That doesn't explain the move towards larger cosmopolitan cities, though. The economically rational thing to do if land values in, say, San Francisco or NYC become more expensive is to move to different cities, ones with abundant land and low housing prices. Yet the predominant migration we see is the other way, from small towns and minor cities to big metropolitan areas.

Anyone who's been in this situation could explain the reason why: because most of the good jobs are in cities. But then answering the question of "Why are the good jobs in cities?" brings us back to square one, where we have to consider China, robots, monopolies, etc.

I'm reminded of Jane Jacob's statement about the economics of cities: "To seek 'causes' of poverty in this way is to enter an intellectual dead end because poverty has no causes. Only prosperity has causes." [0]

To find that a small city that used to have a manufacturing plant is now struggling shouldn't really be surprising―the city never really had a robust economy, and it's hard to say that it really has a future.

Getting a functioning economy that works is really a sort of black magic―when it happens, capture it! Our big cities are one of the surest places we see it, so maybe the real question isn't "why are people moving towards larger cosmopolitan cities," but "why are we making it so hard for our cities to accommodate them?"

[0] http://www.efficology.com/the-gift-of-relationships/apprecia...

There are no jobs there. If you're lucky enough to have job security in a low cost of living part of the country that might work out, but otherwise it's not such a great idea for most people due to high unemployment and lack of high paying jobs.

And that's aside from all of the other issues such as friends, culture, things to do, and, frankly, local politics.

That's the economically rational thing to do if things are all equal. However, the reason many people are moving to SF is because that's where the VC money is, and therefore that's where the tech jobs are (yes, I know there are other tech hubs out there, but none as big as SV). If the VC money was more willing to spread out, and not require everything to be in SV, then we'd have less of a housing issue there.

Here are condos renting for $2-3k per month in downtown Raleigh on the 20th-30th floors of a relatively new development (http://www.theplazacoa.com/homesforsale.php). Now, that seems astronomically expensive for 1000 sq feet to me, being from the South, but it's cheaper than SF rents from what I hear. And plenty of buildings in Queens, Brooklyn or any US city are shorter than 100 feet. There's tons of room for more building.

Building costs are not a complete explanation for the current astronomical prices. Political choices to restrict construction play a huge role.

We enact zoning laws with consideration to what we're being taxed to live and work in a high-demand, low-density environment.

If a tax on holding onto unimproved land is nearly zero, we're very likely to implement zoning laws banning development, because citizens have little reason to change things. But if the holding cost increases, (say with a significant Land Value Tax) folks now have a reason to legalize development.

...Californians should consider the role of Prop 13 in its current housing crisis.

They do, but detractors of Prop 13 also need to remember why it was enacted. Property taxes were skyrocketing, and causing people to lose their homes. Homes they had lived in for most of their lives. These people had done absolutely nothing wrong, except choose to buy a house in a place that later became very desirable. Any solution that does come up should not cause people to be forced from their homes because they became too expensive, or because other people with more money want it.

From my perspective, if new tenants are willing to contribute more to society to live somewhere, that should trump who was on the land first. When they sell, the original owners are well compensated by appreciation in property value.

Artificially suppressing property taxes to protect entrenched owners is a lot like taxing the internet to support newspapers and record stores.

So to you, money trumps all? What if those with more money simply wish to buy the house as an investment, so the people who live there not only get chased out, but the house sits idle?

Implementing a tax on the land would remove the tendency to speculate upon it.

Currently, why do people buy real estate as an investment? It's not because they believe the actual building materials will become more valuable, but rather that the land will. We see far more of "land banking" than speculation in commodities, insofar as commodities tend towards marginal cost.

Anyway, if a land value tax is in place, the land value increase won't be captured as profit, and thus all locations will only be used by people who mean to use them.

There is no reason to believe that middle class residents will be "chased out." However, we would see market incentives that would lead to gradual densification in residential areas that are encountering rising demand.

Then clearly the property taxes aren't high enough.

There's a fairly good solution. Start charging everyone the same tax, but the amount they pay will follow the old prop 13 rules. The rest will be a special lein against the property. You may optionally pay down the lein, or simply wait until the property is sold, when the lein is settled from the profits. Then add in some exceptions for the value going down, and maybe a reduction if the extra is paid early.

Then you won't have people hold on to inventory just for the taxes, and eventually things will even out as people sell each year.

Plus local governments would be able to borrow using the value of those liens as collateral to fund current operations.

Yes! Excellent point that I hadn't even considered.

