patrick.net

burritos says

I don’t see how this would evolve.

me neither.

I only have a leased tenancy in that $100M property, btw.

However, with the money I’ve saved and earned, who’s to say I didn’t create value with the goods/services I exchanged earning that money?

Show me your receipts and invoices of the wealth you've added. You bought existing housing stock and are leasing it out. Removing you from the equation does not alter the wealth that exists in trade.

You are an unnecessary intermediary, taking your cut. You are the parasite in this picture.

If you are arguing that you paid good money for your property, that's the same argument used to justify retaining the human chattel slavery system back in the 1800s.

One of my favorite Georgist quotes: "To prove a legal title to land one must trace it back to the man who stole it" -- David Lloyd George.

Why can’t I just bank it? And that’s how I view RE investment. Not as an investment, but as purchasing a stored value to hedge against inflation. Not something that appreciates beyond inflation.

Indeed, this is a good hedge against inflation -- well, wage inflation, since only wage inflation pushes up property values.

But Winston Churchill covered the difference in land ownership back in 1909 when the Liberal Dems were campaigning very seriously to institute a tax on the rental value of land (they got it through the Commons but the Lords blocked it, precipitating a very serious constitutional crisis).

Anyhoo, Churchill:

"Land, which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position. Land, I say, differs from all other forms of property in these primary and fundamental conditions.

"Nothing is more amusing than to watch the efforts of our monopolist opponents to prove that other forms of property and increment are exactly the same and are similar in all respects to the unearned increment in land."

http://www.cooperativeindividualism.org/churchill_monopolyspeech.html

So while I appreciate your disdain I don’t see how it’s going to turn into what you’ve envisioned.

It's not. The system is far too corrupted to change. We can't even repeal Prop 13 on commercial property here in California.

If I had the capital I'd do something similar as you, but in Tokyo. There is a crying market need for foreigner-friendly housing there, and I'd like to think managing a 6-12 unit complex would be worth the hassle and give me a free place to live in this world.

This was my experience living 1995-2000 in Tokyo, I leased a nice 25m2 place from a old Japanese dude and his wife who bought in 1986 apparently. They lived on the first floor, his son in one of the 2nd floor units, and they had 3 more units paying the mortgage.

Here's a pic:

http://goo.gl/maps/OBe6

The merit of this arrangement compared to investing in SFH are signal. For one, there were 5 households living well in a ~120m2 land footprint. This is a very economical use of land. In Georgist terms the owner was making maximum utility in the available space.

Additionally, the owner was resident in his place. This is very good for social reasons, just like (almost) all classes riding the same trains in Japan results in a more harmonious society.

I'd like to do something similar in Japan, but land prices are pretty freaking high -- Y1,400,000 per meter are common in the nice areas, that's $70M per acre.

Here's a 264m2 lot for $7.2M:

http://used.realestate.yahoo.co.jp/bin/cdetail?rps=6&pf=13&md=key&key=%C6%EE%CB%E3%C9%DB&code=a2104232901atho

the reason this is so expensive are several. One, Japan has a very low property tax, almost nothing. 2ndly, interest rates are half ours. 3rdly, as you can tell in the picture, density is allowed to be insane. This 30,000 sqft lot is zoned up to about 2000 m2 of living space, which is 40 or so units (10 x 1B, 25 x 2B, 5 x 3B), making the capital cost of the land about $500/unit/month.

Anyhoo, I find it sad that Japan, like us, doesn't understand the power of the land value tax. The total land value of Tokyo alone is around $25T or more, an immense tax base that nobody can see.

Same thing here.

Troy says

Show me your receipts and invoices of the wealth you’ve added. You bought existing housing stock and are leasing it out. Removing you from the equation does not alter the wealth that exists in trade.

You are an unnecessary intermediary, taking your cut. You are the parasite in this picture.

If you are arguing that you paid good money for your property, that’s the same argument used to justify retaining the human chattel slavery system back in the 1800s.

Yes, I'm arguing that I'm using money that I earned(not inherited) that was independent of the purchase of the property. I could argue, value was created during the original earning of it. Why am I obligated to create additional wealth with my savings protection strategy. If I bank it, that's the ultimate middleman. They create no wealth, just shuffle money between people and take their cut.

Also, in this last downturn, my 2005 property was purchased for 200k. Today, it might sell for 145k. So I've lost my down payment on paper. In essence I've sheltered the tenant(who buy the way can buy a similar property for less but chooses to rent cause of his life circumstances) from this financial loss.

Troy, do you live in a world where people should not be held accountable for their own choices in life?

If someone works hard and picks a good career path, they'll more than likely be fine. Or should everyone just be guaranteed a house regardless?

Some people can't afford houses, period. It's just the way it is. Of course, the first instinct of any American is to blame someone else. "It's _____'s fault I can't afford a house! It's _____'s fault I'm poor!" Burritos should be able to do whatever the hell he wants with his money, he earned it.

Troy says

The merit of this arrangement compared to investing in SFH are signal. For one, there were 5 households living well in a ~120m2 land footprint. This is a very economical use of land. In Georgist terms the owner was making maximum utility in the available space.

Following your argument to the logical end point SFH should be simply outlawed and everyone live in MFH making the best use of the land for everyone. Oh yea that's been done, russia, eastern europe, etc..

