0:00

Marshall here. Welcome back to

0:02

the realignment.

0:08

Everyone, happy Friday. Hope

0:10

you had the chance to check out

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the conference I appeared yesterday. Freedom

0:15

in progress, put on by Free App.

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Quick reminder before we get in today's episode,

0:20

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Help us really finish strong

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Last As I mentioned during yesterday's

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1:00

pod at gmail dot com or reply

1:02

to the sub stack that's coming out. later

1:05

today. On to today's episodes.

1:07

As I mentioned last Friday with my conversation

1:09

with Jonathan B about Rene Gerard's

1:12

thought. I'm doing a couple episodes that are focused

1:14

on philosophy and how philosophical

1:17

ideas and how political philosophy

1:19

and different sorts of ideas. can

1:21

approach problems we're having. So last

1:24

week was about Rene Gerard. This

1:26

week is with a previous realignment guest,

1:28

Laura Stusset, I appeared on

1:30

his podcast at the start of September.

1:32

It's called NARRATIVE's video host

1:34

with Will Jarvis. Post that in the feed, go

1:36

check it out. But Today, we're talking about

1:39

an idea or a philosophy called

1:41

Georgeism. Lars has actually written a

1:43

book called land is a big deal.

1:45

why rent is too high, wage is too low,

1:47

and what we can do about it. You know,

1:49

we spent a lot of time on land,

1:52

housing prices, wages, employment,

1:55

all those good issues. And what he is putting

1:57

forth here is this idea that Georgeism

1:59

is actually a way of solving for

2:02

or answering a bunch of the questions you're going to have.

2:04

So dive into this episode. It's a deeper

2:06

dive, but like I said, it's Friday.

2:08

Hope you all enjoy it. and you'll see while

2:10

next week.

2:25

Lares to say, back to

2:27

the realignment. Howdy.

2:29

How's everyone doing?

2:30

Howdy as a as a new

2:33

Texan. I am I'm gonna start peppering

2:36

in

2:36

Audi's. You're gonna start

2:39

seeing me roll into studios of

2:41

cowboy boots in, like, April twenty

2:43

twenty three. So thank you for slowly

2:46

accentating myself to

2:48

this lifestyle, which is also useful because

2:50

we're talking today about land,

2:53

rent housing wages,

2:55

all really relevant to Texas, so there's obviously

2:57

something there. But folks will probably

2:59

recognize your name because we did

3:01

a cross posting of a podcast. I actually

3:04

record with you in my house on

3:06

the Meredith's podcast. You wanna go back

3:08

you asked me some really good questions

3:10

that came out towards the end of August, so

3:12

folks could definitely check back there. For

3:15

today, we're here to speak about your

3:17

book. land is a big deal, why

3:19

rent is too high, wage is too

3:21

low, and what we can do

3:23

about it. let's do the first

3:25

question here. You do a funny but

3:27

also perceptive literary

3:31

move at the star in the book's preface where

3:33

you say hey, I'm gonna kind

3:35

of write this as if a

3:37

reader fifty, sixty, seventy, eighty,

3:39

a hundred years from now. or reading

3:41

it. So you kind of describe the

3:43

2020s, what

3:46

you kind of see about this moment,

3:48

what's relevant, Diagnosed

3:51

the 2020s for me, and then answer

3:53

why is land, a fundamental

3:56

part of that story. Right? So

3:58

I think the 2020s

3:59

are a interesting story

4:02

because what's interesting

4:04

why land is a big deal and why everyone's suddenly

4:06

noticing it. now of all times and

4:08

the country is how old

4:10

does the country two hundred and seventeen

4:12

seventy six at three hundred? You know, somewhere in that

4:14

range and doing the math immediately in my head. but

4:17

it's because America has the

4:19

mindset of a frontier nation

4:21

that no longer has a frontier.

4:23

And that is at the heart of

4:26

what I believe to be all our contradictions and problems.

4:28

Why the boomers say just pull yourself up by your

4:30

bootstraps? I did it. Why can't

4:32

you? And the answer is because of

4:34

all the various frontiers that have been in American

4:37

history, those frontiers are now

4:39

closed for the current generation. and

4:42

that has everything to do with America's

4:44

history of land policies and

4:46

why things worked really great for a while.

