“ This issue was initially discovered in 2016 by a RedHat kernel developer and disclosed in a public email thread, but the Linux kernel community did not patch the issue until it was re-reported in 2021.”
People there were thinking about this as a possible fix for a hypothetical crash, not a security issue, and no one was able to prove that there was a crash, nor that the patch fixed it.
No one bothered reviewing it, and the original person who raised the patch didn't advocate further.
None of this seems even close to "insane", this seems like exactly what you expect in most software projects. "Hey, can you explain the bug this patch fixes more?" -> contributor vanishes into the aether -> nothing happens.
Specter/Meltdown was understood to be technically possible since the time pipelined architectures with speculative branching became mainstream in the mid-90s.
Was Spectre as it's understood today ever enunciated though? Not being combative, legitimately looking for papers here because I've read a lot of ones that talk about using side channels to break kernel security [1] and observing that branch predictions are shared (and themselves can be leaked cross context), but never an integrative approach until the Spectre papers dropped. IMO it's one of those things that is so painfully obvious in retrospect but that was a sort of odd blend of works at the time.
> The Linux employees should all be fired for their breach-of-contract with poor Red Hat.
While I appreciate your sarcasm, it is a bit weird that davem dropped that report on the floor altogether for what looks akin to a lack of paperwork.
Not accepting the patch as-is, sure, I get it, process matters. But if the upstream network stack is under your purview one would expect the underlying bug to still be acknowledged, prioritized, and corrected.
This whole thing surprises me since I've interacted with davem via email on multiple occasions. He's always struck me as an asset to the kernel community and caring of upstream issues esp. in the network side.
I'm gonna give him the benefit of the doubt here and presume he assumed the patch's author would follow-up with the necessary acks if it indeed were a genuine bugfix. A lack of follow-up to a maintainer somewhat implies it was a bogus patch and there was nobody willing to corroborate and sign off on it.
Having worked on other large projects with a maintainer model - there is a general lack of ownership. The engineer who is trying to get their patch merged doesn’t feel ownership of the project, and the maintainer rarely feels ownership of any particular CR.
I don’t know if any better model for a project like Linux, but I’d bet good money that neither author nor maintainer felt like they owned the fix for this bug.
Side note but I take offense reading things like this: "The company bet big on formalizing its program of worker misclassification, teaming up with Lyft and other gig-work companies to spend $225m to pass California's Proposition 22, which would allow the company to abuse its drivers with impunity."
Both the left and the right tend to claim that election results are rigged, but of course only when they don't like it.
Prop 22 was directly voted by the people of California with a relatively huge margin for a Proposition - 58%. Yes Uber etc spend a lot of money promoting it but many other Props with big money support have failed. Treating voters like sheep that vote on whatever is being advertised is naive and dangerous.
The right will do the same thing, usually not claiming money influence but rather using the fact that big media is mostly left leaning.
Both sides have to trust the voters may know what they want and perhaps it wasn't the money or the articles that drove the election results, but policies.
> Both the left and the right tend to claim that election results are rigged, but of course only when they don't like it.
I see considerable difference between "They lied to voters to get what they wanted" and "the counts are bogus because I don't like them" which still in 2022 appears to be a popular Republican position.
Not least practically the solutions are very different. Notice how the solution in the latter case is first pointless "audits", which maybe tells us that too many Republicans lack intro-to-arithmetic level understanding of how numbers work. Then though, attempts to stop people voting or to simply override the outcomes, with the effect that you get to "win" all subsequent elections regardless, thus quietly abolishing democracy...
Meanwhile a consequence of the former is that voters eventually realise they were lied to, but don't often get a do-over. People who've secured the vote they wanted will insist it's final and mustn't ever be reconsidered, I'd argue that's because they know they lied and the voters will eventually realise too so they don't want democracy any more.
By the time Brexit was "delivered" many of those who'd voted for it understood they'd been lied to, and the numbers keep going up, but you won't find many politicians with any interest in revisiting, not least because many of them got very wealthy betting against their own country's economy knowing it would be destroyed.
Turns out that you can get turkeys to vote for Christmas (hmm, is that a saying in the US, or do you say "Thanksgiving" here?), but, many of the turkeys are not so happy about that once they realise their fate.
> Both sides have to trust the voters may know what they want and perhaps it wasn't the money or the articles that drove the election results, but policies.
I don't agree that we need to just trust. We should work hard to ensure voters are better informed where possible, and - which is important here - we should use direct democracy (ie voting on issues like this proposition) only sparingly if at all. The reason we have elected representatives is so that they can dedicate their working lives to actually caring about these decisions. Are some of them corrupt? Incompetent? Lunatics? Sure, but replacing those representatives based on their character is an easier vote than having all these propositions.
I remember lots of friends were very happy when the Republic of Ireland got rid of its constitutional prohibition on abortion which they did via direct democracy. But I saw this as cowardly. The politicians didn't want to face the Catholic Church and a minority of potentially violent anti-abortion campaigners, so they said "Give it to the people".
So let me see if I get this. Uber has been struggling to become profitable and this blog has gone to town many times making fun of Uber for not being really profitable. Finally, Uber does the only thing that can get it profitable: raise prices and control costs. And this blog finds a way to complain again, saying that it " Uber transferred $2.8b from its drivers to its shareholders".
Of course, any company that makes any profit could instead, in theory, give that money to its employees/contractors. But then no company would ever be profitable. In addition, the blog says that the main reason for profitability is higher consumer prices, but then calls the profits a transfer from labor.
The post itself says Uber investors have spent 32B and hasn't seen any returns. So yes, profits have to come from consumers spending more money than labor takes in. Revenue minus expenses. It's math.
Don't get me wrong, Uber is very very far from a perfect company. But taking a communist point of view on everything a company does, just to stir anger and resentment, is not helpful.
Uber is inefficient because you need to spend $500 in car maintenance costs / fuel to make $500 as a driver.
Taxi companies, for all of their faults, can order fleet vehicles that minimize maintenance costs. Its a lot easier to maintain 100x of the same car, with the same parts, with the same maintenance crews/training, rather than 100x individuals all spending full rate on their own car maintenance fees.
Whatever vehicle is most efficient (ie: Prius for the last decade), can serve as the low-maintenance backbone of your car network.
While there is truth to what you say, it is greatly, greatly exaggerated.
As a person who delivered pizza through high school, and college, it's just not that bad. And yes, driving 8 hours a night, stop and go, is bad for a car ... regardless if it is pizzas or people being delivered. (Pizza delivery is worse, I'd often deliver 8 pizzas an hour average on Friday nights, try that with people!)
However, I assure you I did not need to spend $500/week on repairs, 20 years ago. That metric has certainly not changed now. An example, by that metric, there are many brand new cars for under $15kUSD (pandemic issues are not part of this argument).
At $500/week income, and by your logic therefore $500 per week in "car repairs", one could buy a new car every 30 weeks, or about twice per year. And as a person who delivered pizza nightly, 8 hours, 5 days per week, you wouldn't even new tires in that 6 months, or brake pads, or ... well.. anything.
Personally, I used to buy used, but where high-cost items are in good shape. EG, transmission, etc, etc. I bought 2 cars in the 6 years I delivered pizza. Each 6+ years old, each only requiring tires, brake pads+rotors from time to time.
When it came time for a big repair? That's when I bolted to the second car.
My point in all of this, is that yes -- you pay for repairs. But the numbers I hear being thrown around, are just extremely excessive.
> So let me see if I get this ... finally, Uber does the only thing that can get it profitable: raise prices and control costs. And this blog finds a way to complain again
What he's saying is that this isn't what they did - their profitability is a balance sheet artefact caused by Uber selling parts of itself off (and incidentally getting over-inflated shares as payment). The main problem with this is that the bits of a company they sell off can only be sold off once.
The fundamentals of the business remain, and despite improvements in revenue vs expenses the reported profitability (using dubious accounting) is no more than a one-off event which they can only repeat by selling more of the family silver and not by running their actual business.
most people find one of the most high paying jobs they can, then adjust their lifestyle to that income, then if they miss the mark ('lowball offer') they have to keep looking.
lifestyle regression is exceptionally hard for humans, especially if your friends/neighbors don't have to go through the same thing (e.g. there's no war raging in your country).
the best thing to do would be to keep your spend way below your means. this maximizes your options and gives you choice. but who does that?
I’ve found keeping expenses well below my means provide a great sense of freedom and autonomy. I don’t need to stay at a job I don’t enjoy and not having work means it’s not a big stressor. It also means I can be selective in the job I do end up taking instead of worry about not being able to pay the bills if I’m out of work too long.
This. But it really depends where you live and when (or if) you bought a house. I live in a city that has very expensive housing but bought in 2011 just before the prices corrected after the 2007/2008 crash. That single choice was the biggest we made. But aside from that, for ethical and lifestyle reasons, we are frugal. We use old phones and laptops, a 10 year old TV, don't fly, don't own a car and don't have kids. Result is that the house is paid off and we have enough in the bank to walk out on any job and remain funemployed for months (or more). You might think our lifestyle sounds boring, but when you remove stress and worry, you realise that a simple life can be a very happy one. A job you like, gardening, board games, long walks, DIY, cooking... None of it needs to cost much. I think that people who live with worry and stress desperately need to escape on holidays and reward themselves with expensive purchases (new cars/tech/fashion) to keep their spirits up and make it seem like the huge effort is worthwhile.
keep your expenses low is easier said than done. Things are different when you have kids, elder people in the family you have to support, than when you’re young and single. In my case, I wanna buy a modest two bedroom apartment that I can afford to pay the mortgage. My family wants to buy a house with a garden.
One of my family members’ 12 year old son suddenly developed a health issue. His dad is worth at least 3M, and was looking to retire in his 40s. But the medical bills are insane, he can’t retire anytime soon, as most of the bills (tens of thousands a month) are being paid by the good insurance his employer gives him.
I have always spent much less than what I make (I don’t even have a bed, I happily sleep on the floor on a sleeping bag). But I also haven’t gotten any raise the last few years, while my rent (for the same apartment) has gone up 20% in the last 4 years. So has my other basic expense like phone bill (same phone, same carrier, same plan), internet etc.
There is a reason people spend long hours working because the alternative is worse.
The most sensible thing to do while one is young is to live frugally, but also earn as much as you can and save.
I live in Europe, and honestly, medical bills are not a concern. My sister had terminal cancer and through the entire horrible process, the medical bills were zero. That's not because she had health insurance either. It just didn't cost anything, apart from a few doctor visits (which we pay for). Once she was assigned a specialist at the hospital, everything from that point was free, including multiple hospital stays, an ambulance trip, drugs, multiple life-saving procedures (collapsed lung, blood clots, all the stuff that happens near the end with terminal cancer). It's completely unfair that anyone would be bankrupted over illness, and that's the reason I would never move to the US.
I mean it sounds comfortable, and minimally stressful, but if it’s not that you can’t have kids, you should start a family. You’re now in such a good position to do it!
Then your life can be chaotic, messy, stressful, and you lose much freedom for many years! But on the plus side you learn to sacrifice everything you’ve done and earned for the good of children who don’t even know how to appreciate it!
We never wanted kids (we're mid 40s, it won't change). We spend time with nephews and nieces, and while it can be fun, we're always very thankful we can return to a calm house with two sleeping dogs and no mess. My wife is even less interested in kids than I am. Lucky it worked out that way, plenty of couples break up over that choice.
Yeah I can respect that. For me it’s more about living for yourself or sacrificing for others. You can choose either whether you have kids or don’t have kids.
Kids just happen to be the easiest way to force yourself to stop living for yourself.
My spouse and I have household income around the median for the area, and through a combination of discipline and good luck have managed to keep expenses very low.
It's not a life of depravation. We take nice vacations and buy the things we want, but we have to be careful not to want things like fancy cars or elaborate remodels. These seem like very unimportant things to forego when you stand to gain freedom from monetary worry.
Family of five, two engineers in Germany (normal engineers salaries there, nothing really big), we live with 1.1 to 1.2 salary.
And we enjoy our life, we rent (luckily not too expensive) and can do what we want. Of course we do not play the traditional "show off your nice stuff" game the society tries to force us into, but for us happiness is time well spent, not accumulated stuff.
I keep my expenses 20% below net income and invest the rest on the stock market. It is a great anti-stress way to live.
Happiness is all about your expectations and who you compare yourself with. I try my best to compare myself with myself 1 year ago instead of random strangers. It makes me focus on what I can actually control (my own actions) instead of things I can’t control (the actions of others).
If you can’t help comparing yourself with your neighbours and feel “poor” where you live then moved to a place where you are “rich” compared with the neighbours. It will do wonders for your happiness.
