24 ms·

Land value tax in online games and virtual worlds (2022)

352 points by larsiusprime 2y ago

qup 2y ago
> If you want to see the extents to which this drives people, just check out this video (warning, language): What video?
- forbiddenlake 2y ago
  From the original post, it's https://www.youtube.com/watch?v=onrX5ZURtek https://www.youtube.com/watch?v=onrX5ZURtek Since the post was written, FFXIV has fully switched to a lottery system[1], so at least one doesn't have to click a placard for hours, but land is still scarce on certain worlds. [1] https://na.finalfantasyxiv.com/lodestone/playguide/contentsguide/housing_land/ https://na.finalfantasyxiv.com/lodestone/playguide/contentsg... under "Lottery System" - all worlds currently use this method
Aloisius 2y ago
I'm not entirely sure how this makes much sense if one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. If the land can't really be used any more efficiently, outside of repossessing unused plots owned by absentee players, then all this does is ensure the wealthiest players are the only ones who can afford the most in-demand lots (assuming the valuation varies). And if the whole goal is simply to repossess undeveloped/unused lots, there are simpler ways of going about it.
- deleted 2y ago
  [deleted]
- larsiusprime 2y ago
  Simpler ways of going about it are indeed possible and are discussed in detail in the article; a simple regular leasing of land accomplishes all the benefits of an LVT without any of the more complicated bits. Also -- you can just make a game where land isn't fundamentally scarce, that's an even simpler option too. > I'm not entirely sure how this makes much sense if one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. It's important to remember that just because something doesn't generate "monetary" income, doesn't mean it isn't providing value, and players will pay for value -- either in "hard" currencies like real money or in-game gold, or "soft" currencies like time, effort, and putting up with pain-in-the-butt. Housing in MMOs is typically a vanity item, but consider that social status, vanity, and the like are real genuine utility for human beings. > If the land can't really be used any more efficiently, outside of repossessing unused plots owned by absentee players, then all this does is ensure the wealthiest players are the only ones who can afford the most in-demand lots (assuming the valuation varies). If something can't be used any more efficiently (which suggests that it either is already being put to its highest and best use already, or that its potential use is severely restricted, akin to real-world municipal zoning restrictions), then there are several ways to look at that: 1. This is fine, actually; the asset is actually being used for its intended purpose and not simply hoarded 2. The developers could remove restrictions on the use of the thing so that there is a higher and better use for it than currently exists 3. The developers might reconsider their underlying assumptions for making the asset scarce in the first place Did you have a concrete example of this scenario? That might make it easier to discuss if you provided an illustration from a particular game (or one you could imagine).
  - bboygravity 2y ago
    A nuclear power plant owned by a private company.
- EdwardDiego 2y ago
  Having a sweet hangout to display your cool shit in was probably the second Morrowind mod I ever installed. The first may have been boob related, I was 14. It is what it is. But yeah, there's a real value to players in having a sweet pad brah, I mean, people still pay real money for people to build them sweet houses on land they bought in Second Life for real money also.
- sapling-ginger 2y ago
  If the owner cannot generate any revenue from owning the plot, then it is not a "land-like asset" and it just doesn't factor into this discussion. A "land" in LVT is not necessarily literally land, although the way most virtual worlds are programmed, the "land" in the game often has functions similar to real-world land, which makes it LVT "land".
  - lupire 2y ago
    Revenue is a representation of utility. Utility hoarding has similar problems and solutions ad revenue hoarding.
- adverbly 2y ago
  > one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. Just because a system is at equilibrium does not mean that a better equilibrium is impossible. There are significant advantages beyond unused plots. Incentives in general will change. The goal is not simply to repossess unused lots. Although you are correct that as a side effect, it does make for a much more efficient resource allocation. The other massive advantage is that because the supply of land is fixed, a land value tax has a unique property of having zero deadweight loss. This makes it the most efficient tax possible. Milton Friedman was in favor of it for this reason.
Buttons840 2y ago
This post might have been inspired by another comment: https://news.ycombinator.com/item?id=40675965 https://news.ycombinator.com/item?id=40675965 At the very least, this other comment makes some related reading suggestions.
Animats 2y ago
Ah, the single taxers. The author mentions Decentraland. The whole point of Decentraland, which is a crypto metaverse, was to make land prices go up. They didn't. Decentraland is boring and nobody goes there. But it does work, and it's up and running all the time. There are other crypto metaverses. Most of them never got beyond the hand-waving stage or the occasional demo of a small virtual world, but that didn't stop them from trying to sell overpriced land. Despite all the noise from the metaverse crowd, few of them got very far on implementation. There's Second Life, which is a single-tax system. You pay Linden Lab a fixed fee per square meter, regardless of what you're doing with the land. Land prices vary widely. Waterfront land is usually expensive; land on rocky plateaus far from roads is cheap. The supply of land is not limited; for a standard monthly fee, you can get another server provisioned with more land for you. You can buy land and rent it as raw land or build on it and rent houses or apartments, so it works economically like real land. Despite doing things the way this author likes, Second Life has overpriced desirable land held off the market to keep prices up. Virtual economy theory is interesting. It's discussed in various game dev books. But this paper is too much "_ is the answer. What was the question?" There are a few real-world cities in the US which tried a single land tax. Here's how that worked out.[1] [1] https://slate.com/news-and-politics/2015/05/the-land-tax-what-happened-to-towns-like-fairhope-alabama-that-tried-georgism.html https://slate.com/news-and-politics/2015/05/the-land-tax-wha...
- angled 2y ago