4:49

until they suddenly stopped working, and

4:51

then just the rent started getting too

4:53

damn high. And there

4:55

are various periods where a Frontier opens,

4:58

and then a frontier closes. And at the end of nineteenth

5:00

century was a period of kind of

5:02

the end of the first frontier, which

5:05

was westward expansion railroads, taking

5:07

land away from the Indians. you know,

5:09

and the second frontier that opened was

5:11

the invention of the automobile in the early twentieth

5:13

century. And that opened up a whole new

5:15

category of land that was now valuable

5:17

to people. but we've now reached the end of that

5:19

as we've reached the maximum amount

5:21

of suburbanization. And I can

5:23

come back to this idea later, but that is what I think

5:25

is the unique moment now is that we've reached

5:27

end of kicking the

5:30

solution to the land problem, kicking

5:32

that can down the road and ignoring it

5:34

through just frontier expansion because we've now

5:36

run down a frontier. and now we're

5:38

left in a situation much like Europe

5:41

where everybody owns the land and now

5:43

we just need to deal with that fact and all the

5:45

consequences that come with it. You

5:47

know,

5:47

this is helpful whenever we're talking

5:50

about these, the NBA,

5:52

yes, my backyard, no, my

5:54

backyard, debates about

5:56

housing policy and land pretty

5:58

quickly. They kind of tended to send

6:00

into

6:03

people in different sides of the issue,

6:05

kind of argue about their ideal

6:07

form of of lifestyle

6:09

of living. There are people who hate cars,

6:12

people who love cars, and people who think that suburbs

6:14

are these nineteen nineties era

6:16

places that kill your existence. There are other people

6:18

like me who say, wait a second. I pay less

6:20

rent than I did in New York and I get a

6:22

backyard. I love the suburbs. Where do

6:24

you kind of come as someone who lives in College

6:26

Station, Texas? Where do you come

6:28

on the like, what is the ideal

6:30

laws, like housing mix? Well,

6:33

if we go by revealed preferences, you

6:35

know, and part of my voice, I've got a

6:37

cough drops that I'm not gonna just be coughing

6:39

every second. But if we go by revealed

6:41

preferences, I live in the suburbs. Right?

6:43

You know, now that said, I don't

6:45

love the suburbs. You know, I remember

6:48

when we recorded your podcast

6:50

at your house and I can't visited you. You

6:52

mentioned that you had been suburb pills, and

6:54

you really enjoy the suburbs. And there's a reason

6:56

for that. The suburbs are

6:59

very desirable for a reason, who

7:02

wouldn't want a maximum amount

7:04

of land to yourself, you know, for

7:06

your budget. With a nice home,

7:08

all to yourself, some separation from your neighbors,

7:10

you keep the noise down. Like, it's a very desirable

7:12

kind of living situation.

7:15

And the

7:17

issue I have with the

7:19

life and the suburbs is

7:21

that, I mean, I've I've chosen it for a reason

7:23

I have narcolepsy. and one of my

7:25

triggers is noise. And so I

7:27

functionally can't live in cities. So if

7:29

I did have a preference for a city, it's just kind of

7:31

off the table because I'll have narcolepsy attacks

7:33

every day. Right? And so I live in the cities.

7:35

I maintain my environment. I I mean, I live in

7:37

a suburb. Right?

7:38

But I have some problems with it.

7:40

For instance, I don't like how card dependent

7:43

I am. I and I remember being a

7:45

kid who grew up in the suburbs too,

7:47

I had to ask my parents, I had to beg

7:49

my parents to go anywhere, to do anything.

7:51

Right? And

7:52

that

7:53

was really frustrating. And what's really interesting is

7:55

that I'm I'm a Norwegian citizen as well as

7:57

an American. My mom's from Norway. I I was

7:59

born in Texas. And so recently I

8:01

went to visit my family in Norway, and

8:03

it's a small nothing rural coastal

8:05

town, not like someone of the Hip Cities, like,

8:08

bed Gun or Oslo or anything like that.

8:10

We're just in this little nothing town. And

8:12

there's and my kids were just just

8:14

over the moon or the fact that there's just a little

8:16

store. that you can just walk to.

