Citation needed.
Productivity has been rising decade after decade - the younger generation produces more than enough to sustain even a larger older generation. Much of that wealth production is re-routed to those at the top of the wealth pyramid. Moving even some of that back downwards would do a lot to resolve these problems.
The plight of the American worker tracks very well with how many of them there are (modulo globalization, which makes the plight of the worker track with how many there are globally). The golden years of the 1950s coincided with the depopulation and destruction of capital stock following WW2; this made America the only country that still had productive industry, which brought in a good deal of global money that could be shared with the G.I. and Silent generations. 70s stagflation and 80s malaise coincided with the entry of baby boomers into the workforce and household-forming years: with more laborers, wages fell, and with more consumers for a fixed number of goods, prices rose. The late 80s recovery and 90s boom coincided with Gen-X and the retirement of the G.I. Generation: with few incoming workers and lots of outgoing ones, wages rose. The post-2000 malaise coincides with the entry of Millenials into the workforce: the world population has grown from 4.5 billion in the early 80s to 7.7 billion today, and all those young people are entering the workforce now.
It's likely that as the Boomers die off and the Homelander generation (post-2001 & tiny) enters the workforce, wages will rise naturally and capital prices will fall significantly.
Also, most of the wealth held by the top of the wealth pyramid is not what has already been produced, but merely claims on future production. I doubt people at the top of the wealth pyramid consume all that much as a fraction of the society's productive capacity - either they are holding onto existing claims or creating new claims by making investments that would increase the future productive capacity.
So if there was a production gap and the youth is not able to support the older generation due to the lack of productive capacity, moving the wealth downwards would exacerbate the gap, because you'd be redirecting some of the productive capacity towards consumption rather than investment.
“Dependency Ratio” is an iron law.
Well, we're forgetting the very young (0-18) who the older work for them, to house, nurture, feed, educate, and usually spoil them...
So there's that. It's not like the young come from nowhere and suddenly have some responsibility to work for the old when nobody never did anything for them...
Of course somebody has to work for them as well. But does not really change anything, this is why I left it out.
> It's not like the young come from nowhere and suddenly have some responsibility to work for the old when nobody never did anything for them...
This is not about responsibility or morale, but just about the pure economics of life.
Well, the "pure economics of life" for humans include that for human life to be sustainable, we should tend to the young (for a culturally adjusted 18 years or so), and that we should tend to the older (65+) too.
Being framed as a "ponzi scheme" targeting the young at the point they enter the workplace, hides that fact that a lots of money and parental energy (and even more time unaccounted for as money) were given to said young before that point...
It's not exactly a "ponzi scheme" if Ponzi and his money, time, and effort is the only reason you're alive and working now...
Resource consumption per capita of youth is less than elderly (especially healthcare), and generally reduces with time (excepting education). Youth lasts only 15-20 years before gainful employment can begin. Old age stretches from 65 onwards. Early retirees may spend 50 years or more "retired".
Which with average life expectancy is close to 15-20 years of remaining life. E.g tons don't make it to 70 even.
>Early retirees may spend 50 years or more "retired"
Early retirees are usually people who saved money / hit the business jackpot, not people who expect some others to work to pay them a pension.
We're also forgetting that (at least in civilized pension systems) retirees at 65 had 30-40 years of paying taxes (along with the employers part) for their pension scheme.
At 45 (early retirement under many systems), 36.1 additional years.
Look at what’s happened to California under prop 13 [1]. What was supposed to protect little old ladies from losing their homes due to rising property taxes has turned into a commercial real estate bonanza. People are making money hand over fist renting rooms at exorbitant prices to young people, and paying next to nothing in property taxes for the privilege. Meanwhile, a young person needs a large six to seven figure income just to afford a home in the Bay Area, and then their property taxes are insanely high, forcing them to subsidize their commercial real estate neighbours. It’s ridiculously unfair.
[1] https://www.latimes.com/california/story/2019-08-14/californ...
