Lovely rant, good analogy. One thing: you said "The car vouchers didn’t help anyone obtain scare goods; it just gave extra money to the sellers." Pretty sure you meant 'scarce'
I was going door-to-door for a candidate in Maine, as one does, and while I was canvassing a trailer park in Brewer, ME a pick up truck pulled up to me and fellow canvassers and it turned out that it was the owner of the trailer park. He was an avowed Republican and we were drumming up support for a Democratic candidate, when he thought out loud "can't be many Democrats here, though most of these wharf rats (his tenants) get metro/Section 8 checks (subsidized rent) so I guess you guys will find some of your sort here". In this he admitted that the tenants didn't receive the subsidies but rather he did, and he didn't seem like the kind of guy that was going to cut his own income if the subsidy went away but rather would keep the inelastic resource he held at the highest possible rent passing the cost onto his tenants whom he held in rather low regard. There is a finite amount of land, and a growing population (though not equally distributed where there is demand for residential units), so where is the self-interest of capital to increase supply to the extent that their owned assets have downward pressure on the price? The trailer park owner wouldn't be interested in buying more land to expand his trailer park if doing so would undercut the rent he could get from his tenants, with or without the subsidy. There is no significant economic actor seeking out to suppress the market's prices but for the state -- even if in the US the efforts to do so is ineffective.
You might point out Japan's lower residential costs, and claim that it is a result of the unrestricted land use zoning and elimination of red tape, but that ignores that all residential buildings have barriers to be used as a value store or income producing asset. Mortgages are tied to the building not the land, and they don't allow new mortgages on homes with out of date building codes. My 1946 built house with a laundry chute and other mid-century building code violations would not have been allowed to have all the previous owners take out a mortgage if in Nagasaki rather than New Haven. Homes get regularly demolished in Japan when sold to a new owner, rather than in the US where the housing stock is over 50 years old on average it's under 30 years old in Japan. No one in Japan sees their home as their greatest financial asset, while that's almost the primary concern of American home owners. Eliminating American zoning won't upend the market dynamics that increase housing costs and inflate the prices of American housing stock, but social housing competing with the private sector would increase the supply at the detriment of the overall profit; see Singapore's housing market with 80% publicly owned housing.
Radical Markets: Uprooting Capitalism and Democracy for a Just Society : Posner, Eric A., Weyl, Glen
has an interesting idea about taxing property based on how much you would sell it for. The higher the price, the higher the tax, but if someone wants it at the price you chose based on how much tax you'd pay, you have to sell. It does eliminate property monopolies, but I'm not sure it would in any way help the little guy. Maybe it would help zoning and therefore supply?
The idea could be taken one step further where you set different prices to sell in one month, one year, and 3 years and you get taxed on the combination of those prices.
So the property tax would be locked into the price the property could be sold? What would happen if the owner kept the theoretical price low until the final year that they intend to sell it? Like I could price my house for $1.00 for all the years until I want to sell it and then pay the property tax for a property at the price that I want to sell it for? Would the price sold just be the minimum, so in a seller's market they underpaid property taxes and a bidding war for the property doubled or tripled the good faith price that was paid in property taxes?
If you price the house for $1, someone will say “ok, here’s your $1”. You have to sell at that price. Every property is always for sale. While you want to keep it, you’d price your house above market, by your own comfort margin and tax affordability. Good point about what about the time when you’re motivated to sell. Will have to think about that. I guess you just drop it to a fair market price to attract buyers. It might radically disrupt the whole real estate market and bidding wars. Not sure if that would/could/should be either bad or good. Both? The book does it more justice, but it’s a Radical idea, hence the book title. It’s hard to really predict the outcomes/outfalls. My concern was similar to gentrification, but also had thoughts it might counterintuitively help. The book makes points about property being a monopoly and having benefits for public good as well as markets. I’m not trying to sell the idea. Just fun to talk about, and Andrew might draw the right crowd for a discussion.
I own my home, and I get calls from realtors at least once a week to see if I'm interested in selling (I tell them if they have a buyer interested in paying $950k for house that was purchased for $430k which sets the cold caller packing), if this was implemented I priced my house above the market (which would be inflated from everyone else pricing above the market) I would have to sell my house at this incredibly inflated price and could be without housing if every other similar house had owners more capable of paying the increase tax liability? That doesn't sound fair to me, and it would lead to hyperinflation in the housing market. Also would the buyer pay the seller what they already paid in property taxes for the year too or would the seller have to include that in their calculation further inflating the house price?
