I honestly think this is a bit over-critical, as I think Ollie's causation points (market + crisis) is largely spot on. The biggest criticism I get behind is that Ollie massively simplified the...
I honestly think this is a bit over-critical, as I think Ollie's causation points (market + crisis) is largely spot on. The biggest criticism I get behind is that Ollie massively simplified the issue for a wider audience. I'm willing to bet relatively few people know the difference between personal property and private property, let alone a LVT verses property tax.
His criticism about landlords not being compensated for the land seizure is way off-base. One of his sources regarding landlords is from one of the biggest pro-Capitalism outlets out there, with a landlord propaganda piece. In short, the tale of a landlord making the same income as their tenants is a lie. Even if their cash profits is only $24,000 annually, they're also building equity on top of their income. The 'victim' discussed in the article was falling behind on debt payments ($1.2 million in total mortgages), but that means they, at some point, had $240,000 in cash to make down payments to secure that property. Which is about 48000x more than your average American. So, as a reasonable compromise for the transition,in the case of very small-time landlords, I could see it being somewhat reasonable to give a small fraction of their equity back upon seizure if that's their only equity and income.
However, Hobbie goes on to say that landlords depend on being landlords. This is false, they can get actual jobs, like their tenants were doing to pay rent. If they were doing the home repairs and such to their properties, they should have no trouble finding jobs as a jack-of-all trades.
At that point he goes on to mention how state would own land, which is great for application of a LVT. And I agree that communities and individuals should form to build/modify/maintain/manage housing at the local level. But I feel that retaining financing at that point is worthless when all housing could just be funded by the LVT from the state, since without paying the LVT the building de-facto belongs to the state.
They are both right that this would massively transform the housing market positively. Here's a solution I ginned up that I believe would work well replace the existing market function of facilitating relocation, while eliminating profit:
Post your intention to move and relevant info about your home to the free (as in beer) market.
People desiring to move into your existing home join a raffle to move in when you move out.
You do the same for a home to the area you wish to relocate to.
Communities/Government inspect homes to insure that they are in good condition, assist with making repairs, possibly levying a fine for existing owner leaving house in disrepair. Perhaps using this as an opportunity for re-evaluating the LVT for the surrounding area if demand is much higher than supply.
The commune aspect isn't even really mandatory under this system, but it would certainly incentivize it. Since the LVT is the same no matter the density of the land, so there would be a bigger economic incentive to live in communal buildings/complexes (think a condo building with a park and pool as part of amenities). If you converted my block from many single-family homes into two or three communal dwellings at 3+ stories high, it would multiply available land for commons usage while fostering community and being cheaper for the families than having their own plot. This could be used for a build-out of wilderness or decentralization of farming to aid in reducing carbon footprint. In a fairly urban area. Multiply that by the dozens of blocks around me and it could seriously improve both air quality from additional plant mass and reducing dependency on shipping in crops.
I want to engage with one of the specific points you're talking about here: the need for cash to acquire property. While it's often true that if you want to buy a house to live in you need a...
I want to engage with one of the specific points you're talking about here: the need for cash to acquire property. While it's often true that if you want to buy a house to live in you need a significant cash down payment, there's a number of ways around it when you're purchasing for an investment. A smaller separately secured loan to acquire the down payment can then be rolled into the mortgage once the property is acquired, leaving you with a highly leveraged asset, but requiring minimal cash. After the first property is fixed up and rented, you can more easily take out a new, larger mortgage to get the down payment for the second property, and so on.
Of course, this requires some specialty knowledge and perhaps a few tens of thousands of dollars, but it's not functionally outside the abilities of the middle class, and certainly doesn't need cash on the scale of $240k, just the willingness to highly leverage your assets.
Fair point might not be quite that high of initial cash, just 2x more per 10,000, so still very few tears shed on this end. Being able to leverage assets to that degree is part of the reason that...
Fair point might not be quite that high of initial cash, just 2x more per 10,000, so still very few tears shed on this end.
Being able to leverage assets to that degree is part of the reason that the current finance industry is a bit of a house of cards.
Presuming what you outlined is how the lady got the properties, the banks were not properly following their due diligence to validate that she could continue paying her debt if her renters could not keep up with payments. If she defaulted on just 1 loan, the underlying assets would be seized in a cascading fashion, with likely not enough to go around to the various debtors.
