The Henry George Program Ep. 11 – James K. Galbraith on Inequality

In this May 20, 2017, episode, we speak with James K. Galbraith, whose most recent book “Inequality: What Everyone Needs to Know” touches on the Land Value Tax. Galbraith is a professor at the Lyndon B. Johnson School of Public Affairs and the University of Texas at Austin, where he runs the University of Texas Inequality Project. His distinguished roles include a place on the executive committee of the World Economics Association and the role of chairman of Economists for Peace and Security.

Galbraith is a professor at the Lyndon B. Johnson School of Public Affairs and the University of Texas at Austin, where he runs the University of Texas Inequality Project. He also serves on the executive committee of the World Economics Association and as chairman of Economists for Peace and Security.

We spoke with Galbraith about the problems with the way in which land is treated in theory and policy, beginning fundamentally with the exclusion of land from traditional factors of production.

“This is a major problem with the way in which economics has been constructed, in a way which the two factors of production that you’re going to encounter in a typical textbook are capital and labor, and resources in general and in particular are not separated.

“I tell my students that as an exercise would they please go back to their workshop and bring something in at the next class that they have constructed purely out of capital and labor; that is to say, out of the machinery that they have at hand and their own labor. They say ‘And nothing else?’ and I say ‘Yes, nothing else’, and they point out to me that it’s really difficult to do that unless you have some resources.

“If you pick up the textbook it appears that everything is made by some miraculous process without the intervention of material products of the land. And that is something which would have astonished the economists of the 18th and even to the end of the 19th century, for whom of course these questions were fundamental.”

Bringing land into the inequality conversation and into tax policy would be challenging, considering the political reach of what Galbraith has called the “predatory class” of the wealthy elite and the ingrained incentives of developers in construction and ownership. Nevertheless, the idea of a Land Value Tax is one he endorses in theory.

“If you take the tax off of labor, it’s going to be much easier for people to have employment. Now, if you take it off of non-rent economic profits, then you’re going to expand the scope for profitable investment. What you want to do is then to place the tax burden, to the extent that you can, on speculative gains, and that has the effect of encouraging people to use land in appropriate ways to take advantage of the high value of land. In order to meet the tax burden on that value you have to put it to a productive use, so you get a double advantage by having a tax system of this kind.”

Listen to the full conversation below:

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: Wikimedia Commons

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The Henry George Program Ep. 10 – Jeff Andrade-Fong and Josh Vincent on Influencing Housing Policy

In this June 13, 2017, episode, we speak with two distinguished policy advisers on land and housing. Jeff Andrade-Fong works with Tech for Housing to bring the implications of housing policy to the attention of tech workers, and what they can do. Josh Vincent advises land policy on a city-by-city basis using open data and more. Changing policy is hard, but we talk about what people can do about it.

Andrade-Fong spoke about the need to get more people involved at a grassroots level, by taking action online and generating accessible content to demonstrate how issues of housing affordability and land use are intertwined.

“There isn’t a single person in tech or out in the Bay Area that’s not thinking about housing prices. Really, the challenge is starting with this general concern that everybody has around the state of housing crisis… and sort of walking them backwards to what are the two to three to four degrees of separation that gets us to the basic root policy issues that need to be addressed. So, everybody’s thinking about housing prices, some people are thinking about how land use is affecting them, and just making that connection for the rest of the folks is our challenge.”

Vincent has been executive director of the Center for the Study of Economics since 1997. He has consulted for more than 75 municipalities, counties, NGOs and national governments. In his works with tax departments and elected officials to promote Land Value Taxation, he has seen the impact of an LVT policy and knows how to get there.

“One thing that creates or takes away land value — or desirability if you want to get out of the economics — is zoning. Zoning trumps all; it’s like a god. Prop. 13, yeah it’s going to be almost impossible to change in the near term, unless you come at it from the flanks.

“For example, going after commercial property, which is subject to Prop. 13 and almost nobody considers that the non-residential property is is going along for the ride too on prop 13 and maintaining that quality of life. But when you change zoning or land use regulations you change value, and by clawing back hyper-restrictive zoning of the Bay Area, you’re therefore going to have more affordable land and more units per parcel.”

Prop. 13 could be partially rescinded in terms of commercial property, or the pursuit of reduced zoning restrictions could continue to happen on a local level, followed by regional and state. Ultimately, less restrictive zoning is only one part of the puzzle. Vincent and Andrade-Fong both suggested that as San Francisco sees the prevalence of owner-occupier homes continue to fall, people will become more receptive to the idea of a Land Value Tax. I think the key is to loosen up restrictions allow the sort of like natural course of events as a player where everything becomes

“I think the key is to loosen up restrictions, allow the natural course of events to play out where everything becomes more urban, and I think in that environment people are more open to what more so feels like taxing their landlords,” Vincent said.

