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Comment by intrasight | Hacker News Reader

I never considered how a street with lots of cool shops could create value for homeowners and commercial real estate owners without necessarily creating value for the businesses that were responsible for making it cool.

I don't think that any of the suggested solutions would work, as they all involve the government and taxation - which can only destroy value, IMHO.

Creating a cool vibe certainly has value and can contribute to price appreciation in the community, but ultimately capitalism is not based upon creating vibe but upon selling products and services.

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> which can only destroy value

One of the stronger arguments for LVT is that land is inherently inelastic, and thus taxing it doesn't create inefficiency (deadweight loss).

Other taxes like sales tax destroy value because they create a deadweight loss by preventing transactions that would otherwise occur. Land supply is constant, so LVT is purely a wealth transfer, and does not create inefficiencies.

It seems like a reach to say that taxation inherently destroys value. For example, in my country I think universal education, roads, universal healthcare, and border control probably all provide value in excess of their cost, and no one has proven a method of funding those things other than taxation. I guess “value” is a subjective idea, though.

I think the argument is that governments don't fund public goods through taxes but through issuing currency, while taxes guarantee a demand for currency and prevent its devaluation. Hence the 'function' of taxes really is to 'destroy' money to prevent oversupply.

Not sure I disagree, though of course that's not how the system works formally.

I don’t completely follow the logic yet. If the government stopped collecting taxes, they could only fund services by taking on ever-increasing debt, right? It’s not like money created by central banks just goes straight into the government’s income.

Officially no, though bond purchases are the most common thing central banks do with cash. Unofficially though, new currency is mostly worth anything at all because it's backed by the 'full faith and credit ' of the hosting country. Faith and credit to accept it as payment for future debts to the country, ie taxes.

>as they all involve the government and taxation - which can only destroy value, IMHO.

My government and taxation provides the police, the courts, the schools, the roads, the sewers, the power, etc. Seems like a little bit of a value add.

I think you've misread the OP's point. It's not that the government doesn't provide the police (although it doesn't - the taxpayer pays for the police and staffs it). It's that government policies and regulations to try and change fundamental market forces create extremely obvious problems, although they aren't always obvious to the myopic voter.

LVT 0 deadweight loss

You’re very close to asking whether capitalism leads to the best quality of life, if you think of quality as going beyond the availability of products and services.

People who grew up in Soviet-era poverty of course see this differently than comfortable middle class people who feel alienated by soulless suburbia.

I think the article could be read as a way to reconcile the two.

Value creation not captured is the definition of a positive externality, and landlords being able to extract that value despite not creating them is an example of rent seeking. Aiming to address these does not somehow question capitalism.

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