[win311fwg]

> Treating houses as investments actually kills the economy.

Failure is always a possibility, but historically it hasn't killed the economy, it has rebalanced the economy; seeing businesses and people reduce their concentration in a specific area as they fan out into lower cost areas. Which is a rather useful function. This is why we're not all living in one giant heap somewhere in Africa.

[jmyeet]

Where do you think the term "rent-seeking" comes from? To quote Adam Smith [1]:

> “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce.”

In the mid 1990s, the average house price in London was under 80k. It's now pushing 700k. Are salaries 9x? No. What is this other than stealing from the next generation? Raising house prices are nother more than a massive wealth transfer from the young and working to the old and wealthy.

but here's the bigger problem. If you have essentially a guaranteed 9% return on a highly-leveraged asset with tax advantages and government guarantees, why would you invest in a factory or a business? That's the real reason manufacturing has hollowed out in the UK.

I agree with Xi: houses are for living, not speculation [2]. We should absolutely punish rampant speculation by heavily taxing land hoarding.

[1]: https://www.prosper.org.au/geoists-in-history/adam-smith-on-...

[2]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...

[win311fwg]

> why would you invest in a factory or a business?

Because you cannot afford to join the ranks of the investment class, so what else are you going to do with your time?

You are quite right that you are not going to build your business in London, though. You are going to take your business to places where starting a new business makes sense.

For the American audience, Detroit lived what you describe. What started as a vibrant manufacturing centre turned to property investment and soon it could no longer sustain itself. The people not benefiting from those investments there didn't throw in the towel, though. They packed their bags for what we now know as Silicon Valley and started new businesses developing the transistor. The economy wasn't killed, it moved.

> We should absolutely punish rampant speculation by heavily taxing land hoarding.

The law is to the will of the people, so this can happen on a whim, but you have to convince the people that piling everyone into a giant heap is desirable. Most people don't want to live in one giant heap. A Kowloon Walled City-esq world is a thing of nightmares for the population at large. Most people want people to move around, to make use of the entire world, not all settle in one place. These economic factors are the engine that pushes people to spread out.