When are we going to admit that DeFi is a regression, not progress, versus the status quo financial system?
Crypto is all about disintermediation. But that doesn't work when people's money / savings are on the line.
So we can easily tell exactly where this leads: Once enough pain has been sustained through errors like this, DeFi code bugs, fraudulent transfers, etc... a whole industry of HUMANS will pop up that will (a) become an intermediary in crypto/DeFi transactions to ensure that fraud, errors, etc are prevented; (b) introduce mechanisms to revert transactions (controlled by said HUMANS); (c) perform the massive paperwork on compliance (KYC, register big transaction, check against blacklists, etc)
Is there really a different outcome?
Crypto fans claim finance is an overbloated industry and they are here to disrupt it. In reality all they are doing is recreating exactly the same system but with one more layer of indirection (instead of transferring dollars you transfer a stablecoin that points to a dollar).
Will there be exciting use cases for crypto at the edges? maybe. Will it 'disrupt' the broader financial system, in the sense that it will make it better/faster/cheaper? I don't see it.
> a whole industry of HUMANS will pop up that will (a) become an intermediary in crypto/DeFi transactions to ensure that fraud, errors, etc are prevented; (b) introduce mechanisms to revert transactions (controlled by said HUMANS); (c) perform the massive paperwork on compliance (KIC, register big transaction, check against blacklists, etc)
When they do that they'll realize they no longer get any benefit from the underlying asset being a cryptocurrency (since it is no longer trustless as the humans are able to reverse transactions) and will switch back to a trust-based system with a good old database as the ledger.
Inevitably when people discuss Bitcoin someone shows up and calls it a ponzi scheme.
Defi is just the market hearing that over and over again and saying, "OK. I heard you like ponzi schemes..." They all already have humans throughout--- if nothing else, in the form of the people walking off with the windfalls.
The fact that the tech keeps blowing up is mostly just an artifact that the tech is just there as obfuscation for the fraud that underlies and motivates the enterprise. The technology is not well thought out because it doesn't need to be, it's not managed by people with high technical expertise because people with such expertise see through the schemes and can find better things to do with their time than to help rip people off. Given the economic or centrally trusted points of failure-- a competent and ethical engineer would usually tell you adding smart contract gunk to these schemes is an unacceptable source of risk without meaningful benefit (except perhaps as pretext to hide from law enforcement) and so the systems the world gets are the ones built by people who were less than competent and ethical.
Apologies to the rare few things under that banner that aren't fraud -- but they're part of a lemon market where they can't be distinguished from their more fraudulent compatriots, so that kind of guilt by association is inevitable.
Crypto is already an "industry of humans". OpenSea is a centralized company, run by humans, and they sometimes need to intermediate when there are bugs or problems in their platform that causes users to lose funds. They also have to comply with the laws of whatever country they are registered in. If an OpenSea developer fat fingered their contract deployment, it would cause massive losses.
But what does that matter? The point of decentralization is not to abolish humans, services, platforms, user-experience designs. The blockchain acts as a neutral base layer, and competing services can operate on top of the same shared data. OpenSea has limited control over the NFTs being listed on it, which is why you can buy and sell the same assets on other platforms.
Olympic sports medals is a vain metric that all it does is hide the fact that authoriterian regimes are destroying their countries and pressing their people.
In the Ancient Greek times the Olympic Games were an opportunities for friends an enemies to come together and have FUN!
It wasn't about who won the most medals. Can you imagine if Sparta and Athens were competing for the highest number of golds? Pathetic. But that's what's happening today.
> In the Ancient Greek times the Olympic Games were an opportunities for friends an enemies to come together and have FUN!
Not sure if you're being serious or being sarcastic. Any evidence for your claim?
The ancient Olympics (as the name itself implies!) is about religion. Olympus!
Violence, murder, corruption was part of it. Perhaps as much as it is today.
"Sotades at the ninety-ninth Festival was victorious in the long race and proclaimed a Cretan, as in fact he was. But at the next Festival he made himself an Ephesian, being bribed to do so by the Ephesian people. For this act he was banished by the Cretans."
"In 67, the Roman Emperor Nero competed in the chariot race at Olympia. He was thrown from his chariot and was thus unable to finish the race. Nevertheless, he was declared the winner on the basis that he would have won if he had finished the race."
It might be a vain metric in the aggregate, but to an individual, the people who are passionate about their sport and have worked nearly their entire lives to become the best at it across the entire globe, it's an accomplishment that is nearly incomparable.
Maybe we could have our cake and eat it too: award medals privately. In fact, do all the scoring privately. All the public (and the countries) get is a spectacle. If your country so much as runs a news story afterward about what kind of medal your guy came back with, you’re banned from ever coming back to the Olympics. Only the participant gets to know how they did.
(Yes, this is prima facie ridiculous. But also kind of fun to imagine.)
I dunno, people were literally dying over olive wreaths! See pankration, the most fun sport of all:
> For when he was contending for the wild olive with the last remaining competitor, whoever he was, the latter got a grip first, and held Arrhachion, hugging him with his legs, and at the same time he squeezed his neck with his hands. Arrhachion dislocated his opponent's toe, but expired owing to suffocation; but he who suffocated Arrhachion was forced to give in at the same time because of the pain in his toe. The Eleans crowned and proclaimed victor the corpse of Arrhachion.
> Philostratus of Athens writes in his Gymnasticus that Arrichion's failure to submit to his opponent was the result of his trainer, Eryxias, shouting to him, "What a noble epitaph, 'He was never defeated at Olympia.'"
Crypto bros say it's worth tolerating 100x cost (technical cost, energy wasted, etc) and 100x more complexity (as one example, we are 7 years in and ETH is about to be 'reborn' the right way, with the transition to proof of stake) in exchange for what?
For a small but key piece of the 'decentralized' Web3 infrastructure to be controlled by a random stranger due to random events?
Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like.
People want to live where they want to live (near family, jobs, culture etc)
Take NYC for instance. Politicians try to address the NYC housing crisis from a demand/cost perspective. Rent is too high? Let's just screw the property owner and cap the rent. Or let's just raise minimum wage to make it easier for people to live in those properties.
The result in both cases: you didn't have enough housing before, you don't have enough housing now. You give more money to people, rents will just go up. You cap the rent, there's still a huge number of people that can't live where they want and you make it impossible for existing tenants to move (or for new/more development to be built, for that matter)
So, what instead? You want to build more housing in NYC? Great, that should work. But you have to make it cheap. Deregulate construction, get rid of unions, prioritize developer rights over tenant or homeowner rights. What? You don't think these are good things? Okay, but then you'll have to sit back and watch new construction trickle in and result in 'luxury' housing because that's the only way a developer can recoup their enormous land acquisition, regulation and construction costs.
So the challenge with housing is that it requires fundamentally difficult decisions. To pretend that you can just spend 100 billion (or even a trillion) and the problem will be solved and people will be happy, is an illusion.
I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes.
Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value.
The counter-argument people make is "that would de-incentivize investment which would reduce the future housing supply". But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure.
It should raise the bar on an investor attempting to profit by owning property. They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident.
The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent.
If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.
Not true, but I'm a Georgist so would be against the GP's targeting non-owner tax. Tax everyone according to the value of the unimproved value of their land.
I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straight to the landlord if you don't have a land value tax, and it goes to society if you do. If you are going to buy a valuable property, why do you need to pay twice[0]?
If you adjust the land tax such that it equals the accruing land value, the price of land becomes zero. The local government can then use that tax money to do all sorts of things[1]. They can also use that as a way to reduce other taxes. Get rid of sales and income taxes. The Henry George Theorem states that a land tax should be able to solely fund governmental services. After all, all taxes come out of rents, so if you tax income, then that disincentives work, so you get less work. If you tax buildings, you get less buildings. If you tax land, there's always a set amount, so there is no harmful effects.
"Taxes have no effect on what the renter pays"; by this I assume you mean "market rate is market rate regardless of cost". Sure, to a point. The tax situation of my individual property does not impact the market rate. Just like how the market rate does not change if there is a mortgage on a property, or paid-in-full.
If the entire market is faced by a new tax all at once, you will see rents rise. Costs across the board went up, and every property owner isn't going to operate at a loss.
> Tax everyone according to the value of the unimproved value of their land.
Sure. This is the exact opposite of what the parent post was suggesting, where they suggested taxing people different based on the use of the same land improvements.
No. Renters are paying for the value of the land and the improvements. If the rental price of the apartment is above that, they won't pay it and find another place. If there are no places they will go homeless. Since landlords are already charging for this value, an increase of taxes does not increase the rents.
> every property owner isn't going to operate at a loss
So they will then sell. But who would buy at current prices? The main effect of a change in tax rate is a one-time change in the market price of the property. Someone won't be under water if the property was $1. The market will find a new clearing price.
I'm sympathetic to current owners, and this is why I prefer to combine the implementation of the Land Value Tax with a Land Tax credit equal to the existing value of the land to the deed owner. This will allow everyone to be net neutral over the transition period, and would even be net positive as the risk of ones property value dropping in recessions would go away.
> If the rental price of the apartment is above that, they won't pay it and find another place. If there are no places they will go homeless. Since landlords are already charging for this value, an increase of taxes does not increase the rents.
Nope. Sorry but that's not how it works.
If the landlord has to pay 4x tax they will pass some (all) of that increase to the renter. Also, a 4x increase in tax != 4x increase in rent.
So, say the property is worth 1mil$, and you pay 1% tax. That's 10k. You charge 3k rent. The taxman makes the tax 4%, now you have to pay 40k. You decide to pass 30k to the renter. So now they pay 36k+30k rent per year. 4x tax, 2x rent.
If a landlord does this, sure. Renters find a new place. No brainer. If all landlords do this, the renters arr fucked. Finding a new place will not save you. In effect you make it way worse on the renters.
The solution to the housing crisis is not some trick involving taxes, rent caps, adding more rules etc. The solution is simple: build more housing. That's the only thing that will work and will bring down the pressure.
We also need to stop conflating affordable housing with home ownership. If you are having trouble finding a place to rent you can afford there is no way you can buy a house. I feel like the HN bubble w/ our high sky salaries is somewhat disconnected from what the average person can actually do.
"If the landlord has to pay 4x tax they will pass some (all) of that increase to the renter. Also, a 4x increase in tax != 4x increase in rent."
How much of a tax gets passed along to the consumer is modeled in an introductory macroeconomics course. It depends upon the elasticity of supply and demand. A tax falls primarily on the side of the transaction with the lower elasticity, because they are less able to adapt behavior to avoid the tax.
The reason economists like a land-value tax is because the elasticity of supply for land is effectively zero: there is a fixed amount of land, and regardless of what the tax rate is, landowners are either going to seek a return on their ownership or will sell it to someone else who'll get a better return. Elasticity of demand is pretty low too, but it's not zero: people can double up with roommates, move in with families, or become homeowners. So a tax on unimproved land ends up falling almost entirely on the landlord, with relatively little long-term impact on rents.
In practice, we're likely to see pretty severe reallocations of land and short-term price dislocations, as existing landowners find that their usage is not productive enough to pay the tax and so they need to sell to new firms who will use the land in different ways. But this is working-as-intended: the goal of an LVT is to incentivize better usage of land through high-density development of desirable parcels, individual homeownership (when density makes sense), and commercial activity.
[Pardon me if I don't have a lot of respect for economists and their crackpot theories (remember 2008? What about the current inflation generated by printing money like there is no to more?)]
There are at least two problems with your logic: if you take all the land you can make the claim about the elasticity of supply, but not all land is created equal. Location, infrastructure, usage all factor into this. Taking the example of unimproved land. If I buy a piece of the said land near a town and don't use it for anything I just pay the tax on it and effectively lose money, right? What if the city builds infra near my land that makes it effective now to develop? Should I pay more tax now? It's still unimproved. Should I pay more tax in case of a rezoning if I could potentially build a house but I don't? See how I actually created one class of land by substracting from another!
If I can buy and afford (ie have the capital) to hold land for the long term + I can see where new developments are going to take I will be incentivized to hoard land. I can also make the case that it's undeveloped and I should pay less tax.
Now there is land that just sits there when it could be used for farming. Now we are having food and housing shortages.
That's why it's a land value tax, on the unimproved value of the land. Not all land is created equal. Land that's out in the boonies, which nobody wants, is going to have a low value and hence low tax. Land in a downtown area, close to all the amenities, transit, parks, etc. - will have a high value and high tax.
To answer all your questions:
"If I buy a piece of the said land near a town and don't use it for anything I just pay the tax on it and effectively lose money, right?"
Yup. Don't do that.
"What if the city builds infra near my land that makes it effective now to develop? Should I pay more tax now?"