Half of the problem of the housing crisis is the presumption that property values will continually rise, and that renters will always be able to keep up with that. Might be true in a world where wages did not stagnate relative to house values.
Absolutely. It's a house of cards. But part of the problem there is that it's not just a matter of taking the property from the owners, regardless of the compensation question. If there's a...
Absolutely. It's a house of cards. But part of the problem there is that it's not just a matter of taking the property from the owners, regardless of the compensation question. If there's a mortgage, how do you deal with that? Dissolve it, or leave it as the prior owner's debt? If it's dissolved, what does that then do to the banks who currently hold the mortgage? Do they take it as a loss? What does that do to their other financial obligations?
I'm not at all arguing that changing the way the housing market works isn't valuable or important, but it's deeply tied into the rest of the economics of the USA, and it would be very easy for there to be unforseen side effects and unforseen winners and losers unless it's handled carefully.
Dissolve debt. Let any bank that can't take the hit fail. Pay out FDIC to the people up to $250k. Create new banks (ideally government-owned) with better regulations.
Dissolve debt. Let any bank that can't take the hit fail. Pay out FDIC to the people up to $250k. Create new banks (ideally government-owned) with better regulations.
I don't see the need to let the banks fail when there's already the infrastructure in place. I do agree that private ownership of banks is problematic, but if we're going for big solutions (that I...
I don't see the need to let the banks fail when there's already the infrastructure in place. I do agree that private ownership of banks is problematic, but if we're going for big solutions (that I don't entirely agree with) it'd be better in my opinion to nationalize the existing banks or convert them to cooperative ownership than tear them down and start anew. It takes a lot of time and money to build infrastructure, and starting hundreds of new banks from scratch would be costly on both fronts.
I'm happy to drop the specific line of conversation, but I feel like implementation details are important. I've worked with a number of nonprofits on smaller scales where the theory and goal are...
I'm happy to drop the specific line of conversation, but I feel like implementation details are important. I've worked with a number of nonprofits on smaller scales where the theory and goal are great, and can be talked about in depth and wrangled in great detail, but when it comes to making decisions about the day to day operation of the organization to implement the actions needed to accomplish those goals, suddenly no one can stand up and talk about how it's going to work.
As someone whose real passion in this world is in the development and refining of operations, this feels like this is the place where a lot of social theory runs aground. I can agree wholeheartedly with the overall goal, but worry that when people say that we can figure out the implementation later they're leaving the discussion mostly incomplete.
I get that and agree to a point..but at this juncture most of this is hypothetical short of revolution. I think a LVT and rent control is a great first step. Beyond that it's mostly theorizing...
I get that and agree to a point..but at this juncture most of this is hypothetical short of revolution.
I think a LVT and rent control is a great first step. Beyond that it's mostly theorizing what next steps should be, and how severe the metaphorical guillotine should be (referring to a massive wealth redistribution in one go).
I honestly think this is a bit over-critical, as I think Ollie's causation points (market + crisis) is largely spot on. The biggest criticism I get behind is that Ollie massively simplified the issue for a wider audience. I'm willing to bet relatively few people know the difference between personal property and private property, let alone a LVT verses property tax.
His criticism about landlords not being compensated for the land seizure is way off-base. One of his sources regarding landlords is from one of the biggest pro-Capitalism outlets out there, with a landlord propaganda piece. In short, the tale of a landlord making the same income as their tenants is a lie. Even if their cash profits is only $24,000 annually, they're also building equity on top of their income. The 'victim' discussed in the article was falling behind on debt payments ($1.2 million in total mortgages), but that means they, at some point, had $240,000 in cash to make down payments to secure that property. Which is about 48000x more than your average American. So, as a reasonable compromise for the transition,in the case of very small-time landlords, I could see it being somewhat reasonable to give a small fraction of their equity back upon seizure if that's their only equity and income.
However, Hobbie goes on to say that landlords depend on being landlords. This is false, they can get actual jobs, like their tenants were doing to pay rent. If they were doing the home repairs and such to their properties, they should have no trouble finding jobs as a jack-of-all trades.
At that point he goes on to mention how state would own land, which is great for application of a LVT. And I agree that communities and individuals should form to build/modify/maintain/manage housing at the local level. But I feel that retaining financing at that point is worthless when all housing could just be funded by the LVT from the state, since without paying the LVT the building de-facto belongs to the state.