  Canberra, ACT has it, too: https://www.revenue.act.gov.au/land-tax https://www.revenue.act.gov.au/land-tax
  - fblp 2y ago
    Actually all Australian states and the ACT have land taxes in lieu of property taxes https://business.gov.au/finance/taxation/taxes-on-your-property#:~:text=Land%20tax%20is%20an%20annual,comparable%2C%20but%20they%20do%20vary https://business.gov.au/finance/taxation/taxes-on-your-prope....
    - langcss 2y ago
matheist 2y ago
I believe the Discworld MUD had (has?) a short term lease by auction system for player housing. Probably for 15-20 years now.
at_compile_time 2y ago
One limitation I have not seen discussed is LVT's self-defeating nature, and it's an important one to figure out if land value taxes are to succeed in practice. An upside and downside of LVT, depending on your perspective, is that the imposition of a LVT would seriously lower land values. The inverse is also true: removing an established LVT carries a significant upside for the affected landowners. Property that had been acquired for cheap under a LVT would be freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce, and some of it would be gradual as people resume buying land because land value always goes up (which causes land values to go up). This creates a powerful incentive to undo any progress that a LVT campaign might accomplish. I doubt that anything short of a revolution would be able to overpower the wealthy landowning class who like their unearned rents and inflated asset values very much thank you, but you don't just need to beat them once, you need to be able to hold their political, economic, and intellectual influence at bay permanently or we end up right back where we started in a matter of years.
- EdwardDiego 2y ago
  Good thing that developers aren't elected lol. Not sure if there's a word for a dictatorship, but you're totally able to just leave if it's not your thing. Most of the real world ones tend to put up walls and guards facing inwards. Or hold your family hostage. Which hopefully doesn't give Blizzard any ideas.
  - jnordwick 2y ago
    Phil Spencer is already trying to move development to Alcatraz island. -- likely true.
- aeternum 2y ago
  Unearned rents is questionable. People have always understood the value of land and have worked hard to be able to purchase it and vote + participate in local government to help protect the value of that land. Especially in the US, that mostly worked quite well. We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Done right, an LVT can actually increase land value. Suppose you are a developer that owns a plot of land in a desirable area but there are some abandoned building nearby that a stingy owner refuses to sell. With a regular property tax, if you make significant improvements like add park space, nice trees, landscaping, etc. to your building you pay much more property tax while the stingy owner pays nothing but benefits from increased property value. LVT at least partially penalizes the freeloaders. They must pay more LVT if the area around them improves. It prices an unpriced externality which is generally a good thing. There might be one thing the rich dislike more than taxes: freeloaders
westurner 2y ago
> Land Crisis [on the internet, too] Land Value Tax: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Virtual economies: https://en.wikipedia.org/wiki/Virtual_economies https://en.wikipedia.org/wiki/Virtual_economies Category:Virtual economies: https://en.wikipedia.org/wiki/Category:Virtual_economies https://en.wikipedia.org/wiki/Category:Virtual_economies Gold farming > Secondary effects on in-game economy; inflation,: https://en.wikipedia.org/wiki/Gold_farming#Secondary_effects_on_in-game_economy https://en.wikipedia.org/wiki/Gold_farming#Secondary_effects... WSE: World Stock Exchange (2007-2008) https://en.wikipedia.org/wiki/World_Stock_Exchange https://en.wikipedia.org/wiki/World_Stock_Exchange The opportunity costs of spending GPU hours on various alternatives. Economy of Second Life > Monetary policy: https://en.wikipedia.org/wiki/Economy_of_Second_Life https://en.wikipedia.org/wiki/Economy_of_Second_Life Circle, Centre > History: https://en.wikipedia.org/wiki/Circle_(company) https://en.wikipedia.org/wiki/Circle_(company) Stablecoin > Reserve-backed stablecoins: https://en.wikipedia.org/wiki/Stablecoin https://en.wikipedia.org/wiki/Stablecoin Economic stability: https://en.wikipedia.org/wiki/Economic_stability https://en.wikipedia.org/wiki/Economic_stability Stabilization policy > Crisis stabilization: https://en.wikipedia.org/wiki/Stabilization_policy#Crisis_stabilization https://en.wikipedia.org/wiki/Stabilization_policy#Crisis_st... Macroeconomics > Macroeconomic policy; a "policy wonk" may also be a "quant" https://en.wikipedia.org/wiki/Macroeconomics#Macroeconomic_policy https://en.wikipedia.org/wiki/Macroeconomics#Macroeconomic_p... Clearing house (finance) > https://en.wikipedia.org/wiki/Clearing_house_(finance) https://en.wikipedia.org/wiki/Clearing_house_(finance) : > Impact: A 2019 study in the Journal of Political Economy found that the establishment of the New York Stock Exchange (NYSE) clearinghouse in 1892 "substantially reduced volatility of NYSE returns caused by settlement risk and increased asset values", indicating "that a clearinghouse can improve market stability and value through a reduction in network contagion and counterparty risk." From https://news.ycombinator.com/item?id=40649612 https://news.ycombinator.com/item?id=40649612 : > Interledger > Peering, Clearing and Settling: https://interledger.org/developers/rfcs/peering-clearing-settling/ https://interledger.org/developers/rfcs/peering-clearing-set... But your problem's this land bubble and then unfortunately unrealized losses and how does that happen
throwawaycities 2y ago
Interesting, I’m trying to apply this to domains and it seems a decent fit or at least a lot of overlap. Domains are sort of the digital land for the internet, and the websites hosted on them are the value add. Domains are practically infinite, though like some of the land examples some domains are far more desirable than others. Individually domains can be divided into practically infinite subdomains and/or subpages. The ~1500 TLDs all have their own rules and fees (taxes). They fall under a central governing authority, ICANN pursuant to ToS/EULA/rules/policies, as well as intellectual property laws which vary from jurisdiction to jurisdiction and may also fall under one or more international treaties. Nevertheless, speculation proliferated and domaining is an entire industry driving prices up, but in practice I don’t think prohibits “new players.” There is enough difference between land/virtual worlds and domains, I don’t think a LVT or harberger tax would be well suited for domains, but it’s interesting to think about. I always hoped that somehow the Internet would find its way back to personal websites in lieu of the social media sandboxes that dominate, or at least adopt the Bluesky approach where users can bring their own username/handle/identity via a custom domain.