I already pay what I consider too much in property taxes in New Haven, but if this would force Yale University to pay their $170 million a year in property taxes, well, I'm in for giving it a go
So, I do apologize. This thought experiment was thrown out there as a curiosity and I did not predict or mean for my answer to your questions would end up being a non-answer. You’re asking very specific questions about one use case, and it seems to me like were the idea to ever get any real consideration, it would require a large effort to evaluate what would happen with a great diversity of “players” and their extensive combination of competitions/interests, and how that would progress over time. You’d take homeowners, businesses, employers, services, warehouses, trains, and probably about 100 other such groups. You’d take towns, and cities, and rural. Diverse resources. You’d take existing infrastructure as a starting point to see where it might go from there. These few sentences probably don’t cover the bases, but given time and effort, this could probably be explored with Agent Based Modeling methods, and then simulated thousands of times to determine possible and probable outcomes. It could probably be done, but it may be that there’s not enough interest or possibility any country would make such a radical implementation to justify the effort. … Regarding your comments about the cold callers, what would you do if someone said, sure, $950k. The idea’s innovators may have not underlined well enough that all ideas of zoning would go right under the bus, and land would then go to the optimal use case, capitalism style. Without zoning, while $950k for your house may be ridiculously above market for a house, a business might not even blink to build a railroad or a gold mine. Presumably, you’d be crazy rich and then could find a new house somewhere less likely to get railroaded (or get richer again if so). … a larger question/perspective here, and one that I’m not championing, just considering, is the idea that a lot of capitalism’s issues could be that things aren’t capitalist enough, or rather, that issues in capitalism are often sticking points that purport to be capitalism, but really aren’t. Posner and Weyl certainly made the point that property is a monopoly and not subject to proper market optimization in the book. Again, not something I champion, but just an idea to be considered.
I’ll add my main concerns would be gentrification, the rich get richer, and while maybe homeowners are getting rich, moving all the time would suck. Often an optimization or increase in productivity on a social level makes for an awful impact on individuals. As far as hyper-inflation, yes, maybe, but the argument is that the monopolization of property is causing the inflation and this is a way to free market, right price, bring the price down. Often things happen differently or even exactly opposite of what we would have guessed or predicted.
“Are you telling me you built a time machine… out of a 3-bedroom 2-bath split-level ranch?”
Lovely rant, good analogy. One thing: you said "The car vouchers didn’t help anyone obtain scare goods; it just gave extra money to the sellers." Pretty sure you meant 'scarce'
Yep!
I was going door-to-door for a candidate in Maine, as one does, and while I was canvassing a trailer park in Brewer, ME a pick up truck pulled up to me and fellow canvassers and it turned out that it was the owner of the trailer park. He was an avowed Republican and we were drumming up support for a Democratic candidate, when he thought out loud "can't be many Democrats here, though most of these wharf rats (his tenants) get metro/Section 8 checks (subsidized rent) so I guess you guys will find some of your sort here". In this he admitted that the tenants didn't receive the subsidies but rather he did, and he didn't seem like the kind of guy that was going to cut his own income if the subsidy went away but rather would keep the inelastic resource he held at the highest possible rent passing the cost onto his tenants whom he held in rather low regard. There is a finite amount of land, and a growing population (though not equally distributed where there is demand for residential units), so where is the self-interest of capital to increase supply to the extent that their owned assets have downward pressure on the price? The trailer park owner wouldn't be interested in buying more land to expand his trailer park if doing so would undercut the rent he could get from his tenants, with or without the subsidy. There is no significant economic actor seeking out to suppress the market's prices but for the state -- even if in the US the efforts to do so is ineffective.
You might point out Japan's lower residential costs, and claim that it is a result of the unrestricted land use zoning and elimination of red tape, but that ignores that all residential buildings have barriers to be used as a value store or income producing asset. Mortgages are tied to the building not the land, and they don't allow new mortgages on homes with out of date building codes. My 1946 built house with a laundry chute and other mid-century building code violations would not have been allowed to have all the previous owners take out a mortgage if in Nagasaki rather than New Haven. Homes get regularly demolished in Japan when sold to a new owner, rather than in the US where the housing stock is over 50 years old on average it's under 30 years old in Japan. No one in Japan sees their home as their greatest financial asset, while that's almost the primary concern of American home owners. Eliminating American zoning won't upend the market dynamics that increase housing costs and inflate the prices of American housing stock, but social housing competing with the private sector would increase the supply at the detriment of the overall profit; see Singapore's housing market with 80% publicly owned housing.