8:18

They're like, you can do that. There can be a store

8:20

that you can just walk to. And this is

8:22

not like some super urbanist like

8:24

walkable city. That it was just literally a

8:27

village with a store that you could walk

8:29

to. And they just thought that was so cool.

8:31

And the way I like to say it is that

8:33

I'm not one of those necessarily like

8:35

super f cars, people like reded

8:38

slash r slash f cars. You know? It's

8:40

like, I am kind of, like, I wish we had smart

8:42

urban development. But when I really

8:44

mourn is the loss of towns. We

8:46

don't have towns and villages in the United States.

8:48

We have suburbs. We have bedroom

8:50

communities. And know,

8:52

whether you wanna have, like, the super

8:54

urbanist hitster walkable community

8:56

with a, you know, with a bistro

8:58

and a and a Bodega and all that stuff. Like, I

9:00

don't care about that stuff so much I would like to

9:02

be able to walk to a store. I

9:04

would like my kids to be able to

9:06

walk to their friends homes and their friends

9:08

like live closer by them. and not be

9:10

dependent on a car for absolute everything. I would like to have a I

9:12

would like to live in a village in a town rather than

9:14

a suburb. Even though I prefer

9:16

a suburb to a city, but I would much prefer

9:18

a village or a town to a suburb. And we

9:20

don't really have those in America anymore. So that is that

9:23

is the ideal Lars living situation.

9:25

you know, I

9:25

want you to spend some time on

9:28

this idea of a

9:30

closed frontier because folks who are thinking

9:32

about the frontier and your to the nineteenth

9:34

century, you'll think of Frederick,

9:36

Jackson Turner, famous, you

9:38

know, academic speech, and then book

9:40

comes out in, you know, the eighteen nineties,

9:42

but it's about In that period,

9:44

the US officially closed, right,

9:46

the the Homestat Act, it

9:48

closed the period where you could

9:50

move out west and just get more land

9:52

your a. you know, European

9:55

migrant and you're living in

9:57

New York or, you know,

9:59

a a

9:59

kind of Shack in Boston, you could

10:02

just go west. That was the solution

10:04

to

10:04

the written land problem

10:07

then. But to your point though,

10:09

We're experiencing this lack of frontier

10:11

now, but there's over a hundred and

10:13

twenty years between the closing of the

10:15

frontier. And at a literal

10:17

level, and

10:18

the word of the 2020s. So

10:20

can you just kind of talk us through? And we'll

10:22

get into Georgia Georgiaism, which is

10:24

the, like, idea we're kind of talking about here, but

10:26

you just kind of describe for me in

10:29

listeners those a hundred and twenty

10:31

years and where and what this idea of

10:33

George is George's of and how it fits into this.

10:35

Right. So Henry George, you know, his

10:37

book, progress and poverty, do I have

10:39

it in front of me? What year was it published? I think it

10:41

was published eighteen seventy nine,

10:43

yes, published in eighteen seventy nine.

10:45

So that's about that period of the closing of a

10:47

frontier. What what what exactly did you say?

10:49

At eighteen ninety

10:51

3345

10:53

Yeah. And end of the nineteenth century. Right?

10:55

So Henry George was born in eighteen seventy nine. He

10:57

runs from mayor of New York City in eighteen

10:59

eighty six. He actually beats Theodore Roosevelt.

11:01

for second place. But I will get into him later.

11:04

But the point is he was riding at this time of the

11:06

closing of the frontier. And so

11:08

now we are back into another time

11:10

period of the closing of the frontier I

11:12

mean, it closed decades ago, but in

11:14

modern age, but what what happened in that hundred and

11:16

twenty years? And this is the

11:18

reason, this is the answer to the question of, like, what

11:20

happened to Georgia's and we'll get we'll get into it is that

11:22

we discovered a new frontier in the form of the

11:24

automobile. Right? And then we also had two

11:26

world wars and the

11:28

Cold War which created, you know, this

11:30

whole the whole capitalist

11:32

socialist dichotomy, which just sucked up all the

11:34

oxygen for a century. But so what

11:36

happened is we invented the automobile and

11:39

that opened a frontier. Now not

11:41

necessarily like When you think of a

11:43

frontier, you think of like land that's available

11:45

out there and you can just go there. Right?