Yes, you should.
This is actually one of the biggest arguments for a LVT, and it has three angles. The first is moral - it's society that's building the schools/parks/transit/infra that made the land value go up, so it should be society that reaps the benefits. After all, the property owner didn't pay to build that subway stop, they just got lucky and got to free-ride off of public benefits. It makes sense that the returns for building public infrastructure go back to the public in the form of additional tax revenue, which they can use to fund maintenance and new infrastructure.
The second is the economic flip-side of this: an LVT provides an incentive to right-size the government. Without this economic feedback loop, there's no check on public-sector spending tax revenues in inefficient ways. Who cares whether a new transit stop benefits residents vs. provides a boondoggle to contractors, if the benefits to residents are all captured by landlords rather than either the residents or the government? But if further public funding is contingent upon raising rents and hence tax revenues within the city, the incentive is to spend money in ways that will actually make the city more desirable and justify those higher rents.
The third economic argument is on individual landlords and developers. An LVT discourages speculation - if you're sitting on that unimproved lot and not getting any revenue from it, you're still paying taxes and will eventually go broke. Your incentive is to sell it to a developer who will build more housing on it, so that more people can enjoy the public amenities that made the land valuable in the first place. Leading into your next question:
"Should I pay more tax in case of a rezoning if I could potentially build a house but I don't?"
Yes. That's how you ensure that land is fully utilized and people who need housing can get it.
"If I can buy and afford (ie have the capital) to hold land for the long term + I can see where new developments are going to take I will be incentivized to hoard land."
It's the opposite way around - you're disincentivized from hoarding land, because you have to pay taxes on the land that's not cash-flowing. You're incentivized to sell to the people who are actually going to build and buy those new developments.
"I can also make the case that it's undeveloped and I should pay less tax."
You can also make the case that the government should just give you money, but in both that and your example, you'd be wrong. Everybody pays the same land tax, based on the unimproved value of the land. A developer who built an 80-unit apartment complex on 2 acres might pay $200K/year; a speculator who sits on 2 acres of undeveloped land also pays $200K/year. The difference is that the developer might be pulling in $2M/year and making a profit of $1.8M/year, while the speculator is slowly going broke. That and the developer is providing housing for 80 families while the speculator is doing nothing useful.
>> "What if the city builds infra near my land that makes it effective now to develop? Should I pay more tax now?"
> Yes, you should.
Doesn't this make NIMBYism even more tempting? I've got to be against any changes near my land, because it's going to increase my taxes and push me to move. In addition to not liking change in general.
A rational economic actor would not be a NIMBY under these conditions, because the increase in land values exceeds the increased tax they would pay, and so they could always sell their property for a profit and buy another one farther away from infrastructure if they don't like it.
In reality, people are change-averse and irrational for a variety of reasons, chief among them emotional attachment. So it wouldn't surprise me if people resist development in practice. A lot of NIMBYism is already of this vein - upzoning a property usually increases its value (because it can be redeveloped into more units), but is also frequently fiercely resisted by existing residents who won't sell at any price.
Note that a system can be rational even if participants are not - capitalism is, because actors who are irrational eventually go bankrupt and are forced to work for actors who are economically rational. That doesn't stop it from being unpopular, which, again, capitalism is. Many of the political issues getting an LVT adopted stem from this.
How is the value of unimproved land determined in places where there is no nearby unimproved land to compare with. For example, how would I determine this value in lower Manhattan?
You run a regression on the value of all the improvements, then subtract that from the sale price to get the value of the unimproved land. Smooth that over the per-square-foot value of neighboring properties and you can have a pretty good estimate of for the unimproved value of the land.
If you have a hundred thousand properties to collect data on, you can get a pretty good idea of "a 3BR unit increases the value of the property this much, a 2BR unit increases it by this much, X feet in height result in this change in value, per parking space the value increases by this much". Sophisticated real-estate investors and the banks that fund them are running this calculation anyway, that's how they know which properties are good deals. Once you have a formula for this, you plug in the stats of the property in question to figure out the value of the improvements, and then the unimproved value of the land is everything left over.
> So, say the property is worth 1mil$, and you pay 1% tax. That's 10k. You charge 3k rent. The taxman makes the tax 4%, now you have to pay 40k. You decide to pass 30k to the renter. So now they pay 36k+30k rent per year. 4x tax, 2x rent.
The price of the property is based on the return that the landlord can return. This should be obvious.
If you increase the tax by 4x, the most likely result is the market value will drop from $1 million to something like $250k-500k. The renters will be paying the same value. The new owner will have the same ROI that the previous owner had. Just different buying price and lower return per rental.
Or they sell it to someone for $1 million who is happy to live in it and pay the 1% tax without renting it out. (It may decrease in value some as it's no longer attractive as a rental property--especially if it isn't setup ideally as a home to live in.)
Not only that, but if I can afford it I will now buy all the land around me to insulate myself and make sure it doesn't get developed.
Also, what people don't get is that the same people that set the tax are the people that have the land and the political and economic power. Why would they do something that goes againt their best interest? We're all cool and open to all kinds of things until it happens in out backyards.
> If you increase the tax by 4x, the most likely result is the market value will drop from $1 million to something like $250k-500k.
Not really. This assumes it must remain a rental property.
What will happen is that this $1M property which was previously a rental now becomes a ~$1M property which is owner-occupied. The owner isn't going to take a 500K-750K loss just to keep it a rental.
>No. Renters are paying for the value of the land and the improvements. If the rental price of the apartment is above that, they won't pay it and find another place.
If investors are investing in apartments for people to live in there is no problem.
If investors are investing in land and leaving it empty waiting for the local city to build valuable infrastructure around them before they sell it, that's a major problem.
A land value tax will see the former do better and the later to do much worse.
As a society we need to decide if we want to have the cake or eat the cake. If I own the land, I own the land. The city has a responsibility to consider this (and many other things) when developing infra.
There are a multitude of levers that can be pulled to deincentivize this behavior, but the tragedy is that the people who benefit from it are hand in hand with the people that make and apply the rules.
> Since landlords are already charging for this value, an increase of taxes does not increase the rents.
This seems to assume that a rental property is forever a rental property and will continue to be rented at market price no matter what.
But that's not true. It's only a rental property if the owner can rent it out and not be losing money. If the conditions change (like taxes on it) so that's it can no longer be profitable, it is taken off the rental market (most likely by selling to someone who wants to live in it).
If that's one unit, no problem, the renter can go elsewhere. In the proposal being discussed where all rental units have a 4x tax increase, this applies to all rental units at once. Rent prices go way up and most rental units disappear from the market.
Well said and interesting. Part of the problem with change is that there are always negative effects somewhere, but the answer should be to address those negative effects... not to postpone change until a mythical no-negative version is found.
probably the main negative consequence of any real estate regime change would be the destruction of incredible amounts of (paper) wealth. if you're going to reduce the market price of real estate, you're going to devalue one of the most foundational assets in the economy.
but, that's the point. you can't reduce real estate prices without reducing real estate prices.
Destruction of wealth would be bad since that would impact everyone (homeowner or not). I would opt for wealth transfer. Build more housing! Once the demand decreases the price will decrease. This also solves another fundamental problem: we pretend that there are X houses and X people that need a place to live. In reality there are more people than houses. Way more. Build more houses. Build high density housing. Stop treating housing like some sort of holy grail investment.
Landlords are price takers. Rental supply is completely fixed in the short to medium run. Landlords can’t change supply when faced with a price shock, which means that rental demand is the only factor that effects prices.a landlords goal is to rent all of their properties at the highest rent they can get, a tax hike doesn’t change that.
> Taxes have absolutely no effect on what the renter pays.
Of course taxes have an effect on the rent price.
If the property tax is very low and the market price rent for that unit is very high, you're right, the owner will charge the high price and pocket the difference.
But the reverse is obviously not true. If the property tax is quadrupled (as per OP proposal) and now the rent no longer covers the ownership costs there are only two possible outcomes: the rent goes up to cover the costs, or, if nobody is willing to pay the new higher rent the owner sells the property off to someone who wants to live in it instead of renting.
The latter is good if we want to incentivize home ownership for everyone. But it does take a former rental unit off the rental market, so if there are people hoping to rent a place, it's bad.
If I sent you a picture of a home, and I asked you what it was worth, you wouldn't be able to answer me until I first mentioned it was in the middle of SF or if it was in the middle of the Arizona desert. The majority of urban values are not the value of the improvements but the value of the land.
The value of the unimproved value of land comes from your neighbors. It comes from your city. When roads and sewers and train stations are built, the value of being close to that infrastructure is given to the existing landowner. By properly returning this value to the city that created it, it gives them funding that they can use to build more infrastructure.
Eventually with a Land Value Tax is in place, what you propose of building new cities will happen. If you treat a city like a company, we might even see investment companies funding new cities. They make an investment of an infrastructure, get a profit, then they can use those profits and give back to their shareholders - the citizens. Or they could use those profits to build another city. The existing paradigm doesn't allow proper investment.
Right now they only charge for their costs and let the landowners take their share while the renters don't see a dime. Imagine if a company was not allowed to make a profit, and could only sell for a cost. That's exactly what happens with real estate today. They let landowners sit on empty lots that appreciate while they do nothing. They incentivize minimum parking requirements and single family zoned cities.
If I sent you a picture of a vacant piece of land in the middle of New York City's best neighborhood and asked you what it was worth, could you answer me?
You wouldn't be able to until I told you what kind of home you are allowed to build. If I only allow you to build a shack or make it a park you won't be able to extract any money by renting it out and thus you wouldn't buy it at any price, even though the neighborhood should command a steep price. If on the other hand I allow you to build a sky scraper of n storeys high, you will now be able to given other information on rents in the area that people are willing to pay.
What is interesting is that the dynamic actually flips once there is adequate zoning. Take a look at this[0] video on Tokyo zoning and how he talks about living in an industrial zoned area. He talks about how it's cheaper to do so, and if you want to move to a single family zoned area, it's actually more expensive!
Under the current system, landowners want their own land to be zoned as high as possible, while they want everyone else's land to be zoned as low as possible. Since 1 < everyone else, when people vote on zoning it is zoned as low as possible. With a LVT the system flips, everyone wants their land to be zoned as low as they desire, and they want everyone else's land to be zoned as high as possible. They would only accept land zoned restrictively if those people would pay higher taxes for the exclusive use of it.
In either system living in an industrial zone (or on the edge of it) will cost less as it is less desirable to live there (noise, air pollution, smells, further from grocery store, no parks etc) and nobody in their right mind would pay high rent there. Nothing to do with land value taxes.
Zoning changes what people will build there (we assumed it was even legal to have housing in an industrial zone there). If you rezone a residential area industrial and make it illegal to have housing there guess what will happen (assuming there's demand for industrially zoned areas)
Your argument is that places that are zoned lower are worth less, and places that are zoned higher are worth more. That's only true in the existing paradigm.
What would be true in the new paradigm is that places would only allowed to be zoned lower if people are willing to pay for that exclusive access. It's not just industrial areas, all higher zoned areas would be cheaper than lower zoned areas.
Land Value Tax incentivizes proper zoning, as the more scarce the housing is, the higher the tax. Proper zoning(like Tokyo has without a land value tax) flips the structure.
In fact the residential zoned houses at the edge of the industrial zone are worth less potentially than the industrial piece of land on that edge. (maybe not, because residential neighbors will get complainy ;))
I am saying that I don't see how a land value tax does what you propose. I had no idea what that even was until I read these posts and looked it up.
I don't see what you mean by zoned "lower" and "higher" actually. I can zone the land for another New York City in the middle of flyover country and that doesn't mean people will come just like that. The price this will command will be super low because there's nothing there (this is actually part of your land value tax system's reasoning). If I can find someone interested at all.
If instead I zone it agricultural I can sell it depending on vicinity to a small town, how flat it is (mountain side? No thank you for big agri, only small homesteaders will pay you a little at all). Flat and great soil near other agri infrastructure? Now we are talking pricy!
1. The inherit value of the land - rivers, gold or oil being key examples.
2. The nearby infrastructure
3. The zoning policies
4. The community and commercial services
If there is land zoned for another NYC, with the infrastructure of NYC, including the excellent port access, it would very quickly become worth what NYC is worth as people showed up. We see this with the pop-up cities in China after they reach completion. Though no doubt some will stay in ghost status forever.
It is up to the local government to do what they can to make the most of their land, just as much as it is up to the landowner of an individual parcel to do what they can to make the most of their land. The city is incentivized to zone the area so that it is valued highest. If they do a poor job of that, that is on them.
I completely agree with that last post's reasoning for why a pop-up city might stay empty or become another New York.
