So, this is going to be a bit of an experimental article for me, and I'm going to warn you, I might be updating this quite a bit as I investigate further into some of these policies, but I feel like I should get my thoughts out on this subject. But housing. It's a huge issue in America today, and it's growing to become more and more like healthcare and higher education when it comes to being something that's essential for human well being, but also problematic when it comes to markets. The fact is, housing is too expensive and is increasingly affordable for every American. But unlike healthcare and college, which could be fully subsidized by the government "single payer" style, if not run by the government directly, housing is more complicated, and it seems like literally every civilization on earth under any political system has had problems with housing.
Markets good, socialism bad
Markets are, sadly, the best we can do. The soviet union, for example, tried to tackle housing under communism, and the results were horrifying. For much of the USSR's existence under the likes of stalin, people were forced to live in cramped homes with up to 7 other families, often with sheets separating the space of one from another. Eventually under Khruschev they built more single family apartments, but they were often low quality.
Also, lets not forget the brutality that the USSR often used to enforce its housing policy. It has the same problems capitalist countries had with people wanting to move into cities en masse, creating a housing crisis. So the USSR established a system of passports to stop people from the country from moving into cities, and it often rounded up people caught without a passport found in cities and shipped them to Siberia to work in gulags. The video above is fairly graphic and describes the horrid conditions of these gulags. I'm posting it not to focus on the brutality with which Russia treated its prisoners, but because its attempts to regulate housing policy are worth noting. Russia solved the overcrowding in cities problem literally by restricting peoples' freedom of movement and rounding people up and shipping them to siberia when they were accused of violating their policies on this matter. Yeah, we might have a problem with overcrowding in cities and high rents under capitalism, but this is precisely BECAUSE we allow freedom of movement and letting people live wherever they want. They just need to afford it.
Basic income
Obviously, my basic income policy is intended to help alleviate this problem somewhat. By giving people $1200 a month they should obviously be able to live SOMEWHERE, and between this and the rise of remote work, we might be able to break Ricardo's Law of Rent somewhat. People crowd into cities to get good jobs, whereas housing in less attractive areas are much cheaper. Breaking the link between work and income and work and certain locations might alleviate the problems with cities, overcrowding, and rising rents. However, rent is getting expensive even in areas that have historically been cheap (rent is skyrocketing an insane amount in my area) due to increased demand and also people treating the housing market as an opportunity to invest and make money, so to go beyond my mere UBI policy, we need to focus on ideas that attempt to regulate bad actors like landlords, house flippers, etc.
Land value tax ideas
One such policy is the land value tax. And yes, I know, I constantly rip on the land value tax on this blog, but I do so within a certain context. I often come across these internet georgists who are like fanatical over the idea and believe in imposing insanely high levels of LVT on the entire market in an indiscriminate fashion, essentially screwing over homeowners. And while often times they pair this with a form of "UBI" known as a citizen's dividend, this UBI is built much differently than the UBI I support. I support a UBI aimed at helping people acquire the basics in life and being able to avoid poverty. Georgists support a UBI as basically a refund for their tax with no real consideration as to whether this is livable without being coerced into the labor market.
Now, if we could have a citizen's dividend separate to UBI, or otherwise exclude homeowners from the LVT and aim them squarely at landlords, house flippers, and investors, i could be more accomodating. After all, I believe everyone should be entitled to A HOME. However, homes are meant for living in, not investing in, and we need to design policies that target behavior we don't want vs behavior we do.
If you own a home, your home should, assuming it is not extraordinarily valuable, not be subject to tax. If we go the citizen's dividend route and implemented a 5% LVT on all properties, we could probably give every adult back a $4600 check. This check should exist on top of my UBI, not replacing it. This would bring my total basic income up to $19000 a year, although home owners would pay back a significant portion of that. As shown in my last article, your typical homeowner at the median ($300k home with $90k land value) would pay $4500 back. Still, assuming people live in families of 2-3 people, they would still likely benefit in net.
