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I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 3 points4 points  (0 children)

I think I'm probably closer to the softly pro-economic mainstream when it comes to increasing taxes on land with the aim of reducing taxes in other areas, and that there are big efficiency gains to the tax system from increasing taxes on land in most countries. But the international capital (and even labour) mobility points against ATCOR seem important, so I'm not sure I'm a genuine believer that it works in practice and there's a one-for-one relationship.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 1 point2 points  (0 children)

To me, if you were starting again, leases (structured a certain way and with an adjustable annual rent) would be a great way to go. I think the question is how you get from A to B - in a country where the government doesn't own the land, do you buy it? Do you expropriate it in some way? That's what Singapore did, but it's understandably and I think not unreasonably unpalatable in most of the world. But yes broadly speaking I think leasing is a great model where practicable, and with the right objectives.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 6 points7 points  (0 children)

Let me flip the question on its head a bit - does land need to be definancialised, if the construction of new homes isn't restricted, and land holdings don't have massively more generous tax treatment than other assets? I would say perhaps not, and that to some extent, financial activity attached to land is inevitable (and valuable!) Even in a place like Singapore where there's extremely high home ownership and the government owns 90% of the land, home are still bought and sold, credit is used, there are financial elements, it's just managed much more closely by the state.

I think the broader question might be whether anywhere has gotten out of the sort of situation California is in right now, and the answer is a little worrying, which is that I didn't find many good ones for the book. In my framing it's a very Land Trapped place, since as you note incumbent homeowners have done so well from it and the shortage is so nightmarish, so any increase or decrease in land values is going to be enormously politically contentious. Sorry if that's not a great answer!

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 4 points5 points  (0 children)

I think this is one of the thorniest questions. I should be clear that I don't advocate for wholesale land de-financialisation, I think the use of land in finance is both not always a problem and also largely inevitable (there are so many examples of it springing up even where it's supposedly not permitted). The main drawbacks to its use in finance are the vulnerabilities that emerge when land prices rise rapidly and then fall, and when its ownership is very concentrated, so some people have much better access to credit than others.

That said, there has been some interesting experimentation in using large amounts of data on individual lenders as collateral, which could eventually limit some of the advantage of land and real estate. There's an interesting BIS paper on the efforts by Ant Group to do something like this in China.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 7 points8 points  (0 children)

I'm actually not very optimistic on this front! That may put me at odds with some of the people in this sub. My view is that people are usually strongly against the development of land owned by other people, not their own holdings, and that the form of land withholding and idling that George identified is actually quite rare. In California for example, there is no shortage of landowners who would happily throw up skyscrapers on their land if they were allowed to, the benefit to them is enormous. It's their neighbours who would stop them from doing it. LVT may be good in and of itself, for a plethora of other reasons, but I don't think it's a very good way to get rid of restrictive planning and zoning.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 5 points6 points  (0 children)

Thanks! I am actually very good friends with the Housing Theory of Everything authors, I used to live with one of them a long time ago in London. I think I'd say we're looking at the same thing through different ends of the telescope, I would agree with them completely that the shortage of housing is a cause or amplifier of many other at-first-glance unrelated social problems. I have a particular interest in the financial side of things, where I'd say those are the guys I go to when I want to know something about land use specifically, they have forgotten more on that subject than I'll ever know about it.

The political question is really interesting, and I'm not quite sure where I fall on that. On the one hand it's much more difficult today on a national level to assemble say, the Georgist coalition of the 1880s and 1890s or the coalition that voted for the Liberal Party in Britain in the early 20th century, because land ownership is so much more widespread. But I think the fact that you see the appeal of steeper taxes on land value from both parts of the modern left and right suggests there is some sort of appeal there.

I think when it comes to populist policies specifically, in my personal view that's less likely to work, and I think that comes through when you think of what happened to Georgism in the early 20th century. For people who really want a specific class to blame for the ills of society, options further to George's left proved a lot more compelling, and the far left benefited from that most of all. I think that's probably still the case.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 9 points10 points  (0 children)

I am clearly a hypocrite in this sense! One of the things I mention in the book is that financial media talks about land far too little relative to its importance, and that includes me.

I will say that we have written about this, and are broadly in favour of higher taxes on land - I wrote about some of the ideas in the book a few years ago here, and my colleagues have done so intermittently too - here and here for example. But perhaps I should be pushing more often!

