The source of funds for the city is taxation on land value. How does a person pay the taxes if they don’t have the liquidity? That is, they are land-rich but cash poor.
Many people borrow against the equity in their property to be able to make personal decisions about how to run their own lives and improve their properties. Businesses do the same to be able to make decisions on how to improve their own businesses.
Once you start taxing someone’s wealth you take away their ability to make decisions that they individually believe are needed. The individual still takes the risk but now has no incentive.
Moreover, your model neglects to deal with accountability. Look at all the failures of government, the graft and corruption (CA train, CA fire suppression and utilities), USAID, US SNAP scams, Medicaid fraud, and on and on). Yes a person is sacrificed here and there but there is never any real accountability.
Collectivism is always and necessarily de minimus. On the contrary, as has been demonstrated everywhere governmental collectivism has been implemented, it does not create a rising tide. It creates a swamp. How’s New York doing with Mamdani?
Utopias fail because they don’t account for reality.
I don’t think the economics would work well in your model. Let’s take your example from Seattle. On a small scale that collective ownership may work because that small group owns the property and is assuming all the risk. If/when maintenance is required or if they want to improve their own businesses property they can leverage their equity to cover the costs. Where is all this cash coming from in your model? Government redistribution? And then why improve properties. There is no incentive if property is collective. This has been proven time and again.
Collectivism comes at the cost of individual liberty.
Yes, as you mentioned, government can develop the environment to enable economic growth (and they can and many time do the opposite as well), but it is the individual who takes the risks for the rewards that build value. Take away the rewards and you take away the ability to build value and innovate and improve things. We need systems that enable (or get out of the way) personal agency.
For the liquidity bit, I'll say the the idea I'm thinking through here is a world without privatized real estate equity. In this world, no one is living in, say, a house on a 5,000 sqft lot in an inner ring suburb. The built environment, and how people inhabit it, would look much much different. Which is to say, the system I'm imagining would mean no one could ever be land rich and cash poor. The point is to produce the opposite, thereby enabling people to have the resources they need to take all the risks we both agree are so important for society.
Now, if you own a house and lever up to get cash and start a business, if that business fails you just lose your house. I'd prefer a world where that value doesn't stay locked up in land and, instead, is used to make everyone more liquid all the time.
Now, as for the corruption issue, two responses here. First, this is a work of semi-speculative institutional design. If you're interested in conversations of organizational efficacy or state capacity, that's a whole separate topic (which I'll be writing about later this year at Urban Proxima!). Second, there are plenty of examples of well functioning institutions. The Hong Kong Metro Railway Corporation Limited, the Battery Park City Authority in NYC, the West Falls Community Development Corporation...these are just a few I happen to be familiar with.
But let's talk about “governmental collectivism”. What I’d offer to you is we, in the United States, already live in the quickly desiccating corpse of post-war collectivism.
Coordinated government policy at all levels conspired to create the land use regime we live in today on the basis of a centrally planned mortgage market whose explicit goal was to enable homeownership at a level that undirected credit markets would have never been able to achieve. Now, we could argue about whether this was good or bad policy (obv I have critiques), but if we want to describe the world I’ve sketched our here on a napkin as collectivist, we also need to acknowledge the degree of central planning that went into the system of homeownership we have in the U.S. today.
I love this idea which really incentivizes all long term development which will add the most future value to benefit all residents, regardless if they will personally use the value generating asset or not.
Jeff, this is extraordinarily provocative and ingenious. Kudos to you for putting this concept together. The best observation you make is that the PARTS of this proposal already exist--and simply require "assembly." I'm an architect writing a substack about Modern Money Theory https://johnalt.substack.com/ and will now be giving thought to how the mechanisms of modern fiat money might assist and contribute to the concept you've described. Thanks for your provocation!
Fascinating idea on how to rethink home ownership, belonging, and funding government.