I agree that it is ‘unfair’ but making it more ‘fair’ would just harm all the people who have actually made it work for them.
Most people who own property in the Bay Area are not predatory landlords.
No it wouldn't; if you've recently brought, your property taxes would go down. What it would mean is that the people who bought in the '80s who would have to step up so that you both paid the same, rather than you carrying them.
> and do nothing to make real estate more available.
Of course it would: it would force a lot of people (particularly older non-working people) to sell up, making a lot more housing available to those who have a greater need/desire to live there now but aren't fortunate enough to have moved in decades ago.
> I agree that it is ‘unfair’ but making it more ‘fair’ would just harm all the people who have actually made it work for them.
The first-order effect would be zero-sum, but the current market distortion leads to inefficient allocation at second order. So levelling the playing field would be a net gain.
> Most people who own property in the Bay Area are not predatory landlords.
People who benefit from prop 13 are at best getting an unearned windfall.
At least you are being honest that the goal here is to force people out of their homes so that people with tech jobs can buy them.
Assuming we want the total tax take to stay the same (changing that is a separate question), people who currently have a higher-than-average tax:property value ratio (which is people who bought recently) would have their tax bill go down (and people who currently have a lower-than-average tax:property value ratio would have their tax bill go up).
> At least you are being honest that the goal here is to force people out of their homes so that people with tech jobs can buy them.
In the same sense that other people are currently "forced" to rent forever and pay extra taxes to support idle homeowners, sure. Saying that I'm not allowed to own a house in San Francisco is just as cruel as saying that you're not allowed to own a house in San Francisco, whether or not you happen to have lived there for some number of years already.
Property taxes are a percentage of the assessed value.
Repealing prop 13 would definitely make them go up.
Nobody is saying you aren’t allowed to own a house in San Francisco.
You are saying that people who do own them should be forced out so that you can have them.
‘It’s just as cruel for me not to have it as for you not to have it’ is literally the logic of a thief.
You're saying that I should pay twice as much property tax or more as someone else living in an equally valuable house. That's unjust.
> You are saying that people who do own them should be forced out so that you can have them.
So charging me taxes is "no-one is saying you're not allowed", but charging them taxes is "force"? It's the same mechanism either way.
> ‘It’s just as cruel for me not to have it as for you not to have it’ is literally the logic of a thief.
"I took it years ago so it's mine now" is thief logic too.
But of course nobody is saying this because nobody took anything years ago.
They bought it from someone who wanted to sell it to them.
The only one suggesting forcing people out of their property here is you.
I am not saying you should pay twice as much property tax as someone living in an equally valuable house.
I am saying that increasing property taxes as prices go up is confiscatory and immoral.
I am saying that anyone who wants to use this mechanism to displace people so that they can acquire their property is a thief.
My personal view is that property taxes are the problem here. Not prop 13.
If the city needs to raise revenue it should be via income, or a per person charge for services. Other countries do this and it works just fine.
> They bought it from someone who wanted to sell it to them.
I'm not proposing to take anyone else's house either. They are more than welcome to keep their house (as long as they keep paying their fair share of taxes, obeying the law, and doing all the other things that we expect of decent citizens). They still have a free choice over whether to sell their house or not. Once we remove the unfair subsidy they get because they happened to buy it a long time ago, a lot of them are likely to decide that the house is worth less to them than what they could sell it for, that's all.
> I am not saying you should pay twice as much property tax as someone living in an equally valuable house.
> I am saying that increasing property taxes as prices go up is confiscatory and immoral.
How do you reconcile those two statements? If you're saying that people should be taxed based on the price they purchased that then you're saying exactly that I should pay twice as much as certain other people living in houses that have the same value. Of course property prices change; taxing everyone based on their current house value is equitable and nondiscriminatory. Taxing based on the price when they happened to buy is neither.
> I am saying that anyone who wants to use this mechanism to displace people so that they can acquire their property is a thief.
We live in a society, it's everyone's responsibility to pay their taxes. The thieves are the people who want to avoid paying their fair share so that they can keep living above their means.
