BirdieNZ

1950s coincides with the post-war building boom (mostly suburbs), along with projects like the USA's interstate highways and similar highway building projects around the Western world. Car dependent suburbia definitely got worse around that time, from a combination of factors.

How does this differ from non-Chinese banking systems? For example, in New Zealand banks can generate money for loans separately from the central bank; they don't borrow from the central bank. There are capital requirements which prevent them from creating infinite money but every time someone borrows money from a bank in NZ, the money is created from thin air.

Tokyo is, yes.

Understanding Georgism/economic rents was like a revelation to me. So many of the common complaints against capitalism are actually complaints against rent-seeking, whether it's landlords, Nestlé extracting water for free and making exorbitant profits from it, or internet companies using regulation to create artificial monopolies that reduce consumer choice and product quality.

As someone who loves the idea of economic liberty, YIMBYism and Georgism are natural allies, but unfortunately many supposedly pro-liberty people are ardent defenders of rent-seeking under the guise of "capitalism".

It's a cross-aisle concern, with politicians for and against on both sides. In reality, productive enterprise would blossom under a tax-neutral switch to land value tax, and cities would prosper when combining that with YIMBYism.

Imagine having no income tax, and instead a land value tax. You wouldn't be punished for your labour, and you could afford to buy with your increased income as land values would be greatly suppressed!

More capital would flow to businesses instead of land banking, mortgages, and rent extraction.

In New Zealand, the government subsidises up to 20 hours of Early Childhood Education (basically preschool/daycare). However, daycare providers usually only allow you to take 6 hours of subsidized daycare a day, and charge an excessive sum for the 7th-8th hours, essentially double dipping. Most people will pay the extra hours because they work ~8 hours a day and need daycare for all or most of it.

Basically the subsidy doesn't really help parents, it just goes to the daycare's pockets (and subsequently, their landlord if they don't own their property).

That's a similar conclusion Scott Alexander came to: https://astralcodexten.substack.com/p/ivermectin-much-more-t...

Congratulations to Lars Doucet, a hackernews regular! This is exciting to see, as it helps remove one of the obstacles to a land value tax (land value assessment).

https://www.top.org.nz/higher-incomes-policy this is the closest we have currently. If you're a pensioner you can defer payment until sale of the property, which is technically "unfair" in that non-pensioners miss out on access to that cashflow, but it isn't politically viable to kick old people out of their homes for non-payment of the tax.

I don't think that landowners are to blame for the problems we have, but you're not considering that about half of the population of NZ do not own their own home. They are currently being screwed over by the system, and landowners on the other hand are benefiting disproportionately. Resetting the system to be more fair does result in some people losing, yes, but equality tends to feel like oppression when you've been benefiting from inequality.

Of course, most people that would start paying the land value tax would get a reduction in income tax, and would also gain intangible benefits like their children and grandchildren being able to afford to live in the same city as them. Currently the government is stealing away large amounts of the profit of our labour (income tax), so we are reducing "communism" by allowing people to keep more of the fruit of their labour.

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I know it's a fairly extreme analogy and probably invoking Godwin's Law, but slaveholders in the UK and USA made similar arguments about losing their investment when they were just working within the system and slavery was in the process of being abolished. They worked and saved to purchase slaves, and then the government was proposing to simply destroy all that investment by freeing the slaves.

The UK government actually ended up compensating slaveowners for their loss of investment, which I think was wrong even if politically expedient.

The analogy works sufficiently if you can answer two questions: 1) why does land increase in value, and 2) is it fair for tenants to miss out of land value gains but landowners to get land value gains?

The only land tax proposal we have in New Zealand currently is from The Opportunities Party, which proposes a revenue-neutral tax shift away from income tax and onto land tax (0.75% land tax per year, with a shifting of the income tax brackets to reduce those significantly for everyone).

In terms of fairness, the reality is that it's actually really fair for those who have owned land for a long time, because they currently benefit disproportionately from land values going up (they don't cause the land values to rise much, but society as a whole does). The current system is grossly unfair for renters, because they contribute to society just like everyone else but don't benefit from land value increases.

Land only goes up in value because of the improvements that society makes around it, which is why land in cities is very expensive. It isn't fair for landowners to benefit from this and renters to not benefit. Of course the biggest beneficiaries of all this are the banks, but most landowners didn't work for the value of their land, so losing the value of their land is fair.

