What if you owned the home you live in, though? Lately, I've become a bit obsessed with this idea. The reason the 'wage slave' concept exists is that most of us have to do the 9-to-5, or we would unsettlingly quickly find ourselves homeless - the ultimate social catastrophe. I sometimes compare this with the lifestyle I see in some 'less developed' countries, where it is still customary for a family to own the house they live in. The result is that even when the breadwinner is frequently un- or underemployed, and with parts of the household staying at home exclusively without generating an income, their lives seem a lot less stressful. Even when they worry about money and basic necessities, they survive, turning down consumption to a minimum in financially challenging times. The equivalent for us, with regards to the subject at hand, would be to work 15 hours of productive, enjoyable work and still get by. Or alternatively, to work 40 hours of really interesting, challenging stuff that might not pay well or at all for a while.
The conclusion would seem to be to work single-mindedly on owning your home. As you said, one option is to move to Colorado and buy a barren plot in the middle of nowhere. But a more reasonable alternative might be to work your freaking ass off to pay off your property as soon as humanly possible. If you are really scrappy, you should be able to do that in around 15 years, depending on where you live and what your salary is. The problem is that people don't want to live like that. We want to live comfortably, with the biggest car we can afford the monthly payments on, with nice vacations, consumer goods etc. etc. Well you pay for that - the price is working 9-to-5 in a job you hate.
I took a slightly different tack, but also own my own home outright without ever having had a mortgage Algorithm is: -Save up enough money to have 1/2 the value of the worst house you can find in a neighborhood that isn't too bad -Use that money to purchase the house using a line of credit backed by the house you're buying. You are allowed by the bank to take out a line of credit on a house you are buying equal to 1/2 the tax assessment or 70% of a formal valuation -Put all your income directly against that line of credit. No maximum payments or other mortgagey bullshit to deal with. You must be disciplined in order to do this effectively. No buying toys! -Spend all your free time renovating in ways that will increase the value of the house: Kitchens, landscaping, new flooring, paint, trim, siding etc -Look for deals on properties (esp. bank repos) so that you can leapfrog up to better properties while still managing on the line of credit. I paid off the previous place before moving up, but I'm sure you could figure out ways to move up before then
Voila. I have owned my own house for the past 7 years. Only took me 3 to pay off my first place, and another 2 to pay off the next, despite costing twice as much Current place is a 1850sqft split level on 1 acre of land with a 30'x50' 2 level shop. 5 minute drive to city centre
Full Disclosure: -I live in a relatively rural area in western Canada. Homes now cost $300-500k. I got mine as a) a steal from a couple that needed a quick sale and b) a bank repo I jumped on the minute it hit the market -We are a family of 5 with a stay at home mom. This is significant in that there is no second income, but all meals are home cooked which saves huge dollars. Also no child care costs -My income not huge, mid to high 5 figures range -I started off with about $50,000 I had saved up prior to marriage -This adventure began at 25yo. I am now 35. I've been mortgage and debt free first at 28 and then again at 31 -The whole thing works best with low interest rates (obviously). I negotiated my line of credit at prime -I had access to tools, know-how and traded labour from relatives (mostly my Dad). I only bought or rented about half the tools I needed -Working in the lumber industry meant access to cheaper lumber -Personal frugality and a frugal wife were huge accelerants. -Being a car salesman's son probably endowed me with better negotiating ability than most
Of course, that assumes that you enjoy the reno/carpenter/craftsman thing.
That said, whatever way that allows you to bring in the most (net) money in the least amount of time will obviously be the most efficient way to pay down debt.
An article (I can't reference) in the WSJ on the Greek economic crises discussed a middle aged adult who left a job in Athens, returning home to the country side to milk goats, his income dropping to a few hundred dollars a month. At least there was a country side to return to.
I would argue that a good portion of the "reason we don't work 15 hours a week" is related to government policy. I am speaking globally here, not isolating one country or another. Government policies raise property taxes, rezone areas, sometimes seize property for development (happening at mass scale in China), and do a whole lot of other things to increase economic activity. Generally, an individual sitting in a home not doing much does not maximize the growth of the particular municipality or nation. Thus, that individual finds themselves with many opposed to his or her interests. The only defense is both very strong property right laws and a general belief system ready to support them.
i paid off my home in less than 7 years (small condo, under 200k) in my early 30's.
i had a friend do the same thing, except his house cost a bit more.
the key is living below your means. you don't buy the biggest house you can afford, because you probably don't need that extra space anyway.
for anyone with a decent job and some discipline, it's possible. finding the job is the easy part...