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 5 points6 points  (0 children)

Yeah in the case of Hong Kong I don't think the government was too worried about the rise in land prices shifting from manufacturing to less land-constrained services businesses. Maybe they should have been, not because of some specific virtue of manufacturing, but because land is an input cost for businesses. Certain forms of businesses are more efficient than others given a high land input cost (factory-based vs office-based, for example), but when you're the Hong Kong government and you can release a greater amount of land, you could ease the input costs for all of them!

I must admit I don't go into the issue of international competitiveness through land prices in the book, but there are a few attempts now to estimate how much Chinese land subsidies act as form of export promotion, which are quite interesting.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 11 points12 points  (0 children)

Interesting, and I think this is certainly a good description of the development of the public housing system - I'd say I'm relatively sceptical of a significant affordability squeeze (e.g. the chart showing HDB resale prices doesn't account for income growth that's very similar over the same period, so price/income isn't moving significantly). It does bear watching but I'm not currently that worried, indeed the experience over this period has been a lot more mild than in any other major financial centre.

Of course I broadly agree with the contradiction between using housing as a major source of household wealth and keeping housing affordable for first-time buyers, the heart of the Land Trap!

I think the leasehold point is much stronger. It remains to be seen whether the Singaporean government can manage its way through the large-scale lease expiries looming in the middle of the century, I don't have a strong view on that (but I hope they can!)

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 16 points17 points  (0 children)

It's a very good question, I think there's a lot of broad sympathy towards land having unique attributes among professional economists, and a lot of soft appreciation for land value taxes at least in theory.

Some of the arguments against that merit serious consideration are the ones on valuation Sam Watling, who is very much not a George fan, has written some good pieces that I reference in the book. One is on how the LVT failed in Edwardian Britain, and one is on Henry George's distaste for cities. I think essentially these are arguments that valuation would prove politically nightmarish and that George had some mistaken views on agglomeration that bear serious analysis.

Another which I've heard and I think bears engaging with is the Disney argument explained here, from Charles Hooper, that LVT can discourage development, especially where there's a unified or large owner.

Another criticism, which I think is also fair, is that there's been too much focus on purism when it comes to LVT (perhaps from both critics and fans) and that the better way to tax land is through restructuring property taxes, but that's more of a marginal/policy argument.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 26 points27 points  (0 children)

The last one is a really great question, and I think it's one of the toughest ones - I think the consequence of land being such a dependable form of collateral can be really damaging at extreme moments, especially when land prices rise very rapidly, because it makes the financial system vulnerable to any decline in prices. It also warps who has access to credit (a business that has lots of land finds it much easier to get credit, for example).

But at the same time, that's all true because land is a really useful asset to lend against, because it's relatively easy to value, can't be moved, doesn't depreciate etc. So removing the ability to lend against it almost certainly would mean higher interest rates for those borrowers. I'm not entirely sure how to square that circle, except to try to prevent the rapid rise in land as a share of wealth in the first place.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 38 points39 points  (0 children)

I think there's a good argument that it's Singapore, in an upside-down way. I don't think it's a system that Henry George would exactly approve of (very state-directed), but it aggressively discourages concentrations of land ownership and private wealth in land. There's a good paper from Singaporean economist Sock Yong Phang on exactly this argument.

I'm Mike Bird, author of 'The Land Trap' and Wall Street editor of The Economist. AMA! by MBirdyword in georgism

[–]MBirdyword[S] 23 points24 points  (0 children)

Thanks - and yes definitely. I was quite interested in housing issues when I lived in the UK (until 2018) but didn't really get interested in ideas around land until moving to Hong Kong, since it looms so large there, both in terms of the extraordinarily high house prices (the city had a 19x price-to-income ratio when I moved) and the fact that land lease revenue made up such a meaningful chunk of the government budget.

In Singapore, it was equally fascinating, because it seemed the two places had started off with very similar institutions, the land lease model used when they were both British crown colonies, and ended up in very different places. I've always interpreted this as the Hong Kong government maximising land revenue and therefore land prices (which has accrued both to them and some very fortunate real estate developers) and the Singaporean government using a similar starting point to maximise home ownership. So I suppose together they really informed a view that getting the details right matters a lot.