> If the city needs to raise revenue it should be via income, or a per person charge for services. Other countries do this and it works just fine.
They do not work "just fine". Poll taxes are immensely regressive. Income taxes disincentivize productive work. Land is the one thing we can't produce more of when prices rise - those hoarding it should absolutely be shouldering a corresponding tax bill.
You are proposing that the taxes of someone who owns a house should be based on the ability of other people to buy it.
Nothing could be more regressive than that. It is absolutely discriminatory and in no way equitable.
Living in the house you bought for yourself is clearly not ‘hoarding’. It seems like you are getting emotional now.
There is nothing discriminatory about basing taxes on the purchase price. If you buy now, you will benefit from prop 13 the same as anyone else.
Also, using taxes to force people out of their houses as you propose, is a terrible idea for the development of the economy since it disincentivizes the development of productive industry in other less developed areas.
> Nothing could be more regressive than that. It is absolutely discriminatory and in no way equitable.
How so? The tax rate on a given house should be independent of who is living in it. Two people living in identical houses (in equivalent locations) should be paying identical taxes. That's obviously the fair approach.
> Living in the house you bought for yourself is clearly not ‘hoarding’.
It easily can be, if you're living in a bigger house than you need, or living in a prime job area when you're not working. Hoarding always means keeping hold of something you bought for yourself so there's no contradiction there.
> There is nothing discriminatory about basing taxes on the purchase price. If you buy now, you will benefit from prop 13 the same as anyone else.
I didn't have the opportunity to buy 40 years ago because I wasn't alive then. I didn't have the opportunity to buy 10 years ago because my parents weren't rich enough to pay my deposit. Prop 13 is very much age/class discrimination in practice.
> is a terrible idea for the development of the economy since it disincentivizes the development of productive industry in other less developed areas.
Subsidising development in cheap areas is just as distortionary and counterproductive as subsidizing development in expensive areas. The best taxes - and land value tax is well known among economists as the perfect tax - don't distort in either direction, leaving the free market to get on with efficient allocation.
“If you are living in a bigger house than you ‘need’ or if you are living in a prime job area and not working”
I see, so you have decided that homes should temporarily allocated to those who are working in the area, and should be sized according to a political opinion about what they ‘need’.
A segregated society where we have worker only zones and industry is more and more concentrated in the places it is already established is a grotesque, quasi-fascist dystopia.
This is what you are advocating for? At least your position is consistent.
If you buy now, over time you will benefit from prop 13 in the same way that everyone else has. In 40 years you’ll have the benefit that people who bought 40 years ago now have.
How is it discriminatory? It has nothing to do with who you are (indeed one doesn't have to know anything about you to figure it out), which is the opposite of discriminatory.
> I see, so you have decided that homes should temporarily allocated to those who are working in the area, and should be sized according to a political opinion about what they ‘need’.
Better that than allocating them by whoever first called dibs. There's a reason we believe most goods should be brought and sold at a market price that's the same for everyone, not different prices for different people.
Do you acknowledge that there's such a thing as a luxury home? I would rather people who just want somewhere to live near where they work had a level playing field with people who want to live in a mansion they don't need. (I'm not even arguing for favouring the workers, just for stopping subsidising the mansion-owners). There's nothing wrong with spending your honestly-earned money on luxuries, but you shouldn't get a tax break for it, particularly when your luxury is someone else's necessity.
> A segregated society where we have worker only zones and industry is more and more concentrated in the places it is already established is a grotesque, quasi-fascist dystopia.
A society where people can't move into the places where the jobs are is far more all of those things (not being able to move freely was one of the biggest criticisms of the Soviet Union; we called ourselves a free country in contrast, precisely because people were free to move wherever they wanted) - and that's what we have at the moment by subsidising the lucky few who happen to live in those places at present.
> If you buy now, over time you will benefit from prop 13 in the same way that everyone else has. In 40 years you’ll have the benefit that people who bought 40 years ago now have.
