a further consideration: How many of you liked those old hole in the wall comic shops, or newspaper stands, or record shops? Most of them are gone now, but there are/were a few surviving in little corners of the world, often because the store owner had been prudent enough to buy the property. Those owners could very well also find themselves priced out of their hard earned and fought properties, even if them being a cornerstone of that area or community is what was responsible for the increase in unimproved land valuation, since culture and niche businesses can have just as much effect as 'high income' businesses on an area's desirability. Consider Petaluma for an example, and while I don't have a counterexample I am sure someone here can show a region that depressed in value when iconic neighborhood commerce closed, whether due to being priced out of the area, or having eminent domain proceedings to give the property to a more worthy developer (see Jo Sun formerly down the street from the county jail in Sacramento California for an example.)
- pharmakom 5y ago
  Yes, have an inflation index linked UBI. If prices rise due to the UBI (debatable) then the payments simply get even higher. Of course, the richest will fight this since it means their taxes will be linked to inflation.
sooheon 5y ago
Regulation yes, rent control no. Google "deadweight loss price ceiling rent control" to see the detrimental economic effects of that policy. Once you understand that, check out the deadweight loss graph of a land value tax: https://en.wikipedia.org/wiki/Land_value_tax#Efficiency https://en.wikipedia.org/wiki/Land_value_tax#Efficiency The type of regulation we need is a tax on the pure unimproved value of land sites (excluding buildings, factories, farms etc.). George: > When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.
- criticaltinker 5y ago
  What do you think about regulation that enforces a maximum limit on the number of dwellings or properties any individual can own? > At what point is someone's wealth acquisition too much–$1b, $10b, $100b, $1t? > Limitarianism is the view that no-one should enjoy more than an upper limit of some valuable goods or resources > Plato's Socrates identifies the ‘endless acquisition of money’ (Plato, 1997b, 373d) as the main cause of civil unrest and war. > In his last dialogue, the Laws, Plato gives a more or less complete limitarian account with a specification of both a lower and an upper threshold. According to this account, ‘extreme poverty and wealth must not be allowed to arise in any section of the citizen-body’ (Plato, 1997a, 744d). > Plato provides a detailed description of the lower threshold which each citizen should meet: everyone should obtain one dwelling near the centre of the country and another one near the outskirts. The size of the pieces of land on which these dwellings are built will vary according to the fertility of the land and its distance to the city [1] https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535 https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535
  - sooheon 5y ago
    When it comes to economics, I don't believe in hard limits. Policies should not be brittle numeric rules ($15 minimum wage, $800 maximum rent, 1 child policy). Think gradients that affect incentives at every point in the map, not hard step functions with wide open loopholes. Plato's ideas seem well intentioned but somewhat ignorant of higher order economic effects of such "1 child policy" like rules. Much better to have a tax policy that's well aligned with the incentives we want to promote, and let the market figure the rest out.
Applejinx 5y ago
Or, turn Mao loose on 'em :) It is possible that landlords inherently run amok until enough of them are literally killed, and then they dial it back until they forget.
- dang 5y ago
  Please don't post flamebait and definitely not ideological flamebait. It leads to ideological flamewars, which are tedious, predictable, and nasty. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
andrekandre 5y ago
> So fiscal stimulus should be paired with some kind of rent control/regulation, then? (i am not an economist, nor the op) but i have heard that argued in some left economic circles... same in the case of ubi i might add...
ars 5y ago
> So fiscal stimulus should be paired with some kind of rent control/regulation, then? I helped someone find an apartment in a rent control area - instead of higher rents you need to pay 4 months "brokerage fee" to make up for the lower rent. (If you don't want to pay, demand is so high someone else will.) Rent control doesn't work, it makes things worse. The correct solution is more supply. You can't fix high demand any other way.
kapuasuite 5y ago
We would be better off with taxing the unimproved value of the land (possibly until the market price of the land itself is $0) and rolling back the barriers to building new housing. That would result in cheaper, more plentiful and higher quality housing.
WalterBright 5y ago
> rent control/regulation No government, ever, has managed to repeal the law of supply & demand. Not in 4000 years of trying. Even in communist countries, where housing is "free", it applies. It's just that the cost is in terms of something other than money, often a network of favors. The same goes on how military base housing is distributed.
ransom1538 5y ago
Rent control = higher rent. Every. Time.
- 988747 5y ago
  Higher rent for the newcomers, of course. And shortages, since very few new apartments get built (mostly the luxury ones). And slow degradation of existing apartments since no sane landlord would invest in any improvements if they cannot make up for the cost in increased rent.
salawat 5y ago
Let me reframe the economy for you with an analogy. Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pipes connecting you to each person or business's bulb you transact with. Each transaction is facilitated by applying vacuum to transfer a small amount of fluid from bulb to bulb. In this thing, you have entities that have many more or much larger bulbs than others, with more powerful vacuums that increase in size with the amount of capital they have at their disposal. Every time you add a bunch of fluid to the system for everyone, you still have all the same networks for extraction in place, and no ability to prevent those connections from just extracting more. Rent, in particular, is special. Realistically speaking, the pipe that extracts rent to your landlord is not just a transaction facilitator, but is an important mechanism for ensuring that your landlord's wealth relative to the rest of the system is maintained. So in a way, the amount getting extracted will always scale once your landlord is made aware of a global infusion of working fluid to everyone, otherwise, the "value" of their real estate is "diminished" in light of the global infusion. Real estate as financial instrument is weird like that. Unfortunately, attempts to control that reactive rent adjustment are fraught with side-effects, because when your entire basis for free market economics is that greed and wealth accumulation (considered axiomatic human vices) can be put to productive use by leaving things alone, as evidenced by any attempt to do otherwise having undesirable outcomes, see the history of centrally managed economies. At least that's as far as I've cared to read up on the matter. After a while trying to get to the bottom of it though, you realize once economics abstracts away any complexities around money moving => physical things happening, it might as well be pontificating on the weather for the questionability of measures involved. This is a sign of me hitting the absolute depth of my understanding and needing to do more digging to potentially get further but not being capable of devoting the time at the moment.
imtringued 5y ago
You're supposed to tax non reproducible assets that are an essential part of daily life. Land is pretty much the number one priority to tax.
dantheman 5y ago
Simpler, don't do fiscal stimulus.
- tablespoon 5y ago
  > Simpler, don't do fiscal stimulus. Do you have some kind of economic intervention in mind that could produce the desired results of stimulus while dealing with some of these side effects. Besides tax cuts, that is. Those are boring and have their own well-understood issues. If the idea is to do nothing, that something that works better in fiction than in the real world (because the real world has real problems that are harder to hand-wave away).