Another way to do it, and I actually lean more toward this, would be to just exempt homes with a land value of $300,000 or less from this tax. This should translate to, assuming a 30% land value, to all homes under $1 million being exempt from the tax. HOWEVER, all land value owned above that amount would be taxed. Also, any additional properties other than your primary residence would be taxed at the 5% rate. I am not sure how much money this would raise in practice, but probably a fraction of what the flat 5% rate would raise, the 5% rate, assuming a $23 trillion land value, would raise $1.15 trillion. Assuming we raise 1/5 of that, that's $230 billion. We could use that, to fund a housing program.
Build more housing
Honestly, part of the problem with the housing market is the demand has outstripped the supply. While an LVT might help redistribute income from players in the market that are hoarding too much land or are using it for their own profit, we ultimately need more housing. Unlearning Economics on youtube has a video for dealing with the housing market from a capitalist perspective, and mostly focused on the land value tax, which I already covered, as well as having the government build an agency aimed at creating more housing like South Korea has. Basically, the government needs to flood the market with extra housing to drive prices down. I know Bernie Sanders wanted to invest $2.5 trillion over the next 10 years in building 10 million more units of housing. And what do you know? My above targetted LVT plan could likely raise that revenue. So yeah, tax bad actors or people hoarding land, and then use that money to flood the market with more housing. We could even dust off Christian Fernandez's old plan to flood the market with microhomes. I still think this is a decent idea and would be good particularly for people who want to live minimalistic lifestyles on a UBI sized budget. The point is, we need more housing. We should have the government flooding the market with housing. More housing means price of housing goes down, means housing is more affordable and people can find places to live.
Change zoning regulations
This is something that would need to be done locally, but some cities need to update zoning regulations. Places like San Francisco are unlivable because existing zoning regulations stop newer, denser construction from taking place. And of course, while some may love SF's more historic neighborhoods with three story building construction, you can't fit many people in it, so updating zoning might allow some cities to alleviate congestion somewhat.
Regulate who can buy housing
Honestly, we want people to buy homes to LIVE IN. Currently, too many buyers have no interest in living in the property they acquire. This is a huge reason I support a land value tax on any property that is not one's primary residence. But beyond that, we should consider restricting some groups of people from purchasing property at all.
For example, foreign nationals. A lot of cities like Vancouver as well as other markets across the US and Canada, have an issue with the like of Chinese nationals buying properties for investment purposes. Properties should not be "invested" in. These are HOMES for people. And all speculation does is drive the price of housing up. While we should allow immigrants who plan to LIVE in a country for a long period of time, if not permanently, to buy homes, any foreigner looking to invest should look elsewhere, and this practice should be banned.
Heck, I think we should also look into banning US corporations from buying properties for investment purposes too. While individual players in my previous attempts to map the market don't have much influence on their own, collectively, they likely drive the price of housing up.
We should also put laws in place to prevent house flippers from buying houses. A common practice in my area is people from New York love to come to my city in Pennsylvania and buy up properties. They fix them up, make them super fancy, and them dump them back on the market for a profit. You might ask whats wrong with this? Well, it essentially amounts to gentification, making it far more difficult for people to be able to afford homes. And what ends up happening is landlords end up snatching them up, and turning them into apartments for people to rent. While my land value tax is intended to punish speculative behavior somewhat and discourage people from holding onto properties they can't live in, we should also make it harder for people to buy property in general if they don't plan to live in it. Perhaps, much like a cell phone contract, people should be expected to own a property for 2-3 years before they can sell it, with penalties for people who break contract. This should be attractive to home buyers, but not to investors, who expect to "flip" houses very quickly to make profits before property (or in this case land value) taxes become due. It could force someone to be stuck with it for at least a reasonable period of time, and discourage people from engaging in speculative behavior.
Now, to be fair, this is admittedly one of my experimental sections of this article I warned you guys about. I have not considered the full extent of how such laws could influence the market. It could lead to situations where people simply don't buy properties to build housing on them or to update and renovate existing housing, causing homes to fall into disrepair and have them be lost to the market in general. It might simply be better for me to maintain a mild LVT like I suggest to discourage people from sitting on homes they aren't using, and to encourage them to be dropped onto the market. Still, I think at minimum stopping foreign investors from screwing up the market for locals would be a good idea.