Listen to the full conversation below:

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: vision63 Noe Valley – San Francisco – Some other Ladies via photopin (license)

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The Henry George Program Ep. 9 – James Howard Kunstler vs Sprawl

In this June 6, 2017, episode, we talk to James Howard Kunstler, who has long been a voice railing against the ugliness of modern sprawl and the psychic torment things brings on ourselves. How does a land tax offer a possible answer to this tragedy? TED called Kunstler “the world’s most outspoken critic of suburban sprawl”. He believes the end of the fossil fuels era will soon force a return to smaller-scale, agrarian communities, and an overhaul of the most destructive features of postwar society.

Kunstler was introduced to the ideas of Henry George when working on his book Geography of Nowhere, and subsequently discussed Georgism in the sequel Home from Nowhere.

“I began to get in in touch with people who were forming the ‘new urbanist’ movement, which was a reform movement among architects and developers and urban planners and public officials to do something about what has become a kind of mandated suburban sprawl. And when I say mandated I mean where we have been literally compelled to build all of our stuff that way because of the embedded codes and the tax laws in our system.”

Sprawl makes sense in a historical context, considering that the industrial revolution made cities into places that were not very attractive for a good and peaceful life, Kunstler said. The story of American development has been one of running with ideas that seemed good at the time.

“In the 1920s, there was very little thought that we would ever a problem with our oil supply; we thought that it would not only be there perpetually but that it would be incredibly cheap forever, and we never thought we would run out of cheap, exploitable real estate on the fringe of the city. It just seemed impossible, but now in the places like the Bay Area you’re there, so what seemed like a good idea at the time is not a good idea anymore.”

One good idea that is on its way out is the concept of megastructures, according to Kunstler, and any solution to affordable housing in urban cores is unlikely to stack thousands of people on top of each other. Moving into the future, the skyscraper is likely to become obsolete due to the cost and we will discover an optimal building height for an urban footprint. “My guess is that it’s probably not much more than five, six, seven stories — airy, and it may amount to as simple a proposition as the number of stories that you can ask people to walk up comfortably. But it’s simply not true that you know if you can just stack so many people in an urban spot that that’s the greatest solution.”

“We’re moving into a capital-scarce period of history where we just don’t have as much money as we thought we did and as we used to, and we’re going to have trouble with fabricated modular building materials of the type that you need to keep these buildings going. Even things as humble as sheetrock which require long manufacturing and mining chains, these materials may not be there for us.

“So if you ask the architects and the developers about the skyscraper they will never come around to that idea, because for them the prime mission is to maximize the floor-to-area ratio of any given building. So the whole question of what the city ends up being in scale is a major issue. We’re ready for a major debate on that and we’re not prepared to have it, because very few people have their head screwed on about this.”

Listen to the full conversation below:

Kunstler is perhaps best known for his nonfiction books, The Geography of Nowhere, The Long Emergency, and Too Much Magic. James has also written The City in Mind: Notes on the Urban Condition, World Made By Hand, a fictional depiction of “the post-oil American future”, which became a four-part series with the subsequent publication of The Witch of Hebron, A History of the Future, and The Harrows of Spring.

Kunstler is the author of eight other novels including The Halloween Ball and An Embarrassment of Riches. He is a contributor to the New York Times Sunday Magazine and Op-Ed page, where he has written on environmental and economic issues.

Kunstler was born in New York City. He worked as a reporter and feature writer for a number of newspapers, and finally as a staff writer for Rolling Stone Magazine. He has lectured at colleges across America and delivered one of the most watched TED talks.

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: Charlie Samuels via Kunstler.com

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The Henry George Program Ep. 8 – Stephen Barton And The Berkeley Landlord Tax

In this May 30, 2017, episode, we speak with Stephen Barton, co-chairman of the Committee for Safe & Affordable Homes, established to support passage of a windfall profits tax on residential landlords. Last November, Berkeley passed Measure U1, nicknamed the “Landlord Tax.” It increased the tax rate for landlords of five or more rental units. Behind the bill was Barton, who’s been working for affordable housing for decades. On the side, he’s been writing about the Georgist history of Berkeley’s leadership.

Barton explained that Measure U1 in Berkeley was targeted at residential landlords in the San Francisco Bay Area, who “are reaping tremendous windfall profits from rising rents and the result is a massive transfer of wealth from tenants to real estate investors.”

