What do you do with the $500k home sitting on the $80k land that just got repossessed?
Why would anyone take care of their 98 year old land if they know it's gonna disappear in a few years? Are you gonna fine every person that goes right up against the line (regarding environmental laws for example) without crossing them? By the time you get to the expired land, it will be a defacto landfill.
Can people choose to lease a specific plot of land and if so does the term reset to 100? Why not pass property around the family back and forth forever?
Who sets the price of a lease? Use gov't prices and the deadweight loss kills your economy. Use market prices and every lease will cost about the same as buying land in our existing system.
You and I don't have to think about this for five minutes as that's too little time and we're not qualified, but I'm sure if we round up all the top economists and university graduates of the G20 countries and put them together in a luxury resort in the alps to brain storm for a few months, I'm sure they'll be able to come up with a better economic land lease model than the system we have now which only encourages multi generational, winner-takes-all, land hoarding scheme for rent seeking purposes, where the earliest who got in the market got a great deal which they can use as leverage to acquire more land over time, and the ones getting into the market now are completely priced out and screwed as the pie is fixed in size and has already been called dibs on.
Basically, we need a system that resets the monopoly board from time to time as currently you're entering the game from square one while others inherited a better starting position with more assets to boot.
I'm sure such a system could be designed if desired but that's not what's desired as the elites and people in power with entrenched wealth don't want to lose their position on the board.
Maybe we need a differential land tax system that's very low taxes for small areas intended for personal living(shelter), and taxes that go up progressively the more land you own, especially if you use it to rent-seek. It should discourage land hoarding and feudalistic rent seeking.
[1] https://nl-m-wikipedia-org.translate.goog/wiki/Erfpacht?_x_t...
The tl;dr is that you'd decide what your $500k home is worth. You could choose to say it's worth $80k, $500k etc. You'd then pay property tax as a function of what you decided it's worth.
The catch is that you'd be obligated to sell it at the price you selected if a buyer showed up.
In economics lingo one thing you can optimize for is "investment efficiency", or "allocation efficiency". Traditional land ownership is the canonical example of the former, someone else might be able to make better use of your land ("allocation efficiency"), but they don't own it, so tough luck.
Turning all "land ownership" into what's basically a mandatory bidding system is a way of maximizing allocation efficiency, you'd optimize for (re)allocating land to someone who can most efficiently use it.
The authors spend a lot of time discussing the various edge cases, and in particular the normal knee-jerk responses someone might have.
In particular you can set a system like this up in such a way that a "mandatory buyout" would be a fantastic deal for a given homeowner, e.g. the equivalent of having someone offer you $1 million for your $500k house.
1. https://press.princeton.edu/books/hardcover/9780691177502/ra...
We shouldn't be taxing people on the fact that their house is near their job. And if they don't raise the price of their house, someone will eventually buy it at the market value of the house, and the value will simply have been destroyed.
So yeah, don't like your new neighbors who just bought a $500k home next to you, you can give them $1.5m (or whatever) to get their house. How are they now worse off exactly?
That family can then probably buy the larger house next to yours for $1m, and have $500k in cash left over. A bank that was willing to give them a loan for a $500k house is less likely to do so when they've got an extra $1m in cash?
The system the authors proposed is mainly intended as a clean way to get rid of things like eminent domain and the holdout problem. Most real estate transactions would take place between "willing" sellers and buyers, just like they do now.
That doesn't work. People will set the "real" value to be lower than the real value, in order to reduce their taxes, but high enough that someone who wants to buy the house has to pay barely enough, after multiplying, to make it worthwhile to sell. The tax rates will then be raised accordingly and we'll just have "the mandatory bidding price is the real value" with extra steps.
But you seem to be arguing that if such a system were implemented the very structure of it would lead to a race to the bottom?
I don't see why that would be the case, if there's political reluctance to implement such a system to avoid certain outcomes, why wouldn't there be the same reluctance to raise the relevant taxes?