The source of funds for the city is taxation on land value. How does a person pay the taxes if they don’t have the liquidity? That is, they are land-rich but cash poor.
Many people borrow against the equity in their property to be able to make personal decisions about how to run their own lives and improve their properties. Businesses do the same to be able to make decisions on how to improve their own businesses.
Once you start taxing someone’s wealth you take away their ability to make decisions that they individually believe are needed. The individual still takes the risk but now has no incentive.
Moreover, your model neglects to deal with accountability. Look at all the failures of government, the graft and corruption (CA train, CA fire suppression and utilities), USAID, US SNAP scams, Medicaid fraud, and on and on). Yes a person is sacrificed here and there but there is never any real accountability.
Collectivism is always and necessarily de minimus. On the contrary, as has been demonstrated everywhere governmental collectivism has been implemented, it does not create a rising tide. It creates a swamp. How’s New York doing with Mamdani?
Utopias fail because they don’t account for reality.
I don’t think the economics would work well in your model. Let’s take your example from Seattle. On a small scale that collective ownership may work because that small group owns the property and is assuming all the risk. If/when maintenance is required or if they want to improve their own businesses property they can leverage their equity to cover the costs. Where is all this cash coming from in your model? Government redistribution? And then why improve properties. There is no incentive if property is collective. This has been proven time and again.
Collectivism comes at the cost of individual liberty.
Yes, as you mentioned, government can develop the environment to enable economic growth (and they can and many time do the opposite as well), but it is the individual who takes the risks for the rewards that build value. Take away the rewards and you take away the ability to build value and innovate and improve things. We need systems that enable (or get out of the way) personal agency.
Hey Tim, thanks for the read!
For the liquidity bit, I'll say the the idea I'm thinking through here is a world without privatized real estate equity. In this world, no one is living in, say, a house on a 5,000 sqft lot in an inner ring suburb. The built environment, and how people inhabit it, would look much much different. Which is to say, the system I'm imagining would mean no one could ever be land rich and cash poor. The point is to produce the opposite, thereby enabling people to have the resources they need to take all the risks we both agree are so important for society.
Now, if you own a house and lever up to get cash and start a business, if that business fails you just lose your house. I'd prefer a world where that value doesn't stay locked up in land and, instead, is used to make everyone more liquid all the time.
Now, as for the corruption issue, two responses here. First, this is a work of semi-speculative institutional design. If you're interested in conversations of organizational efficacy or state capacity, that's a whole separate topic (which I'll be writing about later this year at Urban Proxima!). Second, there are plenty of examples of well functioning institutions. The Hong Kong Metro Railway Corporation Limited, the Battery Park City Authority in NYC, the West Falls Community Development Corporation...these are just a few I happen to be familiar with.
But let's talk about “governmental collectivism”. What I’d offer to you is we, in the United States, already live in the quickly desiccating corpse of post-war collectivism.
Coordinated government policy at all levels conspired to create the land use regime we live in today on the basis of a centrally planned mortgage market whose explicit goal was to enable homeownership at a level that undirected credit markets would have never been able to achieve. Now, we could argue about whether this was good or bad policy (obv I have critiques), but if we want to describe the world I’ve sketched our here on a napkin as collectivist, we also need to acknowledge the degree of central planning that went into the system of homeownership we have in the U.S. today.
If you're interested, I have some thoughts related to the topic here: https://urbanproxima.substack.com/p/how-we-build-housing-is-how-we-build
I love this idea which really incentivizes all long term development which will add the most future value to benefit all residents, regardless if they will personally use the value generating asset or not.
Jeff, this is extraordinarily provocative and ingenious. Kudos to you for putting this concept together. The best observation you make is that the PARTS of this proposal already exist--and simply require "assembly." I'm an architect writing a substack about Modern Money Theory https://johnalt.substack.com/ and will now be giving thought to how the mechanisms of modern fiat money might assist and contribute to the concept you've described. Thanks for your provocation!