By that logic it's fine to refuse to hire over-50s because 30 years ago they had the same benefit that people who are currently 20 have. But actually we still consider that age discrimination, because it is.
You are free to benefit in exactly the same way, and just like any investment it will take 40 years to reap.
40 years ago these people were in the same position as you are. There is no difference.
As to defending the allocation of housing to workers and displacement of the non-working, I applaud you for being honest about your position.
Of course you use a false dichotomy.
People are in fact free to move wherever they want. They just can’t force others out of their homes because they think they deserve them more.
If it is not economical for more workers to come to where the jobs are, then the jobs will come to the workers because corporations need to expand.
You have the same opportunity as those 40 years ago did - go and live somewhere that is cheaper and where industry is going to develop because the economic conditions are right.
That way you too can benefit from economic growth over the next 40 years the way the people you envy have.
No, that's in addition. No-one is saying that if someone bought a $400k house for $50k 40 years ago they should have to pay back the unearned $350k; they get to keep their investment gains and be just as well off as someone who buys a $400k house today. They just shouldn't get an extra tax break on top of that.
> People are in fact free to move wherever they want. They just can’t force others out of their homes because they think they deserve them more.
If charging a market price is "force" then people are being forced to not move to places where they want. Again, the mechanism that would move people out is exactly the same mechanism that currently stops other people moving in.
> You have the same opportunity as those 40 years ago did - go and live somewhere that is cheaper and where industry is going to develop because the economic conditions are right.
That's the opposite of what happened. 40 years ago those people moved into the very centre of the city, not to somewhere cheap. And they had that opportunity because the city wasn't filled up with 40 years' worth of moochers with tax breaks.
Why? Because the city wasn’t considered attractive because the economy hadn’t created a huge demand for housing and a lot of rich people to compete for it.
It wasn’t tax breaks that made the city cheap. It was that the tech boom hadn’t happened yet.
If you )o somewhere where the economic growth is at an earlier stage, and you can benefit in the same way, while helping to improve the economic health of the country.
It wasn't filled with moochers then, it is now. That's my point.
> It wasn’t tax breaks that made the city cheap. It was that the tech boom hadn’t happened yet.
SF wasn't especially cheap, and in any case there's nothing particularly virtuous about moving in or out of somewhere at fair market price (if you move somewhere because it's cheap, you already got your reward for that: it was cheap). The people who happened to move in at a particular time got lucky that the tech boom happened to happen in a particular place, and raked in a massive unearned windfall on their property values. But apparently that isn't enough for them; they continue to massively underpay their property taxes as well.
> If you )o somewhere where the economic growth is at an earlier stage, and you can benefit in the same way, while helping to improve the economic health of the country.
I can benefit from house prices going up as they normally do, sure. I probably can't benefit from a substantial extra subsidy to my property taxes on top of that, because most of the country (rightly) does not have a Prop 13.
If you want to benefit from prop 13 you can buy in California, just like anyone else can.
When you describe the rise in property prices as a result of the tech boom as an ‘unearned windfall’, it sounds like you are opposed to the appreciation of assets altogether.
What would count as ‘earned’ in your estimation?
Not in the age of Prop 13, sadly.
> When you describe the rise in property prices as a result of the tech boom as an ‘unearned windfall’, it sounds like you are opposed to the appreciation of assets altogether.
It's not a question of opposed or not. Sometimes some people get lucky and others don't, that's a fact of life. Houses appreciating at a normal rate is one thing, but SF has gone up massively, and the vast majority of those who benefited from that didn't do anything smart or virtuous to earn it, they just happened to pick a city that happened to become a lot more valuable. (Maybe some people genuinely did economic analysis and decided that SF was a smart place to invest in, but realistically they're a tiny minority).
All of which is fine. Some people picked one city and their houses have gone up 4x, others picked another city and their houses have gone up 10x, even though neither group of people worked more or less hard or are more or less deserving. That's life, that's fine. But we shouldn't be giving a tax subsidy to the people who were already lucky enough to have their houses go up 10x. (Indeed, if anyone should get a discount on their property taxes, it should be people whose land values haven't gone up much - the ones who've been unlucky).