11:48

So when we started industrializing,

11:50

the value of land shifted

11:52

from agricultural land to

11:55

more urban residential land.

11:57

Right? Because productivity shifted

11:59

from you raise crops to you make

12:01

things in factories and stuff. And

12:03

so basically the productivity move from the

12:05

field to your job. And so

12:07

the real land value then is living

12:09

somewhere where you can get a good

12:11

job. Right?

12:12

Hang on. Gonna cough. Gonna

12:14

mute.

12:16

And

12:16

so those land

12:19

values go up. as

12:21

those as as places get more productive,

12:23

as cities get more productive, this is what the theory

12:25

talks about. We can get into that in a late a later bit.

12:27

is that the land values rise to match the

12:30

productivity of the area. And the landlord

12:32

basically captures the majority of that increase

12:34

in production. And so it

12:36

used to be before they mentioned to the car, if

12:38

you wanted to work in a very productive

12:40

city, you had to live like

12:41

really kind of

12:43

really, really close by. Like, you couldn't

12:45

walk, you know, a hundred and twenty

12:47

miles. You know? And so that

12:49

really limited where you could in the

12:51

proximity of the city. And so you got these really

12:53

crowded like tenements, you know, all

12:55

these people

12:57

who wanted those jobs and were needed

12:59

for those jobs but basically being

13:01

priced out of the housing at that time. Like, you had a

13:03

housing crisis at that time

13:05

that very much rhymes with the one today. I mean, it was

13:07

it was worse in many ways. Like,

13:10

you just have this like horrible grinding

13:12

grinding poverty at the time.

13:14

And another thing we forget is

13:16

that America Like,

13:17

there like, open discussion of whether there would be a

13:20

socialist revolution in America. Right?

13:22

Because things were so bad, people were

13:24

like, well, is this the end of capitalism? You

13:26

know, and socialism also hadn't, like,

13:28

crystallized into being synonymous with

13:31

Marxism yet. There were a bunch of

13:33

other competing people like Proud Hahn

13:35

and and other academics

13:37

and writers and theorists that were out

13:39

there before Marx just

13:41

basically became the canonical socialist.

13:44

And then there were other competing theories like

13:46

Henry George had this other idea

13:48

about what was wrong and how to solve things. And he very

13:50

much focused on the land issue. And

13:52

so when we invented the automobile,

13:54

it allowed you to commute into

13:56

work. Right? So now that opens

13:58

a new frontier, there's all this land, like America has

13:59

plenty of land. There's plenty of land in the

14:02

Nevada desert today, but nobody

14:04

cares because it's not productive

14:06

land. Right? And so what matters

14:08

is productive land. So land sixty,

14:10

a hundred twenty miles out of the city center, you

14:12

know, if you've got a car, you know, you can commute

14:15

a certain amount of distance in before

14:17

it becomes know, not worth it

14:19

anymore. Now the traffic gets too

14:21

bad. But there there's like this this

14:23

limit within we we can just

14:25

expand out words. So,

14:26

I mean, we had two world wars, which kinda put everything

14:28

on pause for a while. But after that,

14:30

it's like, okay, let's

14:32

let's build these highways. And those

14:34

highways led to this building of suburbs and

14:36

we moved out of those suburbs. And certain

14:38

people were excluded from

14:40

access to suburbanization, notably

14:42

black people in America and in

14:45

other minorities. But for those who

14:47

were lucky enough to be in on that frontier

14:49

expansion, you know, the kind of parallel there is

14:51

like white settlers were the winners

14:53

of Frontier one point o,

14:55

Indians were the losers. And what

14:57

and

14:57

and, you know, you kinda had a mirroring of that

14:59

with Frontier two point o. And

15:02

I

15:02

forget exactly the year it is. I had an interview with

15:04

Noah Smith where he basically said exactly when homebuilding

15:06

peaked. I think he said two thousand six

15:08

or so. but that's like kind of Noah Smith's

15:10

answer about when the frontier kind of close. We've

15:12

reached the limits of that.

