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Comment by kiba

4 days ago

You're looking at the symptoms rather than the cause. Land is scarce and finite and you cannot make more of it.

6 comments

kiba

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immibis  4 days ago

That has not very much to do with money though. There are many ways to allocate scarce resources, such as rationing. Even if money is used, the mere fact of scarcity doesn't define the price of something. Silver is also finite, but it still costs $2.50 a gram and not $25000 a gram. Land was always finite but was still much cheaper in the past.

The main contributor to the price here is financialization. The more money the average buyer can raise for one of the scarce things, the more they cost. Nobody wins from this except the banks, so perhaps it should be more regulated.

Building regulations are also a problem. Legalize whatever you feel is the minimum safety standard of homeless encampment or slum, and watch house prices crash overnight, since prices are set at the margins and a lot of people (including me) would be happy to find a way to work with simple concrete box if it was cheap and secure, but it's not legal to build those.

  • kiba  4 days ago

    You're getting at the problem but you still don't understand the essence. Land is special because you can't make more of it. Even the Netherlands don't count since what they did is considered an 'improvement'.

    Yes, you still need to solve the problem with 'money', or more accurately a tax. That tax is based on the assessed land value using market knowledge, but it would ideally be set to drive down the price of land to zero. However since we don't live in a world of spherical cow, tax would be set below that ideal to avoid land abandonment.

    This is not even new by the way. The crisis we face is the same as in the 19th century when Land Value Tax and Georgism was proposed.

    • tptacek  4 days ago

      I like Georgism just fine but you don't need it to solve this problem; LVTs are just a prompt align people's incentives with upzoning and increased supply. Instead of doing that (it's not going to happen), you can just outlaw the municipal measures that are used to restrict supply.

johncolanduoni  4 days ago

Okay, but institutional investors didn’t create that fact of reality, and I don’t think they’re responsible for the fact that people want to live in or near cities either (instead of the middle of nowhere, which remains dirt cheap). If they’re not holding significant stock, what effect are they having on scarcity?