Why is ownership in condo's and townhouses any different from SFH. What makes SFH special? Why are landlords with MFH any different than SFH. Your arguments don't make any sense. Shelter is shelter whether it stands alone (SFH) or is part of a larger structure. Are townhouses and row houses (also called zero lot line) SFH or MFH and should landlords be allowed? It's all a bunch of crap.

bob2356 says

It’s all a bunch of crap.

No, the idea that landlording is really providing a necessary service is a bunch of crap.

Ideally I'd like to see all LLs thrown into plastic shredders and the actually productive people of this country able to acquire living space on this planet without having to outbid the people with thicker wallets who are actively looking to enslave them. That'd be great.

But my thoughts above are just an acknowledgement that if most everyone had their choice they'd pick SFH, so it behooves us to zone for SFH, and SFH zoning produces market distortions since it is an artificial constraint on the housing supply.

MFH, with its commons, and inherent on-site management potential, is in fact different from SFH in several respects.

The capital investment in a SFH property is immensely different to MFH, both in construction and long-run maintenance. MFH is much more suited to the management model, while any rental SFH is just an unnecessary intermediation by a parasitical leech taking advantage of a gap in how we as a society manage the land commons known as "real estate".

Japan is actually active in building quality Quango-managed MFH:

http://www.ur-net.go.jp/profile/english/toshi/index.html

it's an interesting idea and at any rate a much better use of government than our throwing tens of billions of section 8 vouchers at low-income people to subsidize their LL's mortgages.

Supply of multifamily in most places really sucks. It doesn't have to, but that's what laissez faire produces, the cheapest shit for our throwaway tenant class.

It doesn't have to be this way, we could as a nation redirect the massive chunk of our monthly paychecks we blow on bidding up the price of housing
towards more productive long-run investments in actual wealth.

I don't pretend I have any answers, I'm just throwing ideas out. But I do know that the status laissez faire quo is screwing over millions of Americans and is only going to get worse as more and more land from the commons is snatched up as this balance-sheet recession continues to create fire-sale conditions in the land market.

StoutFiles says

Some people can’t afford houses, period. It’s just the way it is.

Burros' actions, along with the specuvestor operators alongside of him, are exacerbating this.

Houses are in fact a very durable good. Their amortized construction cost + maintenance is a few hundreds of dollars a month, a mere fraction of the typical Section 8 voucher.

The land component -- which is driven by expectation of future appreciation of the site value and the NPV of the rents this property will collect over the infinite horizon is what makes real estate, especially SFH with its lower density -- "expensive".

It doesn't have to be this way. We could, for example, shift the Federal income tax to a land value tax. This is the idea of my icon to the left, the "Single Tax" idea. While government is probably too large these days to fully cover the modern welfare/warfare state, the LVT could pay for most everything besides FICA and Medicare, if we make some needed cutbacks in military.

StoutFiles says

Burritos should be able to do whatever the hell he wants with his money, he earned it.

That way lies permanent poverty for millions as land -- a good completely fixed in supply -- becomes increasing monopolized by the haves.

http://en.wikipedia.org/wiki/Progress_and_Poverty

It doesn't have to be this way.

burritos says

So I’ve lost my down payment on paper. In essence I’ve sheltered the tenant(who buy the way can buy a similar property for less but chooses to rent cause of his life circumstances) from this financial loss.

Your nobility is touching.

burritos says

Why am I obligated to create additional wealth with my savings protection strategy. If I bank it, that’s the ultimate middleman. They create no wealth, just shuffle money between people and take their cut.

You're not obligated to do anything with your hard-earned money.

My larger point is that there's an immense hole in our economy -- the private capture of publicly-created value. You didn't create the value of that $1650/mo rental, Uncle Sugar is with their housing allowances and decision to privatize family housing for soldiers at (I assume) Ft Lewis.

You're perfectly free to vector in on this leak and snatch what yield you can.

If I had my way we'd find ways to close it, but I'm pretty sure I'm not going to have my way anytime soon, so, like I first said above, enjoy your free money.

It's just another brick in the wall.

Troy - I don't see your ideas as being realistic.

1 - not everyone WANTS to buy. Some people move frequently for various reasons.

2 - in theory, yes, if you eliminate landlords, the prices would probably go down...in isolation. However, your idea is that it's bad for the economy and that everyone would have more money if this system of landlording didn't exist. If everyone had more money, guess what would happen? Prices would get driven up.

3 - The idea of providing disincentive to owning landing and renting it is dangerous. Now you get into your personal values of what is good for society. You know what...I think iPads are stupid and cause people to waste too much time. Lets tax Apple more so they don't make them.

There are plenty of products in our economy that I don't think have any real value or contribute anything to the progress of our society. But that's my opinion. Someone else might think these same products are great.

*For the record, I dont hate iPads - it was just an example. :)

1 - not everyone WANTS to buy. Some people move frequently for various reasons.

I see a possible future where MFH and perhaps even SFH housing for people who like moving is more on the hotel model. No leases, plenty of supply.

This requires building a lot more supply.

If everyone had more money, guess what would happen? Prices would get driven up.

yes, I've thought about the feedback effect, that's why we need to solve the supply part too. Due to basic physics and topology it is generally impossible to economically create more SFH in a given area, but it is not impossible to create an overabundance of MFH supply. This oversupply will drive scarcity rents to zero, and it is the scarcity rents that make real estate so expensive.

Housing supply can also be expanded in a tangential way by more aggressive investment in mass transit, to reduce the time and cost frictions of moving around our urban centers. There is some hope that the supertrain to Fresno will open up the land market more, but I have my doubts, since a daily commute is pretty spendy. Same thing in Tokyo, you can commute from 50 miles out by Shinkansen but it is hella expensive.

