Comment by boona | Hacker News Reader

Comment by boona | Hacker News Reader

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> Landlords grow richer in their sleep, without working, risking, or economizing.

Maybe in John Stuart Mill's time, but like anything in a free market, profit tends to zero (it generally doesn't hit zero, but gets closer over time). Those margins are calculated as part of time preference (see https://en.wikipedia.org/wiki/Time_preference). That's why you see some land owners purchase land and lose money while they wait for it to appreciate. Time is factored into the calculation.

> I wish more libertarians understood the Matthew Effect as well as they did supply and demand.

The Matthew Effect doesn't take into account the fact that many individuals get richer by requesting and receiving special legal privileges from state actors. Classical liberal thought rejects this i.e. equality before the law. That's why many libertarians are against the state's power to regulate, not because you can't have good regulation (the free market is far from perfect after all), rather because the power to regulate is the power to grant special favors. Politicians, like their private counterparts, are susceptible to self-interest. They need money to fund their campaigns. A consistent application of economic principles is necessary (see https://www.youtube.com/watch?v=JAbDrP7whqw).

Edit: Formatting

> some land owners purchase land and lose money while they wait for it to appreciate

It is impossible to lose money just sitting on land in the absence of property tax, which as I've stated acts as a mitigating factors, even if no one thinks of property taxes as rent paid by the land "owner" to the true owner, the commons. Worst case scenario you own land that no one wants to use, and you have zero income from it.

> the power to regulate is the power to grant special favors

And the granting of perpetual title to land for a finite sum of money and the enforcement of that title through police/military force is the epitome of state granted special favor.

We call ourselves the "party of principle," and we base property rights on the principle that everyone is entitled to the fruits of his labor. Land, however, is not the fruit of anyone's labor, and our system of land tenure is based not on labor, but on decrees of privilege issued from the state, called titles. In fact, the term "real estate" is Middle English (originally French) for "royal state." The "title" to land is the essence of the title of nobility, and the root of noble privilege.

It's not a coincidence that owners are called landlords. It's positively feudal.

Or see the Albert J Nock quote in my other reply: https://news.ycombinator.com/item?id=10534047

Rather take advantage of my poor articulation, can you soundly argue against http://geolib.com/essays/sullivan.dan/royallib.html?

> Maybe in John Stuart Mill's time, but like anything in a free market, profit tends to zero

That is true in an perfectly competitive free market, that is, where adequate substitutes are available from alternative vendors so that price competition is unavoidable.

Market freedom does mean that the there isn't a regulatory prohibition on competition, but it doesn't mean that there isn't the absence of a natural bar to competition for a particular good or service. And there certainly are natural limits to real estate alternatives in many cases, as for many uses there is a strictly limited supply of viable substitutes.

This makes real estate an area where effective monopolies (as measured through pricing power) exist, which means monopoly rents can be extracted, which means that prices are not driven to zero economic profit in the manner expected in an idealized free market.

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