And let's not forget, some areas tend to rely more heavily on tourism than others, so renting might be more acceptable in towns built around tourism like Myrtle Beach, Sc, and Pigeon Forge, TN. This means there will be more demand for temporary housing in these locations, allowing for more lax restrictions on this front.
Make it easier for first time home buyers to buy homes
The credit checks necessary to buy homes are insane. You can spend years renting an apartment for $1200 a month, but if you want to buy the same kind of housing for $800, you're deemed a credit risk. Anyone who has a good history of not being regularly evicted due to lack of payment should be considered to buy a home in a similar or cheaper price range to what they are currently renting. Again, if you can afford rent, you can afford a house, and credit checks should keep that into consideration. Ultimately, we should be encouraging more home ownership and less renting.
A problem to be resolved: NIMBYs
NIMBY stands for "not in my back yard" and often refers to existing property owners who are okay with a lot of the above solutions, until they affect them. While I think in some cases there are very real reasons to be afraid of changing the housing market (for example, I'm against hardcore georgists because their ideas for how property should work is so radical I see it as threatening to the very system of owning property), but some are just concerned about their precious housing values, or not having "those people" (ie, people they deem undesirable, poor people, racial minorities, what have you) living around them.
So we often have a situation where a lot of inertia exists on the local level to stop housing markets from becoming more flexible. People dont want new housing "in their back yard" because it might make their neighborhood less desirable in some way. They might fight against rezoning areas above, or building a new housing complex, etc. in order to alleviate the problem. And because it seems to be human nature that people think mostly in terms of their own self interest and the interests of those they care about most (ie, their families), they are often unwilling to bend to allow solutions to exist. So I might have a lot of solutions above, but like many nice left wing ideas I have, there might not be the political will to accomplish them.
While this exists for everything, from UBI to healthcare, this problem is especially salient in housing. The fact is, we all happen to live in a world with a limited amount of space, and allowing ownership of that space allows for stakeholders to take root and discourage the system from changing. Sometimes the system should change for the greater good, but many will often oppose these changes, often for bad reasons.
In this article, I've attempted to respond to at least some of the concerns home owners might have. It's the reason I tried to exempt most homeowners from the LVT, and keep my UBI proposal largely separate from the LVT. I'm a homeowner myself (in effect), and I understand that no one wants their homes to be taken away for some grand ideology or greater good that they can't see. It's the reason why I designed my UBI as I did too, ensuring most people would benefit in net, and would not suffer. I want a better world for everyone. Some on the left seem to want the 80% to suffer for the poorest 20% and pull the most insufferable guilt trips on everyone else, which is a huge reason left wing politics has had such a terrible time actually gaining support in the US. The left's ideals have been muddied in the past 40-50 years, with people really wondering if the left actually stands for making their lives better. Being a former right winger I try to understand this. While there would be losers in my ideals too, I try to ensure they are the most well off in society, generally the top 20% or so of the income stratification. At some point, the rich will have to do a little bit worse to ensure everyone else can do a lot better. It's the nature of things when our society's outcomes are so stratified that the problem lies in the fact that the bottom 80% are stagnating or falling behind so the top 20% can do so well in the first place. While I am a libertarian of sorts, no person is truly an island and at some point, one's good fortune can become someone else's loss or exclusion from society.
All I can hope is that at least some of these ideas become popular enough that they can be implemented, even if not all of them are.
Conclusion
The housing market is a massive mess in America right now, and the pandemic has just caused it to get worse and worse. I've noticed rents and mortgages in my area grow at a rate far faster than even the 8% inflation we're having, where places that used to cost $400-700 a month now cost $1000+ generally speaking. This is getting unlivable, and threatens making my UBI borderline useless. So, housing must be dealt with. We need a land value tax aimed at those who own more than their fair share of land, as well as all investors in the market and the like. We need to build more homes to alleviate the existing congestion in the housing market. We need to change zoning regulations to allow the construction of more dense housing, and perhaps restrict who can be allowed to purchase a home. And of course, we need to relax credit checks to allow people with good credit to buy homes more easily, and give priority to first time home buyers over investors.
There is no single magic bullet to fixing the housing market, but I think a combination of solutions could make housing affordable, in conjunction with my other ideas like basic income.
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