“So the idea was to recapture some of this windfall and put the money to use to create permanently affordable housing for the low-income tenants who are hardest hit by all this, and to help prevent homelessness.”

Value captured by landlords, even those owners of rent-controlled properties, was primarily the creation of the community due to its attractiveness and was thus owed to everyone, Barton said.

“We have businesses that thrive off of that diverse and creative culture and happen to be creating quite an economic boom in the area, so the entire community is making this a really great attractive place to live. And the result is you get increasing demand for moving into the area that’s increasing far faster than the housing supply can possibly increase, and the result then is that landlords — a small sector of the community, those people who own real estate  — are particularly able to take the value that the whole community has created and charge higher rents.”

Listen to the full conversation below:

Barton previously served as Berkeley’s Housing Director, and Deputy Director of the Berkeley Rent Stabilization Program. His work on affordable housing received a National Planning Award from the American Planning Association and an Affordable Housing Leadership award from the Non-Profit Housing Association of Northern California.

Barton also serves on the Board of the Bay Area Community Land Trust, which specializes in the development of limited-equity housing cooperatives and is active in East Bay Housing Organizations and Democratic Socialists of America. He is the author of numerous articles on housing policy and economics, as well as on the history of the Georgist and Socialist movements and has a Ph.D. in City & Regional Planning from the University of California, Berkeley.

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: Committee for Safe and Affordable Housing

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Intentional Communities and Alternative Housing

BIL: Oakland 2016 Recession Generation was an Earthsharing.org conference in Oakland, California on July 9th, 2016. The Intentional Communities Panel explored new ways of living communally, and the need to respond to the housing affordability crisis with revised land use policy.

Betsy Morris, a partner with Co-Housing California, presented dozens of cases around California where tiny homes, mobile accommodation, and other kinds of modern living were proliferating and finding success. The need for these new kinds of housing was stark and urgent, she said.

“Let’s just say it: here in the Bay Area, it is crisis mode. We have a 30-year shortage of housing at almost every scale below the top 10 or 20 percent of the market. And today, our Bay Area government acknowledges that 43 percent of all the nine county households are overpaying, which means that they are sacrificing other parts of their budget to take care of housing, and 23 percent are seriously overpaying.”

The debt-driven housing system that still dominated modern economies was driving people to dream up new ways to live close to amenities, keep communities intact, and avoid devoting a majority of disposable income to simply putting a roof over one’s head, Morris said.

“Not a single county in the U.S. provides enough housing for its low-income people, and that affects everybody else up the scale of incomes to an extent,” she said. “It’s like we’ve forgotten that other alternatives exist.”

Shared equity communities were spreading across California and in other parts of the U.S., and with the right municipal leeway they could be a readily accessible solution for thousands of people otherwise unable to be part of a housing community.

“The great thing about Georgist land economics is it provides a logical, theoretical basis for looking at situations and saying ‘how could this work?’ The kinds of communities I’m showing you are living examples of efforts not to talk about some big overarching macro global economy, but actually on the ground, what does it look like to share the earth?”

“We’re starting to see a body of knowledge that allows conversations with the policymakers who primarily rely on traditional economic theories whether it’s of the state, intervention, or free-market rampant.”

The panel was completed by Aaron Castle and Candace Anderson, a Bay Area couple who have lived in their own tiny house for more than two years. The economic necessity of finding an alternative living solution had also given them both new freedoms and a new sense of community that paying thousands of dollars to rent a room simply didn’t offer.

“There’s no way we would have been able to stay in the Bay Area if we didn’t do this,” Anderson said.

Watch the full panel below:

Featured photo: Bill Dickinson via Flickr

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The Henry George Program – Matt Krisiloff on Y Combinator, Basic Income, and LVT on The United Slate

In this episode, we have Matt Krisiloff of Y Combinator Research to talk about its Basic Income project, Y Combinator, and The United Slate, which features Land Value Taxation as a plank. Should these be viewed as separate, or two ideas that are fundamentally linked?

Krisiloff manages the basic income research being conducted by Y Combinator, a Silicon Valley-based start-up factory that was critical in the success of companies like Airbnb and Dropbox. Fast Company has called it “the world’s most powerful start-up incubator”.

As part of its nonprofit YC Research, Y Combinator is designing a long-term study to distribute basic incomes and understand the positive or negative impacts basic income might have in a US-based population.

