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Purchasing assets under the expectation that values will increase _is_ speculation. The solution in LVT is staring you in the face, I don’t understand why you r

Purchasing assets under the expectation that values will increase _is_ speculation. The solution in LVT is staring you in the face, I don’t understand why you reflexively ignore it and reach for worse policies. Read “Progress and Poverty.” It explains in detail why the cycles you describe would be dampened by a LVT.

somenameforme 3y ago
Are people "speculating" when they pursue higher education? People, overwhelmingly, are not purchasing houses to make a profit, but rather using the perception of endless appreciation as a misguided justification for taking on increasingly absurd levels of debt. And that is the core problem that needs to be solved. You can try to change perceptions, or you can change the ability to take on unreasonably high levels of debt. Same with higher education. As for LVT, you can't expect me to go read a book to appreciate your argument. And I'm vastly more inclined to read than average. Owing to that I did at least check out the Wiki on the book. The excerpts section [1] seems to offer an argument that is either false or highly outdated. Any look at San Francisco, NYC, and other places will clearly show that the areas with the highest level of economic development also offer the highest wages, by an overwhelmingly wide margin. What drives the prices up is not some conniving and far-sighted bourgeois, but rather economic development driving defacto unlimited levels of demand. In a place like San Francisco you can earn $70k for labor that would pay $30k in a less developed area. Because of this you will never have affordable housing, because that $40k delta would otherwise drive everybody over to hoover it up. This is the scenario literally everywhere in the world. When you look at what few exceptions there are, they tend to not be exceptions. For instance Tokyo is often cited, yet it seems most people still have an obsolete image of Japain in their minds. They've gone through a 30 year period of stagflation, have a shrinking population, and a declining economy. So housing seems cheap in Tokyo by Western standards, but it's extremely expensive by Japanese standards which is where the overwhelming majority of the demand, and thus the price equilibrium, comes from. [1] - https://en.wikipedia.org/wiki/Progress_and_Poverty#Excerpts https://en.wikipedia.org/wiki/Progress_and_Poverty#Excerpts
- brutusborn 3y ago
  I don’t think that excerpt is false, or a good summary of the book really. My point is unless you understand the Georgist argument well, it is misguided to think there are better policies to prevent rent seeking causing housing crisis. When both heterodox and orthodox economists agree on the soundness of a policy such as the LVT, you at least have to compare it to your novel proposal or have a good reason for why so many smart people are wrong. I agree with most of what you say about more developed areas having higher wages. But this is predicted in Progress and Poverty: as a society progresses in terms of increasing land value and increasing productivity (in wages and efficiency of land use) poverty arises because the rents tend to eat up all value so that wages become just enough to survive. The best way to reverse this is to tax the unimproved rents. This encourages housing development (efficient use of land) and discourages speculative land bubbles (since you lose money if you do not use the land or let others use it).

somenameforme 3y ago

Are people "speculating" when they pursue higher education? People, overwhelmingly, are not purchasing houses to make a profit, but rather using the perception of endless appreciation as a misguided justification for taking on increasingly absurd levels of debt. And that is the core problem that needs to be solved. You can try to change perceptions, or you can change the ability to take on unreasonably high levels of debt. Same with higher education. As for LVT, you can't expect me to go read a book to appreciate your argument. And I'm vastly more inclined to read than average. Owing to that I did at least check out the Wiki on the book. The excerpts section [1] seems to offer an argument that is either false or highly outdated. Any look at San Francisco, NYC, and other places will clearly show that the areas with the highest level of economic development also offer the highest wages, by an overwhelmingly wide margin. What drives the prices up is not some conniving and far-sighted bourgeois, but rather economic development driving defacto unlimited levels of demand. In a place like San Francisco you can earn $70k for labor that would pay $30k in a less developed area. Because of this you will never have affordable housing, because that $40k delta would otherwise drive everybody over to hoover it up. This is the scenario literally everywhere in the world. When you look at what few exceptions there are, they tend to not be exceptions. For instance Tokyo is often cited, yet it seems most people still have an obsolete image of Japain in their minds. They've gone through a 30 year period of stagflation, have a shrinking population, and a declining economy. So housing seems cheap in Tokyo by Western standards, but it's extremely expensive by Japanese standards which is where the overwhelming majority of the demand, and thus the price equilibrium, comes from. [1] - https://en.wikipedia.org/wiki/Progress_and_Poverty#Excerpts https://en.wikipedia.org/wiki/Progress_and_Poverty#Excerpts

brutusborn 3y ago
I don’t think that excerpt is false, or a good summary of the book really. My point is unless you understand the Georgist argument well, it is misguided to think there are better policies to prevent rent seeking causing housing crisis. When both heterodox and orthodox economists agree on the soundness of a policy such as the LVT, you at least have to compare it to your novel proposal or have a good reason for why so many smart people are wrong. I agree with most of what you say about more developed areas having higher wages. But this is predicted in Progress and Poverty: as a society progresses in terms of increasing land value and increasing productivity (in wages and efficiency of land use) poverty arises because the rents tend to eat up all value so that wages become just enough to survive. The best way to reverse this is to tax the unimproved rents. This encourages housing development (efficient use of land) and discourages speculative land bubbles (since you lose money if you do not use the land or let others use it).