Note though that in a LVT regime scarcity rents go to the state, not the LL. -- LLs theoretically/ideally get returns on their management labor and any capital investments they've made into the fixed improvements.

Even in my utopia there will still be non-uniformity and thus scarcity rents. Views will be different, and not every homesite will be beachfront. But for those who wish to economize there should be an oversupply of quality, livable "above average" housing alternatives in every community.

The idea of providing disincentive to owning landing and renting it is dangerous.

yes, it is a "dangerous idea". Discovering the Georgist argument has been more a curse than a boon.

But I share it with some esteemed people, foremost of which is probably Winston Churchill.

http://www.cooperativeindividualism.org/churchill_monopolyspeech.html

specifically the Rewards for Service and Enrichment Without Service sections, in which WSC details why land is different from other forms of private investment and capitalism in general.

This is echoing the basic thesis of http://en.wikipedia.org/wiki/Progress_and_Poverty of course.

The funny thing is, the most successful economies on the planet do something similar to a LVT -- Hong Kong and Singapore.

In Hong Kong the state owns all the land. Private Equity is forced to invest in actual capital. Singapore, same thing I think. Singapore has the #3 per-capita GDP in the world.

Additionally, the high-tax high-welfare societies of the Norway-Sweden-Denmark region also get some of this LL-constraining policy through the side door of high taxes on income and a generous state-owned social safety net.

The UK is rather stupid in their housing voucher program, a wealth transfer system similar to our own stupid Section 8 bullshit.

Ironically, in Communist China, I gather they've now let the landlords and specuvestors run free with their 2007 land reform. Communist Vietnam also now apparently has a serious problem with the landlordism, something the newly established government in the mid-1950s actually applied a rather absolute solution to, but the LLs have crawled back like the cockroaches they are.

There are plenty of products in our economy that I don’t think have any real value or contribute anything to the progress of our society.

As Churchill said, Land is different than "products". Imagine a future world where corporations have monopolized all the breathable air and potable water in nature, and everyone else is forced to purchase their air and water from them.

This is endgame extrapolation of the individual morality of the LL class pursuing their little corners of the Monopoly board.

LLs did not create the land, the Great Creator did. LLs did nothing to create the site value of the land either, yet they profit greatly from it. This is such a good deal the top 10% of the country owns 75% of the commercial land. Go to any third-world shithole and you see a similar poverty of land distribution.

Thomas Jefferson, 1785:

"Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a commonstock for man to labour and live on. . . . it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small land holders are the most precious part of a state."

The Vietnam War was actually a land revolt inside a Cold War confrontation:

"The "Land to the Tiller" program has reduced farm tenancy from around 60 percent three years ago to almost the vanishing point. It has thus undercut the main theme of communist propaganda vis-a-vis the rural population.

"Our farmers have not been merely passive recipients of government largesse but have enthusiastically participated in the program to improve their lives. They are using the additional income from the sale of crops formerly paid in rent to develop the rural economy, thus contributing to the growth of the nation. Our farmers have now a new sense of personal worth and dignity and have become masters of their destiny, free men with reasons to preserve their freedom."

http://www.presidency.ucsb.edu/ws/index.php?pid=3790#axzz1NX2P5419

Land is different.

True - you do make some very good points. Land is definitely different than products, and I do agree with a lot of what you say.

Troy says

My larger point is that there’s an immense hole in our economy — the private capture of publicly-created value. You didn’t create the value of that $1650/mo rental, Uncle Sugar is with their housing allowances and decision to privatize family housing for soldiers at (I assume) Ft Lewis.

Nor did I create any value when I invested in exxon stock. Oil arguably is a necessary good for a modern civilization to exist. I have not contributed anything to the situation except cash. With the cash I am deriving a dividend and benefiting from capital appreciation. This too is a parasitical situation cause if people weren't able to invest in oil and garner profit from it then the prices of oil could be low and then people would be able to maximize their productiveness without paying an inordinate amount of money to use this necessary commodity.

burritos says

Nor did I create any value when I invested in exxon stock.

yes, oil is another wealth sink, and the great fortunes that the oil industry collected since 1859 were largely a theft from the commons.

Georgism has the answer for that -- the http://en.wikipedia.org/wiki/Severance_tax

This severance tax is used for good measure by the secret Socialists up in Alaska -- their "permanent" fund distributes thousands of dollars a year in a citizen's dividend and also has $60,000 per capita or so saved up, all from severance taxes on the state's oil.

Norway does it even better -- they have a $100,000 per capita pension fund built up from severance taxes from their oil sector. Every Norwegian is basically rich. Their form of "Socialism" works, LOL.

This too is a parasitical situation cause if people weren’t able to invest in oil and garner profit from it then the prices of oil could be low

This is somewhat garbled. Oil -- well gasoline for me -- has immense utility -- I will gladly pay $10 a gallon when prices get that high, and so will most other people reliant on internal combustion engines.

Big Oil threatens to cut production if it doesn't pocket every last penny of that profit, but that is bluffing, though it is indeed a powerful bluff. Australia's political system apparently blinked over the idea of a 30% resource profit tax in its primary sector and the threats made by Rio Tinto et al to take their toys and go elsewhere.

Norway overcame this bluff -- the industry threat of boycotting Norway's fields because of the high severance taxes -- by just building up their own state-owned oil recovery capital and know-how. This allowed them to offer "take it or leave it" tax deals to the oil majors.

