
NIMBYs in the twenty-first century - feelthepain
http://www.economist.com/blogs/freeexchange/2015/03/wealth-inequality?fsrc=scn/tw/te/bl/ed/nimbysinthetwentyfirstcentury
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sun_machine
I am confused by the way the Economist phrased Mr. Rognlie's argument. The
crux of Piketty's argument is that when global returns on wealth (r) is more
than global economy growth (g), capital will start snowballing into the hands
of the few very quickly.

The mechanism of r getting bigger than g is not an increase in r, but a
decrease in g. The increase of the global economy is dominated not by
increasing technological efficiency, but by population growth. There is an
upper limit of the number of people we can fit on this rock (whether 9 billion
or 100 billion, we will hit a limit at some point). Once we bump into that
ceiling, growth will slow dramatically, and those who have already managed to
create a sizable stash, or who have the talent to regularly beat the market,
can accumulate wealth to no end.

In short, as I understood Piketty's book, the fact that r might not increase
if we put the right limits on housing development, doesn't change the overall
hypothesis made by Piketty.

~~~
tomjen3
You seem to be under the assumption that the population is going to grow
towards infinity. The UN projects that we will stay under 10 billion
([http://en.wikipedia.org/wiki/Projections_of_population_growt...](http://en.wikipedia.org/wiki/Projections_of_population_growth))
and even the highest only have us at 16 billion at the end of this century
(compare that to the growth in the 20th century).

So unless there is a relatively low limit for total humans on this planet, we
won't reach it before we become a spacefaring race, at which point the limit
will be the carrying capacity of the Universe.

~~~
onnoonno
> So unless there is a relatively low limit for total humans on this planet,
> we won't reach it before we become a spacefaring race, at which point the
> limit will be the carrying capacity of the Universe.

But even in that case, you can only have at most polynomial growth (human
habitat spherically expanding with speed of light) instead of an exponential
one.

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venomsnake
> Modern forms of capital, such as software, depreciate faster in value than
> equipment did in the past: a giant metal press might have a working life of
> decades while a new piece of database-management software will be obsolete
> in a few years at most.

Those rotting bits ... outside of consumer software, the life of software is
easily measured in decades.

~~~
mikeash
I think it's tremendous confusion on their part about what "obsolete" means.

If people upgrade software every few years it's because the new software is
much better (or at the very least perceived as such). Even most consumer
software keeps on working almost forever (although this is starting to change
now that so many things depend on external services).

Imagine if the giant metal press had a new version come out a few years later
than was twice as efficient. You could keep operating the old one as long as
you wanted, but paying for a new one would be well worth it. The old one is
"obsolete." But the value of the old one, in terms of what it does for your
business, is unchanged! If you wanted to sell it, the price on the secondary
market will take a big hit, but that's less important.

Rather than demonstrating that return from capital is declining, the rapid
obsolescence of software demonstrates that return from capital is increasing!
If businesses were buying new giant metal presses every few years even though
the old ones worked fine, would you say "oh, the return must be decreasing,"
or would you say, "wow, those new presses must be a huge improvement to be
worth such a quick turnaround"?

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nwah1
Housing is a euphemism for land. The value of locations is determined by the
quality of the surrounding community and the environment.

This value winds up in land because it is claimed for exclusive use by
individuals, enforced by government. Yet, claiming ownership over any part of
the surface of this ball of space rock is arbitrary, and no principle of
justice can truly legitimize it.

Instead of Piketty's blunt "wealth tax" we should be taxing land value, which
as the cited MIT/Brookings report shows, is responsible for nearly all the new
growth in inequality.

~~~
matwood
Who isn't paying taxes on their land value? Maybe there are some states that
do not, but every year I pay a pretty large tax bill based on the value of my
land/house.

~~~
ForHackernews
Arguably, we should be taxing based on the value of only the land itself, and
not considering improvements (buildings, etc.) made to the land, in order to
not (mildly) disincentivize making improvements to land one owns.

~~~
Symmetry
The problem is that a large fraction of our land value is in cities and most
of them have zoning restrictions that don't match classic notions of owning
land. It's easy for otherwise identical pieces of land in the same
neighborhood to differ in price by a factor of ten depending on whether it
comes with the right to build a house on it. Well, I suppose that means that
the land tax just has to incorporate different gradients of "owning" land but
that's probably still simpler than trying to determine the value of
improvements.

~~~
whomonk
You are right that assessments are based on the highest and best _allowable_
use, but actually land assessments are the easiest part. Pennsylvanian mayors
are on record that assessment changes (both technical and legal) almost
completely evaporate from shifting from buildings to land.

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ForHackernews
> Modern forms of capital, such as software, depreciate faster in value than
> equipment did in the past: a giant metal press might have a working life of
> decades while a new piece of database-management software will be obsolete
> in a few years at most.

Is software even capital? Isn't this part of why we've been arguing against
software patents for years now? Obviously software and other forms of
intellectual property have value, but to me capital is something used to
_produce_ valuable products, not the products themselves. Maybe the firmware
for some CNC machine is capital?

Are books capital because you can make movies out of them?

