An interesting idea in theory, but I fear it would work poorly in practice. Most people don’t have the time or knowledge to set the right value for their property. Ordinary people would get constantly screwed by professional sharks.

The counterargument I've heard to that is that ordinary people already get screwed by professional sharks, and when it becomes common the market will fill in the need (e.g. companies that track the value of your house, and insure against unexpected forced purchases)

Am I missing something, or do those two ideas completely contradict each other?

But those third-party companies would obviously end up with misaligned incentives to serve the sharks in efforts to cheaply buy from unwitting people. Only wealthy people could afford truly trustworthy third-party insurers to help set the price, which again will entrench the wealthy in the ability to preserve their experience at the opportunity cost of other people.

Much like with third party job recruiters, there is just no possible way they won’t be subverted to disingenuously service the wishes of the wealthier party.

In addition to all this, just imagine all the horrible ways that wealthy people could inflict punitive damage on non-wealthy people. You pissed off the wrong person at work? You’re a journalist who wrote an unflattering piece about the politician? So you come home to find some consortium bought out the home you love, no traceable links back to the person who inflicted it on you, and the money involved was a pittance to them but a life-long nest egg for you that you desperately don’t want to have to convert into the purchase of a different home.

This sounds like the latest in a long line of economic theories and ideas cooked up by people who LOVE the game of pricing things and can't understand why others don't share that love. Basically, economic wankery.

Every field or area of interest has this going on to some extent (e.g. techies wondering why others don't love configuring/tweaking tech as much as they do), I believe its called the false consensus effect: https://en.wikipedia.org/wiki/False_consensus_effect

> This sounds like the latest in a long line of economic theories and ideas cooked up by people who LOVE the game of pricing things and can't understand why others don't share that love. Basically, economic wankery.

Same with democracy.

This sounds like the latest in a long line of political theories and ideas cooked up by people who LOVE the game of voting about things and can't understand why others don't share that love. Basically, political wankery.

You have to do lots of things in society you don't like to have it run smoothly (for you and others) in what might be considered an egalitarian effort. Whenever you don't force it, pareto and bad actors end up capitalizing on the gaps. The western nations have relied on the populace's generous nature for long enough that information technology has given people a chance to see how sub-optimal it is. You now have competition between wants and don't cares, where the don't cares have been outmaneuvered into borderline poverty and below.

This similarity leads me to believe Glen Weyl is on to something.

Essentially all this does make the property owner pay a protection fee to prevent their property from being bought by someone else.

It's a terrible system because a billionaire could come in and scoop up thousands of people's property for pennies (assuming they set their property price low because they can't afford tax when they set it higher).

But very soon it would reach an equilibrium. All billionaires are at their desired space, with jacked up price (to create a price 'moat'), paying much more tax than previous owners..

It can work.

How are you optimistic enough to think that billionaires would just stop at some reasonable amount, instead of taking as much as they possibly could?

No. What will happen is billionaires will capture all the space, everyone else will move out and lose all their money (property is the biggest asset most people have), then the billionaires value their land for pennies and hire security to keep people away.

Isn't it just a question of tuning the dials for taxation levels? A billionaire values my home at $10 million when I value it at $1m, I need to sell it to them at $1m but then to protect it they need to pay taxes on a $10m valuation. So just set the taxes such that it makes it a net positive to society with the billionaires paying for state-funded housing (and other services...job training, language and culture courses for immigrants, etc.) as the cost of scooping up land. They get no free lunch.

Or we could just raise taxes on billionaires directly instead of imposing this convoluted nonsense.

Lower taxes perhaps? Or better yet, eliminate the property taxes and shift them to a sales tax collected upon sale. Or use existing capital gains taxes.

But, to your point: why shouldn’t people pay tax on the value of their property? If they can’t afford the tax, then obviously they can’t afford the house right? Prop 13 is already effectively a Ponzi scheme— actual tax cost is paid by future investors rather than the current investor. So if I buy a house today, my tax rate is x. Tomorrow, my tax rate is still x even if the actual cost of government and my home value has increased. So tomorrow’s buyer pays their tax plus the difference between my x and the actual tax required. Tomorrow’s buyer perpetually subsidizes yesterday’s buyer.

That isn’t fair at all.

> Property owners often don't sell their property even when it seems advantageous to do so, both for them and for the economy in general.