15:14

And there is a frontier three point o, but

15:16

it's very wimpy. And that Frontier three

15:18

point o has worked from home. Yeah. I was

15:19

gonna ask you about this. Yeah. And

15:22

so people are saying that, like, some

15:24

people are hoping that, like, Work from home

15:26

would be the new frontier. If we ever invent perfect

15:28

teleportation like just Star

15:30

Trek teleportation, that will be frontier

15:32

four point o. But I

15:34

I don't think we'll invent that. But

15:36

we're already seeing that, like, the work

15:38

from home frontier

15:39

closed very quickly. because all the

15:42

infrastructure was essentially already laid for it. You

15:44

know, they might have a little bit more give to it.

15:46

But basically, like, it took us

15:47

the whole century, you know, with world

15:49

wars thrown in there. to kind of expand

15:51

out all that infrastructure and then have it

15:53

be fully priced in. That's what really

15:56

represents the closing of the Frontier

15:58

is when the privileges and benefits of

15:59

all that extra productive

16:02

land is now priced into acquiring that

16:04

land. And in work from home now, it's

16:06

like every house in the suburbs that hasn't

16:08

that you could build an extra bedroom on

16:10

for, you know, a home office or that,

16:12

especially, anywhere that has good Internet,

16:14

like, you're already paying a lot more to

16:16

go there. and that amount is starting

16:18

to approach the extra benefit you could

16:20

get. It's an

16:23

open question of exactly like how close that frontier

16:25

is, but it's gonna close a lot faster

16:27

than the long march

16:30

of suburbanization because you gotta build

16:32

all of these highways. So

16:33

and the key thing here is

16:35

what you're essentially saying

16:37

is, you got the

16:39

Levittowns, so post Warburger two, like the first

16:41

suburbs. There's

16:43

sixty years of of

16:45

growth and opportunity in space

16:47

here. Regardless of how long

16:49

the work from home revolution

16:52

will go, your point is the period is just

16:54

much shorter by definition,

16:56

which limits how transformative it's gonna be. Is that

16:58

a good way of summing up? Yeah. Basically,

17:00

it's like whatever opportunity

17:02

is there. basically

17:03

gets eventually fully captured by

17:05

the people who own the land. And the amount

17:07

of time it takes for people to realize

17:09

those productive gains and

17:12

price it in with work from home. Just

17:14

in laying out that infrastructure is much shorter

17:16

period of time. And so us

17:18

getting to the end of that phenomenon is is

17:20

much faster than with with automobiles modernization. This

17:22

is where I wanna double

17:23

down a little more on

17:25

what George's and who Henry

17:27

George was because it's kinda funny

17:30

I actually had a bunch of listeners send

17:32

emails over the past year

17:34

asking me to do an interview on George's

17:36

Club. So your book actually was really

17:38

convincing me time to shout out I

17:40

forgot the folks name is what I'm happy I was able

17:42

to deliver for you eventually.

17:44

But, you know, you keep talking about

17:47

land And as I'm thinking about this as a

17:49

person who surveys the narrative,

17:51

like as a interviewer, I don't wanna

17:53

hear folks talking about land. We

17:55

had contradictory from the New York Times,

17:57

who wrote a great book on on

17:59

housing on. And we talked

17:59

about housing. We talked

18:02

about regulation. We didn't actually talk

18:04

about land. What

18:05

is it about George? George George ism having

18:08

trouble with that word. George ism

18:10

that places land so

18:12

much the center of things.

18:14

So the way I would say it is that,

18:16

you know, you go into any economic

18:19

debate, and everyone talks about labor and

18:21

capital. Right? And what are those two things?

18:23

They belong to a class of things called the

18:25

factors of production. If you open any

18:27

eTextbook, we'll talk about the factors

18:29

of production. And the factors of

18:31

production are things that come together to allow

18:33

us to produce, to produce wealth,

18:35

to do any useful work. Right?