Krisiloff said the pilot in Oakland had been operating for a few months now, and the preliminary results of the study could be available in just two years. The study will explore how best to distribute a guaranteed basic income, how to monitor spending, and whether recipients spend their money “responsibly”. The project also opened up a wide discussion of cost of living and the housing crisis in the Bay Area.

“To really be able to afford something like basic income, we’re going to have to dramatically lower the cost of living,” Krisiloff said.

“Particularly in California, policy could go a long way to alleviate the housing crisis. I think there is a lot of speculation, our zoning laws could be refined to allow for more building in certain areas. I think it’s far too easy right now to block development in communities for long periods of times, using laws on the books — such as CICA environmental regulations — inappropriately.”

Krisiloff has another project that ties directly into economic justice: in partnership with Y Combinator chief executive Sam Altman, Krisiloff is working on The United Slate, a policy project that has laid out ten policy goals for California. Housing supply and some form of land tax are planks of The United Slate.

Krisiloff said Land Value Taxation made a lot of sense.

“Longer term it seems like that is the most fair, equitable taxation system. I think as we go to a world where we should have more and more abundance created by smaller groups of people we shouldn’t be trying to tax incomes — output for work — we should be taxing the resources that are controlled by groups of people.”

“Land is something that is essentially micro-monopolies for whoever is holding it, and we should be taking the resource contributions from those people, rather than just letting the resources just accrue back to them for resource extraction.”

Listen to the full discussion below, and keep up with Sam Altman and Matt Krisiloff on Twitter.

Matt Krisiloff was a co-founder of Entom Foods, which aimed to derive sustainable and palatable food from insect meat, and of a mental health directory for therapists. He led teams that won the University of Chicago’s College New Venture Challenge in his first and second years for Entom Foods and another called CrowdCoin.

Starting in 2017, EarthSharing.org has been collaborating with KZSU Stanford 90.1 FM to create a weekly hour-long radio show. The Henry George Program is a platform for interviews, roundtable discussions, and debates on economic justice and policy.

Tune in for challenging content on the housing crisis in the Bay Area and beyond, economic stagnation, widening wealth inequality, and environmental degradation ― can Henry George’s ideas offer a path forward that unfettered capitalism and incremental socialism lack?

An archive of the Henry George Program can be found here.

Featured photo: Generation Grundeinkommen via Flickr

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Movin’ On Up: A Winning Strategy For Housing And Prosperity

Well we’re movin’ on up,
To the east side,
To a deluxe apartment in the sky.
Movin on up,
To the east side.
We finally got a piece of the pie…

We Can Have it All

Image result for paris buildings
Typical Parisian architecture in the 7th arrondissement.

Who says that a big house surrounded by nature can only be found in the country? Do you have to sacrifice high wages and the convenience of city life for some peace and quiet?

We want everyone living in cities to have space, views, and creature comforts. This sounds like a pipe dream, but it isn’t. To house more people without displacement, it is possible to stimulate the construction of new affordable housing and guarantee existing residents at least the same size home for no more than their current rent.

Paris, for instance, is one of the densest cities in the world. It’s also arguably the most beautiful. They do not have many skyscrapers. Instead of capping the height of buildings at 2 stories, as San Francisco does, Paris consistently has 6 story buildings. Whatever a city’s needs are, and however tall people feel comfortable building, rapid construction is not an external physical constraint.

We’ve been building tall stuff for centuries, and construction technology has only become safer, faster, and more modular. Chinese company Broad Sustainable Building has broken numerous records with its prefabricated construction, completing a 15-story hotel in 48 hours and a 57-story complex in just 19 days. With the right economic incentives, this technology could improve faster even as it becomes more sustainable. Necessity is the mother of invention and if there is one thing that the San Francisco Bay Area has in spades it’s the ability to take innovative ideas and run with them.

But skyscrapers alone do not improve density. There are tall buildings everywhere that sit empty for much of the year. What’s more, landowners in the urban core won’t build if they can coast along on the increases in value of their land being generated by all of the activity around them. Their lot becomes worth more and more simply because of location, so there’s little incentive to use land to generate as much rent as possible. There is really only one way to make sure that urban core landowners actually improve the real supply of housing for everybody and thus lower market rents throughout a city. There must be a strong incentive to use land and buildings for people’s needs.

In Brief

  • Strong Cores: Restrict Land Value Tax to the urban core as a transitional measure.
  • Reduce other taxes such as sales and wage taxes in and outside the core.
  • Freeze the rent of urban core renters.
  • Movin’ On Up: Offer a free upgrade, in terms of location, unit quality, and cost, for those whose building is replaced.

