[neilparikh]

In the case of the salaried employee, you're earning as a direct result of you doing productive work. You can argue that the pay is too high, the but the fact you have to put in work to earn it means it is at least not parasitic.

In the case of a landowner, they need to put in no such work. They didn't create the land. All of the rent comes from the fact that they have a monopoly on a scarce good that cannot be produced further, and one that everyone needs. See Adam Smith [0] and David Ricardo analysis on rent for more on this (the Ricardo's law of rent is a really neat concept).

Now the fact that land and buildings are rented together complicates this a little bit, but this definitively applies to the rent that comes from the land.

Simply claiming two actions are equivalent because they both lead to lots of money is not a useful mental model. How you earn your money matters.

[0] - "The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give." — Wealth of Nations, Book I, Chapter XI

[refurb]

We should probably eliminate interest too then?

I mean, if I loan someone a million at 6%, I'm doing no work and collecting $60k a year!

Oh yeah, it's called risk. Similar to a landlord, the returns are in no way guaranteed.

Let me introduce you to some landlords who went bankrupt in 2008.

[neilparikh]

Comparing land to capital misses some important differences, that economists have recognized.

Land is a scarce resource with a fixed supply. If I want to rent land in SF, I don't too many options. And the demand is increasing, since everyone needs land to exist, and the population (at least in cities) is increasing. This gives the landlords a monopoly (see the law of rent: https://en.wikipedia.org/wiki/Law_of_rent). In the case of loans, if I don't like your rate, I can simply go to a different lender.

Secondly, can you point out what we lose if the landlords doesn't exist?

If lending doesn't exist, there's businesses that would have started, but can not anymore, since they may not have enough capital to get off the ground.

If landlords don't exists, the land is still there, and we lost nothing, since land can't be created or destroyed.

> Let me introduce you to some landlords who went bankrupt in 2008.

My point is not that being a landlord has no risk. Rather, I'm saying that the returns from land do not come at all from the value that the landlord provides, which is not the case for lending, or other productive activities.

[refurb]

If landlords don't exists, the land is still there, and we lost nothing, since land can't be created or destroyed.

If landlords don't exist, people couldn't have a place to live unless they could purchase themselves. I think landlords are great - I can get a nice place to live and have none of the risk the landlord does. Property prices go down? I don't care. House burns down? I don't care. If I want to pick up and leave in a year? Great, here's notice. No real estate fees, paperwork, etc.

I think landlords offer a fantastic service.

[neilparikh]

Two points I want to make.

> House burns down? I don't care.

You're conflating land rents and building rents. The "landlord", in their position as the building owner clearly provides a valuable service: the upfront capital/labour to construct the building and the maintenance. I'm not saying this shouldn't exists; it definitely should. They should capture all the profits that come from the rent you pay because of the building. My point is simply that they shouldn't be able to profit from the landownership itself.

> people couldn't have a place to live unless they could purchase themselves. > Property prices go down? I don't care.

The only reason land has a purchase cost in the first place is because you can extract a rent from it indefinitely. If land did not allow you to extract a rent from it in perpetuity [0], the purchase price would go to zero.

[0] - we can achieve this through a land value tax equal to the rent you could extract from the land.

[erik_seaberg]

Some people buy land to live on indefinitely, with no plans to rent or resell. How would you decide who gets to live in North Beach and who has to commute from San Bruno, if not price?

[neilparikh]

The idea is that we charge a land value tax (https://en.wikipedia.org/wiki/Land_value_tax) equal to market rent value of the land. So you're free to own the land if you pay the tax.

This tax would obviously be higher in desirable areas, so there would still be a price mechanism to ensure that the land is allocated effectively. If I bought a parcel of land in North Beach, but then didn't use it productively, I probably wouldn't be able to pay the tax and I would have to get rid of it. Additionally, since the market value of land reflects its most productive use, it would incentivize using the land in the efficient use (ie. densely in a high value area, since that lets you split the tax over more people).

[imtringued]

You don't seem to understand what the term rent means. It's the act of giving someone temporary access to something and charging based on the amount of time it has been used. That's a pretty useful service if you don't have enough money to outright own your house or apartment.

[neilparikh]

Do you really think I don't understand what rent means? I pay rent every month, I better go figure out what it is I'm actually paying...

I'm not proposing we do away with rent as a concept. In the current situation, when you pay rent, you're really paying two rents combined.

The first rent corresponds to renting the land the building is on. This rent is why an equivalent apartment has a higher rent in SF than it does in Detroit or Houston.

The second rent corresponds to renting the building/unit itself. This rent is why a 2 bedroom apartment has a higher rent than a 1 bedroom apartment.

Now, the first rent is entirely uncorrelated with the value the landlord provides. It is essentially paid due to the landlord owning a monopoly on scarce good, which is only valuable due the community and government putting the effort to make the area valuable. Someone who owns land in downtown NYC didn't make it valuable, it became valuable because the government built the infrastructure to make the city livable, and the other residents made the city into a place where people want to live. Therefore, it's only fair that this rent goes to the commons rather than the landowner, where it can then be used to fund the government, rather than through other taxes.