Georgist taxation is very powerful in that in directly targets some very large http://en.wikipedia.org/wiki/Economic_rent sectors in the system, the "bad" profit margins that continuosly enrich the rich and impoverish the poverished.

It is impossible to make oil "cheap" -- this is a basic supply/demand question like land -- but it is demonstrably possible to direct the "windfall profits" -- aka economic rents -- from the industry to government. This is the very basis of Georgist tax regimes, and why William F Buckley liked it:

http://www.cooperativeindividualism.org/buckley_hgeorge.html

IMV Georgism is really a very "lean and mean" form of Capitalism, one that encourages wealth to focus on wealth creation and not rent protection.

Marx called this regime "Capitalism's last ditch".

Troy says

It’s all a bunch of crap.

No, the idea that landlording is really providing a necessary service is a bunch of crap.

Ideally I’d like to see all LLs thrown into plastic shredders and the actually productive people of this country able to acquire living space on this planet without having to outbid the people with thicker wallets who are actively looking to enslave them. That’d be great.

So who do people rent a SFH from? Where are your ideas for people who want to rent a house? Or are renters just scum suckers who must be segregated into MFH renter ghettos (ve have veys of making you rent) so the Georgian upper crust SFH homeowners aren't forced to deal with the lower classes.

I'm a renter and a landlord. I have not intention of buying a house where I am since the job is a locums and we will only be here a couple of years. Am I supposed to jam my family and belongings into an apartment complex to satisfy some nonsense elitist ivory tower semi socialist idealist fantasies?

I repeat it's all a bunch of crap. Shelter is shelter. If max utilzation of land is the goal then owners are no different than renters and everyone should be in MFH. Georgists are just one more group of we know what's best for other people hypocrites.

Perhaps you haven't noticed but any time there is an attempt to foster social policy by taxation it is a disaster.

bob2356 says

So who do people rent a SFH from? Where are your ideas for people who want to rent a house?

For one, I'd like to see higher-quality MFH compete with SFH. I'm perfectly happy with my garden apartment, there's 600 units on 20 acres but there's more grass, playground, and pools here than the kids know what to do with. If management had bothered to build more underground parking there could be even more commons space for people to enjoy.

The quality of life in this MFH complex is much, much greater than the $600,000 wall-to-wall townhomes with mere meters of margin between concrete driveway slabs that surround the complex.

Noise is not a problem since for some reason this place was built pretty sound-proof. Plus I have pretty upperclass neighbors, I must admit.

Secondly, I'd perhaps like to see city government get into the land management business via land banks. The local oversupply of actually livable MFH would turn SFH living into a marginal luxury, lowering the actual cost of SFH due to lesser demand for it, and also the LVT structure would reduce the actual cost of acquiring SFH to this rental value.

Instead of all this jazz about realtors, title companies, $400,000 mortgages, the SFH market would be converted into people bidding on tax leases on property, with those willing to pay more getting the property as it comes onto the market. Selling a SFH would be simply ceasing the payment of the LVT and getting charged for refurbishment costs necessary to restore the place to how the tenant received it.

This is what I meant by the hotel model above.

I admit this is half-baked compared to fee simple tenancy and introduces as many problems as it attempts to solve. It's just a rough idea.

Alternatively, we could just impose a 75% rent tax on SFH, basically driving the buy-to-let people out of the market and leaving the supply available for actual owner-occupiers. Vacancy could be handled by the land bank idea, people wishing to leave could sell the property back to the bank and go, and the community would manage this.

The overhead on this could easily be paid for by the community collection of ground rent, money that in my case is going to some management company in Boston and then god-knows-where.

Am I supposed to jam my family and belongings into an apartment complex to satisfy some nonsense elitist ivory tower semi socialist idealist fantasies?

"jam". See, thats' the serious bias you have here defending the status quo.

There's no reason MFH could not be superior to SFH, it's the screwed up system we have now that is making it so.

My ideas may be fantasy, but the current reality for millions of Americans is simply peonage, paying the mortgage on someone else's property in a neo-feudal system.

Perhaps you haven’t noticed but any time there is an attempt to foster social policy by taxation it is a disaster.

tell it to the swedes.

Still didn't answer the basic questions. Why should SFH exists for owners at all. If MFH is better for renters, then why not for owners? If only owners have SFH then are renters only allowed to exist in MFH? Why would that be? What makes owners special, why under your systems would renters be shut out?

What social policies has Sweden implemented by taxation? Health care, education, and retirement income are not social policies, they are public services. Sweden was in the forefront of deregulation in Europe and has been known for free trade for decades.

Troy says

tell it to the swedes.

The Danish do the housing market better. They have a more direct secondary market for mortgages, which either cuts out the middleman bankster or cuts the bankster's fee to a fixed and small margin. In addition, you can refinance below par if you agree to a higher interest rate. This is far more efficient than our bankster-driven and government subsidized system.

Troy says

Norway does it even better — they have a $100,000 per capita pension fund built up from severance taxes from their oil sector. Every Norwegian is basically rich. Their form of “Socialism” works, LOL.

This in itself is an example of vamprism. I don't see how someone gets a free ride on the financial benefits of oil for doing nothing except for being birthed out of a Norwegian birthing canal. iWhy should Norway citizens derive any financial benefit from oil in the ground. They didn't do anything to create the wealth. Instead of hording these 100,000 per capita pension, the price of oil should be reduced so that poor non oil producing nations can afford the oil for their own existence.

bob2356 says

Why should SFH exists for owners at all.