I don't see why it needs a land value tax and having one causes anything. All the things you are putting into your land value calculation cause that. Not the tax.
Now don't get me wrong. I'd love me a land value tax as it would probably mean I'd pay less for where I live. But that's it so far. Color me unconvinced otherwise.
Yep, this is a very natural way to think and why Georgist policies have not been enacted.
I'm a programmer, as most are on this website. The thing that mostly interests me is when incremental changes don't lead to global maximums. As are most who study AI and say, Agile development. When is it that prisoner's dilemmas occur?
I pay attention to things like programmers who fix the bug they introduced fix the bug at a deeper level[0], I pay attention to Simple Made Easy[1], I pay attention to the systemic effects[2].
I point out that the Land Value Tax is so simple and yet fixes so many things. It fixes an inherit problem with society at a deep level. You need to pay attention to the incentives and how they mold the eventual outcomes. Land value taxation leads to correctly aligned incentives.
Currently the closest example is Singapore[0], but they have much more central control than what a Georgist would find ideal. 99 year leases are far to long, and shorter leases would have much more beneficial effects.
Detroit was an example of a city that massively expanded[1] because of it, but eventually lost it's way.
Harrison, PA[2] is an example of a city that 'recently' used a revenue neutral split-rate system to keep from going bankrupt.
4x higher tax, not 4x total cost. First housing prices would crash, so rental prices would also drop. And they wouldn't go up 1:1 with tax increases. They would go up by some percentage which is fine. It should be a little more expensive month-to-month to rent vs. own. Renting should still be available, but a lower proportion of housing should be rentals.
“It should be more expensive month to month to rent vs own”
It already is. There are many tax incentives geared towards making owning cheaper. If owning was t already subsidized do you really think anyone would be handing out 4% 30-yr fixed rate mortgages like candy? Removing these would also make housing prices crash, which would lower both purchase cost AND rent, yet I don’t see many people pushing that idea forward (because it also makes it almost impossible for most people to buy)
The “I think people should own property, so I’m okay making it more expensive for people who don’t” is bullshit.
> a lower portion of housing should be rentals
Without numbers (the baseline you’re considering as true, and the number that is “acceptable”) this is just trying to impose a specific viewpoint without any data to back it up.
In Canada we don’t have 30 year fixed mortgages, the longest I have heard of anyone getting is 7 years and that’s me. Despite not having cost certainty in the long term we have the same property market issues as every other desirable place to live.
Those mortgages are still subsidized though. A 5-yr term before it adjusts, with upward protections on rate increases is still not what a "free market" would provide. These are government sponsored (in some way) programs to increse demand for homeownership without a corresponding investment in increasing supply.
Housing being used as a bet on appreciation, which fuels buying, which causes appreciation is best solved by building more housing. The way to make housing cheaper (or not be a speculation vehicle) is to build more housing. Full stop.
The loans are fairly close to an ARM in the US, and they're amortized on (typically) 25yr. They also tend to have prepayment penalties, which the US does not have for residential mortgages anymore.
I was commenting on monthly cost. Upfront cost for owning is much higher. Compare a mortgage down payment to a rental deposit.
How much more expensive proportionally matters; it should be up for discussion democratically.
To own property is to accept responsibility for the land, architecture, and legal liability. If you abdicate that responsibility to another party you should pay for a service; and the bar should be high for the standards of that service.
When it comes to realtor prices, you're absolutely correct. It's ludicrous that that effective monopoly has been able to persist.
There are other costs and risk though. Many places that have transfer taxes, plus inspection costs, appraisal costs, title insurance costs, and loan origination costs.
You also have to accomodate the risk or some major issue in the 1-2 years you're living there. "Saving some money over rent" doesn't necessarily justify the risk of having to cover costs for HVAC/electrical/plumbing work that has to be done.
If you have a bunch of properties with no stable ownership, where the buck will just be passed to the next person every couple of years, properties will fall into disrepair (moreso than they do now), and temporary bandaid fixes will be (more) or the norm.
Ie, I don't believe short-term property ownership is good for the property long-term.
> transfer taxes, plus inspection costs, appraisal costs, title insurance costs, and loan origination costs
Those other costs should be driven to a much lower floor as well. The majority could be automated, and likely are in the process of being (e.g. loan origination costs).
Essentially the only fundamental cost should be inspection: which is ultimately the buyer (and their lender) offloading systems assessment onto a third party. Who, if you read the fine print for inspectors and case law, is generally not legally liable if they miss something.
> some major issue
The solution to property maintenance seems surmountable. Require it for dense, neighbor-impacting scenarios (HOA, etc), and fund it via loans against the underlying asset (HELOC or home equity loans).
I'm sympathetic to your point, but I don't think it takes primacy over enabling individuals to own their own home.
This falls flat on its head when you consider that this would force a bunch of people in becoming small time landlords, with the inability to invest in their skills and competency by scaling up to multiple properties. Barely anyone would be interested in running multi-family real estate and they would migrate to commercial real estate. What would remain for residential is low density condos and shitty small time landlords with variable understanding of the expectations of their role, and variable notions of what's legal and what's harassment. Anything high density is too expensive (in time and capital) to do as a "coop" style endeavor and this means no high density residential would occur unless its luxury and expensive rent, to make up for the substantially higher taxes.
I'm sorry but you can't make more housing appear by simply raising the barrier of entry and throwing sticks in $INSERT_EVIL_GROUP's front bicycle wheel. Ultimately, things need to be cheaper and easier to build, and this will come at the cost of some people's freedoms (expropriating their land for redevelopment, displacing people for redevelopment, preventing bike shedding about neighbors' preferences).
It's easy to take a dump on so called rent-seeking landlords. But picture yourself becoming a landlord; imagine you're this newly minted, high spirited multi-family property owner and you want to do good for your neighborhood without becoming a charity and ruining yourself. Then look at what your options would be. In many US urban areas, there's already a lot of regulation in place that would drive you mad in your inability to make things better for your tenants and yourself in a sustainable manner. The rules literally push you into what you're seeing in the rental market (crappy apartments with high rent).
But the underlying point here (I think) is that people owning one home is higher priority than owning multiple homes. I’m not contradicting either of you, but it feels like you responded to a different question.
I don't disagree (favoring personal ownership over multiple ownership), but then I'm not sure how this works out. Single-family homes everywhere? It's causing housing problems due to sky rocketing prices due to low density. So I think it's accepted that we need multi-family homes, to gain higher density housing. Ultimately skyscrapers, but in most case a few units per building. In most jurisdiction, the cost of developing a unit goes up the less dense the project is, so economical units sort of by definition mean packing more units per project.
It works out if high density housing is built and then all sold as condos. People could pool together and buy land as a coop-style group, and then develop it as high density housing. But then its facing organizational hurdles (coop-style orgs don't have the best outcomes) and the whole thing need to survive years long timelines (to design, permit and build) while staying focused to avoid cost avalanches. Good luck!
I don't have an agenda in this (unlike other commenters suggested) and would love to discover a better way of doing all this. I think the current system is flawed but I don't hear convincing alternatives. And what's there right now is better than a feudal system, that's for sure... Hey, back then, Lords were owner occupiers! How has that worked out for the peasants?
I live in Norway, and it seems to work just fine. The density isn't all that high compared to, say, NYC, but anyways there definitely are plenty of multi-unit apartment building, which suffer from the same organizational problems, that manage to survive fine as individually owned units. I am not qualified to speak too much on this, but anyways it's certainly a solved problem, and there should be plenty of templates from other places to build off of.
Are they also built and developed as a group, or is it via a main developer who buys land, builds the building and then sells the individual units? If that's so, the same sometimes exists here, but because regulations, zoning and permitting is so limiting, lengthy and onerous, the units built end up being prohibitive and quite limited in numbers. Which really doesn't help much solve the problem.
Hence why I think the issue isn't about taxing more for stuff like "not owner occupied", but more about the opposite: make it faster and easier and cheaper to build high density residences. Then prices will fall and the affordable market will be served by smaller developers.
You're funny, I have no agenda. I'm a new owner of a triplex, always been a renter before, and we occupy one of the units. I'm just learning this as I go, but the economical dynamics are playing out in front of my eyes and I'm confused at the conflicting policies from local governments. Give me a chance and perhaps believe me if I say I just have honest and good intentions, and this is based on what I'm seeing as I explore this path? Or you can dehumanize me and pretend I'm some villain.
I have biases of course, but I don’t see what my agenda would be here? What is it that I’m plotting or trying to influence? Tell me what my agenda appears to be?
>but everyone who owns property would be against it because they don't want to see their net-worth drop.
They would be against it because it would mean they can never move, since they are now underwater on their mortgages.
Most people who only own one property don’t care about its impact on their net worth unless they are planning on downsizing, since they can’t just liquidate the house to purchase other things as they can with other assets.
It depends on where they want to move. For national policies prices should drop nation wide, ergo people would still be able to move inside the same country (probably 99% of relocations).
And if they don't sell, they wouldn't care much. Yeah, annoying, but as long as you pay the installments, not much changes in practice.
>For national policies prices should drop nation wide, ergo people would still be able to move inside the same country
No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment.
If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my remaining principal, and use the remaining $300k towards my next $1M house. (If housing prices appreciated by 20%, I have $300k in equity and $200k in profit to put towards another $1.2M house.)
Now suppose the housing market crashes by 50% and my house is worth $500k. If I sell my house for $500k, I still owe $200k of principal to the bank. I don’t have any leftover money to go towards another $500k house, or even a $0 house; instead, I have $200k in debt that buys me absolutely nothing.
Are there any financial products to help with this situation; ie allowing you to take out an $800k loan on the new house? Presumably this wouldn’t be any riskier for the bank than simply continuing to own the old underwater loan. Possibly less risky since the homeowner, living where they wanted to live, would have less incentive to simply walk away.
As others have said, this is an absolutely terrible idea and highly destructive to renters. There is simply no reason to boogeyman real estate investors so long as they are renting out the property. Renting is no less valid a form of housing than ownership and policies like you describe are already in place in many jurisdictions such as Ontario and it is already as we speak harming renters.
For all the people saying "it doesn't matter how much you tax landlords, the market rate is what the renters are willing to pay", don't be silly. Just take your argument to the extreme then. Why stop at 4x, why not charge 10x, 100x, or 1000x? Obviously as you raise taxes on landlording, the number and/or quality of rental units will go down and/or the prices will go up.
I think ownership is better because people value securing the shelter where they sleep. Renting is worse because you can't make decisions about how to improve land and architecture. You are only permitted to be there under a limited contractual agreement vs. being able to stay put until you decide to sell.
You are welcome to think that. But it is an opinion, and not one shared by everyone. Both are equally valid options; in my opinion. I've been in times of my life where owning was better for me. I've been in times of my life where renting was better for me. At the times I was renting, I was very grateful for the landlord I had at the time (mostly; I've had a small number of landlords I did not like); they take on the risk and responsibility that wasn't something I wanted to deal with at the time.
People tend to talk about two different things when they say renting: control and affordability.
Anti-renting people emphasize the control inherent in the relationship. Landlord sets the rules, including price; tenant required to abide. (Attempts to address the market by regulation here have had their share of severe side effects)
Pro-renting people emphasize the affordability and ability to offer housing to those without access to the capital to purchase, as well as the shift of asset risk (physical and market) from the renter to landlord.
The central evil seems not the existence of renting, but the ability of a landlord to capture underlying asset appreciation and charge rent.
Coupled with areas of constrained supply, this leads to landlords getting richer and renters... not. Which seems unfair.
Many people expressly do not value the things you claim, you are projecting your preferences on to people at large. Renting transfers many costs, risks, and hassles to the landlord, which is a desirable arrangement for a significant percentage of people. It is not uncommon for people to strongly prefer renting even when they can easily afford to own a place to live because it is a better use of their time and money.
> Renting transfers many costs, risks, and hassles to the landlord, which is a desirable arrangement for a significant percentage of people.
Agreed that it transfers risks and hassles to the landlord. It doesn't transfer any costs though, as they'll be bundled in the rent price.
Renting is like using AWS. You pay for the convenience of someone else taking care of the hardware, but they're making a profit from providing that service.
Instead of supposedly basing rental figures on median home values, which is highly non-objective, just make the public tax data more transparent. When people can see the relationship between taxes and prices, they can ask the right questions and make their own decisions– through policy changes in their locale if necessary.
What works in small town USA won't necessarily make sense in a Big 6, unless it affects huge national investors like Blackrock but not your small landlords or medium multi-family dwelling manager/owners.
Also, "tax them? might as well kill them!" is the type of nefariously silly exaggeration that is used to shut down discussions. Yours doesn't go quite that far, and I get the point of your example but don't find that limits of infinity are generally helpful.