R0b0t1 5y ago

Multiple options: 1. Stimulus given faster than it can be absorbed into rents. 2. Progressive taxes on dwellings that are not primary residence. 3. Decrease the cost of new housing. Of those, I think the last is the most realistic. It is the only one that does not lead to a housing shortage.

sooheon 5y ago
Option 4, which is unrealistic due to entrenched interests, but economically and socially ideal: a higher tax on the unimproved value of land, a.k.a. ground rent, in return for a lower tax on improvements, labor, capital gains, sales, and everything else.
- CalPointBreak 5y ago
  Something you guys are all ignoring: Taxes on primary residences. Constantly adjusting property tax has already lead to many people losing their property over the years. A better compromise might be that primary residences be either exempted from this new land value tax, or have it fixed to the time of purchase, not unlike Prop 12 used to (still does?) cover in California. The reason for this is that many people wish to settle down in one place. Some even take pride in living in the same location generation after generation. While many modern digital age people either forget, or don't understand that, variable property values could easily lose someone on fixed, little, or no income their property, livelihood, etc. As far as commercial, corporate owned, and high density residential, along with non-homesteaded agriculture properties go, this might not be the worst idea. But at the same time it is just as likely to favor corporations and venture capital over individual owner/operators and their scrimp and save. Efficiency only matters if the rewards of said efficiency lift up the collective populace of society. If they simply consolidate an every larger slice of the pie into fewer hands, they will inevitably return us to de-facto feudalism and effective serfdom. As a further consideration: How many of you liked those old hole in the wall comic shops, or newspaper stands, or record shops? Most of them are gone now, but there are/were a few surviving in little corners of the world, often because the store owner had been prudent enough to buy the property. Those owners could very well also find themselves priced out of their hard earned and fought properties, even if them being a cornerstone of that area or community is what was responsible for the increase in unimproved land valuation, since culture and niche businesses can have just as much effect as 'high income' businesses on an area's desirability. Consider Petaluma for an example, and while I don't have a counterexample I am sure someone here can show a region that depressed in value when iconic neighborhood commerce closed, whether due to being priced out of the area, or having eminent domain proceedings to give the property to a more worthy developer (see Jo Sun formerly down the street from the county jail in Sacramento California for an example.)
pharmakom 5y ago
Yes, have an inflation index linked UBI. If prices rise due to the UBI (debatable) then the payments simply get even higher. Of course, the richest will fight this since it means their taxes will be linked to inflation.

sooheon 5y ago

Regulation yes, rent control no. Google "deadweight loss price ceiling rent control" to see the detrimental economic effects of that policy. Once you understand that, check out the deadweight loss graph of a land value tax: https://en.wikipedia.org/wiki/Land_value_tax#Efficiency https://en.wikipedia.org/wiki/Land_value_tax#Efficiency The type of regulation we need is a tax on the pure unimproved value of land sites (excluding buildings, factories, farms etc.). George: > When all rent is taken by taxation for the needs of the community, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.