18:38

And Most

18:40

econ textbooks and even most neoclassicals

18:42

and Marxist will admit that there's not two factors

18:44

of production, there's three. And those factors

18:46

are land, labor, and

18:49

capital. Right? And then some econ textbooks will throw in like entrepreneurship

18:52

as like a fourth factor of production, but that's

18:54

kinda like fuzz. You

18:55

know? But so when you think about the

18:57

factors of production, you need these

18:59

three things to do anything. You

19:03

you need labor to

19:05

do anything. You need to, like, do some work in order

19:07

to produce something. And then capital

19:09

is kind of a force multiplier. Right? You George

19:12

argues you technically don't need capital, but if

19:14

you wanna, like, get a lot of work

19:16

done productively, you you do need it. And

19:18

capital means like wealth set to

19:21

the purpose of getting more

19:23

wealth. And then land, anything

19:25

you need to do, you need to do it in a location.

19:27

I like to say, you can't eat sleep,

19:29

work, or poop without access

19:31

to a location. And if you do any of

19:33

those things in a location that's unauthorized for

19:36

you, bad things

19:36

will happen to you. You know, like, if

19:38

you try to sleep on a park bench, you can get

19:41

arrested. Right? you know, and so and if you think about it, you

19:43

know, if you're a brilliant programmer and

19:45

you live in India, you know,

19:46

there's a certain difference in

19:48

the amount of wages you can get,

19:50

then if you have if you are a

19:53

US citizen and you're allowed to live and work in the

19:55

United States and have access to that job market.

19:57

Right? And so

20:00

land is a necessary factor of production. And the

20:02

difference between other economic

20:04

philosophies is other economic philosophies

20:06

treat land as if it's basically a species

20:08

of capital. And Henry George

20:10

basically his insight was no.

20:12

It's not a species of capital. Capital behaves

20:14

very differently from land. it to be treated

20:16

as its own unique thing and

20:19

everything flows from there. The way I would like to

20:21

describe it is it's kind of like trying to do chemistry

20:23

without the periodic table. Right?

20:25

It's like before we had chemistry, we had

20:27

alchemy, you know, and before we had astronomy,

20:29

we had astrology. And there were very

20:31

brilliant people working within those frameworks, but

20:33

because they were missing this fundamental

20:36

theoretical insight of of what the building

20:38

blocks even are, they were kinda limited in

20:40

the solutions they could imagine. And

20:42

George's contribution is it's like, land is

20:44

just as important as labor or capital. In fact,

20:46

it's even more important. And if

20:48

you understand how it's different,

20:50

and how it just affects the

20:53

economy, then

20:53

it changes your entire mind, changes the entire

20:55

way you think about economics. George just have

20:57

this kind of metaphor they call seeing

20:59

the cat, like

21:00

this little figure ground illusion like a magic eye

21:02

where you're looking at and you're like, what what is

21:04

that? It's just a landscape. But

21:07

then you see there's this silhouette of

21:09

a cap there. And once you see it, it's one of the solutions

21:11

where you can't unsee it. And so that

21:14

experience of understanding how

21:15

land affects the entire economy, once you

21:17

see it, you can't

21:18

unsee it is the way we like to say. And

21:21

I can go into why that is in

21:23

a second here, but I just wanna and

21:25

thought and pass back to you. No. You you

21:27

gave my you gave you my set up for a for

21:29

my next question. Why? Right.

21:30

Why is light a big deal? And so that

21:32

is the purpose of the book. because it seems

21:34

very strange. Here we are, both in our

21:37

own homes, you know,

21:39

teleconferencing virtually. You know,

21:41

my background is originally

21:43

in video games and stuff like that. So like these

21:45

very virtual lives we live, what

21:47

was sold to us is that land should matter

21:49

less than it has ever mattered before. we

21:51

we are entirely virtual ephemeral beings. You

21:54

know, work from home

21:56

all this, like, like and then someone comes along

21:58

and says, land is actually the most important thing

22:00

in economy or at least more important than we're giving

22:02

a credit for. Like, it just sounds so

22:04

weird and backwards. Right? And

22:06

that is because I think a lot of people

22:08

are over indexing on the fact agriculture is

22:10

a smaller part of this economy than it has

22:12

ever has been. And that's certainly

22:15

true. But and you can see this in some

22:17

graphs that are in my book. I got them from

22:19

Thomas Pickety. spoke capital in the twenty

22:21

first century. He's done a lot

22:23

of research and he's shown that most of

22:25

the value that used to be in agricultural land

22:27

has now just gone straight into residential

22:29

land.