Because having a spot of ground to call your own on this planet is a basic human right.

Georgism doesn't eliminate this right, it just makes people pay the market price for it -- not to a LL, but to the community that is largely responsible for the site value to begin with.

In the purest LVT system, those economizing on a below-average amount of land in ground-rent terms would actually see a citizen's dividend, exacted from those desiring the above-average locations.

There are associated problems with this -- land values rising and people losing their security in tenancy by higher LVTs, but they are solvable.

What social policies has Sweden implemented by taxation? Health care, education, and retirement income are not social policies, they are public services.

I generally buy the theory/observation that "all taxes come out of rents".

This is why I don't oppose a much higher taxation level -- across the board -- in the US, instead of trying to load a 60% top marginal rate only on millionaires.

http://www.wealthandwant.com/themes/ATCOR.html

The more that is taxed out of incomes, the less we have to bid up the price of land. It is something of a free lunch, as long as the revenue generated from these taxes is returned to the people who pay them in the form of public goods and services, like in the Nordic countries.

Now, I don't have the first clue about the housing situation in the Norway-Sweden-Denmark triangle. It could suck or be great.

A 10-second google yielded this:

"1 400 000 tenants lives in nearly 850 000 dwellings owned by 300 public housing companies “allmännyttan” in Sweden."

http://www.socialhousingaction.com/social_housing_in_sweden.htm

Sweden was in the forefront of deregulation in Europe and has been known for free trade for decades.

Georgism is no way incompatible with free-trade. He was a major proponent of it.

http://mises.org/daily/1592

burritos says

the price of oil should be reduced so that poor non oil producing nations can afford the oil for their own existence.

this argument has merit, though in this world we collectively allocate success and failure at the state level. Norwegians have the government they deserve, as does everyone else. There is no over-arching world state framework within which we can collectively allocate the world's wealth, like how it is done in the Eurosocialist areas.

However, the price of oil is what it is. Socializing its ownership cannot make it less expensive, this is driven purely by supply and demand, and how much the last successful buyer-bidder is willing to pay for it.

If people want to burn oil, they need to get a job. The price of gas is a major ass-spreader in Norway, and wisely so. This discourages the locals from wastefully burning up the merchandize.

Troy says

doing your part to dispossess people of their natural right to use the commons.

your actions in buy-to-let single family housing is generally parallel on the moral plane with the more wealthy buying up a locale’s breathable air to later lease, if such a thing were possible.

You really are a nutjob. So, when I rented out a room in my last house, was I being a scumsucking leech landlord? Should I not have leased the room out at all, or should I have just let anybody that wanted to live there walk right in and set up camp for free.

Troy says

Because having a spot of ground to call your own on this planet is a basic human right.

Everybody in a free country has that right. Don't be melodramatic with this bullshit, which is that everybody ought to have the right to claim any land or home as theirs at any moment of their choosing. That's like a 7 year-old whining about not getting into fucking med school.

Troy says

burritos says

What kind of options would they have in a world with out SFH land lords.

god bless your self-serving little heart.
“Nessuna soluzione . . . nessun problema!„

You didn't answer his question.

As somebody who rents a SFH and prefers it over your idealized North Korean egg-crate herd-managed housing, I'd love to know how an abused pleb such as myself would be served by removing the SFH option. I don't want the commitment of ownership, or the higher costs. So what else is there, Dear Leader?

klarek says

Troy says

burritos says

What kind of options would they have in a world with out SFH land lords.

god bless your self-serving little heart.
“Nessuna soluzione . . . nessun problema!„

I don't argue that I don't have selfish motives. I don't work for the government, so I'm not going to get a pension. So I'm setting up my pension on the backs of my renters. Am I skinning them alive? I don't think so. They could always buy a home(prices continue to drop) or rent in a MFH. While you judge me as a parasite, that doesn't solve the problem as to who's going to financially take care of me later on. If I sell my homes right now, will you pick up that bill?

you are of course entirely justified in your investments, this is the system-as-it-is. People in the South found it necessary to participate in the economy as it was to survive and prosper.

I'm just railing on you to highlight the larger issues here, the principles are more important to me than the present realities.

Over the short-term, the injustice is trivial, it is over the long-term, and especially the intergenerational nature of land monopolization, that creates the larger injustices.

Not that I expect anything to change in my lifetime, for that to happen I'll have to buy a plane ticket out of this place.

Troy says

bob2356 says

Why should SFH exists for owners at all.

Because having a spot of ground to call your own on this planet is a basic human righ

So renters who will have to live in MFH because only owners will have SFH don't have basic human rights or are they subhuman until they actually buy a SFH? You keep dancing around the question.

bob2356 says

So renters who will have to live in MFH because only owners will have SFH don’t have basic human rights or are they subhuman until they actually buy a SFH?

? the basic human right is security in tenancy, LH or FS, SFH or MFH. These are not in conflict with each other, they are just different flavors of tenancy and condominium that combine in a 2 x 2 matrix of options.

People choosing to economize their use of land can choose a condominium (it's funny how nobody really groks what that word really means in the latin) arrangement with higher density than is possible with SFH. In a LVT regime this would obviously have a significant cost-of-living benefit due to the minimization of land usage -- if the current garden apartments I'm in now were converted each unit would have about $80,000 of land value, compared to the typical 3500' lot here with a LVT footprint 4X greater.