> What would count as ‘earned’ in your estimation?
Labour income. Things that require active involvement. It's fairly standard terminology, no?
I.e. It enables people who have normal labor income from active involvement to keep the houses they were able to afford rather than being penalized simply because a nearby industry booming.
It impacts these people far more beneficially than any negative that comes from not penalizing the people for whom the tax would not be a problem.
You give the appearance of to preferring labor involvement over passive investment, and yet your entire argument is based on how unfair it is that you didn’t get to benefit from a passive investment. It seems like you would actually like that for yourself, no?
If you want to buy a home and your income comes from labor in the Bay Area, then Prop 13 is the only thing protecting you from being displaced if prices continue to rise.
Working the same job you've always worked even as (relative) demand for your industry drops is the opposite of active involvement. No-one should be entitled to unearned money for life, or excess wages for life, or low property taxes for life, just because they got there first. They're blocking out other people who work harder or need it more; it should be a level playing field for everyone, which means fair market rate for the job you're doing, fair market prices for the things you buy, and nondiscriminatory taxation.
> It impacts these people far more beneficially than any negative that comes from not penalizing the people for whom the tax would not be a problem.
But you're not accounting for the people who can't move in because of people sitting on undertaxed properties. Once you add up everyone, prop 13 does a lot more harm than good.
> You give the appearance of to preferring labor involvement over passive investment, and yet your entire argument is based on how unfair it is that you didn’t get to benefit from a passive investment. It seems like you would actually like that for yourself, no?
I mean of course I'd like a pile of free cash. But it's unjust to be giving out public money (which is ultimately everyone else's tax dollars) arbitrarily, and it's doubly unjust to be giving it out to the people who already won big on passive investment.
> If you want to buy a home and your income comes from labor in the Bay Area, then Prop 13 is the only thing protecting you from being displaced if prices continue to rise.
Sure, but for everyone who's displaced there's another person who's now able to afford a better place to live. Likely more than one person actually, since in practice it's more often a case of empty-nesters in a big house that could be subdivided for several working people. (If people want to stop themselves being displaced in a fair way, the right answer is to allow more homebuilding - unfortunately homeowners are incentivised to pull up the ladder behind them so as to increase their own home price, and prop 13 just makes that worse). If I can't pay my fair share of property taxes, I'll sell my place on to people who can - and given how much money I'd be pocketing from price appreciation for that to happen, I wouldn't be particularly sad about it.
You make the assumption that I’m some kind of boomer who’s somehow benefitted from buying decades ago.
Repealing prop 13 in order to take peoples homes away through confiscatory taxation so that people with high incomes can buy them is not a correction. It is theft.
Why not work somewhere else where you can afford a home? That is the real ‘correction’.
You own a home. Your housing payments aren't being thrown into a void.
>Repealing prop 13 in order to take peoples homes away through confiscatory taxation so that people with high incomes can buy them is not a correction. It is theft.
So is rent-seeking, if we have such a low bar for "theft." Really, it's just society deciding where its priorities lay: people who need housing for practical reasons, or the people privileged enough to use their housing as an investment vehicle?
>Why not work somewhere else where you can afford a home? That is the real ‘correction’.
Now you're getting emotional. That's not a market correction at all.
There is nothing emotional about suggesting that people choose to live and work in places they can afford to.
The solution to the Bay Area housing crisis is for employers to establish operations in places where housing is cheaper - not for housing to be confiscated from earlier purchasers through confiscatory taxation.
It's actually both.
>There is nothing emotional about suggesting that people choose to live and work in places they can afford to.
It is, within context. The proposal in question might have a net negative outcome for you, but be positive for the community. Further, while the status quo has full-time workers living on the street, readjusting this regulation and allowing a market correction to take place would presumably not ruin you, but simply force you to move. (Hey, you suggested it for others, should be good enough for you too.) In the end, though, you're against something that would ultimately be a boon for the area and is at least tenable for you. That's an emotional argument.