The Transition to a Winning Solution

Land Value Taxation is a proven and sorely needed policy. If you need a primer, start here. With LVT in place, landowners have to use their land productively to cover the tax.  Rather than construct luxury units to be held vacant as a store of wealth, they are going to build sites for rich, middle class, and poor renters alike that actually generate rent. Right now, new development in the urban core simply spurs new speculation, and new development outside the urban core is either met with fierce resistance or it doesn’t happen at all.

In New York, Manhattan’s Upper East Side now sees a huge proportion of apartments left vacant for most of the year. According to the New York Times, about one in every 25 Manhattan homes has an owner or renter who lives there less than two months of the year, and the number of absentee owners and renters grew more than 70 percent between 2000 and 2011. Ownership of this space in the urban core is being used as an investment by the wealthy all around the world, while local residents are pushed out of the city.

Photo: smith_cl9 East River Esplanade, Yorkville via photopin (license)

In the long run under an LVT, city centers become more accessible to all. The problem with LVT is not the end result but that without a slow transition, it too could temporarily push poor people toward the periphery.

Freeze Rent and Free Apartment Upgrades

To get around even the temporary downsides of LVT, a sensible and politically feasible solution would be to restrict the tax to the urban core, freeze the rent of all urban core residents, and guarantee them a new better and more centrally located home if their building is replaced. Heck, we’ll even pay their moving costs. This will stop the banishment without turning newcomers away.

For renters and newcomers alike in the SF Bay Area, this will mean an enormous new supply of housing in the city center. When housing is no longer in such short supply, landlords won’t be able to charge such exorbitant rents. Less disposable income will be lost to rent, and young tech industry employees can rest assured that they are not creating gentrification and displacement.

Here’s a table showing how key players will be affected by such an Urban Core Land Value Tax policy, coupled with a few other transitional measures:

Landowners Outside the Core

  • No new proposed subsidized housing in their communities
  • Lower taxes
Urban Core Landlords & Developers

  • Lifts on zoning requirements
  • Land values increase faster than the tax
  • LVT will offset income and sales tax
  • Bigger workforce, less pressure on wages
Renters Outside the Core

  • Much greater supply of housing near their jobs
  • Lower rents as supply in the core increases to satisfy demand
Urban Core Renters

  • Rent freeze
  • Possibility of upgrade
  • Keep their community

Among those worried about higher taxes on land are suburban and peri-urban NIMBY (not in my backyard) landowners, and they are the source of many uninformed and polemical attacks on Land Value Tax and those who would seek to get rid of Prop 13. They are a barrier to the system we need, but they have legitimate needs too. It has to be made clear that these people will pay the same taxes or less and that they won’t be forced, by this measure, to adopt new zoning laws.

In fact, all of the people they may currently want to keep out of their single-story neighborhoods will stay out, not merely via zoning laws and blocks on subsidized housing, but because living in the urban core will become possible again. Everyone will flock there. These outlying communities can be run however local residents see fit, and the increase in the supply of real housing in the city centers will reduce the push to build affordable housing in these neighborhoods. Pressure will be taken off the periphery.

Savings for Everyone, Everywhere

In addition, NIMBYs outside of the urban core could actually pay less tax than they currently do, even under Prop. 13! This is because land in the center of the city is exponentially more valuable the closer it is to the urban core. Outlying landowners will see a drop in what they pay in taxes, in most cities, under LVT. However, if it’s salient to these owners that an Urban Core Land Value Tax will be restricted to the core, outlying land owners will not be affected. In fact, their tax bills would probably go down. One reason for this is that the city would be enabled to eliminate sales and wage taxes with the revenue obtained from taxing the value of the land in the urban core. It might even be possible to offer a rebate on federal income taxes. Everyone will want to flock to the urban cores for these reasons, and this will increase land values and the revenue it generates, even more.

 

st_theheightsb_f

With a radically greater supply of housing and business space, renters will gain leverage and everyone’s taxes will be reduced. It’s a win-win, even for the property developers who want to build higher but are prevented from doing so. As long as the buildings are safe and conform to zoning, there is no reason why this should not be implemented. If it makes it more politically feasible, the urban core land value tax can be slowly raised as opposed to being done all at once.

SF’s Historical Barriers to Housing

The Mission Yuppie Eradication Project began in the summer of 1998, encouraging the destruction of property of dotcom-era newcomers to the Mission District. Photo: Found SF

Kim-Mai Cutler, writing for TechCrunch in 2014, described how the “formidable permitting process” in San Francisco is a product of tenant action and environmental movements over the past 50 years.