firekvz 2y ago
cool read but this article misses pretty much the biggest factor in the whole history and is that no matter how much you think about this "problem", it will always be defeated by the players will to win or take advantage lets remember after all, games and virtuals worlds, are that, games and virtuals worlds, so players have pretty much nothing to lose in trying to exploit whatever system you put in place so if you are a gamemaster/game dev/etc, noone cares how much time or resources you invest in thinking how to solve the land crisis or housing crisis, you wont solve it and at the end if you put the most complex system or the most punisheable on you will most likely end up with your player base actually quitting or not interested in playing your game or following your rules. so its actually just about to just accepting that there will be a land crisis or housing crisis and that you will just have to look the other way and let it be, cause at the end you might just end up killing your own game by going with the full try hard way. theres actually silly solutions that have been proven to be good, like for example, adding new areas with the updates thus rendering the old areas useless and having people repeat the cycle of trying to be the new ones in those areas or the favourite of all the game publishers, just tax with ingame credits that can only be purchased with $$$, so everyone is happy haha btw, most of games end up failing trying to solve this land crisis or housing crisis cause while the focus so much on that, they have bigger problems that affect direct on it like currency inflation, RMT, gold farming and even more deep problems like cheating/botting
eqvinox 2y ago
> Economist Ramin Shokrizade, with no formal knowledge of Georgist theory, fixed EVE Online’s land recession simply by directing CCP Games to assess a “high enough” holding fee to land-like spaceship factories, which had the effect of dissuading speculators. How is it that EVE Online (not even that large of an MMORPG) is notorious for having an actual economist on staff (Eyjolfur “Eyjo” Guðmundsson), while actual claimed-to-be publicly relevant projects ("metaverse") seem to be spitballing this? Some of them are going as far as claiming "everyone" will {need,want} a "parcel of land" there. Where are their economy papers?
- intelVISA 2y ago
  EVE online had to exist and deliver value to generate revenue. Metaverse and friends is under no such obligation, hence the vaporware attitude to any rigor.
- roughly 2y ago
  At the end of the day, economics is still a social science, and tech cannot abide the social sciences. If Meta didn’t hire anyone after they facilitated genocide, if Twitter never bothered to hire any of the people who wrote books about the problems Twitter would face years before they faced them, if Google never bothered to hire anyone after their seven hundredth social network failed, they sure weren’t going to hire anyone with any real expertise when they decided to build an economy - after all, they’re very smart, and how hard could it be?
- Ono-Sendai 2y ago
  Where are the useful economics papers to help the metaverse projects?
  - eqvinox 2y ago
    Why are you expecting economists to publish such papers for free? All metaverse projects I've seen so far are proprietary commercial ventures.
    - 2y ago
ruuda 2y ago
> The lack of a formal market for land has not made land any cheaper, it has simply shifted the price from being denominated in money-dollars, to time-dollars and pain-in-the-butt-dollars. Vitalik writes about this too: https://vitalik.eth.limo/general/2021/08/22/prices.html https://vitalik.eth.limo/general/2021/08/22/prices.html
dclowd9901 2y ago
> Furthermore, those that already own land often become “NIMBYs” who lobby for restrictive building and zoning policies that restrict other landowners from building, because more housing could help meet demand, in turn lowering the market value of the NIMBY’s existing properties. Sorry, I know this is way outside the meat of this article, but I have a beef with the whole “NIMBYs are merely pulling the ladder up behind them” bullshit. I don’t care if I sound like a NIMBY when I say this: it’s not always motivated by profit. I have two kids and we live in a nice neighborhood where we can walk to school. A local homeless support group wants to put an ephemeral housing lot in the neighboring block. Having lived in a place where I lived within that very proximity to people who were homeless and in recovery, I know what to expect from it. Yeah I’m a fucking NIMBY. I don’t want it here. I moved out of the city to be further away from that shit, and I want to continue feeling safe and comfortable walking my 2 and 7 year old to school. Take me out back and shoot me.
- thaumasiotes 2y ago
  > Having lived in a place where I lived within that very proximity to people who were homeless and in recovery, I know what to expect from it. Yeah I’m a fucking NIMBY. I don’t want it here. I moved out of the city to be further away from that shit, and I want to continue feeling safe and comfortable walking my 2 and 7 year old to school. That isn't quite the usual idea of "Not In My BackYard". The observation there was that people opposed the development of beneficial things near themselves. You're opposing the development of a detrimental thing near yourself. Sure, it's worse when it's closer to you, but an ephemeral housing lot for vagrants makes everyone worse off no matter where it gets built. Unless you're saying you'd support it if it was built a few blocks over?
  - arlort 2y ago
    > makes everyone worse off no matter where it gets built No? It's not like the vagrants will disappear if you don't build an housing lot. They'll just exist not in your backyard and continue to be an overall issue. That's the definition of NIMBY
    - 2y ago
twelvechairs 2y ago
> important one to figure out if land value taxes are to succeed in practice. LVTs have succeeded in practice over the long term in many places. Australia, Hong Kong, Taiwan, parts of Europe (Hungary?) Of course it's all a question of how high the land tax is. In Australia it's generally 1.5 percent or thereabouts. So it's one of many taxes. A long way from the Georgist ideal of LVT as a single tax. Perhaps that's what you are getting at more with this point? > the imposition of a LVT would seriously lower land values I think you need to compare to overall property taxes. Compared to them LVTs have distinct advantages in not encourage run down buildings or empty lots (e.g. car parking lots).
gwd 2y ago
