Re:Building China: Rise of the Superblock
by bobthepanda on Monday April 29, 2019 @12:58AM
(#19775949)
Land leasing is mostly just an indirect form of tax which distorts government incentives and the economy
- Governments are incentivized to promote development above all else, which means that unsavory tactics like unfair compensation of rural farmers is rampant.
- At the same time, governments are incentivized to prop up property prices. The housing price to income ratio is a multiple of those even in Western cities, making it unaffordable for most citizens. And the central government cannot deflate a plainly obvious property bubble threatening the economy, because then developers won't make land-lease payments and the local governments will default en masse.
- Governments are incentivized to promote development above all else, which means that unsavory tactics like unfair compensation of rural farmers is rampant.
- At the same time, governments are incentivized to prop up property prices. The housing price to income ratio is a multiple of those even in Western cities, making it unaffordable for most citizens. And the central government cannot deflate a plainly obvious property bubble threatening the economy, because then developers won't make land-lease payments and the local governments will default en masse.