Recent buyers are the most screwed over by land values dropping, because they did work very hard for their deposit and mortgage but then without working less they suddenly lose out a lot.

There are plenty of ways of handling this; in New Zealand, local council rates (like a property tax) are used to pay for infrastructure, and after the city budget is set, each property owner pays in proportion to the value of their property (currently land + capital improvement). This can be separate from the ideally national land value tax, and take into account different infrastructure requirements.

The other reality is that the single family homes in the area which just got a massive boost in infrastructure spending are benefiting from those improvements disproportionately; their land could be providing access for 100 families to those services but instead are only allowing access for 1 family. Their land value will have skyrocketed hugely because of the improvements around them, so they should pay the tax to return to society the land value they gained.

If it doesn't make fiscal sense for them to pay that tax, then they can sell their now hugely expensive piece of land for a tidy profit and live somewhere it makes more sense for them to be, allowing their land to be developed into a 100-family apartment.

> Maybe it would be possible to introduce it slowly and fairly, but I can’t see how a government could actually do it and stay elected.

Australia's ACT is in the middle of introducing a land value tax to replace stamp duty over 20 years; it's perhaps not the largest land value tax that could exist but they're ~10 years in and it's having a good effect on increasing home ownership rates and decreasing rents. You can read about it here: https://www.prosper.org.au/campaigns/stamp-duty-to-land-tax/...

I don't think it's communist to tax land rent; Adam Smith, David Ricardo and Henry George aren't exactly communists and they all recognized the problem with land rents draining the productivity of society. Rather, it is much better for productivity and prosperity if we move tax away from income and sales taxes and company taxes, and place it onto land and other natural resources.

This is why people like Milton Friedman thought it was the least-bad tax, because it doesn't create deadweight loss and instead stimulates productivity.

Auckland specifically has a declining population, although it may change this year with immigration returning to pre-Covid levels. Aucklanders often move out of Auckland either overseas or to cheaper cities, when the economy slows, in a mild version of a boom bust cycle. Usually immigration offsets this but it hasn't quite picked up to the previous levels yet.

NZ as a whole doesn't have a declining population, and Auckland usually does not.

I think it's way too early to say Auckland has fixed house prices. Auckland has made some improvements to zoning through the Unitary Plan, and the New Zealand government has 2-3 pieces of legislation which also increase the potential for supply in all NZ cities, but the Auckland City Council still does severely restrict supply, and the fundamentals of property ownership, tax, and landlording haven't changed, so I don't foresee house prices returning to a more sensible price-to-income ratio, even if they improve somewhat.

Hopefully we can implement a land value tax and/or build lots of public housing, to fix the fundamentals.

Regarding (2), it depends on what you mean by affordable. It is becoming more affordable to buy land compared to the last few years, because of interest rate rises making the cost of credit increase. It is becoming less affordable to build a house or other capital improvements, because of construction material cost increases and a labour shortage. Rents are rising but not as rapidly as the rest of NZ because of a declining population combined with an increase in the supply of housing. This last point is really what the author is touching on, but those who rent are not your friends that have large mortgages.

People don't hoard houses, they hoard land. Taxing houses results in fewer houses, but taxing land doesn't result in less land. Check out https://astralcodexten.substack.com/p/your-book-review-progr...

Why should it be an attractive financial asset if you do live there? Why shouldn't it just be a depreciating asset like a car (which it would be if land was taxed effectively)?

That way, we could invest in productive assets instead of land.

Singapore

The easiest way to compare is to look at what a family of renters get vs a family of landowners. In a city with growing land values, the renters get nothing but the landowners get a lot, yet their contributions as "families contributing to society" would be equivalent.

Yes, everyone contributes to society in some way, hence "outsized to their contributions." If you sit on a piece of land and wait 10 years in my city, you might have made $500,000 of tax-free land value gains, but without needing to contribute anything to achieve it. In fact, if you do nothing but sit on the land, you're a net negative on society because you deny access to that land from everyone else.

Landlords aren't in proper competition in supply constrained cities (most of them), so they aren't actually competing that much with each other. In reality, landlords are charging as much as the tenant can afford to pay (in aggregate). This means that the tenant will not be able to pay a higher rent, even if every other landlord also raises rent, so instead they become homeless (or move back with their parents). This happens across the tenancy market, so landlords are already charging as much as they can.