criticaltinker 5y ago
What do you think about regulation that enforces a maximum limit on the number of dwellings or properties any individual can own? > At what point is someone's wealth acquisition too much–$1b, $10b, $100b, $1t? > Limitarianism is the view that no-one should enjoy more than an upper limit of some valuable goods or resources > Plato's Socrates identifies the ‘endless acquisition of money’ (Plato, 1997b, 373d) as the main cause of civil unrest and war. > In his last dialogue, the Laws, Plato gives a more or less complete limitarian account with a specification of both a lower and an upper threshold. According to this account, ‘extreme poverty and wealth must not be allowed to arise in any section of the citizen-body’ (Plato, 1997a, 744d). > Plato provides a detailed description of the lower threshold which each citizen should meet: everyone should obtain one dwelling near the centre of the country and another one near the outskirts. The size of the pieces of land on which these dwellings are built will vary according to the fertility of the land and its distance to the city [1] https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535 https://onlinelibrary.wiley.com/doi/pdf/10.1111/ejop.12535
- sooheon 5y ago
  When it comes to economics, I don't believe in hard limits. Policies should not be brittle numeric rules ($15 minimum wage, $800 maximum rent, 1 child policy). Think gradients that affect incentives at every point in the map, not hard step functions with wide open loopholes. Plato's ideas seem well intentioned but somewhat ignorant of higher order economic effects of such "1 child policy" like rules. Much better to have a tax policy that's well aligned with the incentives we want to promote, and let the market figure the rest out.

Applejinx 5y ago

Or, turn Mao loose on 'em :) It is possible that landlords inherently run amok until enough of them are literally killed, and then they dial it back until they forget.

dang 5y ago
Please don't post flamebait and definitely not ideological flamebait. It leads to ideological flamewars, which are tedious, predictable, and nasty. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

andrekandre 5y ago

> So fiscal stimulus should be paired with some kind of rent control/regulation, then? (i am not an economist, nor the op) but i have heard that argued in some left economic circles... same in the case of ubi i might add...

ars 5y ago

> So fiscal stimulus should be paired with some kind of rent control/regulation, then? I helped someone find an apartment in a rent control area - instead of higher rents you need to pay 4 months "brokerage fee" to make up for the lower rent. (If you don't want to pay, demand is so high someone else will.) Rent control doesn't work, it makes things worse. The correct solution is more supply. You can't fix high demand any other way.

kapuasuite 5y ago

We would be better off with taxing the unimproved value of the land (possibly until the market price of the land itself is $0) and rolling back the barriers to building new housing. That would result in cheaper, more plentiful and higher quality housing.

WalterBright 5y ago

> rent control/regulation No government, ever, has managed to repeal the law of supply & demand. Not in 4000 years of trying. Even in communist countries, where housing is "free", it applies. It's just that the cost is in terms of something other than money, often a network of favors. The same goes on how military base housing is distributed.

ransom1538 5y ago

Rent control = higher rent. Every. Time.

988747 5y ago
Higher rent for the newcomers, of course. And shortages, since very few new apartments get built (mostly the luxury ones). And slow degradation of existing apartments since no sane landlord would invest in any improvements if they cannot make up for the cost in increased rent.

salawat 5y ago

Let me reframe the economy for you with an analogy. Imagine wealth as a fluid. When it's in your account, it resides in a bulb. Connected to these bulbs are pipes connecting you to each person or business's bulb you transact with. Each transaction is facilitated by applying vacuum to transfer a small amount of fluid from bulb to bulb. In this thing, you have entities that have many more or much larger bulbs than others, with more powerful vacuums that increase in size with the amount of capital they have at their disposal. Every time you add a bunch of fluid to the system for everyone, you still have all the same networks for extraction in place, and no ability to prevent those connections from just extracting more. Rent, in particular, is special. Realistically speaking, the pipe that extracts rent to your landlord is not just a transaction facilitator, but is an important mechanism for ensuring that your landlord's wealth relative to the rest of the system is maintained. So in a way, the amount getting extracted will always scale once your landlord is made aware of a global infusion of working fluid to everyone, otherwise, the "value" of their real estate is "diminished" in light of the global infusion. Real estate as financial instrument is weird like that. Unfortunately, attempts to control that reactive rent adjustment are fraught with side-effects, because when your entire basis for free market economics is that greed and wealth accumulation (considered axiomatic human vices) can be put to productive use by leaving things alone, as evidenced by any attempt to do otherwise having undesirable outcomes, see the history of centrally managed economies. At least that's as far as I've cared to read up on the matter. After a while trying to get to the bottom of it though, you realize once economics abstracts away any complexities around money moving => physical things happening, it might as well be pontificating on the weather for the questionability of measures involved. This is a sign of me hitting the absolute depth of my understanding and needing to do more digging to potentially get further but not being capable of devoting the time at the moment.

imtringued 5y ago

You're supposed to tax non reproducible assets that are an essential part of daily life. Land is pretty much the number one priority to tax.

dantheman 5y ago

Simpler, don't do fiscal stimulus.

tablespoon 5y ago
> Simpler, don't do fiscal stimulus. Do you have some kind of economic intervention in mind that could produce the desired results of stimulus while dealing with some of these side effects. Besides tax cuts, that is. Those are boring and have their own well-understood issues. If the idea is to do nothing, that something that works better in fiction than in the real world (because the real world has real problems that are harder to hand-wave away).