The plight of a person in such a situation should never be discounted, but it's simply not a viable option to guarantee any land holding to be held in perpetuity regardless of ability to pay for its rent. If you ration off land this way (quite inefficiently, that is), you cease to have enough land for everyone else. Which causes a class of suffering far greater than granny deciding to sell out, and move to a condo.

I think people underestimate the elasticity of land.

While it is true that the surface area of the ellipsoid is not changing, economic resources are only counted when they can be brought to market. You don't usually create new [economic] land by dumping dredged sand into a harbor--though such projects do exist. More often, new land is brought to market by building a road to it, or an airstrip on it, or a pier on its shore.

And such land is not fungible, it most often has multiple competing uses, and some non-competing uses. And those uses can be amplified by capital improvements.

When I want "land" in a city, that's usually at least 75 m^3 of interior building volume as a safe location to sleep and store all my useful stuff. You can make more of that in the same footprint by erecting buildings with more floors--not even necessarily taller, just more floors. Or you can dig down, and again, add more floors.

And I value proximity by time, rather than distance. So you can make land "closer" to the city by enabling faster transportation. The 50th floor of a building with a fast elevator is closer to the ground than the 50th floor at the same physical height, but with a slow elevator. The suburb next to an expressway is closer than the one without convenient roads.

We really still have plenty of available land, barring situations like Hong Kong or Singapore. The Chicago-Pittsburgh megalopolis has more untapped land supply than the Boston-DC megalopolis, but those acres can all be gridded and developed to the limit of human engineering ability, which is a pretty darned distant limit.

The problem is usually that development is often politically constrained such that supply cannot change as quickly as demand. You just can't build fast enough in Silicon Valley, and you just can't demolish fast enough in Detroit.

Land is defined as everything not supplied by human effort. It is thus perfectly inelastic in supply.

Bringing land into use is a service ie Labor.

Hope this helps.

That definition completely removes the actual pile of dirt and rocks from economic consideration. Humans only buy and sell that which a human has brought to the market. If it was not supplied by human effort, it isn't available for sale.

I suppose we're all buying and selling the labor from surveyors and the register of deeds then. It is certainly convenient for some people to call this legal right to exclude all others from exploiting resources from a defined area on the surface of the ellipsoid as "owning land".

Humans bring slaves and stolen goods to the market. Neither of which were supplied by slavers or thieves.

Same thing as natural resources. You are conflating two separate things.

What gives Land its economic value and meaning is its relative difference in productivity ie marginal vs inframarginal Land.

The Saudis are rich because their oil reserves are cheap to exploit relative to those found at the margin of production, like Canadian Tar Sands.

That difference isn't due to the efforts of the Saudis supplying it. It is purely natural advantage ie Land.

What is true of oil is true of all natural resources, but particularly 3D space ie Location.

Hope this helps.

The Saudis only become rich when they extract the oil and sell it on the world market. Otherwise they just have some warm fuzzy feelings, knowing that there are some long carbon chains somewhere underneath their feet. The value of their property right is in the implicit agreement that anyone else that tries to erect an oil rig and take their easily exploited oil will be shot, and any capital brought seized for the benefit of the Saudis.

It is all humans. The energy and engineering requirements of exploiting land pale before the sociopolitical requirements of exploiting it for any particular person's benefit.

A human is not a sellable slave until a slaver captures him and drags him to the block. The stolen goods are just goods that have been detached from the previous labor of legitimized title-service and security providers.

Inanimate objects have no intrinsic value. Every last speck of their value comes from human desires and expectations.

Imagine, if you will, two planetoids orbiting a star 1000 light-years away. One of them is 100 million metric tons of shiny 24K gold. One of them is 100 million metric tons of stinking manure. Which is more valuable?

This is essentially accurate, but I have to ask: why do you think that development is often politically constrained?

> exponentially more expensive to go up

A lot of Europe is 2-6 stories over large areas, and that works pretty well and is quite doable with the technology of 200 years ago.

Germany has had flat land prices in real terms for a long time because they have many small banks who are issuing against productive endeavor first and foremost. Hence Germany as an industrial superpower. They also make it easy to procure land to build on to avoid the artificial scarcity used to drive up prices.

These are all understood problems.

> Building out also isn't a solution, because people want to be close to the city center or the things they go to the most. Self-driving cars may help with this issue in the long term, but not the short term.

Self-driving cars won't help in the long term either, for the same reason traffic is terrible in sprawling cities like LA today. Fast, high-density regional transit is needed and even that is only a better constant factor. The N^2 or whatever scaling problem remains.