It doesn't apply in your case as your property tax is probably much less than your maintenance fee to the property management. I know it is silly to think this way but I can't shake the feeling that I can lose my house that I own if tomorrow I don't have enough income to pay property taxes.
Property taxes are relatively high where I live(about $350/month, though I pay quarterly.)
I don't know what a realistic rate would be for such a thing, but probably quite low. So you'd probably have to put in something like 50x your annual property tax payment.
Water and sewer is already paid for by taxes on those services. Really the big issue is with the schools, however existing income and/or sales taxes could compensate.
The problem with taxed land is that the taxable value determines the taxed amount rather than some other, more objective measure. Valuations on land and improvements are subject to external, market forces and by their nature are unfair. Imagine a family that purchased unused Napa farmland 100 years ago. Their real income has stayed the same (or declined) yet their taxes have increased with no correlation to their income. Even if the land was prime vineyard, unless they're actually making income from it, the effective output of the land didn't change from when they purchased it. So by the mere fact that they chose not to plant grapes and produce wine, they could lose their land due to an inability to pay the taxes. That then puts economic pressures on landowners that would lead them to selling out to large conglomerates.
For example, if you have prime farmland and choose not to capitalize on it, you'd have a big incentive to sell-out to a company like Monsanto, or else lose the land or go bankrupt paying the taxes. Yet if you were taxed on the land's income (and services consumed,) you'd be able to afford the taxes which would be based on output rather than potential output.
This would benefit everyone, except perhaps country property appraisal offices. As it is now, you're taxed based on potential market value and not necessarily real value. Real value can't be determined until someone actually pays money for a property -- anything before the actual purchase is just somewhat educated speculation.
http://www.infoplease.com/timelines/voting.html "1790 Only white male adult property-owners have the right to vote."
You can come up with ways to replace property taxes, without a doubt. There's nothing necessary about any particular tax. The question is just whether it's the best way to do things.
Water and sewer would work fine without it, I agree. A bigger problem, I think, is roads. Highways are mostly funded from gas taxes but local roads are not. It's not practical to directly charge for use of local roads.
You could compensate with other taxes, but now you're taxing (and thus somewhat discouraging) productive activity.
The scenarios you paint don't necessarily seem bad to me. Unfair to the owners, perhaps, but it doesn't seem to benefit everybody else as you say. You correctly infer that property taxes encourage productive use of land and discourage allowing it to sit fallow, but isn't that a good thing? If we make the strong but at least partially true assumption that money is a proxy for value, land that produces enough money to pay for its taxes is producing more value than land that does not. Someone sitting on prime farmland and not actually farming it is a net negative to society unless they're getting more value out of that land than a farmer would.
I don't mean to go all Ayn Rand here and start acting like nature, parks, and anything that's not economically productive is valueless. But still, I think there is value to be had in encouraging land owners to put their property to some actual economic use.
I'd be more upset if property taxes were higher, perhaps. Here, for example, they're about 1%, which is not much. If you can't afford 1%, then you have an enormous amount of money tied up in your property without much money outside of it. It's hard to fit right into a spot where you could afford to maintain your property, but can't afford the taxes. For the vast majority of property owners, the mortgage is by far the major question when it comes to losing one's house or land because they don't have money. Pay off your mortgage and have some savings and you are nearly safe from losing it due to property taxes.
To play the devil's advocate: Why stop at land? What about people who have gold under their mattress? Or perhaps (stick with me here) someone who owns the patents for a machine that he refuses to sell anything himself and forbids anyone else from selling anything remotely similar?
Also, I hear we pay farmers not to produce crops because we are afraid seasonal over-production could destabilize prices?
In the case of land, there's an absolutely limited supply of land, and so I think it could be argued that, in balance, it's more important to make sure that limited supply is used effectively.
Gold, by itself, isn't actually very useful. If someone wants to hoard it, they'll increase the market price for it, and maybe luxuries like jewelry or electronics will be more expensive, but it won't affect much.
I'd actually argue that patents that aren't being used should be made public domain. There's only so many good ways of solving some problem, and if society is blocked off from using some or all of them, then society is that much worse off.
If used as intended, to protect the results of invention/research until a product is brought to market, a patent's downsides are outweighed by its benefits.
A wealth tax is an interesting idea. I have to wonder why it's so uncommon. I'd guess it's some combination of being hard to enforce and easy to move money around. Such a tax would trigger a flight of capital, something that can't happen with a tax on houses. And you can't audit people's mattresses very easily, so it would just encourage hoarding cash.