Radical Markets: Uprooting Capitalism and Democracy for a Just Society : Posner, Eric A., Weyl, Glen
has an interesting idea about taxing property based on how much you would sell it for. The higher the price, the higher the tax, but if someone wants it at the price you chose based on how much tax you'd pay, you have to sell. It does eliminate property monopolies, but I'm not sure it would in any way help the little guy. Maybe it would help zoning and therefore supply?
The idea could be taken one step further where you set different prices to sell in one month, one year, and 3 years and you get taxed on the combination of those prices.
So the property tax would be locked into the price the property could be sold? What would happen if the owner kept the theoretical price low until the final year that they intend to sell it? Like I could price my house for $1.00 for all the years until I want to sell it and then pay the property tax for a property at the price that I want to sell it for? Would the price sold just be the minimum, so in a seller's market they underpaid property taxes and a bidding war for the property doubled or tripled the good faith price that was paid in property taxes?
If you price the house for $1, someone will say “ok, here’s your $1”. You have to sell at that price. Every property is always for sale. While you want to keep it, you’d price your house above market, by your own comfort margin and tax affordability. Good point about what about the time when you’re motivated to sell. Will have to think about that. I guess you just drop it to a fair market price to attract buyers. It might radically disrupt the whole real estate market and bidding wars. Not sure if that would/could/should be either bad or good. Both? The book does it more justice, but it’s a Radical idea, hence the book title. It’s hard to really predict the outcomes/outfalls. My concern was similar to gentrification, but also had thoughts it might counterintuitively help. The book makes points about property being a monopoly and having benefits for public good as well as markets. I’m not trying to sell the idea. Just fun to talk about, and Andrew might draw the right crowd for a discussion.
I own my home, and I get calls from realtors at least once a week to see if I'm interested in selling (I tell them if they have a buyer interested in paying $950k for house that was purchased for $430k which sets the cold caller packing), if this was implemented I priced my house above the market (which would be inflated from everyone else pricing above the market) I would have to sell my house at this incredibly inflated price and could be without housing if every other similar house had owners more capable of paying the increase tax liability? That doesn't sound fair to me, and it would lead to hyperinflation in the housing market. Also would the buyer pay the seller what they already paid in property taxes for the year too or would the seller have to include that in their calculation further inflating the house price?
I already pay what I consider too much in property taxes in New Haven, but if this would force Yale University to pay their $170 million a year in property taxes, well, I'm in for giving it a go
So, I do apologize. This thought experiment was thrown out there as a curiosity and I did not predict or mean for my answer to your questions would end up being a non-answer. You’re asking very specific questions about one use case, and it seems to me like were the idea to ever get any real consideration, it would require a large effort to evaluate what would happen with a great diversity of “players” and their extensive combination of competitions/interests, and how that would progress over time. You’d take homeowners, businesses, employers, services, warehouses, trains, and probably about 100 other such groups. You’d take towns, and cities, and rural. Diverse resources. You’d take existing infrastructure as a starting point to see where it might go from there. These few sentences probably don’t cover the bases, but given time and effort, this could probably be explored with Agent Based Modeling methods, and then simulated thousands of times to determine possible and probable outcomes. It could probably be done, but it may be that there’s not enough interest or possibility any country would make such a radical implementation to justify the effort. … Regarding your comments about the cold callers, what would you do if someone said, sure, $950k. The idea’s innovators may have not underlined well enough that all ideas of zoning would go right under the bus, and land would then go to the optimal use case, capitalism style. Without zoning, while $950k for your house may be ridiculously above market for a house, a business might not even blink to build a railroad or a gold mine. Presumably, you’d be crazy rich and then could find a new house somewhere less likely to get railroaded (or get richer again if so). … a larger question/perspective here, and one that I’m not championing, just considering, is the idea that a lot of capitalism’s issues could be that things aren’t capitalist enough, or rather, that issues in capitalism are often sticking points that purport to be capitalism, but really aren’t. Posner and Weyl certainly made the point that property is a monopoly and not subject to proper market optimization in the book. Again, not something I champion, but just an idea to be considered.
I’ll add my main concerns would be gentrification, the rich get richer, and while maybe homeowners are getting rich, moving all the time would suck. Often an optimization or increase in productivity on a social level makes for an awful impact on individuals. As far as hyper-inflation, yes, maybe, but the argument is that the monopolization of property is causing the inflation and this is a way to free market, right price, bring the price down. Often things happen differently or even exactly opposite of what we would have guessed or predicted.
That really *does* look like a knee injury.