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Comment by matthoiland | Hacker News Reader

> Everybody works but the vacant lot. I paid $3600 for this lot and will hold 'till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it. for the remedy read Henry George.

- Billboard posted in an empty lot, Rockford Illinois, 1914

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For remedy read this wikipedia page: https://en.wikipedia.org/wiki/Land_value_tax

It's a bit discouraging that over a century later the same problem still remains.

Pretty sure a plot of land in Rockford, IL is still worth about $3600 though :)

That's a common meme - that asset appreciation is unearned wealth.

But it's not.

That investor could've spent the 3600 on hookers and blackjack.

Investors freezing their money in communities in the form of real estate or other investment is a key part of those communites becoming richer and more complex.

There's a real risk of losing your money - there's no worse financial nightmare than holding real estate that you're trying to sell for years... but no-one is buying

How did the investor in that empty lot make the community richer?

It was used for blackjack and hookers.

Speculative investment without asset improvements like that is the worst kind, but it still serves to stabilize prices for other investors. At worst, the speculator loses their shirt and a more capable capital allocator gets to work with the money.

So.. investor helps other investors? Great. What about the common man?

>that asset appreciation is unearned wealth

I'm sure we can agree the vacant lot never improved itself. It's not unearned -- it's earned by the surrounding community improving things -- which make that lot more attractive.

The incentives don't align. If that community was to massively regress e.g. unfavorable rezoning -- the value of that lot would plummet.

However in this case it's likely to be partially addressed by paying land value taxes which disincentivizes leaving it vacant -- what Henry George was getting at and wasn't there at the time.

Any benefit is earned with a suitable definition of "earned"...

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