Those choosing a MFH tenancy do not give up any human rights, any more than those choosing to take the subway in Tokyo instead of getting financially raped driving a car there do.

You asked why FS SFH is necessary in my utopia. SFH is a relative luxury, given the additional land it removes from the commons, but I wouldn't want to live in a world where luxuries were not allowed. I also think any LVT should be very sensitive about not booting people off their landholding just because they can't afford the LVT.

Part of my emphasis on quality MFH supply is to totally kill the scarcity rents that most communities suffer wrt land value. I gave you the example of Sweden and its rather large public sector MFH. I don't know how good it is but I'd hope it's a perfectly viable alternative to SFH tenancy.

Once we reduce the scarcity rent pressure on SFH lots, it should be possible to also protect the median SFH FS tenant and below from LVT pressures. People should have reasonable security in their tenancy, especially in retirement. We should in the general case never force people off the land, especially that housing stock that is in no way prime land in an area. If it's just average land, the LVT should largely just let it be.

I'm not dogmatic about this stuff, the important thing is to just figure out what works best for all, basically creating a society and economic ruleset that would pass if not win John Rawls' http://en.wikipedia.org/wiki/Veil_of_ignorance test.

Troy says

I’m not dogmatic about this stuff

You keep using that word...

Or, "it's funny how nobody really groks what the word really means in the greek"

- MFH landlord, SFH owner, SFH renter, simultaneously. I feel neither exploitative nor exploited. I do pay a lot of taxes though.

I'm in agreement with Troy on an issue that there is no benefit brought by this, just leeching/mooching off the system.

The system, roughly, is that a public commodity (land) is leased to individuals ("owners") in exchange for rent ("taxes") paid into the public trust.

This is pretty much how most public commodities are managed, with some obvious exceptions. It is imperfect, but it is driven by organic processes rather than artificial planned-economy imaginations.

If the debate is whether the public receives enough value in exchange for the owner's right to exploit the resource, then that's a different argument. If you imagine that higher property taxes would result in greater affordability for "owners" or their "tenants", then I'd like to see that explained intelligently.

quesera says

is that a public commodity (land)

land is not a "commodity". Land is variable by location and is immobile. Also, its supply is fixed, land can never be created, only improved. The value of a plot of land is largely determined by everything that exists outside of the lot lines.

f the debate is whether the public receives enough value

that is entirely the argument. My thing about not being dogmatic is just making things work better, and good enough.

I'm not wedded to the LVT, I don't think Norway or Sweden have one and their quality of life and economy is much better than ours.

And it's not about receiving "value" from the LL. The LL adds no value to this economy, he is entirely a parasite. The question is about the community taking back from the LL the value the community adds to the LL's land holdings.

in exchange for the owner’s right to exploit

Georgists say privilege, not right. But this is the philosophical question at the heart of the debate. Georgists say we all have a right to that which we labor to create.

The LL did not labor to create the land, the land title that defines his ownership privilege was expropriated by the state from the commons.

If the story ended there it would not be so entirely horrible, but thanks to development (community amenities) and investment in public goods like roads, land accrues increasing site value over time, which the LL also pockets via rents without having contributed to their creation.

And the story does not end even there, as inflation adds another cascade of rent capture over time.

the resource

and . . . land is not a resource, because it is never consumed. What the LL is actually exploiting is the community who wants to use his land.

If you imagine that higher property taxes would result in greater affordability for “owners” or their “tenants”, then I’d like to see that explained intelligently.

"It was Adam Smith, in his book The Wealth of Nations, who first rigorously analyzed the effects of a land value tax, pointing out how it would not hurt economic activity, and how it would not raise land rents."

http://en.wikipedia.org/wiki/Land_value_tax#Classical_economists

Due to its scarcity, livable land has rental value. This is why this nation has $10T in mortgage debt, trying to avoid paying the man's rent.

In concrete terms, the rent on the place I'm in now is $1500/mo. It was built in 1989 for about $30,000 in construction costs so the current owner is enjoying a current cap rate of around 50% on his original investment, and this cap rate will only increase thanks to wage inflation and Prop 13.

This is how rentierism works -- wage inflation over time pulls money out of the productive economy and to the land monopolists'. This is largely why the ownership class has seen their real incomes rise so much than the bottom two quintiles, who rent and therefore are stuck on the rentslave treadmill.

The LVT just proposes to take this $1000/mo ground rent of this building and have it replace other taxes, impoverishing the LL by taxing away the flow of free money, and enriching everyone else engaged in actual productive employment, by either reducing other tax burdens or providing more public goods.

The LVT also encourages increasing density, which increases supply and thus drives down housing costs.

The LVT of course is highly disruptive to existing business plans and LL debt loads. This is just a philosophical discussion since we will never be able to implement it, not in this lifetime, and probably not without this system collapsing first.

The LVT boosters saw a golden opportunity in the collapse of the Soviet Union, and their arguments deserve a close reading:

http://en.wikisource.org/wiki/Open_letter_to_Mikhail_Gorbachev

if you are indeed interested in an "intelligent explanation" of the merits of the LVT.

Troy says

the basic human right is security in tenancy, LH or FS, SFH or MFH. These are not in conflict with each other, they are just different flavors of tenancy and condominium that combine in a 2 x 2 matrix of options.