22:29

Right? It's almost a one for one

22:32

transfer

22:32

of the the

22:34

share of real assets. And so

22:36

land is important. It's a different kind of land now than it

22:39

used to be, but the same rule applies.

22:41

And so in my book, I go out to like prove

22:43

this. Right? Land is a big

22:45

deal. It's right there in the title. And

22:47

I try to empirically demonstrate

22:49

it in a couple of concrete

22:52

ways. And the concrete testable hypotheses of

22:54

Islam, a big deal are most of

22:56

the

22:56

value of urban real estate is land.

22:58

So when you're buying a house in an urban

23:01

area, like, at least seventy percent of the value in most

23:03

of your big coastal cities is just paying

23:05

for the dirt, the location. Correct. on this.

23:07

You you you you

23:09

realize this on two levels. One, like, I hope

23:11

to buy a house next year. And if you

23:13

google on Zillow, in Austin, there

23:15

are lots of lots.

23:17

but are incredibly expensive.

23:19

And you really, really realize that

23:21

adding a house onto that wouldn't be

23:23

that much more. You also noticed this

23:25

as started watching like fix

23:28

her upper, you know, with Chip

23:30

and Joanna Gaines just for fun to get myself in

23:32

the home buying mode. And then just, like, wreck

23:34

the house but the Hikyo is still

23:36

there because it's just the land there. So

23:38

I I just I put what you

23:40

just said through a new frame, but I wouldn't have

23:42

had, like, six months ago. Right.

23:44

With a lot of house slippings is actually just enabled.

23:46

Like, they're really they a lot of house slippers

23:48

either think or they say that

23:50

they're making value off of, like, improving the

23:53

building. and that's possible, but that's mostly

23:55

subsidized just by the fact that people are moving into

23:57

the area and demand for the dirt is going up.

23:59

So whatever they do to the house, they could totally

24:01

wreck it concrete the the toilet.

24:04

It's like because someone will pay more for the

24:06

land even if they just plan on demoing

24:08

whatever ugly shock they managed to

24:10

to to to rig up

24:12

on it. So,

24:12

yeah, what's the second part? Okay. So, the

24:15

second way that land is a big deal is that

24:17

America's land rents

24:19

represent a sizable percentage of government spend

24:21

And this goes into Henry George's, like, idea that a

24:23

land value tax could replace some or

24:26

all other taxes. And a lot of people

24:28

say that's not possible. I went out and I did

24:30

the math, and it shows out that it's, like, we can

24:32

pay for an enormous amount of our current

24:34

spending just with a

24:35

tax on American land rents.

24:38

And then a prop has a different than a property

24:40

tax?

24:41

a property tax taxes buildings and land,

24:43

and it actually punishes you for building.

24:45

A land value tax taxes you

24:47

only on the value of the land as if there was

24:49

nothing on it. Right?

24:51

And the other

24:53

three ways that land

24:55

is a big deal is land

24:57

represents a significant percent

24:59

of all major bank loans, like

25:01

a growing majority share.

25:03

I think it's up to, like, sixty percent as of,

25:05

like, two thousand ten. So that's twelve

25:08

years old. It's been going up in almost all countries. It's particularly

25:10

that in China, as you can imagine. But

25:12

real bank loans are mostly just

25:14

chasing real estate around. And

25:16

we can see this with the effect that interest

25:18

rates and stuff like that have on the price of real

25:20

estate. And then land represents a

25:22

significant percent of all gross personal assets.

25:25

real estate is the world's biggest

25:27

asset class, like sixty seven,

25:29

it's two thirds. Two

25:31

thirds of all real assets. And a real

25:33

asset is like take the paper wealth decompose

25:35

it into the atoms that it points to at the

25:37

end of the day, two thirds of that is real estate.

25:39

And then land is the key driver of

25:41

that. So, like, if you take land and minerals

25:43

and other things that are considered economic

25:46

land. It's like forty percent of real assets is

25:48

just land. You know, it's easily a third

25:50

of everything. And

25:52

then land ownership is, of course, highly

25:54

concentrated among the wealthy. So

25:56

those are the ways that and and I have, like, figures

25:58

empirically, like, working all those out of all

26:00

those different ways that land is a big deal. So banks

26:02

are chasing it, wealthy people are

26:04

hoarding it, and

26:08

if the land rents produce an enormous amount

26:10

of income and most of the value of trying

26:12

to buy a house in a high demand location is just

26:14

paying for the dirt. that's how land is a

26:16

big deal. Okay.