~~~
eldavido
The economist is taking the position of the buyer (not maker) of software --
the prototypical business that buys a CRM tool to manage its customer
relationships.

Seen as a good that increases the productive capacity of a company or the
economy more generally, it seems software very much _is_ capital.

~~~
ForHackernews
Do they buy a CRM tool, or do they just license the use of one? My
understanding is that it's almost impossible to really "buy" and "own"
commercial software, you can only acquire a license to use it.

~~~
Symmetry
If the license lasts any period of time then it's still capital, albeit
capital that depreciates quickly.

------
pcarolan
Conventional wisdom says that homes are bad investments compared to equities,
conventional wisdom looks to be wrong. Maybe loading up your 401k instead of
buying a home isn't such a good idea. The right answer is probably to
rebalance a bit towards property.

~~~
psaintla
Yes, which is always why I always cringe when I see how many people in their
20s and 30s believe that home ownership is a bad idea. The willingness to rent
for life in order to live a high density, urban lifestyle is going to come
back to haunt them when they get older. It's good for me as a landlord but I
hope people my age start rethinking their position on home ownership.

~~~
enraged_camel
I don't rent for the urban lifestyle. I rent because it gives me tremendous
flexibility when it comes to where to work. If I bought a house somewhere, I
would be stuck in that place for close to ten years. Sure I could do remote
work, but that is still not as common-place as regular in-office work, so I
would be shooting myself in the foot in terms of job prospects and therefore
earning potential.

Home ownership was a no-brainer back when people got a job out of high school
or college and worked at that job for decades, got regular raises, then
retired with a pension. Nowadays though? Job hopping is the only reliable way
of increasing one's income, and "right to work" is very common which means you
can lose your job one day just because someone decided they no longer want
you.

Not to mention the economic downturns. What did we see during the most recent
recession? People lost their jobs first, then they lost their houses because
they couldn't pay mortgage anymore. Barely six years have passed and yet
people are already losing their minds again about home ownership.

Does home ownership have its advantages? Absolutely. Is it the right choice
for everyone? Hell no.

~~~
pzxc
Not to nitpick but the distinction is important: "at-will employment" is what
means your employer can fire you at any time for any reason (or no reason),
"right to work" refers to the idea that in some states unions cannot force
non-union members to pay fair share fees.

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hucker
Paywalled... Does anyone have a mirror?

edit: They removed it, thanks The Economist!

~~~
throwaway_xl5
Economist lets you read a limited number of articles free of charge each
month. The link gave me the full article so perhaps you used up your quota, or
their rules are different in your territory?

~~~
hucker
It says I've used up my number of articles for the month, but I can't remember
reading any in a long time, which my browser history confirms. Weird.

------
michaelochurch
The weak point of democracy is the phenomenon of _cheap votes_. On any high
stakes issue, there are still a large number of people who don't give a damn
and will sell their vote for $25 if they legally can. This undermines the
democratic process, as power accrues to those who bundle cheap votes together
and deploy or sell the packages. This leads to a "democracy" (or, in Silicon
Valley corporate-speak, a meritocracy) that can readily be used to validate
the will of the existing elite, while posing no threat to it or check against
its greed.

In elections, we prohibit explicit vote selling. But marketing is also about
cheap-vote buying. Pepsi advertises because a large number of people just
don't care which cola they get. Wal-Marts destroy small towns, but they're
profitable because a large number of people will (with no ill intent, or
cognizance of this being what they're doing) "vote" against their own
communities to save $25 on Christmas shopping.

In culture, the term for very loud or passionate cheap votes is "useful
idiots". Startup cheerleaders and the tech press (regulatory arbitrage! so
visionary!) are useful idiots for the venture capitalists. The 22-year-olds
who work 12 hours per day because they believe their 0.03% slices are just
"teasers" and that they'll be introduced to VCs inside of 6 months are cheap
votes.

NIMBY is two problems come together, because it's a cheap-vote dynamic on both
sides. Among the renters on the losing side, most people don't get involved in
local issues, and _not_ voting is a vote. They're selling their vote for the
benefit of not having to put time in, and perhaps because they consider the
NIMBY problem helpless. On the other hand, the NIMBYs are also cheap votes.
They know what's good for society and the rising generation, yet they push for
the opposite because they'd rather jerk up their housing prices and get
artificial money they don't need (and can't use unless they sell their houses
and move to a cheaper place) than do the right thing. They're easily bought.

The story of the "first world" 21st century, in terms of the breakdown of
democracy, capitalism, and meritocracy at the hands of a corporate elite, is
the story of cheap vote aggregation. Nowhere is this more evident than in
venture capital, where passive capital (cheap votes) from teachers' and
firefighters' pension funds from Ohio and Nebraska and Montana is siphoned off
to the career benefit of well-connected rich kids in California. The people
who should care, don't, because it doesn't affect them _enough_.

~~~
icebraining
Why bring new terminology to replace "concentrated benefits and dispersed
costs", which is well established?