People choosing to economize their use of land can choose a condominium (it’s funny how nobody really groks what that word really means in the latin) arrangement with higher density than is possible with SFH. In a LVT regime this would obviously have a significant cost-of-living benefit due to the minimization of land usage — if the current garden apartments I’m in now were converted each unit would have about $80,000 of land value, compared to the typical 3500′ lot here with a LVT footprint 4X greater.

Those choosing a MFH tenancy do not give up any human rights, any more than those choosing to take the subway in Tokyo instead of getting financially raped driving a car there do.

You keep dancing around in circles. You said "Because having a spot of ground to call your own on this planet is a basic human right" in reference to SFH, yet you say being forced into MFH does not give up any human rights. If only owners can occupy SFH then renters aren't choosing, they are being forced. Which is it?

So if all the ll's were impoverished then now one would have the option to rent. Everyone would be an owner? In your world there is no one who is just living someplace for 6 months or a year and doesn't want to tie all their capital (if they have any) up in real estate? I'm beginning to agree with the person who said you are an nutjob.

NYC used rent control to impoverish all the ll's in the 60's and 70's and tens of thousands of really nice buildings were burned to the ground. I remember driving through places like flatbush and east new york going to visit my suppliers. There were long stretches where entire city blocks that were just rubble with an occasional standing but trashed building in the middle of a city with a dire housing crisis. These were vibrant working class neighborhoods less than 20 years earlier.

Troy says

land is not a “commodity”. Land is variable by location and is immobile. Also, its supply is fixed, land can never be created, only improved. The value of a plot of land is largely determined by everything that exists outside of the lot lines.

Everything is limited and of a fixed supply. What do you think we'll run out of first, oil or land?. You just want to live near the ocean. Fine that's your choice but it's not an entitlement to you and everyone who wants to live near the coast. I you're entitled to tenancy, someone who dreams of the uptopia you describe can certainly can build affordable housing middle of the desert. The supply will see infinite to you and the next 10 generations.

bob2356 says

You said “Because having a spot of ground to call your own on this planet is a basic human right” in reference to SFH, yet you say being forced into MFH does not give up any human rights. If only owners can occupy SFH then renters aren’t choosing, they are being forced. Which is it?

I suspect we are talking past each other here.

In an LVT regime owners of SFH would be perfectly free to rent out their units to LH tenants. They just wouldn't be tapped into their tenants' monthly paychecks so deeply, as their yield would be relative to the actual capital cost of the improvements the tenant is enjoying (their rightful property) and not the site value of the lot the improvements sit on (said site value the LL has done absolutely nothing to create).

So if all the ll’s were impoverished then now one would have the option to rent.

Right, SFH renters would become buyers. I really fail to see the bleeping problem here.

If the problem is that buying is too onerous for people, there are ways to streamline things. For one, the LVT eliminates the site value and future rental value of the land from the equation, this will cut the acquisition cost of SFHs by half or more.

If sell-side liquidity is desired, the community authority that is largely receiving the inflows of the LVT can easily establish some sort of land bank facility.

It would also behoove us to eliminate all the paper-pushing bullshit associated with land sales.

In your world there is no one who is just living someplace for 6 months or a year and doesn’t want to tie all their capital (if they have any) up in real estate?

One of the purposes of this LVT idea is to eliminate the boom-bust nature of real estate, said nature driven by its substantial appeal as an investment and not a consumer good. By restoring long-term stability, and also by increasing the supply of housing alternatives to SFH, the cost of living in a community should fall tremendously, enriching everyone, except the leeching LLs of course.

you are an nutjob

This ad-hom normally gets broken out in discussions with people defending our current system, yes.

NYC used rent control to impoverish all the ll’s in the 60’s and 70’s and tens of thousands of really nice buildings were burned to the ground.

LVT is the opposite of rent-control. It removes ALL taxes from actual capital formation and the LL's improvements to the community.

Unlike Prop 13, which actually penalizes LLs when they redevelop.

These were vibrant working class neighborhoods less than 20 years earlier.

yeah, well, this disaster-stuff didn't happen when and where LVT was implemented. Quite the opposite in fact.

burritos says

Everything is limited and of a fixed supply. What do you think we’ll run out of first, oil or land?

Oil is land in its natural state, once severed from the land it becomes a commodity product in competition with other forms of energy.

Running out of oil is not necessarily a tragedy, we will find other forms of energy to create and trade, hopefully superior forms if the history of science & technology is any guide.

China, India, and Bangladesh are in fact "running out of land".

So have Singapore and Hong Kong, but they were quite wise in cutting their parasite landlord class off at the knees via LVT, rent taxes, and social policy like subsidized MFH.

You just want to live near the ocean. Fine that’s your choice but it’s not an entitlement to you and everyone who wants to live near the coast.

LVT does not propose that all rents be reduced to equality, that one acre in Selma be the same rent as one acre in Pismo.

Quite the opposite. The LVT captures the scarcity rent of the most desirable places to live quite amazingly.

There's, what, 500 miles of inhabitable coast in California? Going with $10M per acre of site value for this coastal zone (call it 5 acres in) and a 2.5% LVT rate, that would be 65,000 acres x $10M x 2.5% = $16.5B in annual LVT from coastal site value of this narrow ~1000' strip alone.

Do you really want me to continue exposing how much site value this state has that is untaxed? I'd be happy to do so!

I you’re entitled to tenancy, someone who dreams of the uptopia you describe can certainly can build affordable housing middle of the desert.

The desert lacks government infrastructure investment, community development, and of course any existing productive resource base. That's why its still a desert.