In any case, the book I cited upthread doesn't argue for some sort of "shock therapy" introduction of a system like this, but e.g. starting with commercial real estate.
Even people who'd argue that they should never have to sell their ancestral family home would probably find it hard to extent that argument to their neighbourhood Starbucks never having to accept a bid from a competing coffee company.
For example, one could misinterpret the neighbor as having the same socio-economic status, making it far less clear how losing the house but gaining an equitable amount of money causes hardship. And blacks specifically have been targeted by such policies in the past, so it's a lot easier to imagine how other social policies align to make becoming un-housed even more problematic for that neighbor.
Maybe you want to go see a movie you've been dying to see tomorrow, and you've got your $100 tickets in hand.
But there's someone else in the same situation, but they'd really like to see it. If a market exists they could offer you $1000, and you'd both be happier, as you can now afford something you'd prefer more than the $100 activity.
The same goes for real estate, it's just a less liquid market currently.
It’s not universal worldwide to have the emotional connect we do to our homes
House purchases aren't quick so you'd only need to do a few a year.
No:
1. There's no requirement to list the house - who would even know if you sold it twice a year?
2. There's no requirement that the seller has to take the highest offer. The other bidder will have to bid again next year when taxes are due.[1]
[1] You can't set the tax based on what the bid is, because the bidder may not have the money (or may not be granted the bond) when time comes to actually do the transfer. The tax has to be based on what the actual selling price is.
The status quo effectively leaves you without a recourse if the current owner isn't willing to sell, the system noted upthread assumes that emotional bonds to real estate can be priced.
Forcing people to sell their home and get out, any time some rich guy comes along and decides he likes the neighborhood, seems like a terrible idea.
A modification to that I read somewhere which I like is the buyer has to put in a cash over the barrel offer. Completely unencumbered cash for a period too long for any leveraged investor to tolerate. And enforcing that "cash"'ness is the courts will not enforce claims upon the property based upon pledging it as collateral for say, 2X median population lifespan years.
I'd also want to see a natural person exception and a bounty. If you are a natural person (non-corporate entity, real human), then your home is exempted from the bidding system. But if someone figures out a natural person individual claimed two or more properties under the exemption for some period (say a year and a day) or longer, then that someone gets their choice of properties illegally claimed under the exemption, with instant eviction enforced by the state immediately after the court-supported decision.
The intent of the modification is to disallow hacking the bidding system by tapping credit markets far beyond the reach of median homeowners and systematically outbidding them.
This is not a new invention.
Technically speaking, the lease terms are 49 / 98 years. The problem is that when you reach the end of the lease, there is no real possibility of _not_ extending the lease. And the lease is for the _land_, not anything on top of that.
So it "sounds" nice, but in practical terms, it just adds another body that you have to go through.
From economic perspective, there is very little difference between the two. A bank will give you a mortgage to buy a house whose "land lease" expire next year, for example. Because there is no possibility of that not being extended.
There is _slight_ advantage to buying houses not leased, but mostly because that means somewhat less paperwork to go through.
Some tax auctions are only for the right to collect the tax. In those states, you never can acquire ownership. You just get a lien.
And some tax auctions are for worthless strips of land. I've seen some that were essentially the strip of grass between a parking lot and the street. The shopping mall had a permanent easement to put a driveway through that grass (if they wanted) and there was no possible way to make ownership of that 10 foot wide (and several hundred feet long) strip of lawn to be useful. Plus, you get to pay property taxes for something you can't live on.
Tax auctions are a wild west of buyer beware.
Do I camp outside Microsoft headquarters then walk in on day 1 of year 101 and say, “this is mine now”?
Where I live we have leasehold land so titles theoretically extinguish after 99 years. What has happened in practise is that the lease just auto-renews, making the situation no different to freehold apart from the paperwork.
You'd probably have to outbid Microsoft for it. I don't think land should ever be free for the taking for whoever claims it first; It should belong to society and you purchase use rights from society.