Yeah, Vancouver BC actually is creating policies like taxing unoccupied housing at a higher rate, instituting a tax on the sale of homes to foreign buyers, and further regulations around real estate "commoditization" and these are effective tools. I don't know why people say it's a difficult problem. Cities are actually just looking the other way.
I find that a lot of the criticisms of taxation and better housing policy are boiled down to the bad faith, we can't try anything because it's too complicated, but really they mean this is going to cause me or my rich friends problems so don't do it.
There is a 10% tax when buying a house for renting (ie each house after the first one) in the Netherlands. It did stop some people from thinking of buying a house (like my wife) but there is still a huge shortage (and speculation/investment) so it didn't solve the problem. OTOH comparable per meter prices are way lower than London or Frankfurt
How come rents for high-end real estate in Paris are vastly higher than in London? Sales prices on the other hand are vastly lower.
Are the prices so high because people in Paris are willing to pay much higher rents more people in London? Or are they so high because renting in Paris is super risky for the landlord due to aggressive tenant protections?
So to be clear, are rents in Paris vastly higher in general, or just for "high-end real estate"? If just the latter, then great, sounds like the policies are working.
Oh, rents in Paris are sky high regardless. Renting is also super difficult because landlords are terrified of tenants.
It’s just easier to compare the high-end of the market because offering is similar and concentrated in central areas, whereas lower-end real estate is scattered across lots of very different areas.
It's whatever maximum renters are willing to pay, combined with whatever minimum property owners are willing to accept and the availability of alternatives.
Applying a cost increase across the board, in a way where everyone knows it was across the board, will reset the market floor. If California (just as an example) can out and said "There will be a flat $200/month tax on all home rentals" you can be damn sure that every available property would align to +$200 over the course of a year or two.
The maximum that renters are willing to pay is a function of the availability of cheaper alternatives, and a tax on rental units increases rents across the board and removes cheaper alternatives, increasing the amount that people are willing to pay. This is literal Econ 101, supply and demand curve stuff.
> That would be true if rent was a percentage on top of cost. But it is not, it is whatever maximum renters are willing to pay.
Not exactly, rent price is either the max renters are willing to pay, or, a small percentage on top of ownership costs, whichever is higher.
In the case of the latter, if nobody shows up willing to pay the higher price then the rental unit is removed from the market. It won't make the price go down because the owner won't rent it out at a loss.
The main way if you look at it is investors willing to run on empty - buying houses and then failing to rent them at the amounts they're trying to get, where they sit empty for some time before the investor goes belly up.
So in this case the investor is taking a few hundred thousand dollar loss so the building can then be sold for a loss and rented at a price that makes market rent make sense?
I feel restrictive zoning is a much bigger issue than empty unsustainable houses.
Honestly it would make owning a single family home more expensive and a rental cheaper. Since the rental is closer to maximizing the land's utility. Georgists never mention this. You'd also eliminate things like rent control and need to standardize zoning.
It's counter-intuitive but the majority of housing has to be non-owner-occupied for prices to fall.
>making property taxes substantially higher for non-owner-occupied property.
>but everyone who owns property would be against it because they don't want to see their assets drop in value.
After the initial dip, prices will rise again because residents will vote out every city government that tries to implement zoning that doesn't increase the value of their property.
Don't forget that you are living in a democracy. If the tenants can make the rules they don't have to repeat history. However, as the zoning laws show, they are short-sighted, and most likely will repeat history.
Creating such huge distortions in a market always results in unintended consequences, usually counterproductive to the goal of them. For example, rent control makes for less units available to rent.
You don't even have to removal all of them; just make it so you can't use all of them.
You're depreciating your asset? You don't get to depreciate, and deduct repair/maintenance costs.
You're depreciating? You don't get to 1031 the asset as well (and avoid recapture).
Regarding government back loans, I think you're right, ish. It's very weird that it's a thing at all, and that you can use subsidized loans for up to 4 unit properties. BUT I do believe this availability has been an on-ramp to a career in real estate, and a wealth building mechanism, for many, many previously-disadvantaged people. It's definitely been bastardized into something else over the last decade.
That aside though, individuals are limited to a maximum of 10 government-backed morgages, and it becomes much more difficult to qualify for new ones after 4. While yes, that sounds like a lot, large real estate companies that are managing 10s of thousands of units are not utilizing these programs, and eliminating them would serve only to limit the "mom and pop landlords" that, frankly, tend to offer a lot more flexibility for tenants than large management companies do.
> I would start by making property taxes substantially higher for non-owner-occupied property.
But that in turn means rents would go up substantially since the owner of that unit is now paying a lot more taxes on it because they rent it out instead of living in it themselves.
If the desired goal is to incentivize everyone to own their home and get rid of rentals mostly, that may work. But if there are people who want to rent affordably, it doesn't.
So it will be more economical for me to convert my apartment building to a single family home? OK. Sounds like the ideal neolib hellscape, single family home suburbia as far as the eye can see.
It is already difficult to make money in real estate. Your proposal would reduce housing stock.
> But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure.
Including those on minimum wage? Including secondary education students who have no income? Including (international/visiting) folks on a (consulting) contract that may not want to settle in the location?
There are many situations in which rental housing is the solution for people.
> They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident.
"Increasing the value of real estate" is not the only metric to judge things by. Proving a valuable service to the public is another.
> There are many situations in which rental housing is the solution for people.
Then we can address that via rental vouchers to offset the taxes.
Real estate has the same problem as healthcare, in that it's an enormously complicated system, where any adjustment always has negative outcomes.
However, I agree with parent that the central and most critical failing is -- we are not incentivizing owner-occupied home construction at an accessible price point.
And a critical component of that is decoupling {build and sell to commercial landlord} and {build and sell to occupying owner}. The former will always be able to deploy more capital, and thus drive up the asset price to levels the latter can't afford.
And just to make it explicit: this is independent of density. You can have dense development that is still owner occupied (individual units).
If you are residing on your property rather than subdividing it and making it available up people who can't afford to buy you should pay way higher taxes, maybe 4x. Rental availability would explode and that would be the point.
I think that also highlights that there's an investment class outside of the reach of normal citizens.
If people can't pay to own property because it's easier for regulators and mega-owners to only have to deal with bulk-owners, then there's not a human-class. One cause is not enough resources in local government. Shrinking the abilities of the public servants until offices become autocratic, oligarchic hellholes is a long-favored strategy in consolidating authority.
We're in an era that has to balance a lot of novel challenges, but they have seemed to tip in the favor of the few over the many for the past generation or two.
Stuff like this always has unintended consequences. For example, if I inherit a house that I do not want to use as a primary residence and do not want to hold on to, I’d still get fucked over for 4x property taxes during the time it takes me to prepare the house for sale. You can’t write the rules with exceptions for every situation where you’d cause somebody unfair pain, because you can’t anticipate every such situation.
You wouldn't be fucked over, you just got a house for nothing and then you have to pay taxes on it because you weren't living in it. I don't see why that would warrant an exception.
I like this idea but I think it should apply to rental income and not property tax, i.e. tax any income from rent higher. I know a few people that own multiple homes but have kids or friends of family staying there.
Tax land value appreciation, that is the rent seeking part of the equation. You want to incentivize developers to create more units, you want to discourage people buying units hoping to bank on appreciation.
"Some people prefer to be homeless on the street versus getting [...] a roof over their head that they don't like"
Do you have a reference to back up this statement?
Have you ever spoken to any homeless people and asked them what they think about this?
Clearly there are some limits in which your statement holds; I would prefer to be homeless in a city in the UK than held in a forced labour camp with housing for example. I think once you include some basic minimum requirements very few people would prefer to be homeless.
I was also put off by the phrase "...roof over their head that they don't like", but the statement can be steelman'd into something I agree with and think is correct. Empirically homeless shelters operating below capacity and cheap housing in far off locations exist but we still see homeless people in tents under bridges and elsewhere.
I've seen numerous reports where homeless people say they don't use shelters because they're unsafe or the shelter's rules are too restrictive (eg "The shelter where I stayed briefly, you had to be in line. They technically opened at 7:00, but you had to be in line at 4:30 in the afternoon to be able to get your bed back..." [0]). I guess I don't know what homeless people would choose if they were offered a home in a far off town or something, but AFAIK, the only general options presented to homeless people are shelters, homelessness, and maybe social services in cities willing to work on the problem.
I have spoken to more than a couple homeless people that feel this way. Obviously “roof over their head they don’t like” is the big qualifier here. Many of the homeless I spoke to refused shelters because their drugs were stolen/confiscated. If you could get them into an apartment where no one bothered them they’d take it, but that’s not an option.
What is required of the homeless to qualify? Often there are big strings attached like you have to be sober or at least be working towards that. They often don't want to help addicts who don't want to quit using.
Right there will never be something good enough. They want an amazing hotel they can shoot up and congregate and party in with all of their druggie friends.
It’s totally reasonable to expect a bare minimum of compliance in order to get taxpayer funded housing. I don’t know if you have friends or family who are heroin addicts but I can promise you they are not pleasant people to be around, especially when they start stealing to fund their habit.
Counterpoint: do you think it’s wrong to let the sick stay sick and not help them? Addiction is a sickness and often requires a lot of help addicts can not themselves do to quit. You can’t expect someone who isn’t able to help themselves help themselves. This is the crux of the issue.
Also, people in half way houses or assisted living absolutely should be sober so they don’t cause anyone else in the facility to regress, but it is a hard problem. These people often need intense rehabilitation and these programs are neither quick or cheap. Someone has to run the program and success is never guaranteed. Mandatory government funded rehab would be AMAZING, but imagine how many people would crow about their “freedom” to shoot up meth is being infringed if that happened at the federal level.
This is a very hard problem and there aren’t easy solutions. My opinion changed a bit after I married a girl with a masters in social work. This is very draining heavy emotional capital work.
Agreed we need to help the sick, I didn't make that clear enough. I was trying to understand if the previous poster thought it was wrong to say "Here is housing and a program. You can't have the housing without the program."
After working with foster and adoption of two preteens from an unhealthy home situation my opinions have changed a bit as well. Compassion is hard - it should push us to do. Now if I can just work on being less blunt ...
Yet isn't this more due to control and oversight versus desire or location? Perhaps the options that are presented to them as "free" contain other entanglements that tips the scales towards camping?
It’s common for homeless in the US to not want to stay at shelters at least due to not agreeing with the requirements (being sober) or they think they’re dirty and might have bed bugs.
I’ve always tried to get food for betters outside of grocery stores or pharmacies whenever they’re asking for money.
In Russia there is depressing Vorkuta city, where prices for flats are literally near zero. :-)
It's clear indicator that most people prefer to be homeless than own 2 bedroom flat in Vorkuta :-)))
My bullshit detector went off right here. Housing isn't complicated. It's only complicated by investment money being involved. Having a roof over ones head is a basic human right.
In Australia, the market is so hot, very few young people can afford anything, if you're living in a nice place, you can easily be kicked out after your rent doubles. I know of good, professional people who migrated to Australia and went back to their home country of this behavior.
It's complicated because we've made it complicated. I also think it's why we're living in a world with a lot less creativity. Who can make nice things when all we're doing is racing to the bottom to make ends meet ?
>We are headed for a massive population crash almost everywhere
We're not. Many countries predict stable populations at worst for several decades still. Some continue to predict population growths. Politicians are all too eager to use immigration as a way to band-aid low birthrates, and many are already subsidizing children more.
Your last line gives it away too. Japan is primarily crashing in the countryside. Tokyo is lagging behind by almost two decades, only just starting to drop. The high housing prices globally are primarily in urban and suburban areas. Many of those areas are still growing tremendously at the expense of rural areas. People don't want to live in rural areas because there are no jobs. Even if there was a crash, it hardly matters if populations continue to rise or remain stable in areas where housing is getting too expensive for the jobs provided.
One thing I find interesting though is that at least in Australia, it's speculated that a lot of the property pressure is from foreign investment, especially from China.
So if China's population starts to crash or their economy goes bad at some stage what effect will this then have on the Australian market (for example)?
I'm guessing not much because the inflationary property price damage has been done. It's a curious thought.
Also in the case for "steady populations with little growth", wouldn't this mean that property prices will also stabilize and eventually drop? This stabilized property market will be interesting because people won't be able to make the huge capital gains and returns they were used too? A lot of property investors are also probably pretty heavily indebted and so any type of economic trouble might put many in a precarious position.
Too many variables to say. In theory, you would say a stable population all other things equal would keep the housing prices equal (or drop a little initially since predictions aren't green anymore). In practice, even without foreign money, there are still many ways with which the value of housing can go up. And as long as the majority of voters want housing to go up, it likely will.