“Even back in 1967, thousands of Latino residents in the Mission — the heart of the gentrification battle today — organized and convinced the city’s Board of Supervisors to vote down an urban renewal program in the neighborhood. They saw what happened to the Fillmore — once the “Harlem of the West” —when the city’s re-development agency razed it, displacing tens of thousands of black residents and the businesses they had created after World War II.

To this day, there’s distrust and fear that the same thing will happen again, especially if it’s carried out by private developers. Advocacy group Causa Justa has been documenting this displacement through Census data, noting that the Mission has lost 1,400 Latino households while adding 2,900 white households between 1990 and 2011. In the same time period, Oakland lost 40 percent of its black residents.”

In 1986, a resolution was enacted that set annual limits on new commercial real estate space. Cutler highlights the side effect of this preservation movement as a barrier to housing for all. The city has added 1,500 units per year for the last 20 years, while between 2010 and 2013 alone the population grew by 32,000.

What about the eyesore of tall buildings? A more consistent use of the land — say a limit of six stories like Paris versus the height limit of two stories (see image below) — would allow SF to accommodate a lot more people at more affordable rents. This will undoubtedly be the solution in certain areas of the city where buildings are more vulnerable to earthquakes and other considerations.

Map of San Francisco’s building height limits. Yellow represents a two-story limit.

 

Luxury Apartments for All!

Though this article is focused on SF, the same key insights apply to other cities as well. In essence, the idea is that if you’re a renter somewhere in an urban core, you are either going to keep living there at the same rent, or (if your building is demolished) be moved into a much nicer building. Your rent won’t go up, and you’ll either live on the same lot or move on up closer to the center. This would not be a scheme to force all the low-income people into the same shoddy inner-city housing, and they wouldn’t be singled out or ridiculed for receiving one of these apartments.

It would be a bona fide upgrade and sustainable means of protection from erratic forms of displacement and gentrification. Note, that this is a slightly different conception of the idealized end-stage Georgist model of housing where the market is flooded with centrally located supply and the lowest income residents live only slightly outside the core. It’s also not the YIMBY(yes in my backyard) ideal of “Build Baby Build” –anywhere and everywhere. This would only affect urban cores and would leave other communities alone. There would a boom in housing for all, not just the rich, and not just existing privileged residents. Everyone could put down their pitchforks and get along.

We all have a right to space. We all have an equal right to the social value that we collectively create in city centers, with all of their passion and innovative dynamism. Here’s a realistic and economically sensible way to achieve that.

Featured photo: ShanePix Fly with me! via photopin (license)

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Yoram Bauman: The Layman’s Principles Of Economics

BIL: Oakland 2016 Recession Generation was an Earthsharing.org conference in Oakland, California on July 9th, 2016. Yoram Bauman, who declares himself the world’s first and only stand-up economist, took the opportunity to present a humorous interlude before a featured panel on optimal taxation.

“Many people are surprised that I do economics comedy for a living. I believe it is one of the last jobs that will be taken over by robots.”

Bauman spoke about political apathy and his belief that centrist swing voters are to blame for budget deficits. The misinformed voter will respond to ideas for new infrastructure and to promises of tax cuts, without realizing the necessary tradeoffs to achieve this, he said.

“In America, there are a lot of swing voters. If you are not a communist or a fascist, then you are probably a swing voter. And if you do not know the difference between communists and fascists then you are definitely a swing voter. Now, your job when it comes to politics and current events, extremely important… your job is to pay absolutely no attention whatsoever, and then every four years you determine the fate of the free world. I know it sounds like a big responsibility, but trust me, don’t give it a second thought.”

Bauman’s main presentation was his revised and translated version of Greg Mankiw’s 10 Principles of Economics:

Mankiw

  1. People face tradeoffs
  2. The cost of something is what you give up to get it
  3. Rational people think at the margin
  4. People respond to incentives
  5. Trade can make everyone better off
  6. Markets are usually a good way to organize economic activity
  7. Governments can sometimes improve market conditions
  8. A country’s standard of living depends on its ability to produce goods and services
  9. Prices rise when the government prints too much money
  10. Society faces a short-run tradeoff between inflation and unemployment

Bauman

  1. Choices are bad
  2. Choices are really bad
  3. People are stupid
  4. People aren’t that stupid
  5. Trade can make everyone worse off
  6. Governments are stupid
  7. Governments aren’t that stupid
  8. Blah blah blah
  9. Blah blah blah
  10. Blah blah blah

Watch the full talk below:

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Featured photo: Alaska Dispatch News

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Ageism, Power, and Intergenerational Animosity

Ageism is a two-way street, but is usually thought of only in terms of discrimination against the old. In federal employment law, protections are afforded to over-40s, but favoring an older worker over a younger one is not a problem.

