From your lips to God’s ears but I’m not holding my breath. LVT has many enemies and few supporters and it will be so easy for politicians to take the road more travelled. The Left will scream that LVT is capitalism and the Right will scream that LVT is socialism. The Centre needs to put their fingers in their ears and push it through.
Truly, shifting taxes off buildings to land is a pragmatic policy that does not need to get caught up in large Socialism v Capitalism debates. Housing policy reforms have been making headways all across the US, and while contentious, there is always hope. Abundance will become a framework that local officials can use to justify pro-housing interventions, and shifts in taxes will hopefully be part of the equation.
Take our current property taxes, and split the property tax into two taxes: one on land and one buildings. Decrease the tax on buildings and increase the tax on land.
Do that, and see the impacts. Then continue to shift more tax burden onto land. If we end up a century from now in a single-tax world, then that's what will happen. But, I think a single-tax is a distraction from the fact that we can start achieving the benefits of land value taxes right now by advocating for smart property tax policy.
Still, massive new building only appears detrimental. And despite it, the population of unhoused and porch pirates explodes. Reminds me of the aphorism, when you find yourself in a hole, quit digging.
I believe abundance is a natural gateway to Georgism. Henry George’s original question was essentially “why does progress create more scarcity instead of abundance”? The answer was that any attempts at abundance got absorbed into rent, thus reinforcing a scarcity mindset.
De-growthers on the left and the right correctly see that a growing economy has actually widened inequality, and incorrectly deduce that we should slow growth to shrink inequality. Georgism is the antidote to this thinking, it’s the way to ensure that economic gains benefit everyone, it’s the way to have our cake and eat it too. Georgism is the tool to make abundance seem not so scary.
Good article I suggest that you also emphasize demand side not just supply. In other words, greater purchasing capacity with LVT and removing taxes on labor, production. Tax shift is supply and demand sides solution.
2. Those that adhere to some form of Keynes' General Theory argue that stimulating demand with government spending will achieve a wage equal to the marginal disutility of labor.
3. The authors of ABUNDANCE are wondering why Keynes' "demand, on average, creates supply" is not working.
Worth looking at. When there were classicals, a retroactive term applied by Keynes, it was true that most everyone who could work wanted to work. Just draw a vertical line from the X-axis until it connects with the aggregate supply capability.
Not true anymore. Economists agree that markets respond to incentives and disincentives.
After many years of subsidizing sloth, a significant portion of society would rather live off government subsidies that supply anything at all. They wish to be consumers, period.
Yes, there is some nuance and lots of interesting political economy to think about. Supply creates demand often because supply decreases prices (though there could be some behavioral economic effects too).
One point I did not get in this piece is that any new movement or framework is always reactionary to the status quo. In a world where housing were abundant, I doubt we would be talking about abundance right now. Which is to say, there is significant demand for housing and not enough supply. In these circumstances, we should solve the supply problem which is a bottleneck to matching demand (as you say).
Once we get to a place of relative abundance, particularly compared to our status quo, then we should judge to what extend we are inducing demand. In fact, the Odd Lots piece I linked is somewhat about this, basically saying that we can create massive government projects for anything we want, but then that creates new demand.
On the welfare question, well yes, we should think about how our welfare systems incentivize or disincentivize behavior we want.
So, quit penalizing workers by requiring confession and penalty of perjury, and payment of a very non-uniform "excise" tax (which ought not exist at all) of them.
Construction, primarily of high-density housing (stack 'n pack) continues at a staggering rate, and many in more urban centers are high-rise. Most lots, many of them teardowns, have already been taken, yet rents on the Wasatch Front continue to mount. Does Georgism address this phenomenon?
Yes. Because Land remains untaxed, there's no incentive to produce housing in excess of demand. Supply follows demand, otherwise no one would build because they would lose out on their RoC.
Watch Austin, TX. They overbuilt, rents will drop, but all construction projects will wrap up, or just stall out. In a few years, the population increase will drive rents right back up. Land owners will sit on their assets and wait until prices skyrocket before re-initiating construction.
With an LVT, land owners in Austin would be forced to build something to make money, or dispose of the land. This would stabilize rent prices, but more likely for them down. The city self-corrects here as well, if development stops, they can cancel future infrastructure projects moving outwards and focus on existing infrastructure enhancement and lower their operating costs long-term.
Explain how building to saturation (granted, much is 4-story podium housing rather than high-rises) continues to provide demand. Rents continue to mount. Is this like the old, environmentalist trope, building roads increase traffic? (Fwiw, podium housing concentrates near light-rail lines, but most units get a parking space.) How about you haul all these "high-tech", etc. people and the developers accommodating them, down to Austin?
Sorry for just getting to this, I am not entirely familiar with the situation on the Wasatch Front, but I think there are a variety of factors to consider:
1. Land rents always rise. They rise with inflation. So, obviously the past few years has seen incredible rises in housing prices.
2. Rents tend to decrease with more housing. However, they only decrease insofar as the more housing is outpacing population growth.
3. Population influx of capital-wealthy individuals (like tech people) can cause some short-term artificial increases in rent as they can outbid the rest of the market.
Designing the right policies in response then is all about your objectives. If you are progress-forward, you view this influx of capital into the region as exactly the type of thing you want. This will vitalize the region. Land values will increase, and this is why land value taxes are important. LVT encourages development while also ensuring the public captures the rise in land values from the migration inwards.
