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That sounds great until you spend 5 minutes thinking about it... What do you do with the $500k home sitting on the $80k land that just got repossessed? Why wo

by NavinF 4y ago

That sounds great until you spend 5 minutes thinking about it... What do you do with the $500k home sitting on the $80k land that just got repossessed? Why would anyone take care of their 98 year old land if they know it's gonna disappear in a few years? Are you gonna fine every person that goes right up against the line (regarding environmental laws for example) without crossing the line? By the time you get to the expired land, it will be a defacto landfill. Can people choose to lease a specific plot of land and if so does the term reset to 100? Why not pass property around the family back and forth forever? Who sets the price of a lease? Use gov't prices and the deadweight loss kills your economy. Use market prices and every lease will cost about the same as buying land in our existing system.

ChuckNorris89 4y ago
> That sounds great until you spend 5 minutes thinking about it... You and I don't have to think about this for five minutes as that's too little time and we're not qualified, but I'm sure if we round up all the top economists and university graduates of the G20 countries and put them together in a luxury resort in the alps to brain storm for a few months, I'm sure they'll be able to come up with a better economic land lease model than the system we have now which only encourages multi generational, winner-takes-all, land hoarding scheme for rent seeking purposes, where the earliest who got in the market got a great deal which they can use as leverage to acquire more land over time, and the ones getting into the market now are completely priced out and screwed as the pie is fixed in size and has already been called dibs on. Basically, we need a system that resets the monopoly board from time to time as currently you're entering the game from square one while others inherited a better starting position with more assets to boot. I'm sure such a system could be designed if desired but that's not what's desired as the elites and people in power with entrenched wealth don't want to lose their position on the board.
- scatters 4y ago
  This has already been solved. The solution is a land value tax.
  - ChuckNorris89 4y ago
    Maybe the land value taxes are (intentionally) too low for the super rich who own lots of land? Maybe we need a differential land tax system that's very low taxes for small areas intended for personal living(shelter), and taxes that go up progressively the more land you own, especially if you use it to rent-seek. It should discourage land hoarding and feudalistic rent seeking. @benj111 That was just an example off the top of my head. Obviously more qualified people than me can come with a sensible model that accounts for farms and other land used by businesses who need it. My main idea was to discourage rent seeking not farms and other businesses who contribute to society.
    - benj111 4y ago
      How would farms fit in this model?
      - mschuster91 4y ago
        Farm land is already differently taxed in most parts of the world.
        benj111 4y ago
        Right but we are talking about introducing a new model
    - tekknik 4y ago
      What is the definition of too much land? If I save up for my entire life making $100k a year across the family and buy 100acres should the gov be able to tax me off that land?
  - llampx 4y ago
    Where has this been solved and a land value tax implemented?
    - scatters 4y ago
mcv 4y ago
All of this has already been thought about. In Amsterdam, for example, you don't own the ground that your home is on; you lease it from the city. Extending that lease is automatic, but technically, eventually everything reverts back to the city. And if you still need it, you lease it from the city again, for whatever the city now thinks the land is worth. That way the city continues to benefit from private development of the city.
- deleted 4y ago
  [deleted]
- red_admiral 4y ago
  Is this basically Georgism? Or is there some important distinction I'm missing?
  - mcv 4y ago
    I don't know. I'm not familiar with Georgism. It's called "erfpacht" in Dutch, and it's an old practice. Amsterdam is the only city I'm aware of that does it on this scale, but it's not unheard of elsewhere.
    - deleted 4y ago
      [deleted]
    - quickthrower2 4y ago
      Is this like ground rent in the UK for leasehold property? This is a thing but usually a fairly insignificant cost as long as you keep renewing it with decades to spare.
      - justincormack 4y ago
        Except when someone invented ground leases that keep doubling a while back…
      - red_admiral 4y ago
avar 4y ago
People have spent more than 5 minutes thinking about it. There's a 2018 book called Radical Markets[1] that explores alternative models for various entranced economic systems, such as property ownership, voting etc. There's a free podcast interview with the author online[2]. The tl;dr is that you'd decide what your $500k home is worth. You could choose to say it's worth $80k, $500k etc. You'd then pay property tax as a function of what you decided it's worth. The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up. In economics lingo one thing you can optimize for is "investment efficiency", or "allocation efficiency". Traditional land ownership is the canonical example of the former, someone else might be able to make better use of your land ("allocation efficiency"), but they don't own it, so tough luck. Turning all "land ownership" into what's basically a mandatory bidding system is a way of maximizing allocation efficiency, you'd optimize for (re)allocating land to someone who can most efficiently use it. The authors spend a lot of time discussing the various edge cases, and in particular the normal knee-jerk responses someone might have. In particular you can set a system like this up in such a way that a "mandatory buyout" would be a fantastic deal for a given homeowner, e.g. the equivalent of having someone offer you $1 million for your $500k house. 1. https://press.princeton.edu/books/hardcover/9780691177502/radical-markets https://press.princeton.edu/books/hardcover/9780691177502/ra... 2. https://www.econtalk.org/glen-weyl-on-radical-markets/ https://www.econtalk.org/glen-weyl-on-radical-markets/
- anshorei 4y ago
  To me my house is worth a lot more than it is to the market because to me it has an emotional value. A mandatory buyout assumes that people do not have emotional bonds with their homes. Do you suggest one adjusts their estimate of the value twice, or thrice as high to prevent a mandatory buyout? How is that fair to those people?
  - girvo 4y ago
    I wonder if under that system the culture that leads to emotional connection to some particular spot of land and home on top of it would decline? It’s not universal worldwide to have the emotional connect we do to our homes
vidarh 4y ago
The UK has leaseholds, which do run out. Typically it means the value of a property drops as a lease gets short, and so you're incentivised to pay to extend the lease to remove the uncertainty. This is not a new invention.
- tekknik 4y ago
  Singapore has them as well.