Practice can be seen by the many cultural shifts we had which had zero to do with population growth / housing shortages, but still increased prices tremendously. Higher loans, longer mortgages and lower interest rates, for one. Increased dual incomes is another.
However, unless there is another population boom on the horizon (which really seems unlikely at present). Property speculators must have their doubts.
This combined with climate change and it's ability to change the landscape (literally) makes it getting harder to predict where people might actually want to live.
For example, I visited Scottsdale, Arizona not long ago which is going through it's own mini-boom at the moment. Will that be a nice place to live in ten years with rising temps? One would have to ask the question? Would people still pay huge money to live in Tahoe with poor snow quality and lots of bush fires in summer?
What I saw is fewer kids in almost all countries. The urbanisation push this even further as adult living in dense cities have even fewer kids.
Yes, it will take some time, but the aging of population is already there. And old people consume very little.
I agree that the speculative nature of housing is a problem, from what I see it is caused mainly by the devaluation of currencies.
You by a house at 100k$ with 90k$ of mortgage, your government print money making your mortgage worth less, bam you got a 200k$ house with 90k$ mortgage. Your 10k$ gave you 110k$ While your currency is worth half of its previous value.
It was the easiest way to get rich for a long time, it work as long as the currency keep debasing (you can count on that) and the housing market is good.
I, and most people, don't have $10,000 to spend, and even that wouldn't be nearly enough to build a house, let alone buy a cheap lot of land, let alone install a septic system and a well, post for gas and maintenance for my car, all while incurring the time cost of living farther from work.
> But you need someone else to provide your ’basic human right’
For many people, this isn't true.
A lot of people would easily be able to afford to buy or build in a nicer area if there wasn't so much competition for land or housing due to investment. I think if there was much much higher cost of non-owner-occupied housing, you'd just see people move into nicer areas with less financial pressure to do so. This sounds like a nice thing.
Interesting new problem Japan is facing is that even in the areas where they're giving houses away, they're starting to have trouble servicing the surrounding infrastructure, roads etc which I guess is from not enough taxes, administration and construction workers left to keep these areas a float.
Populations are expected to keep rising until 2100 at least. India and China may see a big drop but everywhere else will continue to grow albeit slower than before
> It's complicated because we've made it complicated.
And thus, it is complicated. Also worth taking into consideration: we may not be able to do otherwise. Currently, for sure (hence the commonality of conversations on this topic), and perhaps never if we don't/can't change the way we think.
Some of us can change how we think, but big corporations and investment firms (and banks with investment divisions) are not going to adopt our way of thinking.
They are thinking of what to do with their piles of cash, and how to make their piles grow. They are absolutely not concerned about the wellbeing of individuals outside their own organizations/families.
This is basically the housing ownership version of the monopoly concept (and I don't specifically mean the game). There are, or were, laws to prevent companies from becoming monopolies. People (and governments) realized that once a company grows and consumes or blocks out all its competition, things eventually get very bad for the consumers/public.
There seem to be quite a few people on HN in the "regulation is bad" camp, but there are a lot of regulations such as the ones related to prevention of monopolies which are critically important. And now we see that there need to be similar regulations to prevent the equivalent in housing.
For this to naturally correct itself (and laws to become demanded by the people and written by the government) will take decades and likely some level of revolt. Maybe it will happen sooner than I think. It will be ironic if the camp that has been promoting gun ownership while simultaneously screwing its supporters becomes subject to forceful demands of its angry former followers. (Actually we see this right now in US politics when someone from "the good team" finally speaks out loud negatively about their great leader. The "good team" followers become immediately vicious and threatening. Perhaps once enough of those armed good old boys finally put their puzzles together and realize they've been fooled on a grand scale, we'll start to see some change.)
> Some of us can change how we think, but big corporations and investment firms (and banks with investment divisions) are not going to adopt our way of thinking.
I wonder: can you overcome this way of thinking?
> People (and governments) realized that once a company grows and consumes or blocks out all its competition, things eventually get very bad for the consumers/public.
Realized to some degree.
> And now we see that there need to be similar regulations to prevent the equivalent in housing.
Some see this, some see other things (sometimes the opposite). Whose visions are correct?
> It will be ironic if the camp that has been promoting gun ownership while simultaneously screwing its supporters becomes subject to forceful demands of its angry former followers.
It would be even more ironic if all followers began to question the stories their leaders tell them, and the stories they tell themselves.
> Perhaps once enough of those armed good old boys finally put their puzzles together and realize they've been fooled on a grand scale, we'll start to see some change.
Surely, to some degree. But even more powerful would be if all people could do this simultaneously...or even a critical mass of people, especially if they managed to do it according to a non-partisan methodology. Perhaps someone will create something like that some day. Or, perhaps not, and we will remain at this local optimum indefinitely, content in the knowledge that it is all someone else's fault.
"We" as evolved social animals have pretty universally come to the agreement that humans should have a few basic necessities, such as food, water, shelter, (and less agreed but equally important) personal safety.
I could ask if you continuing to live is your human right.
I'm not sure there's any absolute decree that everyone can agree on that says you deserve to live. However, we evolved people tend to assume that every human deserves to continue living (at least until our differences become too great, at which time we sometimes just kill each other).
Therefore, your demand for proof that having shelter is a human right is bunk.
OK, and here I was thinking that human rights were premised on a philosophical basis. Thank you for clarifying that they are merely a political matter.
Just because he said it in this way doesn't mean you can't think for yourself and realize that it also has a philosophical basis. You are a human. You are capable of your own independent thoughts and conclusions which are as valid as other people's. If you can yourself find ethical reasons to give humans a place to live by default, and I'm sure you can, (because suffering = bad, no home = suffering, true for every human) you just created a philosophical reason for why it might be valid to consider it a human right.
Among those the UN counts as members are the Taliban (by way of Afghanistan) and Putin’s Russia, which makes it arguable that the UN as a body is in a deciding position on fundamental human rights, let alone a coherent position.
How does one 'prove' that other than by appealing to a list of 'human rights', upon which you and the other commenter surely disagree? There is no fundamental philosophical principle beneath human rights in which it will rigorously generate a list of rights. It's a null question, and I suspect you know that.
The stellman of 'housing is a human right' is 'everyone should have adequate shelter', and that's a far more productive starting point. The 'right' angle adds nothing.
I agree! That's why I take issue with calling X or Y human rights. It misleads the average person person into thinking that there is actually is such a thing as a human right, rather than the term just meaning "thing we really like".
With that being said, I don't think it's unreasonable to expect that assertions about human rights by organizations such as the UN be internally consistent. The UN claims that human rights are universal. Human rights such as to food, shelter, medicine, etc. fail this universality. To provide them requires taking resources from others and reallocating them. Therefore, they are conditional upon the ability of a society to reallocate these resources. Therefore, they cannot be human rights, and assertions to the contrary should be identified as being politically motivated.
I don't think universality is a prerequisite for validity
For that matter I guess I would disagree with the UN. Someone who forfeits their basic human rights, for example, would not be entitled to them. So in that sense they're not universal.
That logic doesn't follow. There are plenty of things that, in some cases, lack of them causes death; but are not human rights. There are people that cannot survive without a liver transplant; not everyone gets a liver transplant; some people die because they cannot get a liver transplant. A live transplant is not a basic human right.
There are many things that, as a society, we should do our best to make sure everyone has access to; housing, food, medical care, etc. The more people that have access to them, the better off we, as a society, are. Whether or not those things are a "basic human right" is debatable; but they fact that you need them to survive doesn't define them as such.
This is a normative fallacy. If people die because they didn't get healthcare, that doesn't mean they didn't deserve healthcare. I'd argue that everyone who needs a liver (which is not the same as a liver transplant) has the right to one.
> but they fact that you need them to survive doesn't define them as such
Isn't that basically saying that surviving needn't be in a definition of 'human right'?
> Isn't that basically saying that surviving needn't be in a definition of 'human right'?
Yes, because "surviving" isn't a human right. It's something we, as a society, should do our best to make sure everyone is able to do, but that's not the same as saying it's a human right. If it was, then "not having a heart attack" would be a human right, which is clearly ridiculous.
Not so clear to me. If some company flooded a river with heart attack inducing chemicals, would you say that's fine because not having heart attacks isn't a human right?
I'll put it to you like this. If you believe there is a human right, then someone can't pursue it if they're dead. So if, in order to pursue that right, they need to pursue being alive, the pursuit of being alive falls within that right, no?
It's amazing how many people in government globally refuse to understand this. The UK government has just been talking about inheritable 50 year mortgages. No one wants to build more housing.
I think it might help people understand to put it in terms like this: there are 100 housing units out there and 150 people. How do we solve the problem?
Yeah. You just have to build more. Simple as that.
I was talking to a NIMBY and converted her to YIMBY by relating to her that in Santiago anybody builds whatever the fuck wherever the fuck, zoning be damned basically, and that leads to rent being like $150 a month. For real, you get what you get in SF for $4000 a month for ah...$400 a month in Santiago. And the minimum is very low. Sometimes $100.
The NIMBYs are usually the ones owning the property and possibly charging $4k/month. They might say publicly how they want affordable housing but behind the scenes they’ll always vote against it.
Having lived in a zoning-free US city (Houston), I can't say that I'm a fan of "build wherever you want". It leads to large disorganized, unwalkable and inaccessible areas that just don't make sense from an infrastructure standpoint.
People complain about how bad zoning is, and I agree that municipalities can get carried away with it, but most people highly underestimate the impact zoning has had on their lives and take even moderately executed city planning for granted.
I know that’s not the case in Chile for any of the central neighborhoods (Yungay, Brazil, Lastarria, Franklin, etc…) which I think are probably close to SF in terms of size. 325k CLP is about the lower end for a nice, small 2BR. You can get more rooms but the square footage is smaller. Las Condes/Vitacura goes up from there.
You can buy a nice 2BR apartment for $175k USD though.
Haha yeah Santiago de Chile. Hey I bet you can get a great deal in Santiago de Cuba, way under $100, and it's notable enough people say "which Santiago" like you just did. Cuba has incredibly cheap rent, like Communism works, works mandatory unpaid overtime, in terms of cheap rent.
So those are all beautiful quaint neighborhoods--myself I'm in Lastarria, but come on that's expensive. Yungay, little less. Barrio Brasil, no he cotizado [I haven't seen prices]. Franklin I don't know. I bet Franklin isn't that bad. But uh, try Estación Central. Another place I heard of that sounded like a great idea was Parque Forestal near Baquedano. Huge places at a third the going rate, just because of the violence, which I seek out because it comes with low rent, and which I in particular can handle, as a local. That's my niche. Las Condes/Vitacura is of course much more expensive, because first there's zoning, second it's for GCU--gente como uno[1], they're much more restrictive with buildings than other neighborhoods. Another cheap one is Ñuñoa, practically no zoning, on the subway line and there's tons of huge buildings.
But you gotta be a street cat and adjust expectations. So for instance, there's lots of burglary. All the time. Steal anything, shoes shaver knives children's toys all kinds of shit. Anything. But they're looking for the macbooks. Violence: there's guns these days. It depends on the neighborhood. Bad sentences for armed crooks, like I knew in rehab a guy who put a kitchen knife like between his cheeks but at any rate in his pants for protection when he was partying in the poorer parts of town. He got busted, it looked bad on him, weapons are forbidden. But dude then there's poorer and poorer neighborhoods, cheaper and cheaper rent, it's only a matter of being tough enough for the cheap street. People live in Maipú (pronounced as you fear) for hella cheap.
You just mentioned the neighborhoods where the privileged live. Those are all nice neighborhoods, for the HN crowd, American-friendly (they'll cheat you and steal from you--not from me, but from you--but hell it's cheaper than SF rent). Hell, go live near Pajaritos or Neptuno, I can tell you the rent won't fuck up your checking account. And none of the places I mentioned are tent cities, there's those here too, along with--more common previously--poblaciones callampa, shroomtowns, popping up out of nowhere squatting on unsuited land like shrooms out of the ground, from one day to the next.
It's a mixture of continents. Europe in Sector Oriente, Asia a bit in Patronato (my agent scouted there when he needed Asian actors/models), like there's real Latin American poverty too, but not that that's worse, just poverty is suffering, not a stain on the dignity of the sufferer.
But there's no overlap with San Francisco. The most expensive Santiago place will come in cheaper than the cheapest San Francisco place.