LA was a desert 150 years ago, but it had great natural advantages. Once the city fathers stole the water rights from the Sierras, they were good to go.

Well how about this scenario. My uncle lived in his 1st home for 20 years. He saved and upgraded to a larger home. Instead of selling his primary home, he rented it out. In your utopia, you think he should be mandated to sell it before purchasing the next home correct?

Troy says

Oil is land in its natural state, once severed from the land it becomes a commodity product in competition with other forms of energy.

What doesn't come from the land that we use? Everyone who works, breathes and earns a living, is somehow leeching off the natural land in one shape or form, not just the landlords.

burritos says

In your utopia, you think he should be mandated to sell it before purchasing the next home correct?

Mandated, no. Encouraged by increasing land value taxes, yes.

We should, as much as practicable, be a nation of owners not renters.

California's supply of SFHs are undoubtedly being locked up by Prop 13 protections of long-term holders of tax-protected houses.

Then we throw tens of billions of dollars of Section 8 vouches at the market. This is completely assinine.

Here's a well-known nutjob from the 18th century on this question:

"Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise."

burritos says

What doesn’t come from the land that we use? Everyone who works, breathes and earns a living, is somehow leeching off the natural land in one shape or form, not just the landlords.

but only landlords by definition charge others for these very basics of human existence.

Georgists believe that all takings from the commons generally requires a severance tax.

Landlords also by definition do not leech off the land, they leech off others desiring to use the land.

Troy says

but only landlords by definition charge others for these very basics of human existence.

No, anyone who exploits the land to produce anything of value charges others for the use or consumption of that product. Agriculture, minerals, power, livestock, granite countertops, parking lots.

Troy says

Georgists believe that all takings from the commons generally requires a severance tax.

Georgists should be aware that the takings from the commons were granted in exchange for some value, equivalent to a severance tax. The fact that the "owners" have, individually and collectively, and in concert with public management, happenstance, and exogenous events, made those takings more valuable over time is irrelevant, but good.

Georgists should further be aware that land "owners" make recurring remittances into the public trust for continued use of those takings. If those remittances became overburdensome and the takings reverted to public management, do you suggest that they'd be managed more effectively or fairly, or somehow otherwise bring about a better world for someone?

You have the great benefit of zero real world empirical data to compare your system against the existing, so you can't be proven wrong, per se. Your expectation of improvement is entirely a matter of faith, however.

I don't know where your faith comes from. But for now at least, your election to supreme leader seems unlikely, so I guess it's harmless.

Troy says

it is impossible for the holder of a land title to individually improve the site value of that land, for the site value is dependent on everything OUTSIDE the lot lines.

That makes zero sense. Yes, the title holder cannot improve the "land value" as a line item on the tax assessment -- only to the improvements thereon. But the "value" of all the surrounding "land" comes in large part due to other title holders improvements. The intrinsic value of the land is interesting but inseparable from the aggregated improvements for any sort of "use".

Troy says

This is a continued perversion of the language by you.

Truly, my use of "rights" derives from the contract between title holder and sovereign administrator. You call it privilege, but the entire foundation of real property law disagrees with you. We can both be correct, but as semantic perversions go in this conversation, I contend that yours is the more aberrant.

We've had approximately the same discussion before, and I still respect the depth and nuance of the arguments you espouse, as well as the significance of the problems they hope to address.

I stated before that I disagree with the conclusions reached. I definitely do disagree, but only when burdened by the consideration of implementability. Ditching the existing social contract and ideological inertia, your logic is as rational as any other reconstruction -- though not, to me, evidently superior.

Troy says

I’d settle for elimination of Prop 13 for non-owner occupied in my lifetime, actually.

On this, we agree. I wouldn't stop there, but I'd welcome it as a first step.

quesera says

But the “value” of all the surrounding “land” comes in large part due to other title holders improvements.

Nope. Empty buildings are liabilities not boons unless one enjoys parkour.

It is the community of users -- the business operations themselves -- that create site value, LLs earn their way from the rent.

The intrinsic value of the land is interesting

It's more than merely "interesting". It is the unearned increment itself! Your attempts at being coy about this are amusing.

but inseparable from the aggregated improvements for any sort of “use”.

Calculating the unimproved value of land is an elemental task for assessors. This valuation is generally continuous on maps, though of course million-dollar views and such do provide some variation, as do zoning limits of course.

So this is just arguing for the sake of arguing, for this is just quibbling about a minor detail of how much other improvements affect site value. To the extent that other forms of use add site value to neighbors -- eg. private train right of ways -- they can be incented with a lower LVT burden while that improvement is in operation.

my use of “rights” derives from the contract between title holder and sovereign administrator. You call it privilege,

Privilege itself is "a grant to an individual, corporation, etc., of a special right or immunity, under certain conditions." Sure looks like a land title to me -- when the state grants exclusive rights to someone, these are clearly privileges, by the very root meanings of the word.

It's kinda important to get the basics correct. The perversion I reacted to was your development of this idea that the original grant of land use privilege gives one a inalienable right to retain all future rental income from the land -- or, with immunity hold the title without developing it while the community fills in around it.

That is an utter non-sequitur. For one, the grant of fee simple estate in land already includes the tax liability to the state. The question isn't whether the state can assess taxes on land, but what it should tax, for what duration it should tax it, and by how much.

Understanding that land titles are a collective loss of rights for a granting of privilege is a very important point.

but the entire foundation of real property law disagrees with you.

Lawyers, lawmakers, and judges own a lot of land, yes.