One thing that doesn't seem to be explained in the article: Why do "we" (the policymakers) want to separate out the value of the land from the value of the improvements on it? Why not just use Harberger taxes (as described in the article) on the combined value of the property?
- _nalply 2y ago
  Because all taxes have the downside that they reduce the thing being taxed. One example was the window tax. People started to build houses without taxes. LVT is unique that it doesn't reduce the thing it taxes because land is constant. If you would tax the combined value of the property then people would avoid to improve the land.
  - gwd 2y ago
    > If you would tax the combined value of the property then people would avoid to improve the land. But isn't it the case that currently, in most places (at least in the US), property taxes do tax the total value of the land? And yet people still build and improve houses; which would seem to contradict this thesis.
    - _nalply 2y ago
      They do it less than if it were not taxes. One example are vacant lots which are held only for speculation.
      - gwd 2y ago
        > They do it less than if it were not taxes. Do you have any evidence of that whatsoever? I've never heard anyone say, "Well, I would build an extension to my house, but that would raise my property taxes." > One example are vacant lots which are held only for speculation. Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? The whole point of speculation is to make money with a minimum of cost and effort, both up-front and ongoing. Building something on an empty property increases all of those.
irusensei 2y ago
The part about Final Fantasy XIV is outdated. > There’s far more demand for housing plots in FFXIV than there is available land, and no formal market that allows land or houses to be bought or sold. Instead, when a plot is relinquished, a hidden timer starts counting down. At a random moment over the next 24 hours, the plot will silently become available for sale for a fixed price, and the first person to make an offer gets it. It's a lottery system now. Also, the game is not as crowded as it was during the pandemic times so I'm starting to see plenty of empty plots on my EU server. If you spent too much time away from it it gets demolished and put up to sale again. The subscription is the tax.
deleted 2y ago
[deleted]
Ono-Sendai 2y ago
One problem with the LVT is the logistics of actually levying the tax. You will have to collect a lot of payments from a lot of people. And have to deal with non-payment etc.. (virtual debt collectors?)
- adverbly 2y ago
  The IRS has a significantly more challenging task when assessing the complex tax codes surrounding income and capital gains. Nobody can hide land in an offshore tax Haven. LVT is a slam dunk by comparison?.
dustypotato 2y ago
This makes me wonder if it's possible to create a real-life simulation video game where you can study the economic effects of policies and make better decisions in real life.
- EVa5I7bHFq9mnYK 2y ago
  Don't know about that, but you can study the true human nature, in an anonymous environment without serious law enforcement. It's not pretty.
  - arlort 2y ago
    Saying that human nature in the absence of societal pressures is the true human nature is questionable We are social animals, taking us out of an environment where we're part of and accountable to a community is our true nature is like taking a fish out of water to study its true behavior
  - dustypotato 2y ago
    Sure , if you want to study cavemen, but even they were social creatures, not anonymous.
    - EVa5I7bHFq9mnYK 2y ago
      I was talking about the MMO games.
- Lichtso 2y ago
  I sometimes play with this thought as well, and I think we will see more of it as AI technologies allow for more realistic behavior of virtual agents. The reason why I think having virtual agents instead of real players is important is because real players are not invested enough. They can always switch to a different reality whereas virtual agents are stuck and have to live with the consequences of their actions. That does change the dynamics a lot.
- aqme28 2y ago
  It's always possible to model a system on a computer, the question is what assumptions you take. We don't have a perfect model of human behavior or even much consensus on how humans behave, so your assumptions are going to drive your results
hankchinaski 2y ago
We don’t need simulations for this there are plenty of countries where housing is not a speculative asset
- fikama 2y ago
  Ok you can't just say "plenty" and not name any examples. I would personally prefer examples from "1st world countries" group. I am not criticising, just trying to figure out where to move ;)
perihelions 2y ago
Related, ongoing HN thread with additional comments of interest, https://news.ycombinator.com/item?id=40674208 https://news.ycombinator.com/item?id=40674208 ("Rent in Cities Skylines 2 was too high, so the devs removed landlords (arstechnica.com)"; 14 hours ago, 83 comments)
Phiwise_ 2y ago
Even a big fan of using games as datasets for research, I'm so tired of reading policy proposals based on literal fake economies meant for maximizing entertainment only after being buoyed up by some other real and unrelated cost behind the scenes. Why would we expect to learn anything useful in this flat potemkin setting?
adverbly 2y ago
LVT is such an obvious slam dunk. I would easily vote for a single issue party looking to implement one. Might even volunteer for it at some point!
meigwilym 2y ago
The quote in the image at the top of the page made me curious. Henry George was quite the personality. In favour of land tax but also free trade. His ideas have were very popular, but have now fallen out of memory. https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George
deleted 2y ago
[deleted]
somegent 2y ago
This is basically how land worked in Second Life. LindenLab charged a set price for a parcel (by size) or island (by compute), regardless of what was on it. They didn't calculate that by continually assessing the earnings of the land (which seems awfully close to charging for the improvements and not the land itself, and a staffing issue). The prices of islands changed over time, though I don't think parcel charges increased (haven't paid attention since I stopped working there). Land owners had to pay the above price to LL monthly. They could then resell/rent to other residents.
beryilma 2y ago
In the real world, cities like Boston go for what's called Land Value Capture instead of LVT. Basically asking developers for bunch of benefits such as bike lanes, affordable units, etc. at the time of permitting process. My thoughts are mixed about this approach. On one hand, it feels like extortion since it is tied to permitting. On the other hand, benefiting the community in general around the development site seems also right.