They are both right that this would massively transform the housing market positively. Here's a solution I ginned up that I believe would work well replace the existing market function of facilitating relocation, while eliminating profit:
The commune aspect isn't even really mandatory under this system, but it would certainly incentivize it. Since the LVT is the same no matter the density of the land, so there would be a bigger economic incentive to live in communal buildings/complexes (think a condo building with a park and pool as part of amenities). If you converted my block from many single-family homes into two or three communal dwellings at 3+ stories high, it would multiply available land for commons usage while fostering community and being cheaper for the families than having their own plot. This could be used for a build-out of wilderness or decentralization of farming to aid in reducing carbon footprint. In a fairly urban area. Multiply that by the dozens of blocks around me and it could seriously improve both air quality from additional plant mass and reducing dependency on shipping in crops.
I want to engage with one of the specific points you're talking about here: the need for cash to acquire property. While it's often true that if you want to buy a house to live in you need a significant cash down payment, there's a number of ways around it when you're purchasing for an investment. A smaller separately secured loan to acquire the down payment can then be rolled into the mortgage once the property is acquired, leaving you with a highly leveraged asset, but requiring minimal cash. After the first property is fixed up and rented, you can more easily take out a new, larger mortgage to get the down payment for the second property, and so on.
Of course, this requires some specialty knowledge and perhaps a few tens of thousands of dollars, but it's not functionally outside the abilities of the middle class, and certainly doesn't need cash on the scale of $240k, just the willingness to highly leverage your assets.
Fair point might not be quite that high of initial cash, just 2x more per 10,000, so still very few tears shed on this end.
Being able to leverage assets to that degree is part of the reason that the current finance industry is a bit of a house of cards.
Presuming what you outlined is how the lady got the properties, the banks were not properly following their due diligence to validate that she could continue paying her debt if her renters could not keep up with payments. If she defaulted on just 1 loan, the underlying assets would be seized in a cascading fashion, with likely not enough to go around to the various debtors.
Half of the problem of the housing crisis is the presumption that property values will continually rise, and that renters will always be able to keep up with that. Might be true in a world where wages did not stagnate relative to house values.
Absolutely. It's a house of cards. But part of the problem there is that it's not just a matter of taking the property from the owners, regardless of the compensation question. If there's a mortgage, how do you deal with that? Dissolve it, or leave it as the prior owner's debt? If it's dissolved, what does that then do to the banks who currently hold the mortgage? Do they take it as a loss? What does that do to their other financial obligations?
I'm not at all arguing that changing the way the housing market works isn't valuable or important, but it's deeply tied into the rest of the economics of the USA, and it would be very easy for there to be unforseen side effects and unforseen winners and losers unless it's handled carefully.
Dissolve debt. Let any bank that can't take the hit fail. Pay out FDIC to the people up to $250k. Create new banks (ideally government-owned) with better regulations.
I don't see the need to let the banks fail when there's already the infrastructure in place. I do agree that private ownership of banks is problematic, but if we're going for big solutions (that I don't entirely agree with) it'd be better in my opinion to nationalize the existing banks or convert them to cooperative ownership than tear them down and start anew. It takes a lot of time and money to build infrastructure, and starting hundreds of new banks from scratch would be costly on both fronts.
That's fair. I'll chalk that one up to implementation details. :)
I'm happy to drop the specific line of conversation, but I feel like implementation details are important. I've worked with a number of nonprofits on smaller scales where the theory and goal are great, and can be talked about in depth and wrangled in great detail, but when it comes to making decisions about the day to day operation of the organization to implement the actions needed to accomplish those goals, suddenly no one can stand up and talk about how it's going to work.
As someone whose real passion in this world is in the development and refining of operations, this feels like this is the place where a lot of social theory runs aground. I can agree wholeheartedly with the overall goal, but worry that when people say that we can figure out the implementation later they're leaving the discussion mostly incomplete.
I get that and agree to a point..but at this juncture most of this is hypothetical short of revolution.
I think a LVT and rent control is a great first step. Beyond that it's mostly theorizing what next steps should be, and how severe the metaphorical guillotine should be (referring to a massive wealth redistribution in one go).