Best of both worlds. You discourage real estate speculative and hoarding for rent seeking purposes and still have the free market competition determining the prices.
Once your lease is up you can renew it at current market prices if you want it and can afford it. If not, then you make way for someone else to take up the lease.
I also don't see how it discourages speculative investment. If nothing you own is really yours for very long then you're much more likely to have your property bought from under you if it's in a desirable area. As an investor I would want to do that if I believe I could rent it out at a profit.
Why limit ownership restrictions to land ownership only?
Private ownership of property (not limited to land) is foundational for functioning democracies; some would even go as far as saying it's foundational for society.
Those societies that went your route of "from each according to his abilities to each according to his need" turned out very badly.
Also, they're substitutable; if people can't afford classic cars, they'll buy art, or wine, or yachts, or Rolexes, or a thousand other luxury goods. Land is only imperfectly substitutable, and it substitution has definite economic costs.
We already know how to solve for this, via land value taxes. No need to remove private ownership to fix that.
This is all fine and very nice when it comes to your ability to take a leisurely stroll in the countryside, but it is only such a small facet of the actual issue at hand: Land being hoarded and/or not being developed to the most of it's potential utility. This is why a city like San Francisco has thousands of homeless people and almost no high density housing.
To me the freedom to roam is more valuable as an example of how property rights the way they are elsewhere is a huge infringement on liberty in that it massively restricts the general public to the benefit of individual owners.
Once you've experienced it, it is hard not to feel walled in and unfree when you move somewhere without that right.
As such, it is reasonable to discuss which other aspects of property rights ought to be curtailed if one wants to maximise liberty for all.
I completely agree, I was referring to Scotland where the Right to Roam was introduced relatively recently - I suspect to counterbalance the existing historical land ownership position which is very complex and opaque.
Norway was in a similar situation in that until the 1950's the right was implicit - the one major area of law which was not codified because it was seen as so self-evident that it wasn't considered necessary (Sweden, in contrast, has it embedded in its constitution) - until pressure from land owners who increasingly started blocking off land in ways which violated of centuries of tradition made it clear it needed to be codified so it could be defended in court.
It's seen as integral enough to Norwegian culture that it's taught in primary school.
I think you'd need to cite why this is the sole explanation for the scale of SF's homeless population.
Land value taxes (in the Georgist/Geoist manner) will ensure that a very valuable parcel of land, such as the one in the middle of San Francisco, will not have a low-value improvement such as a parking lot or a single-story dwelling on top of it.
Too bad that the actual policy we have instead is stuff like Prop 13 and rent control, which all but assures that such higher-value development will not happen.
You're right though, inheritance taxes on all assets help to iron out such issues; but in general the ruling classes avoid most taxes (and often laws in general) and aren't keen to enforce their application.
That's just a different way of saying that it isn't practical. Consider Communism as a goal. Communism is a goal that is often attempted but is never achieved.
When no one can implement something in practice, it's the something that's the problem, not the people.
> You're right though, inheritance taxes on all assets help to iron out such issues; but in general the ruling classes avoid most taxes (and often laws in general) and aren't keen to enforce their application.
Firstly, it's ridiculously easy to dodge inheritance taxes if you're rich.
Secondly, going down the path of "if you, personally, didn't earn something, we will confiscate it from you" historically never worked out well.
Never? Not even for a medium percentage?
Also this isn't confiscation. An inheritance is not something you already own. The tax steps in during the transfer process.
So you're telling me that we should allow people to own pieces of the planet earth forever? Sorry, but how is that sustainable? How is it fair the someone gets to own large swaths of the planet and use it as leverage to buy even more of it, just because his great granddad came to an empty country and got land basically for free which now make his grandchildren millionaire landlords even though they didn't contribute to society in any way to earn what they have and if they were to buy their property at current market rate they wouldn't be able to afford even 10% of it.