352 points by larsiusprime 2y ago

qup 2y ago

> If you want to see the extents to which this drives people, just check out this video (warning, language): What video?

forbiddenlake 2y ago
From the original post, it's https://www.youtube.com/watch?v=onrX5ZURtek https://www.youtube.com/watch?v=onrX5ZURtek Since the post was written, FFXIV has fully switched to a lottery system[1], so at least one doesn't have to click a placard for hours, but land is still scarce on certain worlds. [1] https://na.finalfantasyxiv.com/lodestone/playguide/contentsguide/housing_land/ https://na.finalfantasyxiv.com/lodestone/playguide/contentsg... under "Lottery System" - all worlds currently use this method

Aloisius 2y ago

I'm not entirely sure how this makes much sense if one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. If the land can't really be used any more efficiently, outside of repossessing unused plots owned by absentee players, then all this does is ensure the wealthiest players are the only ones who can afford the most in-demand lots (assuming the valuation varies). And if the whole goal is simply to repossess undeveloped/unused lots, there are simpler ways of going about it.

deleted 2y ago
[deleted]
larsiusprime 2y ago
Simpler ways of going about it are indeed possible and are discussed in detail in the article; a simple regular leasing of land accomplishes all the benefits of an LVT without any of the more complicated bits. Also -- you can just make a game where land isn't fundamentally scarce, that's an even simpler option too. > I'm not entirely sure how this makes much sense if one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. It's important to remember that just because something doesn't generate "monetary" income, doesn't mean it isn't providing value, and players will pay for value -- either in "hard" currencies like real money or in-game gold, or "soft" currencies like time, effort, and putting up with pain-in-the-butt. Housing in MMOs is typically a vanity item, but consider that social status, vanity, and the like are real genuine utility for human beings. > If the land can't really be used any more efficiently, outside of repossessing unused plots owned by absentee players, then all this does is ensure the wealthiest players are the only ones who can afford the most in-demand lots (assuming the valuation varies). If something can't be used any more efficiently (which suggests that it either is already being put to its highest and best use already, or that its potential use is severely restricted, akin to real-world municipal zoning restrictions), then there are several ways to look at that: 1. This is fine, actually; the asset is actually being used for its intended purpose and not simply hoarded 2. The developers could remove restrictions on the use of the thing so that there is a higher and better use for it than currently exists 3. The developers might reconsider their underlying assumptions for making the asset scarce in the first place Did you have a concrete example of this scenario? That might make it easier to discuss if you provided an illustration from a particular game (or one you could imagine).
- bboygravity 2y ago
  A nuclear power plant owned by a private company.
EdwardDiego 2y ago
Having a sweet hangout to display your cool shit in was probably the second Morrowind mod I ever installed. The first may have been boob related, I was 14. It is what it is. But yeah, there's a real value to players in having a sweet pad brah, I mean, people still pay real money for people to build them sweet houses on land they bought in Second Life for real money also.
sapling-ginger 2y ago
If the owner cannot generate any revenue from owning the plot, then it is not a "land-like asset" and it just doesn't factor into this discussion. A "land" in LVT is not necessarily literally land, although the way most virtual worlds are programmed, the "land" in the game often has functions similar to real-world land, which makes it LVT "land".
- lupire 2y ago
  Revenue is a representation of utility. Utility hoarding has similar problems and solutions ad revenue hoarding.
adverbly 2y ago
> one can't generate any revenue from land and lots are limited to a single tenant - which seems to be the norm. Just because a system is at equilibrium does not mean that a better equilibrium is impossible. There are significant advantages beyond unused plots. Incentives in general will change. The goal is not simply to repossess unused lots. Although you are correct that as a side effect, it does make for a much more efficient resource allocation. The other massive advantage is that because the supply of land is fixed, a land value tax has a unique property of having zero deadweight loss. This makes it the most efficient tax possible. Milton Friedman was in favor of it for this reason.

Buttons840 2y ago

This post might have been inspired by another comment: https://news.ycombinator.com/item?id=40675965 https://news.ycombinator.com/item?id=40675965 At the very least, this other comment makes some related reading suggestions.

Animats 2y ago

Ah, the single taxers. The author mentions Decentraland. The whole point of Decentraland, which is a crypto metaverse, was to make land prices go up. They didn't. Decentraland is boring and nobody goes there. But it does work, and it's up and running all the time. There are other crypto metaverses. Most of them never got beyond the hand-waving stage or the occasional demo of a small virtual world, but that didn't stop them from trying to sell overpriced land. Despite all the noise from the metaverse crowd, few of them got very far on implementation. There's Second Life, which is a single-tax system. You pay Linden Lab a fixed fee per square meter, regardless of what you're doing with the land. Land prices vary widely. Waterfront land is usually expensive; land on rocky plateaus far from roads is cheap. The supply of land is not limited; for a standard monthly fee, you can get another server provisioned with more land for you. You can buy land and rent it as raw land or build on it and rent houses or apartments, so it works economically like real land. Despite doing things the way this author likes, Second Life has overpriced desirable land held off the market to keep prices up. Virtual economy theory is interesting. It's discussed in various game dev books. But this paper is too much "_ is the answer. What was the question?" There are a few real-world cities in the US which tried a single land tax. Here's how that worked out.[1] [1] https://slate.com/news-and-politics/2015/05/the-land-tax-what-happened-to-towns-like-fairhope-alabama-that-tried-georgism.html https://slate.com/news-and-politics/2015/05/the-land-tax-wha...

angled 2y ago
Canberra, ACT has it, too: https://www.revenue.act.gov.au/land-tax https://www.revenue.act.gov.au/land-tax
- fblp 2y ago
  Actually all Australian states and the ACT have land taxes in lieu of property taxes https://business.gov.au/finance/taxation/taxes-on-your-property#:~:text=Land%20tax%20is%20an%20annual,comparable%2C%20but%20they%20do%20vary https://business.gov.au/finance/taxation/taxes-on-your-prope....
  - langcss 2y ago

matheist 2y ago

I believe the Discworld MUD had (has?) a short term lease by auction system for player housing. Probably for 15-20 years now.