[1] This is a joke indigenous to Chile. They idea is going back not many generations, the people in the target audience for this joke had some money and some status, before downward mobility as the fortunes of the country rose and fell repeatedly. So there's an in-crowd. Specifically, in Chile, one sociological measure of status is whether you have a Spanish surname. So Gutiérrez, Pérez, those are considered--by sociologists, and in general by the culture--low status. Then on the other side is the Basque surnames, with lots of z's and r's, very recognizable, long names. Basques did very well for themselves in Chile, and that's more or less the only thing that matters for status really, is money. Power much less. It has to do with the neoliberal economy, so like the lay of the land up til 2019 was best understood by reading an introductory economics textbook, whereas in America it's the Bible. Money is everything, and like how you go about getting it, where it springs and where it's scarce, and the myriad ways you get fucked when you don't know the trick they're pulling on you. Which you can usually figure out, again with an econ textbook. Gente como uno is like an in-joke of the recent immigrants, not the very recent immigrants from eg Venezuela, but the wave from before which had non-Spanish surnames, like Basque, but also Italian or Dutch or German, or English is good too, Irish is very good in Chile in particular despite the Irish community being vanishingly small (most of it mixed in producing more redheads than blondes, blonde hair is incredibly rare in Chile, to the point any shade of hair that is brown or blonde is called "rubio", which stands for blond/blonde. I got put down as "rubio" in castings, it's a cultural thing, in America I say I have brown hair. It's just blond by American standards, platinum blond, like many Chilean men I know before their hair darkens dramatically (Pedro Pascal being one example, the Mandalorian. I saw an analog picture of him as a child, platinum blond, just darkened dramatically, to jet black, this happens to some Chilean men), so platinum blond, is incredibly rare here, 1 in 10000 people or so. Like if you're a blonde woman interested in Latin men like the bravado the dancing, and sure it's the safest part of Latin America, if you're blonde Chile is not for you, it's considered intimidatingly beautiful, nobody will hit on you. So I'm told.
I've lived in both (Yungay and time in Maipú), looked at buying in 2019 Yungay/Ñuñoa (before October 18), and wives family is there, living in Maipú, Lastarria, etc... it's all kind of apples to orange though because the working class/middle class/upper class profiles are different than in SF. Maipú is probably the cheapest but of course you end up far away (unless you work in one of the places nearby, which is probably lower middle class to be honest).
Comparing via square footage, it's true - cheapest SF place is more expensive than most expensive Santiago place, but 3BR Parque Forestral penthouses (Even Barrio Italia) used to push $750k, for example, which you could get a 1BR place in SF for at the time probably too. If you go outside of SF city limits it gets much harder to compare.
Of course, these are just housing costs. Other things end up being more expensive in Chile in a different ways. We have kids, and even mediocre public schools like you find in the bay area are better than almost all private schools in Chile.
You can't buy absolutely anything for less than a million anywhere in SF.
So in that, you agreed with me. Let me take the chance to agree with you, public schools ("liceos") are not as good as Chile deserves. Well first off very underfunded, if you go and send your kids to Nido de Aguilas that's about the same budget per student as an American public school. And it's the best education. Just yeah it's hard scratching up that change in the Chilean economy, as it stands today. And there's plenty of schools, just education in America is subsidized and you have to pay your way in Chile.
Small towns are just inherently unsustainable in a globalized developed economy. Most of our economic activity comes from working with other people, that means the rational move is to move to where everyone else is, ie a city. Remote work can slow that process down, but it’s not reversing.
Yes, but you don’t need to live in a city of 8 million people to participate in the global economy anymore.
Globalism has made it easier to do global business in much of the US, logistics, transportation, and communication have changed dramatically since then.
People take for granted the fact that you can pop into any small town grocery store and find a vegetable grown in another country. That’s a relatively recent possibility.
But there’s also many cities of 100-300k residents with plenty of affordable housing and Fortune 500 offices.
I watched my grandparent’s hometown (Newton, IA) become less and less desirable over the decades after Maytag moved the factory to China. They diversified a bit by adding a race track, but it’s a shell of its former self. Cheaper offshoring (not from one party or another, but encouraged by politicians on both sides) really wrecked the economy of small US cities and towns.
England has been building more housing - pretty much everywhere I go there's housing going up, new housing starts are apparently at their highest since the last housing bubble popped in 2008, and the national government basically removed the ability for local governments to block news housing development in order to encourage more to be built. It's just not working. Also, the areas where the jobs are have started to run out of important things like water and electric grid capacity.
Make it OK for 2, 3 people to live in one "housing unit". The whole "out of the house by 20" thing is a pretty new and American idea. Intergenerational housing is going to be the future till this shit gets sorted.
When people speculate on land it doesn't get used as much as it should. By having people pay for the value of the land, that either forces them to make use of it, increasing housing supply, or get rid of it, which then the next person who buys will make use of it. Even a partial land value tax like we see in certain PA cities[0] yields real results and after implementing the tax vacant land went away and current homeowners actually saw a tax decrease.
When you tax land value, the initial price of the property drops to offset, which makes it easier for less wealthy people to afford a down payment. A perfect land value tax would set the price of land at zero with a hefty month tax payment.
If this raises more tax money then the government can meaningfully spend, you simply give it back evenly to the community. Note that, just like the carbon fee and dividend system, still incentivizes that people use as little land as they can.
This sounds like the quick way to create a nation of renters. Otherwise, people would be priced out of their homes in short order by the ever increasing LVT. Which of course, isn't a bug, but the feature of Georgism (a family of 4 living making a home there probably won't permanently be the most efficient form of land use on that plot)
Renters are already paying for the land value, so if a renter can afford a property, so to can a homeowner. Under a Land Value Tax it is even easier to be a homeowner, as you no longer have a huge upfront cost of buying the land. As we saw in PA, current homeowners saw a tax decrease because so much vacant land went up for sale. A larger land tax would see even more positive effects. A larger land tax would also allow us to start reducing sales and income taxes, since that would end up simply increasing land values by more than they tax.
Since this incentivizes increasing the housing supply, zoning would quickly change from exclusionary to abundant. With those new homes being built, people would choose to move from their worn-down house into something new and better, and their current property would eventually have the same fate. It's not kicking people who love their homes out, it's letting people leave their homes for better ones.
You would still have apartments. You would still have AirBNB's. You would still have co-ops. You would still have houses.
Any tax money in excess of what is currently paid would be currently would simply be given back as a citizen's dividend, unless that tax money could be better spent on infrastructure, infrastructure that would pay for itself in higher land taxes that would yield even more land tax share dividends.
Precisely. A nation of renters rather than a two tiered class system with land owners at the top of the economic hierarchy and elderly renters at the very bottom.
Land being a liability means that the "owner" will have zero incentive to hoard it. It will mean that owners of low rise property in high demand locations wont be doing everything in their power to inhibit high rise development because theyre sitting on a pot of gold. Theyll be sitting on a pot of taxes instead.
It means any undeveloped land will be developed or sold to somebody who will.
It means slumlords who rent out shit housing will lose money.
We all recognise that this is the appropriate way to deal with electronic spectrum - auctioning off time limited rights. The idea that your great-great-grandfather owned 400-405MHz so you should too is no less ridiculous.
That sounded surprisingly high so I looked it up. Rental vacancy was 5.6% and homeowner vacancy was 0.8% in 2022Q2. Vacancy hasn’t been near 10% in about a decade.
How much rental vacancy is needed for there to be enough space for people to move around? 3-5%? Too low and you have gridlock.
There are absolutely not a lot of existing homes sitting empty. I know the internet really wants to spin this as a "look at greedy people hoarding housing!" but real statistics begs to differ.
Rental vacancies across the US are at about 6%[1]. This is spread across a wide number of areas, in major metros the vacancy rate is sub-4%, which is probably close to the minimum vacancy rate needed to turn-over tenants who want to move in/out of an area.[3]
Home vacancy rates are currently at about 0.9%(!!)[2]
These are both very low. In home vacancies it's probably the lowest the US has ever seen, and in rental rates it's almost the lowest, and many metropolitan areas are probably experiencing the lowest rate they've ever seen.
Supply is the problem. Almost every other comment I see on this topic seems to suggest that the issue is something else, but this is all really simple economics. Supply in the places where people want to live is very low, demand is very high (and possibly higher than ever due to pandemic pressures), prices go up up up until the supply-demand curve settles down.
I'm not afraid to use the government to try create justice in housing, but the fact is that the only thing that really matters at scale today is SUPPLY. If we get more supply in the places people actually want to live, prices will go down. The fastest and cheapest (and probably only) way a government can make this happen at the scale needed is by making construction of (or conversion to) new dwellings much cheaper. If you are proposing policies that don't do this, I think the best outcome is nothing and the likely outcome is an even more messed up market that will inevitably privilege the rich over the poor.
As far as commoditizing housing, I just don't think it's a problem (and probably not very viable either) so long as there is enough housing supply. Anyone who thinks the residential-real-estate party is never going to stop is out of their mind or trying to scam investors. The party will stop.
The national vacancy rate isn't very helpful. Abandoned houses in the industrializing cities or decaying rural towns don't help people who are trying to live closer to where jobs are. Look at the vacancy rates in the cities that are strongest economically, and you'll see just a few percent.
Because there was far more to the comment than that single sentence. On the balance of the comment, I felt that it contributed to the discussion, so I up voted it.
If you consider it not helpful in the discussion, then please down vote it. This will help to lower its ranking.
I've struggled to buy a house almost my entire adult life. I'll add some nuance to things you said, and hopefully that can connect the dots for some folks.
I don't like looking at a house as an investment, but it currently is. I'm a very frugal person and I save as much of my money as I can. Nevertheless, at 33, when I first met with my financial planner one of the first things she told me was that I'd already maxed out and exhausted places I could legally stick my money for long term investment... besides a house. There are a couple alternatives, but they likely won't be around long. One was a life insurance market account that you push money into every month - turns out, due to it's tax free nature, it can rival the growth of a home. Historically, when houses were lower barrier to entry, they were the simplest and most effective form of saving money.
Next, location. I don't need to live somewhere fancy, but when I bought a starter home ($200k) in Dallas the only place I could afford was about 45 minutes north of the city. My commutes to any place I could work were long. Prior to this I had moved to the country to save money to buy that house. My commute was 2.5 hours every day. Even with mass transportation, my commute would be long due to the size of the DFW metroplex. This weighed on me every day. I was missing time with my dogs and family.
I was trapped in a scenario with a bunch of tradeoffs that all yielded similar results just as the Dallas market was heating up. Quite literally, the only reason I got my house is because no one bid on it. It had been hit by a tornado and leveled a year prior. People were very superstitious about buying the house.
> . But you have to make it cheap. Deregulate construction, get rid of unions, prioritize developer rights over tenant or homeowner rights.
What's insane is that we never consider the obvious alternative. GOVERNMENTS HAVE TO PAY FOR THE HOUSING THEY NEED.
It's true that developers will not build if they can't make a profit. So we raise money through taxes and treat housing like an investment in our future.
This American notion of "free market or nothing" has left us with unlivable cities of sprawling suburban houses because that's where the profit is. But that's not what's good for our long term future. It turns out you can't laissez-faire your way to good urban planning
> This American notion of "free market or nothing" has left us with unlivable cities of sprawling suburban houses because that's where the profit is. But that's not what's good for our long term future. It turns out you can't laissez-faire your way to good urban planning.
While I agree America needs to put in some serious work into urban planning, the current and recent past of the US urban planning is anything but laissez-faire: strict zoning, housing codes, permits for most major building actions, minimum parking requirements...
> : strict zoning, housing codes, permits for most major building actions, minimum parking requirements...
Yeah, a bit of hyperbole. It seems more that the mess of regulations are just patches on top of patches, sometimes with conflicting intent and not with much long term design.
And a lot of it is controlled at a extremely local level. This means we end up with paradoxes where everyone acknowledges that we need more houses, nobody wants to densify areas near themselves. It's always someone else's problem.
It's the same story with power shortages in California. We need more generation but plant after plant was denied because the locals objected to the proposal for building near them.
It's clear we need planning at the state level and override local municipalities to force development. If they complain then the response should be "you had your chance to solve it and blew it. Too late now. "
[UI confusion led me to think this was a reply in a nyc specific comment chain. It’s still relevant but less perfectly so.]
You land-tax to make sure the most efficient buildings end up using the land. But the construction industry in towns like SF and NYC is mostly constrained by what you can get approved, which comes down to connections and what politician-pleasing giveaways you have to tack on.
And expensive downtown Manhattan land has lots of potential competition, but with transportation infrastructure costs running $2 billion a mile (!!!!!)
That will merely increase the carrying cost of the land and ensure that only rich people can live there, and that's true even if you break it up into smaller units on each unit of land, it's just higher cost smaller units.
There is NO one single point of influence that works the way we want it to, and that starts right at the 2nd-order effects, not even tertiary effects.