I think there is a big difference between property owners who buy a house to live there, retire, hoping it appreciates in value, and people wealthy enough to buy a 2nd or 3rd house, or even a whole block. The later, would have no qualms selling them quickly if another opportunity arose. The first category of people will be a lot more risk averse. That's also one of the reason why the wealthy get wealthier, they don't have to worry about risk, and can easier jump from opportunity to opportunity.

I imagine the way this would feel for a homeowner would be that they have to pay an ever increasing amount of “protection money” to stop rich property developers from kicking them out of their home at any time.

Politicially, the optics of this for the elderly or others on fixed incomes would be terrible. Just imagine story after story showing sobbing old person removed from the area they lived in their whole life, “ripped away from family and neighbourhood ties” etc.

A less radical, and probably more tolerable, version would allow the owner to retain the property by increasing the declared value to the offer and paying back taxes with some formula (say, presuming linear increase from the last repricing, with some added interest payments for the delay if the back taxes for a given year are above a specified fraction of the original amount.)

This would prevent both sniping in response to changing market conditions and exploitation of people who just failed to reevaluate value.

OTOH, it's still an annoying system and politically impossible: look at the national blowup a few years ago about one town exercising eminent domain for private development. Thid essentially is delegating the power of eminent domain to be exercised arbitrarily by every individual and business.

> One of the ideas is to allow anyone to buy a property at its set value at any time (giving a reasonable notice period, I presume). The property owner is the one who sets the value of the property.

I must be misunderstanding something, this is how any free/mixed economy works, including in Canada and US. You may make the property owner an offer at anytime, and the owner sets the price by either accepting or rejecting an offer. The problem is the buyer can't just do anything with the property (like subdivide/build apartments) due to zoning laws.

the point is that owner should pay (high) tax on the high offer he is not accepting.

I'm stunned that this idea is getting any kind of consideration at a time when extreme concentration of wealth and political power is a frequent topic of conversation.

Let's take a look at the rental market in Sacramento [1]. 2008 hits, and a single investment firm buys up 50,000 houses around the country, mostly in densely populated areas like Sacramento, and flips them into rental properties. In Sacramento county alone, they buy up 1500+ properties through a variety of subsidiary companies. (I'm suuuuure they price all their rentals competitively.)

And these guys aren't the only player in this game. Across California, as many as 25% of single family homes are being rented from institutional investors.

So now, let's give these guys the ability to buy any property they want, whenever they want, so long as they can come up with the cash for it. How will this play out?

a. They'll have far easier access to capital than you or I or any other unfortunate shmuck in this scenario, which means they'll be able to buy properties at much lower interest rates, lowering their overall cost to purchase.

b. They can then set the price to whatever they want for their market niche. They might rent the properties, set them up as vacation properties, or sell them back to upper-class buyers for a tidy profit. Or, heck, just let them lay vacant and wait for the market to creep upward, as is happening right now with foreign real estate investors all over the place. [2]

c. They'll have the ability to set higher prices because, for them, the increased tax costs will be covered by their increased profit margins, and they'll have the resources to find or purchase any tax code loopholes that will improve the situation even more for them. They'll also have an incentive to artificially inflate their property values because it'll make their portfolio look that much richer, which'll make it easier to secure even more investment, to buy even more property with.

d. Meanwhile, everyone who doesn't have a ton of money in the bank and a stellar line of credit gets kicked out of their house and forced into one of two situations: dense, expensive urban housing, or cheaper rural housing in economically depressed areas. In either case, these losers' purchasing power just evaporates.

e. The few people left deluded enough to believe they might not be poor someday have the lovely option of buying into this mess through companies like https://fundrise.com/. Of course, they're contributing to the problem by collectively giving lots of extra cash to the very people that are artificially inflating housing markets, but hey, at least you get 1 or 2% compounding out of it.

f. It at some point the peasants start getting noisy, they'll just contact their buddies at one of the three media conglomerates in the country and run some segments on how un-American it is to "redistribute" money (notably: it's only un-American if you're redistributing from the rich to the poor), and everyone getting screwed in this scenario will be convinced that they should feel proud to be screwed so hard.

This is one of the worst applications of "let the free market sort it all out" I've heard in a while.

[1]: http://www.kcra.com/article/this-is-the-largest-owner-of-ren...

[2]: https://calmatters.org/articles/data-dig-are-foreign-investo...

A very interesting idea, which will never gain political traction.