In a world where such a tax could be enforced and applied worldwide, it doesn't seem like a terrible idea. It shouldn't be very large, but it could have similar effects to property taxes.
On the other hand, we already effectively have such a tax, we just call it "inflation" and the tax rate isn't directly controlled by the government. Inflation has the same good effects I described for property taxes, in that it discourages hoarding and encourages putting money to work. (It has bad effects to, no doubt, so this isn't a total endorsement of inflation or anything.)
Yes, they are. (Particularly, they are intangible personal property.)
> They're a government-granted temporary monopoly.
All "property" is government-granted monopoly in the control/use of some thing (sometimes dependent on a grant from another private party, but still ultimately government granted), concrete or abstract. Some are temporary (this is true of real and tangible personal property, too), some are permanent.
> In the absence of government, there's still some notion of property, but no notion whatsoever of patents.
Outside of government/legality, there's certainly still some notion that things, concrete and abstract, can belong to certain people such that it is wrong to "steal" them, and that certainly includes ideas. The particular details and names of particular classes of property are, of course, products of people, over time, spending time teasing out vague notions into more detailed sets of rules -- which, in the case of property rights, is something that tends to happen in the context of government (not always by government, but you don't even have developed philosophy of property rights without government existing to create a stable enough society for people to spend time writing rather than defending their immediate personal possessions and survival necessities.)
Humans have an intrinsic idea of "property" that the legal idea is built upon. A two-year-old child understands the idea of "mine". People still own things when government is not present, they just have a harder time enforcing that ownership.
Patents, on the other hand, are an entirely governmental construct.
Edit: additionally, cash doesn't expire, while patents only last two decades.
Basically, in a tax-less scheme, there's a strong financial advantage to just showing up first.
There is an absolutely limited supply of land, and society has an incentive to make sure this limited supply is being used effectively to produce wealth. Society also has an incentive to make sure that everyone is housed, financially stable, and healthy. These are competing concerns.
Say there were no property taxes, so the only incentive for selling land would be a high enough price. Your hypothetical family would be sitting on prime Napa farmland, not producing wine, and society would have that much less wine to drink.
An aspiring young wine-grower might like to purchase this land, and could even trade a bit of land of his own. If the original family doesn't want to move, though, the aspiring wine-grower is out of luck.
A property taxation scheme encourages people to use their land to produce wealth, either by producing it directly, a la farmland, or by housing people and keeping them healthy, such as houses or apartment buildings.
In a tax-less scheme, there's a strong advantage to just showing up first. The lucky few to first colonize Napa can maintain control of the land indefinitely, and younger generations and immigrants are at a financial disadvantage, as they won't have the option of owning their own land, but they'll be in a marketplace competing with persons who don't have to worry about housing at all.
The problem being, of course, that fire has a habit of not staying put.
This kind of idea becomes even more ridiculous if you apply it to police service instead. Are they not going to arrest the criminals because the person didn't pay their quarterly police stipend? Do they get arrested after they step off the property, and the stolen goods just auctioned off?
There is a societal benefit to having these services, so therefore society as a whole is requested to pay.
Where I live, a Southern European country, we don't really have big cars and nice vacations, but we do have cheap health care and high life expectancy (80 years).
And there aren't many less developed countries on the top of this list: https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
Is it worth the 9-to-5 (or higher)? I don't know.
In places I've done contracting work I've seen vast offices full of these folks, and it almost feels to me as if their bosses are sort of covering for them. Cubes full of people browsing Facebook at least half the day.
Personally, quite often my jobs have been meaningless or worse. The worse they paid, probably the more meaningful they were.
For example: in the case of corporate leadership, it is easy and appealing to suggest they aren't creating any direct value... i.e. fire the leadership and 'widgets' will still get made. The problem with this thinking is that the output from some individuals only shows up in the medium to long term... take away great leadership from a company and they will make the numbers for the next few quarters, but in a year they will be out-maneuvered and out-performed by the competition. In today's economy it's not about how many widgets you make, it's about making the right widget in the first place... figuring that out is a lot harder than actually making the thing in the end.
The value some jobs create is more difficult to view directly, but is no less valuable in terms of delivering things people want, that they are willing to pay for - i.e. creating wealth. Investors understand this very well, which is why they are willing to pay huge sums to top leadership.
As a final thought, if you really want to 'reap the benefits' or our more productive society, you can work 15 hours starting today. The tradeoff is that you'll need to move to the middle of Colorado, buy a small plot of land, build your own house and purchase a straight edge razor. If you want to enjoy the vast benefits (however small) that our progressive society enjoys, then you also need to live within that system and work in some way to push things forward... however incrementally.