From your lips to God’s ears but I’m not holding my breath. LVT has many enemies and few supporters and it will be so easy for politicians to take the road more travelled. The Left will scream that LVT is capitalism and the Right will scream that LVT is socialism. The Centre needs to put their fingers in their ears and push it through.
That's the goal.
Truly, shifting taxes off buildings to land is a pragmatic policy that does not need to get caught up in large Socialism v Capitalism debates. Housing policy reforms have been making headways all across the US, and while contentious, there is always hope. Abundance will become a framework that local officials can use to justify pro-housing interventions, and shifts in taxes will hopefully be part of the equation.
How does that help? Add a rental tax to the single-tax?
The way I view this is:
Take our current property taxes, and split the property tax into two taxes: one on land and one buildings. Decrease the tax on buildings and increase the tax on land.
Do that, and see the impacts. Then continue to shift more tax burden onto land. If we end up a century from now in a single-tax world, then that's what will happen. But, I think a single-tax is a distraction from the fact that we can start achieving the benefits of land value taxes right now by advocating for smart property tax policy.
Still, massive new building only appears detrimental. And despite it, the population of unhoused and porch pirates explodes. Reminds me of the aphorism, when you find yourself in a hole, quit digging.
I believe abundance is a natural gateway to Georgism. Henry George’s original question was essentially “why does progress create more scarcity instead of abundance”? The answer was that any attempts at abundance got absorbed into rent, thus reinforcing a scarcity mindset.
De-growthers on the left and the right correctly see that a growing economy has actually widened inequality, and incorrectly deduce that we should slow growth to shrink inequality. Georgism is the antidote to this thinking, it’s the way to ensure that economic gains benefit everyone, it’s the way to have our cake and eat it too. Georgism is the tool to make abundance seem not so scary.
Yup, George offers good counter to those worried about distributional impacts of growth.
Good article I suggest that you also emphasize demand side not just supply. In other words, greater purchasing capacity with LVT and removing taxes on labor, production. Tax shift is supply and demand sides solution.
Does supply, on average, create demand?
1. As a new classical, I say yes.
2. Those that adhere to some form of Keynes' General Theory argue that stimulating demand with government spending will achieve a wage equal to the marginal disutility of labor.
3. The authors of ABUNDANCE are wondering why Keynes' "demand, on average, creates supply" is not working.
Worth looking at. When there were classicals, a retroactive term applied by Keynes, it was true that most everyone who could work wanted to work. Just draw a vertical line from the X-axis until it connects with the aggregate supply capability.
Not true anymore. Economists agree that markets respond to incentives and disincentives.
After many years of subsidizing sloth, a significant portion of society would rather live off government subsidies that supply anything at all. They wish to be consumers, period.
Yes, there is some nuance and lots of interesting political economy to think about. Supply creates demand often because supply decreases prices (though there could be some behavioral economic effects too).
One point I did not get in this piece is that any new movement or framework is always reactionary to the status quo. In a world where housing were abundant, I doubt we would be talking about abundance right now. Which is to say, there is significant demand for housing and not enough supply. In these circumstances, we should solve the supply problem which is a bottleneck to matching demand (as you say).
Once we get to a place of relative abundance, particularly compared to our status quo, then we should judge to what extend we are inducing demand. In fact, the Odd Lots piece I linked is somewhat about this, basically saying that we can create massive government projects for anything we want, but then that creates new demand.
On the welfare question, well yes, we should think about how our welfare systems incentivize or disincentivize behavior we want.
So, quit penalizing workers by requiring confession and penalty of perjury, and payment of a very non-uniform "excise" tax (which ought not exist at all) of them.
Amazing, go LVT.
Construction, primarily of high-density housing (stack 'n pack) continues at a staggering rate, and many in more urban centers are high-rise. Most lots, many of them teardowns, have already been taken, yet rents on the Wasatch Front continue to mount. Does Georgism address this phenomenon?
Yes. Because Land remains untaxed, there's no incentive to produce housing in excess of demand. Supply follows demand, otherwise no one would build because they would lose out on their RoC.
Watch Austin, TX. They overbuilt, rents will drop, but all construction projects will wrap up, or just stall out. In a few years, the population increase will drive rents right back up. Land owners will sit on their assets and wait until prices skyrocket before re-initiating construction.
With an LVT, land owners in Austin would be forced to build something to make money, or dispose of the land. This would stabilize rent prices, but more likely for them down. The city self-corrects here as well, if development stops, they can cancel future infrastructure projects moving outwards and focus on existing infrastructure enhancement and lower their operating costs long-term.
Explain how building to saturation (granted, much is 4-story podium housing rather than high-rises) continues to provide demand. Rents continue to mount. Is this like the old, environmentalist trope, building roads increase traffic? (Fwiw, podium housing concentrates near light-rail lines, but most units get a parking space.) How about you haul all these "high-tech", etc. people and the developers accommodating them, down to Austin?
Sorry for just getting to this, I am not entirely familiar with the situation on the Wasatch Front, but I think there are a variety of factors to consider:
1. Land rents always rise. They rise with inflation. So, obviously the past few years has seen incredible rises in housing prices.
2. Rents tend to decrease with more housing. However, they only decrease insofar as the more housing is outpacing population growth.
3. Population influx of capital-wealthy individuals (like tech people) can cause some short-term artificial increases in rent as they can outbid the rest of the market.
Designing the right policies in response then is all about your objectives. If you are progress-forward, you view this influx of capital into the region as exactly the type of thing you want. This will vitalize the region. Land values will increase, and this is why land value taxes are important. LVT encourages development while also ensuring the public captures the rise in land values from the migration inwards.