In terms of power in society, almost every area is completely dominated by old people, from billionaires and boards of directors to major shareholders and company executives. In academia, tenured professors hold all the power and associate professors are disposable and work for scraps. The average age of the 113th Congress was 57.6 years, and our last presidential election was between two 70-year-olds.

The only voting blocs that politicians really cater to are “homeowners”, which is a codeword for landed upper middle-class people who are older and financially secure. They vote the most and donate the most because they want their land titles propped up in value through government policy. They want their healthcare and pensions. They want all taxes shifted away from accumulated wealth, which inevitably means that they want taxation redirected to the young. Meanwhile, political participation for the young is intrinsically a more altruistic endeavor, because they really don’t draw on government privilege for their existence.

Unfortunately, this also results in low turnout for young adults. More than half of eligible voters aged 18 to 24 stayed home for the 1998 midterms. Those young people who are politically inclined tend to care about a more diverse spectrum of issues, which creates divisions within liberal politics and keeps deciding power in the hands of older, more cohesive voters. This imbalance is likely to get worse, as declining fertility rates among younger generations will see seniors account for much higher proportions of overall population growth in the future than they did in the past. While the population aged 65 and older accounted for 18 percent of overall population growth from 1950 to 2010, they will account for 51 percent of population growth between 2010 and 2050.

Despite the imbalance of power, most conversations about age discrimination involve the young victimizing the old. Why is it that the reverse is rarely considered? Historically, the perception is that old people are responsible, with traditional moral values, and are inherently worthy of respect and capitulation. But at this point in time, statistically speaking, young people have far fewer vices.

Rates of teen pregnancy are at an historic low, and young people smoke less, exercise more and make better choices about what they put in their bodies. They are frugal, more secular, and more tolerant than any previous generation in memory. Millennials are the most educated generation in American history, with more than 63 percent of millennials having a Bachelor’s Degree. More than half either want to start a business or already have started one.

Sociology professor Judith Bessant has explored how two early-twentieth-century writers encouraged the perception of the young as less capable: psychologist G. Stanley Hall introduced the concept of ‘the adolescent’ and sociologist Talcott Parsons began the discussion of so-called ‘youth culture’. Both these men focussed on the most troublesome among young people, popularizing the notion that they are unpredictable, emotionally turbulent, and rebellious across the board.

Photo: Mikey G Ottawa Boom Box – Montreal 1987 via photopin (license)

Surely the expectation of rebellion or failure is partly responsible for that same rebellion, or that failure. A lack of rights, responsibilities, and respect can become a self-fulfilling prophecy, and if young people are not afforded treatment as equals in society, they will continue to boycott full participation. Intergenerational animosity can manifest itself as a healthy and friendly competition, or it can mutate into genuine resentment. In many cases, we seem to be trending toward the latter.

The generalizations they made have persisted for decades. Meanwhile, young people are showing themselves to be more purpose-driven in their work than any previous generation. Research from Deloitte showed that while millennials in leadership positions believe profit is important, they prioritize purpose, innovation, and the wellbeing of themselves and the workforce. Despite their demonstrable ability and ambition, young people have been walled off from many avenues of power in society.

Having started out with huge student debt, many young people have trouble getting jobs at all, and old people are living longer than ever, closing leadership opportunities off even more. Further confounding this is that there are formal and informal metrics by which the old judge the performance of the young based on the values of the old. Often times these metrics are outmoded in certain fields.

This is particularly true of technology. Consider the ‘rapid iteration’ work style of software development, whereby timeliness and planning are discarded in favor of live progress-tracking and goals that can be discarded as quickly as they are set. How does this compare to the clunky, paper-pushing environment in which much of business and bureaucracy still operates?

Older people will thus downplay the importance of technological understanding as a metric for leadership abilities and play up the importance of skills with which older people have more experience, even if these skills are outmoded.

Older people, being in the position to create rules and regulations, have the ability to subtly introduce ways to increase their perceived value to an institution. This makes the legitimacy of authority in an institution circular in its reasoning. Why do we do what we do? Tradition! Why should this be done? Because I said so! If there are no definable goals, there are no checks and balances on power. No newcomers can challenge that power on a strategic or meritocratic basis because strategy and merit are nonexistent.