by NavinF 4y ago

ChuckNorris89 4y ago

> That sounds great until you spend 5 minutes thinking about it... You and I don't have to think about this for five minutes as that's too little time and we're not qualified, but I'm sure if we round up all the top economists and university graduates of the G20 countries and put them together in a luxury resort in the alps to brain storm for a few months, I'm sure they'll be able to come up with a better economic land lease model than the system we have now which only encourages multi generational, winner-takes-all, land hoarding scheme for rent seeking purposes, where the earliest who got in the market got a great deal which they can use as leverage to acquire more land over time, and the ones getting into the market now are completely priced out and screwed as the pie is fixed in size and has already been called dibs on. Basically, we need a system that resets the monopoly board from time to time as currently you're entering the game from square one while others inherited a better starting position with more assets to boot. I'm sure such a system could be designed if desired but that's not what's desired as the elites and people in power with entrenched wealth don't want to lose their position on the board.

scatters 4y ago
This has already been solved. The solution is a land value tax.
- ChuckNorris89 4y ago
  Maybe the land value taxes are (intentionally) too low for the super rich who own lots of land? Maybe we need a differential land tax system that's very low taxes for small areas intended for personal living(shelter), and taxes that go up progressively the more land you own, especially if you use it to rent-seek. It should discourage land hoarding and feudalistic rent seeking. @benj111 That was just an example off the top of my head. Obviously more qualified people than me can come with a sensible model that accounts for farms and other land used by businesses who need it. My main idea was to discourage rent seeking not farms and other businesses who contribute to society.
  - benj111 4y ago
    How would farms fit in this model?
    - mschuster91 4y ago
      Farm land is already differently taxed in most parts of the world.
      - benj111 4y ago
        Right but we are talking about introducing a new model
  - tekknik 4y ago
    What is the definition of too much land? If I save up for my entire life making $100k a year across the family and buy 100acres should the gov be able to tax me off that land?
- llampx 4y ago
  Where has this been solved and a land value tax implemented?
  - scatters 4y ago

mcv 4y ago

All of this has already been thought about. In Amsterdam, for example, you don't own the ground that your home is on; you lease it from the city. Extending that lease is automatic, but technically, eventually everything reverts back to the city. And if you still need it, you lease it from the city again, for whatever the city now thinks the land is worth. That way the city continues to benefit from private development of the city.

deleted 4y ago
[deleted]
red_admiral 4y ago
Is this basically Georgism? Or is there some important distinction I'm missing?
- mcv 4y ago
  I don't know. I'm not familiar with Georgism. It's called "erfpacht" in Dutch, and it's an old practice. Amsterdam is the only city I'm aware of that does it on this scale, but it's not unheard of elsewhere.
  - deleted 4y ago
    [deleted]
  - quickthrower2 4y ago
    Is this like ground rent in the UK for leasehold property? This is a thing but usually a fairly insignificant cost as long as you keep renewing it with decades to spare.
    - justincormack 4y ago
      Except when someone invented ground leases that keep doubling a while back…
    - red_admiral 4y ago

avar 4y ago

People have spent more than 5 minutes thinking about it. There's a 2018 book called Radical Markets[1] that explores alternative models for various entranced economic systems, such as property ownership, voting etc. There's a free podcast interview with the author online[2]. The tl;dr is that you'd decide what your $500k home is worth. You could choose to say it's worth $80k, $500k etc. You'd then pay property tax as a function of what you decided it's worth. The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up. In economics lingo one thing you can optimize for is "investment efficiency", or "allocation efficiency". Traditional land ownership is the canonical example of the former, someone else might be able to make better use of your land ("allocation efficiency"), but they don't own it, so tough luck. Turning all "land ownership" into what's basically a mandatory bidding system is a way of maximizing allocation efficiency, you'd optimize for (re)allocating land to someone who can most efficiently use it. The authors spend a lot of time discussing the various edge cases, and in particular the normal knee-jerk responses someone might have. In particular you can set a system like this up in such a way that a "mandatory buyout" would be a fantastic deal for a given homeowner, e.g. the equivalent of having someone offer you $1 million for your $500k house. 1. https://press.princeton.edu/books/hardcover/9780691177502/radical-markets https://press.princeton.edu/books/hardcover/9780691177502/ra... 2. https://www.econtalk.org/glen-weyl-on-radical-markets/ https://www.econtalk.org/glen-weyl-on-radical-markets/

anshorei 4y ago
To me my house is worth a lot more than it is to the market because to me it has an emotional value. A mandatory buyout assumes that people do not have emotional bonds with their homes. Do you suggest one adjusts their estimate of the value twice, or thrice as high to prevent a mandatory buyout? How is that fair to those people?
- girvo 4y ago
  I wonder if under that system the culture that leads to emotional connection to some particular spot of land and home on top of it would decline? It’s not universal worldwide to have the emotional connect we do to our homes

vidarh 4y ago

The UK has leaseholds, which do run out. Typically it means the value of a property drops as a lease gets short, and so you're incentivised to pay to extend the lease to remove the uncertainty. This is not a new invention.

tekknik 4y ago
Singapore has them as well.