at_compile_time 2y ago

One limitation I have not seen discussed is LVT's self-defeating nature, and it's an important one to figure out if land value taxes are to succeed in practice. An upside and downside of LVT, depending on your perspective, is that the imposition of a LVT would seriously lower land values. The inverse is also true: removing an established LVT carries a significant upside for the affected landowners. Property that had been acquired for cheap under a LVT would be freed of its shackles and allowed to appreciate again. Some of this would be immediate, as thousands of dollars in taxes shift away from land and back onto labour, enterprise, and commerce, and some of it would be gradual as people resume buying land because land value always goes up (which causes land values to go up). This creates a powerful incentive to undo any progress that a LVT campaign might accomplish. I doubt that anything short of a revolution would be able to overpower the wealthy landowning class who like their unearned rents and inflated asset values very much thank you, but you don't just need to beat them once, you need to be able to hold their political, economic, and intellectual influence at bay permanently or we end up right back where we started in a matter of years.

EdwardDiego 2y ago
Good thing that developers aren't elected lol. Not sure if there's a word for a dictatorship, but you're totally able to just leave if it's not your thing. Most of the real world ones tend to put up walls and guards facing inwards. Or hold your family hostage. Which hopefully doesn't give Blizzard any ideas.
- jnordwick 2y ago
  Phil Spencer is already trying to move development to Alcatraz island. -- likely true.
aeternum 2y ago
Unearned rents is questionable. People have always understood the value of land and have worked hard to be able to purchase it and vote + participate in local government to help protect the value of that land. Especially in the US, that mostly worked quite well. We still have huge amounts of extremely cheap land that could be made desirable with enough hard work. You can still buy a crazy amount of land in parts of the country for like $50k. Done right, an LVT can actually increase land value. Suppose you are a developer that owns a plot of land in a desirable area but there are some abandoned building nearby that a stingy owner refuses to sell. With a regular property tax, if you make significant improvements like add park space, nice trees, landscaping, etc. to your building you pay much more property tax while the stingy owner pays nothing but benefits from increased property value. LVT at least partially penalizes the freeloaders. They must pay more LVT if the area around them improves. It prices an unpriced externality which is generally a good thing. There might be one thing the rich dislike more than taxes: freeloaders

westurner 2y ago

> Land Crisis [on the internet, too] Land Value Tax: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax Virtual economies: https://en.wikipedia.org/wiki/Virtual_economies https://en.wikipedia.org/wiki/Virtual_economies Category:Virtual economies: https://en.wikipedia.org/wiki/Category:Virtual_economies https://en.wikipedia.org/wiki/Category:Virtual_economies Gold farming > Secondary effects on in-game economy; inflation,: https://en.wikipedia.org/wiki/Gold_farming#Secondary_effects_on_in-game_economy https://en.wikipedia.org/wiki/Gold_farming#Secondary_effects... WSE: World Stock Exchange (2007-2008) https://en.wikipedia.org/wiki/World_Stock_Exchange https://en.wikipedia.org/wiki/World_Stock_Exchange The opportunity costs of spending GPU hours on various alternatives. Economy of Second Life > Monetary policy: https://en.wikipedia.org/wiki/Economy_of_Second_Life https://en.wikipedia.org/wiki/Economy_of_Second_Life Circle, Centre > History: https://en.wikipedia.org/wiki/Circle_(company) https://en.wikipedia.org/wiki/Circle_(company) Stablecoin > Reserve-backed stablecoins: https://en.wikipedia.org/wiki/Stablecoin https://en.wikipedia.org/wiki/Stablecoin Economic stability: https://en.wikipedia.org/wiki/Economic_stability https://en.wikipedia.org/wiki/Economic_stability Stabilization policy > Crisis stabilization: https://en.wikipedia.org/wiki/Stabilization_policy#Crisis_stabilization https://en.wikipedia.org/wiki/Stabilization_policy#Crisis_st... Macroeconomics > Macroeconomic policy; a "policy wonk" may also be a "quant" https://en.wikipedia.org/wiki/Macroeconomics#Macroeconomic_policy https://en.wikipedia.org/wiki/Macroeconomics#Macroeconomic_p... Clearing house (finance) > https://en.wikipedia.org/wiki/Clearing_house_(finance) https://en.wikipedia.org/wiki/Clearing_house_(finance) : > Impact: A 2019 study in the Journal of Political Economy found that the establishment of the New York Stock Exchange (NYSE) clearinghouse in 1892 "substantially reduced volatility of NYSE returns caused by settlement risk and increased asset values", indicating "that a clearinghouse can improve market stability and value through a reduction in network contagion and counterparty risk." From https://news.ycombinator.com/item?id=40649612 https://news.ycombinator.com/item?id=40649612 : > Interledger > Peering, Clearing and Settling: https://interledger.org/developers/rfcs/peering-clearing-settling/ https://interledger.org/developers/rfcs/peering-clearing-set... But your problem's this land bubble and then unfortunately unrealized losses and how does that happen

throwawaycities 2y ago

Interesting, I’m trying to apply this to domains and it seems a decent fit or at least a lot of overlap. Domains are sort of the digital land for the internet, and the websites hosted on them are the value add. Domains are practically infinite, though like some of the land examples some domains are far more desirable than others. Individually domains can be divided into practically infinite subdomains and/or subpages. The ~1500 TLDs all have their own rules and fees (taxes). They fall under a central governing authority, ICANN pursuant to ToS/EULA/rules/policies, as well as intellectual property laws which vary from jurisdiction to jurisdiction and may also fall under one or more international treaties. Nevertheless, speculation proliferated and domaining is an entire industry driving prices up, but in practice I don’t think prohibits “new players.” There is enough difference between land/virtual worlds and domains, I don’t think a LVT or harberger tax would be well suited for domains, but it’s interesting to think about. I always hoped that somehow the Internet would find its way back to personal websites in lieu of the social media sandboxes that dominate, or at least adopt the Bluesky approach where users can bring their own username/handle/identity via a custom domain.