According to the U.S. Chamber of Commerce, the erosion of the union movement has made it more difficult for those with blue collar jobs to rise to the middle class. Males with high school diplomas in 2010 actually made less money than their 1980 counterparts: $30,000 versus $39,750 in annual salary adjusted for inflation. The younger worker is more likely to be laid off if a “Last In, First Out” policy is in place, simply because she has not been with the company for as long. The assumption persists that experience equates to merit, when in many cases the opposite may be true.

Despite the genuine difficulties young people face, it’s not uncommon to hear it suggested that the young are lazy, entitled, or incapable. It is socially acceptable to vent frustration about dealing with young people and children in public places, or in extreme cases to implement high-frequency sound technology only audible to young people as a deterrent to keep young people away from certain areas entirely. The fact that more millennials are still living with their parents is easy fodder for mockery. Yet, it is the economic policies of previous generations that have caused the current economic climate.

Photo: Kurayba For Rent via photopin (license)

As a brief thought experiment, consider these common criticisms:

  • “Oppressed ethnic groups shouldn’t be treated like children!”
  • “Women shouldn’t be treated like children!”
  • “Disabled people shouldn’t be treated like children!”

Maybe there is something deeply wrong with the way that we treat children and young people. The ageism that flows towards the young is insidious, since it is the powerful attacking the powerless. Whereas the faintest hint of ageism towards the elderly is met with grave condemnation.

Experience is sometimes correlated with merit, but it is not merit itself. Furthermore, people “rise to the level of their incompetence.” Young people are less likely to have reached their capacities yet. Therefore, there is a lag that needs to be accounted for when comparing young and old. There should be more active competition on objective standards of merit instead of simply discounting a person on the basis of age. Certainly, people at their peak physical and intellectual capacities stand an increased chance of being the best choice for a position, if irrational biases against the young are properly accounted for.

WIthout young people, we simply wouldn’t have seen the kind of power that brought the civil rights movement to the United States. Many young people postponed their studies and early careers for the sake of fighting for change, against entrenched powers that were not necessarily malicious but which had no reason to upset the present structure of society. There are countless other instances of young people being the engine of critical improvements throughout history.

How do we create the best situation for everyone? Public office, corporate boards, taxes, and voting laws disproportionately favor the old. The old need young people’s new talents and energy. The young need to learn from the experiences of the old. Both groups can work for the benefit of the other. If people are given power in proportion to their merits, irrespective of age and other irrelevant factors, we would see a more balanced age distribution and much more sensible policy outcomes. No rational agent wants to give up power, but there are rare occasions where doing so is better for everyone, including the powerful.

Featured photo: DonkeyHotey MSM Spotlights (license)

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A New Resource For Advocacy And Education

Over the years, many reputable researchers and organizations have dedicated resources to examining the theory and the implementation of Land Value Taxation. This system of tax is not just a good idea, it is a demonstrably effective tool for reducing speculation, driving down land prices, and incentivizing the optimal use of centrally-located land.

EarthSharing has compiled a database of high-quality research on LVT, which you can access here. This is not a gathering of platitudes presented by people who are influenced by their pre-existing support for such a policy; this is serious academic work that scrutinizes LVT alongside other tax structures and has reached the same conclusions. Consider the following from a 2015 OECD publication:

Property taxes can underpin sustainable land use. A pure land tax can help contain urban sprawl and foster the conversion of developed land instead of greenfield development. The land-use effects of property taxes – which also tax investment – are more ambiguous. Specifically designed “green” property taxes (soil-sealing taxes, development charges, etc.) can further help internalise land-use externalities

This list is far from exhaustive, and we strive to create a resource for advocacy and education that is as comprehensive as possible. If you can contribute to furthering the goal of this resource with additional research, please contact us and we will add to it.

Land Value Taxation Endorsements

Prosper Australia Research Institute (2016)
Australian Dept. of Infrastructure & Regional Development (2016)
OECD (2015)
National Tax Journal (2015)
International Monetary Fund (2013)
Institute for Fiscal Studies (2013)
Land Values Research Group (2013)
Prosper Australia Research Institute (2013)
Romney Institute, Brigham Young University (2012)
United Nations Human Settlements Programme (2011)
SERC, London School of Economics (2011)
Lincoln Institute of Land Policy (2010)
Kingston University School of Planning & Surveying (2009)
Motu Economic and Public Policy Research (2009)
Land Values Research Group (2007)
Oxfordshire CC & Vale of White Horse DC (2006)
Lincoln Institute of Land Policy (2004)
Australian Tax Forum (2003)
Lincoln Institute of Land Policy (2001)

Featured photo: Unsplash via Pixabay

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