I did not suggest forcing anyone to move. I suggest that if you cannot afford a home, you should go somewhere you can, rather than stealing homes from people who have bought them already through confiscatory taxation.
There is no reason why people need to be displaced from their homes if jobs are created elsewhere.
If people in full time employment are unable to afford housing, they are being paid too little, and should not have accepted the job, thus forcing employers to offer more.
You have stated that you think people should be driven out of their homes even if work can be moved elsewhere. (“The solution is both”).
That seems pretty reprehensible, and I’m curious why you think it?
The point is, the young would have a higher quality of life if they did not have to support the old. If one young person has to support two old, their quality of life will decline no matter what the fiscal arrangements are. Sure, technology improves efficiency, but not 300%
And, um...I don't wish to worry you, but efficiency has improved a whole hell of a lot more than 300% over the last 40 years or so.
The problem is that the gains have gone almost entirely to the people at the very top of the pyramid.
Gains have been marginal in air travel,, oil extraction, heating, steel, food and concrete production. Many of these are near the physical limits of possible efficiency.
It's just over 250% increase in productivity since 1979, while real wages have risen a fraction of that.
So, if we were to reduce the ability of the people at the very top to siphon away 99% of the productivity gains we've seen over the past 40 years, we would have more than enough food, clothing, and shelter for everyone, with enough margin that people could also work shorter hours without losing the ability to provide for everyone.
The cost of that is that a very small percentage of the population can no longer have massively extravagant lifestyles.
i miss my grandmother a great deal.
The older two, if they didn't have to support the young, e.g. not have babies, or just send them to work on farms at 6 years old...
Are the "young" supposed to get raised for free from 0 to 18 or even 0-25 or more in these days, and then coast along, with no responsibility of paying back to society for that?
If you have 4 siblings, supporting your ageing parents is quite easy
If you are a single child, supporting two ageing parents can be challenging
If you alone had to support 4 ageing people (like someone who decided not to have kids), while also having to meet your work commitments, that would probably be very difficult.
You are missing one big thing: productivity increasing. Since I'm born in 1988, the GDP of my country (France) doubled (adjusted for inflation), assuming GDP is not totally meaninglessness, that means that we need much less «young» to sustain the entire society with the standard of living we had in 1988 (which was a pretty decent one by all standards).
That argument might have seemed less ridiculous before the invention of money. It's this amazing thing: a medium of exchange that can be stored indefinitely and then used to purchase almost any good or service. Quite a few people even tout money as the solution to every problem of incentives or matching supply to demand, though I think that's taking the idea a bit too far.
In the real economy, what matters is production, investment and consumption - money is just a social construct designed to incentivize people to do consume/invest/produce the right amounts of the right things.
But this analogy fails at a larger scale - an entire generation can't just save up enough while they work and expect to be provided for in retirement because what they saved up are just claims on future production - their consumption still has to come from the production provided by future generations. Their claims cannot and will not automatically cause the excess production to occur.
Now this is a purely hypothetical problem and we're arguably in a world with the opposite problem (too much productive capacity, too many people trying to save and not enough demand). Though arguably even this problem is due to too many people to save up to prepare for the other scenario, decades before it happens.
How can we model the spoilage of goods and therefore of the loss of value of money that represents a claim to these goods? With inflation. How can we encourage manufacturers to maintain production capacity even in the future? With inflation.
The idea seems that if one has coupons there will always be a sucker to do the work for you, in exchange for the coupons. There will eventually be a final sucker holding onto the coupons: No fiat-currency ever survived.
In every society where some people are working ("the young") and some people are not ("the old"), and everybody is consuming, the young people have to work for the old. There is no way around that. There are not much goods or services that you can store for more than a year. They young always have to do the work. You can think of different schemes how you transfer the buying power to the old (taxes, dividends, interests, rent, ...) but in the end of the day, some are working, some are not and the young always have to do the work for the old.