Lars Doucet has a good essay on this with empirical sources on AstralCodexTen: https://astralcodexten.substack.com/p/does-georgism-work-par... I believe he frequents HN as well.

If he could do that after the tax, why not do it right now without the tax?

Rents are already as high as the market can bear for most tenancies, so the landlord has to eat cost increases.

> For example, if utilities are included in the rent and the utility rates shift up, then the rent will increase due to that.

This is an example of a tenant cost, not a landlord cost. In fact, the landlord may not be able to increase rent as much in the future due to the utility cost increase, because the tenant has less disposable income.

> If the tenant makes $1M/year it won’t really affect what the landlord charges them.

I don't think an extreme end of the scale is particularly useful to consider in this case; most tenants don't make $1m a year, and most people who make $1m a year don't rent.

This is relatively easy to resolve, anyway. If "Costs are frequently passed on directly" as you say, then you should be able to make some predictions about landlord costs and rent and then see them replicated in the market.

An example would be:

Many landlords have mortgages. An increase in mortgage rates in countries with non-30-year mortgage rates is an increase in landlord costs. We can expect a doubling of mortgage rates to have a significant impact on landlord costs, and thus a significant impact on rents. Do we find in countries with non-30-year mortgage rate rises that rents go up significantly more than usual with significant mortgage rate rises, or not?

You can also think of an example more to prove whether rents go up when tenant incomes go up or not, such as:

Do rent increases have a correlation with tenant income increases, or are they unrelated?

In my country (New Zealand), there is ample evidence to support landlord costs not generally being passed onto the tenants (I say generally because there will be specific instances where this isn't true).

Landlord costs aren't ordinarily passed onto tenants, or only in minor part, because landlords already charge as much as they can. If they could raise rents by some incoming cost amount, they would have already done it. I don't know if there are good statistics showing this in the USA, but in NZ it's pretty easy to demonstrate (e.g. interest rate rises are an increase in costs to most landlords, but they aren't followed by corresponding rent rises, and vice versa for interest rate decreases). Landlords charge as much as the tenant can bear, so an increase in discretionary tenant income is where you see a correlation to rents, not landlord costs.

Land value tax is one of the few taxes where the incidence is primarily on the land-owner, not the tenant. This is because it's an essential need that is of limited supply, so the price of the land rent is already set to the maximum. The landlord has to eat the cost of the tax.

Land value tax would fix this!

Land/location is not a capital good and isn't affected by the same market rules as capital goods, because it is unique and possesses monopoly properties. It's essentially impossible for land and other natural resources to have a free market, by nature.

Both are benefiting from the labour and value created by the rest of society, outsized to their contributions. Land receives its value due to all the infrastructure, people, businesses, and so on that are around the land, and everyone who owns land benefits from this as their land value increases. Owner-occupiers benefit just as much as landlords (they are, in fact, lords of their land too, but their tenant is themselves). They should return to society the value that society created for them, in the form of a land value tax.

This should of course be offset by a reduction in other taxes, but it is a supremely just and efficient tax and far preferred to most other taxes.

What they've identified is that the amount of profit a landlord who owns a house outright can extract from their tenants "feels" too high. Even if they can't explain the reasons, intuitively they feel there is some kind of injustice occurring.

There is, because land owners are monopolists that can extract economic rents (extra-high profits due to monopoly ownership) far beyond the ordinary rate of return in a fair and free market of capital goods.

This is primarily because land (or more specifically, location) is a monopoly good, not a capital good that can be created if demand increases.

The extreme end of this reality is feudalism, which most countries in the world decided against for one reason or another. Your young relatives are intuitively sensing that they feel like serfs in feudalism, and there's an increasing truth to that.

Land value tax would solve this.

It depends on where you live; properly speaking, the proportion of your rent that is caused either by regulatory capture or by land ownership is the "rent-seeking" kind of rent, the rest is "hiring a house" kind of rent.

In municipalities with highly restricted supply due to regulation, as well as expensive land due to lack of a land value tax or property tax, most of your rent will be the "rent-seeking" kind of rent. Apartments usually are built on very expensive land and are still affected by restricted supply caused by regulatory capture, so they're not different in this instance.