Yeah, it's very neat, but having to sell your house because you mistook the value of your home? Not gonna fly.

Wasn't something like it actually done in classical Athens? http://www.daviddfriedman.com/Academic/Course_Pages/legal_sy... bottom of page:

"The solution was simple. I offer to exchange everything I own for everything you own. If you refuse, you have admitted that you are richer than I am, and so you get to do the liturgy that was to be imposed on me."

Seems like the converse to an idea I once had, wherein if the property tax assessor valued a parcel of real estate too highly, the owner could compel the municipality to buy it at that price. Assess too low, and you don't get enough property taxes, but assess it too high, and the owner calls your bluff.

Related is an the idea for eminent domain reform, where instead of compelling a sale, the government could usurp an arm's-length sale in progress, taking the property, paying the owner the agreed-upon sale price, and paying the disappointed buyer a percentage of the sale price, plus any actual costs incurred by failure to take possession of the property. That would likely feed the property-flipper industry, where an eminent domain seizure counts as an instant flip.

I listened to that podcast episode and had the same reaction.

Their counter-argument is to start with markets where there is not so much personal emotion wrapped up in the price setting and valuation, such as broadcast spectrum rights. Then you could work out the logistical details of how it would work, people would get comfortable with it, and then years or decades later you expand it to housing.

Part of their proposal relies on a huge mental shift in how we think about housing and property rights, to treat it as a shared public good rather than something any individual owns. That's the kicker, which realistically would take a few generations as the mental model shift required probably exceeds the capacity for change in anyone over the age of 40.

What a horrible dystopian idea. No one should be forced to move out of their home on short notice just because they failed to set the value correctly. Imagine how wealthy people could abuse that system to punish their critics by purchasing their homes and evicting them.

Sounds fantastic for the wealthy, who in a recession still have access to easy capital. Better yet REITs, who can swoop in to take entire blocks of SF homes and then rent them back to the same people who don't want to leave.

Then why didn’t those people set the value higher? If you sell for some price, then you agree that you do want to leave for that price. The “market” would be efficient — people would sell for exactly what they would be willing to sell for. “Sentimental” value could be expressed in actual, taxable value. You could quantify exactly what a house is worth to you — and can insure the home appropriately.

> “Sentimental” value could be actual, taxable value. You could quantify exactly what a house is worth to you

That sounds horrible and very much impossible by definition. The “exact” value of my house where I spent my entire adulthood/childhood is “not for sale”

I keep hearing abouy this market efficiency but never came across a quantifiable measurement of this efficiency. Could you please point me to some literature where they say “oh this market is 70% efficient and that market is 90% because …”? How do you put “exact value” to this efficiency stuff?

Moving every time someone else decide you have to would sux for anyone except very young people. It would also make it even harder to keep social ties and networks. In particular those people who care about elderly or sick relatives who live nearby. It is also pretty cool when your kids can have stable set of friends, stable school and what not.

Having to pack everything and look for new place to live just because some asshole decided he wants your living place now must be real pleasure.

So set a high price. Problem solved. You wouldn’t be forced to sell for any less than the value you, yourself have assigned. Nobody gets exploited: people get exactly what they want.

Except that there is the tax thing which is literally designed to make people bleed money if they want to stay at place and force them to move.

See, when I am with small baby and kid has friends and I have deadlines in work, I don't want to have to move nor be suddenly force to pay much higher tax then flexible single dude who can leave easily.

But a high price leads to higher taxes. In this way I am taxed for my sentimental attachments, which seems wrong. An old man with 5 years left may have a very high sentimental attachment as he wishes to die in his 'forever home.' Should he be taxed more for that? What about a young couple who just had their first kid? Providing a sense of stability and staying in their current home has a lot of meaning to that family, should they be charged for it? A family in 2008/2009 who is making payments but barely and struggling may place huge value on being able to maintain their position as homeowners. You're going to force them to choose between much higher taxes or selling to a PE firm?

We already have a system where you can offer any property owner any amount to sell, the idea that the government should come in and shape the market in such a way that people are charged for emotional attachments and compelled to sell at a specific price is ugly. It seems wrong to shape human behavior in that way (especially for a spurious benefit) and it seems like it mistakes efficiency towards a goal for the goal itself.

The idea of owner appraises property for taxes and commits to selling at that price (or raise it and pay N years back taxes of the amount they had to raise it) was mentioned in one of the later Heinlein novels, Number of the Beast I think.