firekvz 2y ago

cool read but this article misses pretty much the biggest factor in the whole history and is that no matter how much you think about this "problem", it will always be defeated by the players will to win or take advantage lets remember after all, games and virtuals worlds, are that, games and virtuals worlds, so players have pretty much nothing to lose in trying to exploit whatever system you put in place so if you are a gamemaster/game dev/etc, noone cares how much time or resources you invest in thinking how to solve the land crisis or housing crisis, you wont solve it and at the end if you put the most complex system or the most punisheable on you will most likely end up with your player base actually quitting or not interested in playing your game or following your rules. so its actually just about to just accepting that there will be a land crisis or housing crisis and that you will just have to look the other way and let it be, cause at the end you might just end up killing your own game by going with the full try hard way. theres actually silly solutions that have been proven to be good, like for example, adding new areas with the updates thus rendering the old areas useless and having people repeat the cycle of trying to be the new ones in those areas or the favourite of all the game publishers, just tax with ingame credits that can only be purchased with $$$, so everyone is happy haha btw, most of games end up failing trying to solve this land crisis or housing crisis cause while the focus so much on that, they have bigger problems that affect direct on it like currency inflation, RMT, gold farming and even more deep problems like cheating/botting

eqvinox 2y ago

> Economist Ramin Shokrizade, with no formal knowledge of Georgist theory, fixed EVE Online’s land recession simply by directing CCP Games to assess a “high enough” holding fee to land-like spaceship factories, which had the effect of dissuading speculators. How is it that EVE Online (not even that large of an MMORPG) is notorious for having an actual economist on staff (Eyjolfur “Eyjo” Guðmundsson), while actual claimed-to-be publicly relevant projects ("metaverse") seem to be spitballing this? Some of them are going as far as claiming "everyone" will {need,want} a "parcel of land" there. Where are their economy papers?

intelVISA 2y ago
EVE online had to exist and deliver value to generate revenue. Metaverse and friends is under no such obligation, hence the vaporware attitude to any rigor.
roughly 2y ago
At the end of the day, economics is still a social science, and tech cannot abide the social sciences. If Meta didn’t hire anyone after they facilitated genocide, if Twitter never bothered to hire any of the people who wrote books about the problems Twitter would face years before they faced them, if Google never bothered to hire anyone after their seven hundredth social network failed, they sure weren’t going to hire anyone with any real expertise when they decided to build an economy - after all, they’re very smart, and how hard could it be?
Ono-Sendai 2y ago
Where are the useful economics papers to help the metaverse projects?
- eqvinox 2y ago
  Why are you expecting economists to publish such papers for free? All metaverse projects I've seen so far are proprietary commercial ventures.
  - 2y ago

ruuda 2y ago

> The lack of a formal market for land has not made land any cheaper, it has simply shifted the price from being denominated in money-dollars, to time-dollars and pain-in-the-butt-dollars. Vitalik writes about this too: https://vitalik.eth.limo/general/2021/08/22/prices.html https://vitalik.eth.limo/general/2021/08/22/prices.html

dclowd9901 2y ago

> Furthermore, those that already own land often become “NIMBYs” who lobby for restrictive building and zoning policies that restrict other landowners from building, because more housing could help meet demand, in turn lowering the market value of the NIMBY’s existing properties. Sorry, I know this is way outside the meat of this article, but I have a beef with the whole “NIMBYs are merely pulling the ladder up behind them” bullshit. I don’t care if I sound like a NIMBY when I say this: it’s not always motivated by profit. I have two kids and we live in a nice neighborhood where we can walk to school. A local homeless support group wants to put an ephemeral housing lot in the neighboring block. Having lived in a place where I lived within that very proximity to people who were homeless and in recovery, I know what to expect from it. Yeah I’m a fucking NIMBY. I don’t want it here. I moved out of the city to be further away from that shit, and I want to continue feeling safe and comfortable walking my 2 and 7 year old to school. Take me out back and shoot me.

thaumasiotes 2y ago
> Having lived in a place where I lived within that very proximity to people who were homeless and in recovery, I know what to expect from it. Yeah I’m a fucking NIMBY. I don’t want it here. I moved out of the city to be further away from that shit, and I want to continue feeling safe and comfortable walking my 2 and 7 year old to school. That isn't quite the usual idea of "Not In My BackYard". The observation there was that people opposed the development of beneficial things near themselves. You're opposing the development of a detrimental thing near yourself. Sure, it's worse when it's closer to you, but an ephemeral housing lot for vagrants makes everyone worse off no matter where it gets built. Unless you're saying you'd support it if it was built a few blocks over?
- arlort 2y ago
  > makes everyone worse off no matter where it gets built No? It's not like the vagrants will disappear if you don't build an housing lot. They'll just exist not in your backyard and continue to be an overall issue. That's the definition of NIMBY
  - 2y ago

twelvechairs 2y ago

> important one to figure out if land value taxes are to succeed in practice. LVTs have succeeded in practice over the long term in many places. Australia, Hong Kong, Taiwan, parts of Europe (Hungary?) Of course it's all a question of how high the land tax is. In Australia it's generally 1.5 percent or thereabouts. So it's one of many taxes. A long way from the Georgist ideal of LVT as a single tax. Perhaps that's what you are getting at more with this point? > the imposition of a LVT would seriously lower land values I think you need to compare to overall property taxes. Compared to them LVTs have distinct advantages in not encourage run down buildings or empty lots (e.g. car parking lots).

gwd 2y ago

One thing that doesn't seem to be explained in the article: Why do "we" (the policymakers) want to separate out the value of the land from the value of the improvements on it? Why not just use Harberger taxes (as described in the article) on the combined value of the property?