What I propose is a land value tax equal to this land rent, so it is returned to the commons. The owner is still free to keep the rent from the building. This ideology is https://en.wikipedia.org/wiki/Georgism, and is pretty well supported from both an economic and fairness perspective.

[imtringued]

>Secondly, can you point out what we lose if the landlords doesn't exist?

You now need a $1.4 million loan to live in an apartment.

[perl4ever]

>In the case of a landowner, they need to put in no such work. They didn't create the land

I don't understand. If you buy a hamburger, you didn't create the hamburger. What does that have to do with whether you earned the money to buy it?

[mapgrep]

Awfully convenient reasoning for engineers. Making half a million dollars a year optimizing the invasion of people’s privacy, for a company that dodges taxes, after four years of government subsidized education is real work and if you get rich in a liquidity event you earned it; assembling $1 million twenty years ago when people were fleeing SF, spending two decades maintaining marketing renting servicing paying taxes on and chasing rents on the property in the meantime, keeping up with and complying with city and state regulations — that’s always just parasitism and if the city you chose turns into a boomtown it’s good luck you have not earned.

Not a fan of landlords as a rule but you are slicing your analyses of privilege way too thin.

[neilparikh]

> spending two decades maintaining marketing renting servicing paying taxes on and chasing rents on the property in the meantime, keeping up with and complying with city and state regulation

Literally none of that matters in deciding who profits from land and who doesn't, and that's my entire point. The landowners in SF who didn't put this work in were still able to capture the rising value, and those in Detroit who did put all these effort in, didn't get anything to show for it.

Land doesn't rise in value because the landowner put in effort to raise the land value. The community and the government increased the value through building a city people wanted to move to (through building public transit, art scenes etc.). Why should the landowner capture that wealth?

Also, your tax point is moot, because California caps property taxes at essentially the level you bought the property at, so all the gains are free.

> the city you chose turns into a boomtown it’s good luck you have not earned

Yes, this is exactly my point.

Let me give you concrete scenario of where the current system breaks down. Let's say I own an apartment building on the edge of town, and the city decides to build a new transit line to the community. Rents in my apartment building will go up; let's say by $100. Renters are willing to pay an extra $100 because they value living near a transit line more than the being far from one. But why should that extra $100 go to my pockets, while the government has trouble even paying for transit system? It's not like I was the one who built transit system, it was funded by the income taxes of the people who work there, and then built by the government.

I guess my question to you is, why are we so attached to this system? As I pointed out, almost all economists agree that land rents "not at all proportioned to what the landlord may have laid out upon the improvement of the land". So why do we want to push forward a system where the reward is completely uncorrelated by the value you provide? Isn't that antithetical to capitalism?

Edit: To address your points about engineers, I'm not claiming that engineers do "real work" or "if you get rich in a liquidity event you earned it". I'm simply stating the reality of the fact that engineers actually produce something (code), while landlords don't (what could they even produce, more land???). If my landlord didn't buy the land I live 20 years ago, it would still be there, no worse for wear.

[perl4ever]

>Land doesn't rise in value because the landowner put in effort to raise the land value

Let's have some perspective - that's why there are property taxes. Now, maybe the property taxes are too low, but the fundamental issue is recognized by society and the mechanism exists to balance things.

[neilparikh]

> fundamental issue is recognized by society

I don't get the impression that the issue is completely recognized by society though. We see articles all the time in the news about how the real estate market is going up. Clearly, most landowners currently have an expectation that they should get some return on their land ownership.

That's why so many advocate for restrictions on building in their communities.

[perl4ever]

People expect the stock market to always go up too. I don't think that is possible.

I'm not saying it can't be a local, situational problem, I'm saying it's not a universal fundamental wrongness in the way society is structured.

It's like, a certain number of heart attacks happen each year. We may see a trend in heart disease over time. There could be some environmental reason for it. But extrapolating the current trend indefinitely and drawing the conclusion that there is something fundamentally wrong about the human heart's workings that requires a new mechanism is probably excessive.

[neilparikh]

> I'm saying it's not a universal fundamental wrongness in the way society is structured.

The supply of land is fixed, but the population (demand) increases, so the land owners have an structural advantage in that sense.

[kamaal]

>>They didn't create the land. All of the rent comes from the fact that they have a monopoly on a scarce good that cannot be produced further, and one that everyone needs.

If we go by your logic, we must also ban reading books, exercise, good relationships etc.

Pretty much any investment including things like education work very similar to land investments. There are only fixed college seats, is it fair to everyone?

Firstly start with understanding you can't give any thing to any one they don't want to earn. At the same time you can't stop people from going after these things and earning them.

[empath75]

> the but the fact you have to put in work to earn it means it is at least not parasitic.

I mean, most of us are just typing and talking. It’s not exactly laying bricks.

[neilparikh]

Yes, that's why I said "You can argue that the pay is too high". But it's still "labour", in the socioeconomic sense.