This may have been the foundation of societies, thousands or hundreds of years ago, but what was the population of the earth back then and what is it now? This system is not sustainable, and just like laws, it should be updated to account for current conditions.
Our current system is flawed as it just comes around full circle to creating a society of a few landlords owning most of the property and assets and the peasantry which can't afford to own anything. And looking back on history we know how that usually ends. We need a new system that resets the monopoly board fairly instead of waiting for social uprisings to boil due to increased wealth inequality.
Which country allows this? All "land-owners" pay land taxes, and if you stop paying "your" land will be confiscated.
> just because his great granddad came to an empty country and got land basically for free which now make his grandchildren millionaire landlords even though they didn't contribute to society in any way to earn what they have
And now we're back to the argument "to each according to his need". Until/unless you are willing to ruthlessly enforce that nobody gets anything unless they, personally, earn it, there will be large numbers of people who will have stuff that they did not earn.
Arguments along the lines of "to each according to his need" are broken, almost by design.
> We need a new system that resets the monopoly board fairly instead of waiting for social uprisings to boil due to increased wealth inequality.
IIRC, the last time I checked, the countries with the least wealth inequality were those with the strongest private ownership laws.
If it's wealth inequality you're targetting, then strong economies help. Countries with restrictions on ownership mostly, with some outliers, fare poorly on wealth inequality.
No person owns large swathes of our planet.
> I wasn't advocating for communism
Hard to know where else commenters are going if they're saying the government should be allowed to seize property from people it defines as "people who deserve to have their property seized".
> This system is not sustainable, and just like laws, it should be updated to account for current conditions.
A large factor in current conditions is the constriction of supply by regulation. Trying to socially engineer cities has vote-winning, short term positive consequences (rent control means your rent doesn't change! Hooray!) and predictable but overlooked non-short term enormous negative consequences (it's not worth landlords' time to upkeep properties! It's only worth building luxury apartments!)
Before we say "the government should just come in and take property in the name of redistribution, the way they did in the USSR", perhaps we should consider some alternatives. Saying "there's a problem; here's a solution; if you disagree with my solution than you are saying there's no problem" is a syllogism as old as time.
What's your solution? All you did was call me and everyone who thinks the current system is wrong, a commie.
>A large factor in current conditions is the constriction of supply by regulation.
Yes, which is why we're in this mess. It's a rigged system masquerading as the free market. Those who own property have vested interest in increasing the value of what they own and use it as leverage to buy more, at the expense of those who don't own and wish to buy in.
No. I didn't do that, and I didn't only do that.
> It's a rigged system masquerading as the free market. Those who own property have vested interest in increasing the value of what they own and use it as leverage to buy more, at the expense of those who don't own and wish to buy in.
It is nowhere near a free market, and I don't believe it pretends to be.
> What's your solution?
My personal solution is to do the following:
Realise that most people have property because their parents or grandparents worked hard and sacrificed for years or decades or their whole lives to give a transformationally different life to their descendents.
This can't happen overnight or via regulation.
Take a hard look at the long term effects of policies that are short-term vote winners. The state intervening more in housing should be the last resort, not the first.
Undermine envy by remembering that most families with wealth lose it within 3 generations, and that many people move into the top 1% of earners during their lifetimes, if only for while.
I don't know if that would work for anyone else, though.
Agree that too much gov regulations push prices up, but like it or not, the gov intervention is a necessary evil for quality housing that has infrastructure and won't fall on you after 10 years. Where I'm from in Eastern Europe housing is affordable due to the lack of gov regulations as developers go crazy and just build anything everywhere but those buildings while nice looking and modern, have no good infrastructure anywhere near them as neither the developers nor the government wants to spend money on it. So you get apartment buildings with no paved roads or parking lots, no schools, no kindergartens, no doctors, no bus stops, no parks or green spaces. Awful. Gov regulation could fix this but also make buildings more expensive for the developers and for the end buyers. In the end you can't just leave everything to the "free market".
