undefined | Better HN

0 pointsestearum12d ago0 comments

These are not incompatible with each other. If not for growth in land rents (which has no reason to exist given the complete lack of input costs), then each unit of labor would produce a more substantial improvement to their material circumstances.

Land rents are a very aggressive tax on all activity.

> There is an official government policy in all the English speaking countries I know about that every year prices should rise exponentially. I'd tag that as the most likely reason prices keep rising. It is surprising people don't point at it more often when prices rise.

Sure but this is an economic necessity to prevent an extremely perverse incentive (to not spend money as its value is expected to grow). The rise in land rents, or more specifically its capture by private individuals, is not an economic necessity and is itself a perverse incentive (to not utilize land as its value is expected to grow).

Monetary inflation adds more money to circulation which creates more production and eventually is economically neutral. The "increased prices" do not get captured by anyone. This is not how land rents work. The increased prices of land do not increase production whatsoever – the land already exists – and the increased prices are captured exclusively by landowners even though they get infused into and distributed across every price in the economy.

0 comments

3 comments · 1 top-level

roenxi12d ago· 2 in thread

Ok, well you've transitioned from "Yet somehow the prices keep rising." to "[prices rising] is an economic necessity to prevent an extremely perverse incentive". You don't seem to regard this state of affairs as suspicious so much as good policy.

> The rise in land rents, or more specifically its capture by private individuals, is not an economic necessity

Make your mind up, are prices going up something you want to happen or not? You can't expect land prices to drop relative to everything else for no reason if nothing else is changing in real terms. Obviously if prices going up generally is an economic necessity then prices of every particular thing are going to go up on average. You complained that people need to work to cover the cost of living, then simultaneously believe that people not having to work to cover the cost of living is a perverse incentive.

I'll give you a hint - prices going up isn't an economic necessity and the thing you're calling a "perverse incentive" is actually the same thing that you wanted to happen a few posts up. It is a lot easier for people to work less if they save some money. If people make a habit of spending literally all their money then they tend to discover that they need to work full time. If you have people earning and not spending all their money then taking a year off work starts looking quite attractive.

estearumOP12d ago

Huh?

Here, let me flesh out the original claim so you can see the difference:

> Like every single productivity improvement before it, the bulk of the gains of AI will be piled into land rents, which then gets diffused into the cost of everything that happens upon land (which is everything) and does not intrinsically result in higher wages to match higher nominal costs like monetary inflation does. Then we'll just remark "wow, we still need to keep working because the cost of living has really gone up!"

It's not a different claim at all. Didn't think I needed to account for the guy who doesn't know that monetary inflation isn't captured by anyone and is economically neutral in the long run lol.

> people not having to work to cover the cost of living is a perverse incentive.

You are simply mistaken if you think this is what happens when you have deflation.

And to be clear, I actually don't even have a problem with rising land prices. Prices are important tools for allocating resources. I have a problem with rising rents being captured by landowners for doing nothing. This should draw an even clearer distinction between rising land rents and monetary inflation which –– again –– does not get captured by anyone. It instead equilibrates with higher wages, increasing nominal costs but not affecting real wages. This is truly elementary stuff.

Nominal prices don't mean anything. I'm interested in the relationship between a person's productivity and their material conditions. Today's technology, sans the unjustified capture of land rents, is able to convert a person's labor into dramatically better material conditions than they actually get today. Land rents are the only expense in an economy where higher nominal prices do not feed back into an equilibrating increase in nominal wages. Those higher nominal prices do not do anything in the economy. They do not spur more production. They do not generate more demand. Land rents truly siphon productivity out of the economy in a way no other price increases do.

"Deflation is good" is the rightwing analog of "just tax unrealized gains" haha. Total inability to think one step further.

roenxi12d ago

So when you say

> Then we'll just remark "wow, we still need to keep working because the cost of living has really gone up!" and somehow not realize that the only thing in our economy where its inputs have not increased in price -- ever -- is the land beneath our feet. There are no input costs! Yet somehow the prices keep rising.

> Suspicious.

What you're actually doing is just adding generic filler that doesn't say anything? Because it seems like a lot of paragraph was ignoring the idea that monetary inflation isn't captured by anyone and is economically neutral in the long run lol.

EDIT And I'm not even convinced you've checked that rents are up compared to monetary inflation if you're using adjusted prices. Assuming we're talking about the US, if I pick out a reasonable-looking series for rent [0] and compare it to the M2 [1] from 1970 the two are close enough to keeping pace. Land rents are actually going up slower. What data are you working with here?

> Like every single productivity improvement before it...

On an aside, this is obviously wrong. It is clear we've all captured some of the benefits of past productivity improvements, life is pretty luxurious today compared to what our ancestors lived with. That couldn't be done without capturing some of the productivity gains.

[0] https://fred.stlouisfed.org/series/ASRLRRA027N

[1] https://fred.stlouisfed.org/series/M2SL

1 more reply

j / k navigate · click thread line to collapse