_nalply 2y ago
Because all taxes have the downside that they reduce the thing being taxed. One example was the window tax. People started to build houses without taxes. LVT is unique that it doesn't reduce the thing it taxes because land is constant. If you would tax the combined value of the property then people would avoid to improve the land.
- gwd 2y ago
  > If you would tax the combined value of the property then people would avoid to improve the land. But isn't it the case that currently, in most places (at least in the US), property taxes do tax the total value of the land? And yet people still build and improve houses; which would seem to contradict this thesis.
  - _nalply 2y ago
    They do it less than if it were not taxes. One example are vacant lots which are held only for speculation.
    - gwd 2y ago
      > They do it less than if it were not taxes. Do you have any evidence of that whatsoever? I've never heard anyone say, "Well, I would build an extension to my house, but that would raise my property taxes." > One example are vacant lots which are held only for speculation. Do you think that if there were no property taxes, all these speculators would suddenly decide to build things on the property? The whole point of speculation is to make money with a minimum of cost and effort, both up-front and ongoing. Building something on an empty property increases all of those.

irusensei 2y ago

The part about Final Fantasy XIV is outdated. > There’s far more demand for housing plots in FFXIV than there is available land, and no formal market that allows land or houses to be bought or sold. Instead, when a plot is relinquished, a hidden timer starts counting down. At a random moment over the next 24 hours, the plot will silently become available for sale for a fixed price, and the first person to make an offer gets it. It's a lottery system now. Also, the game is not as crowded as it was during the pandemic times so I'm starting to see plenty of empty plots on my EU server. If you spent too much time away from it it gets demolished and put up to sale again. The subscription is the tax.

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Ono-Sendai 2y ago

One problem with the LVT is the logistics of actually levying the tax. You will have to collect a lot of payments from a lot of people. And have to deal with non-payment etc.. (virtual debt collectors?)

adverbly 2y ago
The IRS has a significantly more challenging task when assessing the complex tax codes surrounding income and capital gains. Nobody can hide land in an offshore tax Haven. LVT is a slam dunk by comparison?.

dustypotato 2y ago

This makes me wonder if it's possible to create a real-life simulation video game where you can study the economic effects of policies and make better decisions in real life.

EVa5I7bHFq9mnYK 2y ago
Don't know about that, but you can study the true human nature, in an anonymous environment without serious law enforcement. It's not pretty.
- arlort 2y ago
  Saying that human nature in the absence of societal pressures is the true human nature is questionable We are social animals, taking us out of an environment where we're part of and accountable to a community is our true nature is like taking a fish out of water to study its true behavior
- dustypotato 2y ago
  Sure , if you want to study cavemen, but even they were social creatures, not anonymous.
  - EVa5I7bHFq9mnYK 2y ago
    I was talking about the MMO games.
Lichtso 2y ago
I sometimes play with this thought as well, and I think we will see more of it as AI technologies allow for more realistic behavior of virtual agents. The reason why I think having virtual agents instead of real players is important is because real players are not invested enough. They can always switch to a different reality whereas virtual agents are stuck and have to live with the consequences of their actions. That does change the dynamics a lot.
aqme28 2y ago
It's always possible to model a system on a computer, the question is what assumptions you take. We don't have a perfect model of human behavior or even much consensus on how humans behave, so your assumptions are going to drive your results

hankchinaski 2y ago

We don’t need simulations for this there are plenty of countries where housing is not a speculative asset

fikama 2y ago
Ok you can't just say "plenty" and not name any examples. I would personally prefer examples from "1st world countries" group. I am not criticising, just trying to figure out where to move ;)

perihelions 2y ago

Related, ongoing HN thread with additional comments of interest, https://news.ycombinator.com/item?id=40674208 https://news.ycombinator.com/item?id=40674208 ("Rent in Cities Skylines 2 was too high, so the devs removed landlords (arstechnica.com)"; 14 hours ago, 83 comments)

Phiwise_ 2y ago

Even a big fan of using games as datasets for research, I'm so tired of reading policy proposals based on literal fake economies meant for maximizing entertainment only after being buoyed up by some other real and unrelated cost behind the scenes. Why would we expect to learn anything useful in this flat potemkin setting?

adverbly 2y ago

LVT is such an obvious slam dunk. I would easily vote for a single issue party looking to implement one. Might even volunteer for it at some point!

meigwilym 2y ago

The quote in the image at the top of the page made me curious. Henry George was quite the personality. In favour of land tax but also free trade. His ideas have were very popular, but have now fallen out of memory. https://en.wikipedia.org/wiki/Henry_George https://en.wikipedia.org/wiki/Henry_George

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somegent 2y ago

This is basically how land worked in Second Life. LindenLab charged a set price for a parcel (by size) or island (by compute), regardless of what was on it. They didn't calculate that by continually assessing the earnings of the land (which seems awfully close to charging for the improvements and not the land itself, and a staffing issue). The prices of islands changed over time, though I don't think parcel charges increased (haven't paid attention since I stopped working there). Land owners had to pay the above price to LL monthly. They could then resell/rent to other residents.

beryilma 2y ago

In the real world, cities like Boston go for what's called Land Value Capture instead of LVT. Basically asking developers for bunch of benefits such as bike lanes, affordable units, etc. at the time of permitting process. My thoughts are mixed about this approach. On one hand, it feels like extortion since it is tied to permitting. On the other hand, benefiting the community in general around the development site seems also right.