>Realise that most people have property because their parents or grandparents worked hard and sacrificed for years or decades or their whole lives
Or, they got lucky to be born in a time when real estate, even in now red hot metro areas, was far cheaper for the average worker/family, as was getting education and a stable career and raising a family.
Saying hard work and sacrifice is the key ingredient to getting rich is massive survivorship bias and young people have wised up to this fact.
>Undermine envy by remembering that most families with wealth lose it within 3 generations, and that many people move into the top 1% of earners during their lifetimes, if only for while.
That's so untrue for Western Europe where the wealthiest families go back hundreds of years, and due to high taxes and low skilled wages you can't really move to the top 1%.
In Austria, the country's top 100 richest people own a third of the wealth in the entire country, and during the covid pandemic, the gap between them and everyone else got even wider while they got richer and everyone else poorer. One city already voted a communist mayor into power. Their wealth goes back centuries and hasn't been lost in 3 generations and will survive 3 more generations.
> Saying hard work and sacrifice is the key ingredient to getting rich
I didn't say it's the key to getting rich. I said they worked extremely hard (no holidays / long hours of hard jobs / making sure their kids prioritised school and working hard) to ensure their descendents could afford something. Not get rich. Afford something.
> is massive survivorship bias
This is not reasonable. I'm not saying that these things guarantee a home. They're just the most likely path to getting one.
If you're more left wing, you probably view the state as a parent who can be trusted to confiscate and dole things out fairly.
If you're right wing you probably view the state as a necessary evil for providing specific services that can't be provided fairly purely through people making agreements with each other.
If you're the former, you may well think that the state seizing property in the name of redistribution will solve more problems than it causes. If you're the latter, it's the other way round.
Who's granting people perpetual ownership of a piece of land? Once you stop paying taxes on it, the state will take it back.
> but I think land should be only leased for a limited time, like the max lifespan of a person, ~100 years or so, and then expire, never owned in perpetuity by any individual or corporation.
I mean in a practical sense this is exactly what happens. You die -> taxes are no longer paid on the land -> someone else gets it. That "someone else" is either an heir who is now paying tax on it, or its sold to someone else entirely.
The USA has 1.9 billion acres. Developed urban areas account for only 3.5% of this area. If you count other, non-urban areas with more than 30 people per square mile, then the occupation of habitable land constitutes less than 6%.
Accounting for mountains and bodies of water, Earth has 24,642,757 square miles or 15.77 billion acres (43%) of habitable land. Humanity is only 1/100th of the total biomass on this planet.
Less than 15% of earth is either an urban area or occupied for agricultural use. And 95% of the world’s population is concentrated in just 10% of the land.
Land is generally affordable. Land in areas not yet fully developed is actually quite inexpensive. You can pick up 40 acres of land in Montana for $20,000 USD, and they'll even throw in some livestock and feed.
Property in developed population centers increase in price because of scarcity and market conditions. That's the product of living in an area that has recursive development, amenities, limited supply, and practically unlimited demand.
This leads to an inevitable conclusion. We have plenty of land and plenty of resources. Anyone who says otherwise is trying to sell something. With this in mind, you could double the population of the planet and still not use a third of the habitable land. As it turns out, Earth is really, really big.
IMHO that should also apply to land ownership rights which should also expire after some time. How can we say with a straight face that granting people, institutions or corporate entities rights to own a piece of the Planet Earth in perpetuity, forever, is fair or a good thing that is sustainable? It might have sounded good 300-500 years ago when new land was constantly discovered (cough conquered/taken cough) but what happens when the land pie runs out? Do we just say "tough shit mate, you should have been born 50 years ago when land was still available and affordable for everyone, or you should have been born in a family with inherited land ownership"?
Land should be only leased for a limited time, like the max lifespan of a person, ~100 years or so, and then expire, never owned in perpetuity by any individual or corporation.