This is partially a result of Americans choosing to consume more housing than citizens of peer nations or, indeed, Americans historically. The size of the average owned American home doubled since 1950. You can save a substantial amount of money if you're willing to live like a 2015 Japanese salaryman or a 1950 American middle class family, but the modal American considers that standard of living "poverty" and is unwilling to accept it.
Another layer is that big houses gate access to good school districts, which is a very, very deep can of worms.
...But Japan doesn’t have the history of racially motivated urban design in general, so the story is a bit complicated.
That, and America has been heavily subsidizing an automobile-based lifestyle for 60–70 years, encouraging people to trade more living space for longer commutes, without facing the full infrastructure costs of the choice.
[1] http://freakonomics.com/2014/02/27/why-are-japanese-homes-di...
What I mean is, Japan didn’t design its whole large-scale metropolitan plan around racial segregation, the way many places in America did.
Many new schools, especially in the South, are built in the county or in a more rural part of the town, because property is cheap or donated there.
If the school is a "good" (you can decide on what that means for you) school, then all of a sudden, the property near that school become much more valuable to build home on for parents.
If the value of the property goes up, taxes go up in those new divisions.
Now, you have a situation where THE SCHOOL has driven off poor families and increased its own budget ... just because it was "good" to start off with!
So it isn't always that people are building the "good" schools on already expensive property to cater to the wealthy.
If you are a parent, it is a BIG deal. Over the past 10 or so years my location movements have had available education in the top three criteria (along with price and crime rate).
That's not an advanced enough theory of why there's interest on capital and the rate of it. It doesn't even seem quite sane, in comparison with the example of reasoning that he was setting and teaching up to that point. There should be some school of economics that promotes a George-like view of rent, but that isn't embarrassing when it comes to explaining capital and interest.
For the most comprehensive book on the subject, see http://www.amazon.com/Modern-Macroeconomics-Origins-Developm...
Yes, I noticed that too. I'm not enough of an economist (obviously) to know what he should have said instead.
It's a weakness, but I don't think it's fatal to his key point, which is that urban land values are socially created and should benefit society as a whole.
Also consider that the median wage in the U.S. includes the effect of a lot of immigration. Average immigrants make more than they would in their countries of origin, but less than average Americans, while average American born workers have done better than the median statistic. College educated American born workers have done better yet, but a lot of that increase has been paid in the form of mortgages and rent to retirees and the rich, because of urban housing market inflation, as ScottBurson pointed out.
Well, I guess they don't want tall buildings falling over due to a quake...
I was not familiar with this theory until a few days ago, when someone here on HN linked to an online version (edited and abridged) of Henry George's Progress and Poverty [0]. I've been reading it since; its clarity is stunning: I feel as if a great veil has been lifted from my eyes. Whether I'll still feel that way in a few days, months, or years remains to be seen, but for the moment, Henry George has me eating out of the palm of his hand.
Whatever the general validity of his theory, it certainly seems to explain the SF Bay Area extremely well. Salaries here sound incredible to people outside the area, but then it costs so much more to live here as to deny the wage earner much of the benefit. Broadly, we can break the population into three groups. Renters, obviously, have to pay the market rents, which seem to rise inexorably. Those who bought houses here years ago, before the big increases in property values, and are still living in them, are the ones who can really enjoy the high salaries they can earn here. Those who bought property here more recently, on the other hand, have large mortgages, because someone who previously owned the property made a pile of money when they sold it. In effect, the mortgage is like rent being paid to whichever previous owner or owners saw the property appreciate.
George's theory starts with Ricardo's law of rent [1], which is a truism of classical economics (and another idea I was not aware of until just recently). One could say it takes that law to its logical conclusion.
EDITED to add: while George's theory has not been fully embraced by mainstream economics, it hasn't been completely rejected by any means. Joseph Stiglitz, Herbert Simon, and to some extent Milton Friedman are some of its adherents, and Hayek credits George with awakening his interest in economics. [2]
[0] http://www.henrygeorge.org/pcontents.htm
[1] https://en.wikipedia.org/wiki/Law_of_rent
[2] https://en.wikipedia.org/wiki/Georgism