My understanding is that it is the next level of knock-on effect.
So, maybe an example of turning on & engaging the motor of a boat on a lake would be the primary effect is the boat accelerates, the secondary effect is the wave/wake created, and the tertiary effect is the wake bouncing other boats and it's effects on shore.
So with this land tax example, the primary effect of the tax is increased revenues for the city and costs for the landholders, the secondary effect would be restring ownership/renters to a wealthier set of people, and the tertiary effect might be changes in the mix of transportation used like more private cars and less public transport...
I think there may be a disconnect here (and I apologize if there isn't; this is not my wheelhouse)...
1. Some people talk about "land tax" meaning a tax on the value of _only_ the land. So you pay a tax based on the land, but not anything built on it.
2. Some people talk about "land tax" meaning a tax on the value of the property if you were to sell it; including any construction on it. This is the common situation in the US, to the best of my knowledge.
The former, taxing _only_ the land, is what (I believe) a lot of people are talking about when they say it will promote more/better construction on the existing land. Because you're paying the same tax regardless of what is built on it, so build whatever it the most useful for you.
Everyone says there is a housing shortage, yet only the extremely poor live on the streets. So, there is no housing shortage: there are housing units available for almost everyone who has an income. Almost all the houses are just owned by landlords instead of by residents, where the owner uses the property as an investment rather than as a home.
The only shortage is in homes that are not investment properties
> So, what instead? You want to build more housing in NYC? Great, that should work. But you have to make it cheap.
> because that's the only way a developer can recoup their enormous land acquisition,
There you go - in order to make it cheap you need a land tax, nothing else will work (alternatives have been rehashed over and over decades by georgists).
Without land tax the property market is stalled without market clearing and both tenants and developers get stuck. You won't find a solution by catering to either. The solution resides outside of this left and right dimension.
If you want the real solution, you go asks georgists. If you want to score politics points with YIMBYs or NIMBYs you keep beating the same dead horse forever.
Because you're buying the tax liability as well as the benefit of the potential rent. Under a perfect land tax those are equal, so the price of all land is zero.
A huge amount of housing issues across North America are due to zoning issues, with areas that don’t allow high density housing to be built (or where the residents fight fiercely against it). You don’t need to deal with most of the other problems you mentioned if you fix this first.
The other issue is vacancy. 10% of homes are unoccupied. Coming up with ways to fill even some of those properties would be hugely impactful.
> The other issue is vacancy. 10% of homes are unoccupied.
This is the second time I've seen this number thrown around, but as near as I can tell it's completely wrong[0]. Homeowner vacancy has never reached higher than 3%, and the 10% figure was rental vacancy at the height of the last recession: it's now 5.8%.
Aside from the fact that the number itself is outdated, it also lumps the entire US into a single category. Most of the land in the US isn't suffering from a housing crisis, and including homes in those areas in one big national vacancy rate doesn't help understand the degree to which vacancy is playing a role in the big cities. You need to be looking at vacancy by neighborhood, not by country.
You are right that throwing money at it isn't a solution. But corporations should not own residencial housing and no one should be allowed to sell propery at a meaningful profit if they own multiple properties.
The government should excecise it's power of taxation to take the profits of an investment housing sell (as defined above: multiple property owner selling at profit) with something like a 95% tax on profit and use that to build competitive housing (not for the homeless but for the regular person).
It is doable politically but only if there is support with the people. This bullshit about your housing being an equity investment and other related sentiment needs to go away.
Incentivizing individual home ownership I get, but killing the home flipping market, I don’t. Personality, I don’t want to renovate an out of date home, I just want to move in and done with it. Taxing flippers to death doesn’t seem progressive to me.
That's the first argument I usually get as well. I am very much saying end flipping. I don't know what is progressive about that at all. But to be practical, perhaps loosening the profit tax based on how long you owned it makes sense. Perhaps 1% for every year owned? That way you can flip it, live in it 20 years and sell it with inflation adjusted 20% profit?
That's not what people usually mean by flipping, and doesn't address your parent's point. They want to be able to buy property in good condition, and flippers are providing a useful service of increasing the supply of housing good condition.
(I would actually like us to deregulate housing construction past the point where flipping is no longer economic.)
Sellers themselves would be incentivized to make their house in good condition to sell it at a profit. If all they do is renovate then that should be a service to the original seller. If your house is devalued by 20% when selling, you pay a renovator to fix it up and take 50% of profits so instead you only lose 10%. Like you said they provide a service, they could handle the sale as a real estate agent and get more pay as well. My suggestion just means the original owner will retain ownership until an actual person who wants to live in the house buys it.
> Sellers themselves would be incentivized to make their house in good condition to sell it at a profit
Many sellers don't want to do this.
Consider someone who inherits their parents house, 1000 miles away. The house needs renovation.
You want them to uproot their lives or find a "service provider" (1000 miles away) instead of just doing an "as is" sale to someone who will do the renovation and sell it.
Sellers want out. There's no social benefit to making that more difficult.
Flippers are selling for profit so they will not sell until the market is suitable that means an incentive to artificially raise prices because as you point out flippers don't just want out unlike residents.
Many sellers can't afford to do a renovation and even if they can, they don't have the knowledge to do what the market wants. (They can't borrow without both equity and the ability to repay.) They also may not have the time.
Many buyers aren't interested in doing a renovation, and most of the other things apply.
People who renovate for a living do have those things.
You seem to think that holding out for more money is no-cost - you're wrong.
Flippers lose money if they're wrong about the market, so why are you so insistent that it's wrong for them to make money?
Which reminds me, how long does someone have to own something for you to be okay with them selling?
I won't repeat what I said about flippers since I replied to multiple other comments but they would still exist but provide flipping/renovation as a service(see other comments).
People can sell whenever they want, my restriction is the profit margin. I have no problem with that margin being more and more over time so long as that rate is nationally set to be uniform.
Are you going to cap the amount that flippers can lose as well? Why not? And, why should their profit be uniform? (Some flippers are better than others.)
Flipping as a service requires waiting by buyers and/or sellers which costs them money. Why is that a good thing? (A renovation may take 6-12 months.)
That wouldn't be flipping just a side-effect of ownership. Flippers should provide renovation/real-estate as a service with the original owner maintaining ownership until the sale to someone else.
> Flippers should provide renovation/real-estate as a service
That's a general contractor, not a flipper. The key difference is who takes on the risk: if I hire a general contractor and they turn out to be not very good at their job, that's my problem.
Exactly, what I am suggesting is current flippers will guarantee a sale price to the seller, renovate and how much of the profit above the sale price they take is a matter of market/negotiation. They still take on the risk and work on multiple houses they just now have a seller pestering them to sell soon instead of hoard houses until price is high enough.
I agree, except E.G. retired 'snowbirds' really love a stable climate and might have two homes in different climate zones. There's also the case where someone is selling one home and moving into another.
The tax break should be made if someone's primary residence is occupied for at least 35% of a tax year. A number intentionally just a tiny bit bigger than one third, so the break can only apply to a maximum of two homes, but low enough to be flexible.
I mean, they can still own multiple properties and sell it close to the original purchase price, I am just saying they can't make a profit from the sale of their second or third property.
You're right that building more housing is the solution. But we don't need to get rid of unions or deregulate construction. The main issue is land use regulation [0]. We just need to let developers build.
It looks like you can't see the real issue: too many people want to live in NYC. If you make it cheaper to own, build or rent in NYC even more people will come and the there will not be enough housing. Perhaps people should be encouraged to live somewhere else/in more places? Living in NYC is not a human right either.
The problem is that when the cost of living goes up, it tends to force out poorer residents that have been there for many years.
Encouraging people to just live somewhere else because they can no longer afford the home they've owned for decades undermines the entire premise of home ownership because it means that you may own the deed today, but you only control the property as long as the financial system underpinning your local real estate market operates within a range that you can afford.
And in 40 years when you're retired and on a fixed income that assumed you'd be paying a property tax rate that has now doubled and you can no longer afford the property, then it becomes your turn to GTFO and make room for the people who can afford it.
>>Encouraging people to just live somewhere else because they can no longer afford the home they've owned for decades undermines the entire premise of home ownership
Who is to blame that you stagnated financially all these years and the place you lived increased in value? You could sell the property you own and move somewhere else(cheaper) "living like a millionare". Chances are that if you are too poor to afford tax on the property you own or the places around (i.e restaurants surely got more expensive too) then you don't fell like you belong there anymore. You find the place hostile. Your friends may have moved as well or now they are too rich to hang out with you. If you don't want to get into this situation you should either make sure you have enough money when you retire or plan your retirement somewhere else or just consider that buying a property in the world's biggest financial center doesn't mean you will afford it forever. Change is part of life. Also consider that when you purchased your house you increased the value of the properties around and forced some people to move somewhere elese too. It's the circle of life, survival of the fittest.
I find it right that millionaire and less millionare eldery don't fell bad for young people whining that they can't live anywhere else except the "old town"/city center / downtown of the old people. The value of the land is really given by the people living there.
The existing paradigm creates extremes. We have Manhattan filled with 40-100 story skyscrapers, then we have the other boroughs with much less. We've got suburban NJ, CT, and NY. If those areas stopped their restrictive zoning policies, and allowed building more density, then the people who wanted to live in NYC could do so, and the people who wanted to live near NYC could do so.
When you take a look at Tokyo, who have had stable housing prices, and have a sane zoning system, what you see is that people can live where they want to live. Yes you have some skyscrapers. But you also have many places that aren't.
I am as YIMBY as they come regarding zoning, but this is a complete non-sequitur. It also shows a casual disregard for basic republican values: the right to freely associate and to withhold one's labor.
An international comparative perspective, as well as a regional perspective, do not suggest that construction union density can explain the widespread housing affordability crisis in the U.S.
Only 12.6% of American construction workers are union, and residential construction is a less union dense subsector than commercial real-estate or large-scale infrastructure.
Many countries have both dramatically lower housing costs and higher union density in the construction trades that the United States [1].
Within the U.S., it's clear there are problems provisioning housing where construction workers on residential projects are rarely if ever union (e.g. Virginia, Florida).
> I am as YIMBY as they come regarding zoning, but this is a complete non-sequitur. It also shows a casual disregard for basic republican values: the right to freely associate and to withhold one's labor.
It does no such thing. Rather, it's noting that unions raise the cost of many things they are associated with; especially construction. The value added by the union being in place isn't being questioned (or even commented on). Just the fact that they add cost.
The same is true of safety regulations. Those regulations (generally) add a lot of value by keeping people safe/alive. But every safety regulation _also_ adds to the cost. Pointing out that they add to the cost in no way belittles their benefit or the desire to have them.
"Let’s say you want to make a $100 payment to a merchant. Using your credit card would cost the merchant $3, which is then passed along to you via hidden costs. "
You also get 1-3 credit card points, which for you is extra money that you wouldn't get if you were to pay for this with Bitcoin or, for that matter, cash.
Also if the merchant screws you and sends you the wrong or a broken item, you can dispute the charge and real humans from American Express or Chase will spend their valuable time to help you resolve the dispute.
And, of course, if someone makes an outright fraudulent transaction with your card then the CC company will return your funds no questions asked. With bitcoin, your funds are lost for ever whether it was a mistake or a fraud.
These services are necessary (to build trust or for regulation reasons). If that was not the case we'd have seen a lot more real world adoption of crypto by now.
If crypto was the default we would all be amazed at this improved system of having fraud insurance, rewards for spending, customer service, and fast transactions.
Lightning, the technology discussed in the article, solves this problem.
> As with most layer-2 solutions, Lightning seeks to increase transaction throughput and lower costs while retaining sufficient decentralization by moving activity to a second network. Once BTC is on the Lightning network, it can be transacted instantly typically at fractions of a penny.
> Rather than expensively sending each transaction over the Bitcoin blockchain, users deposit BTC into the Lightning Network and then transact inexpensively through payment channels. As with most networks, the more people and companies that join, the more useful it becomes.
I noticed that abroad too that no one batted an eye at using a credit card for tiny transactions worth ~$2, but in the US an independent merchant would either have a $10 minimum or charge a ¢50 fee or both.
I dunno, I'm skeptical that if merchants actually saved more money now they'd pass along those benefits to consumers. Maybe if we were at the beginning of the adoption of cards, but with those costs baked in I'd bet it'd just be pocketed as profit.
A company could offer these on top of the lightning network. The article's point is that an oligopoly of payment processors is collectively costing consumers billion. It is sad so many HN users would rather see cryptocurrency fail than see disruption of this space
But I think consumers understand that getting a Bitcoin-based payment network off the ground is far more important than any of those features you list /s.
Insane.