26:17

So here's what you've convinced me of.

26:19

I did not think of land

26:22

before I heard of

26:24

Georgeism or encountered your book,

26:26

but

26:26

you've got a subtitle why rent

26:28

is too high

26:29

Wages too low.

26:31

What does everything you just articulated

26:35

have to do with rent

26:37

and then the wages specifically?

26:39

Okay.

26:39

So this has to do with There's a

26:41

guy called David Ricardo who comes from

26:43

before Henry George. He's one of these English

26:46

economists you studied economics, you see him

26:48

listed right alongside Adam Smith. And

26:50

Adam Smith was a proto George, just by the

26:52

way. Henry George built off of a lot of the

26:54

same recommendations that Adam Smith captain capitalism

26:56

himself made. And David Riccardo has

26:59

this thing called Riccardo's law of

27:02

rent. And George uses us a

27:04

lot to explain the

27:06

mechanisms for how

27:09

rent affects wages. And the basic

27:11

idea is I have

27:12

this graph in my book here

27:14

where

27:14

I show that if you imagine that

27:18

basically it means that the productivity of

27:20

land gets soaked into the rent. So if you

27:22

can earn more money at a

27:24

location because it has access to a good

27:26

job or if it's a good fertile

27:28

agricultural field, your

27:29

landlord is gonna charge

27:31

you more as that area becomes

27:33

more productive. And And

27:36

the two fields, right?

27:39

And both of them could give you a

27:41

hundred units of wealth for working on

27:43

it. But one of them is privately owned and one of them is just it's common

27:45

land. Anyone can go work on it. Why

27:47

would you ever pay this guy any rent? You're just gonna go

27:49

work on the common land. Right? And you're gonna earn

27:51

a hundred units above. And

27:53

then there's a third field that only will give you ten

27:55

units of wealth. You're not gonna work on the crappy field. You're

27:57

gonna work on the good one, you're gonna earn a hundred units

27:59

of wealth. But now

28:01

the land owner buys that second

28:03

field and now you have to negotiate with

28:06

him. Your best alternative is the

28:08

crappy field for ten. So

28:10

now he can charge you eighty nine units in rent because

28:12

it's like, hey, you're gonna make eleven. Your

28:14

best alternative is to go work for ten. Right?

28:17

And if he buys that third field, he can charge

28:19

ninety nine. Right? You know, the absolute

28:22

minimum maximum amount he can charge

28:24

reducing you to subsistence. And so this is

28:26

what we see is happening in big

28:28

cities is that as the

28:30

city gets more productive, as

28:32

more companies

28:34

move in, you know, higher paying jobs.

28:36

Like in San Francisco, a family

28:38

of four earning a hundred thousand dollars is

28:40

below the poverty line. That's insane. Like, how can you

28:42

be making six figures and be below the

28:44

poverty line? It's because you're paying it all

28:46

in rent. Because the landowners

28:49

know that this area is more productive.

28:51

And so they can charge just right up

28:53

to that limit. And as

28:55

it gets more productive, we talk about all

28:57

the things that increase productivity. This

28:59

is why you can't technology and innovate your

29:02

way out of this problem

29:04

because it will just increase the land

29:06

values of the area. even more and more and more. And

29:08

so it might take a little while. There might be a

29:10

little give before the land values catch up,

29:12

but they always catch up eventually.

29:14

Here's what I'm

29:16

really wondering here.

29:18

I didn't put two and two together when

29:21

you referenced Henry George

29:23

outperforming theater Roosevelt when he ran

29:25

for mayor of New York

29:27

City. This is before he

29:29

becomes police commissioner secret

29:32

under secretary of the navy, all

29:34

that good stuff. Theater Roosevelt shut

29:37

out. But I realized that, you know, Henry George

29:39

plays a huge role in That

29:41

portion of the story, this is in the rise of

29:43

Theodore Roosevelt by Edmund Morris. And

29:45

I don't know if you read the book, but Edmund

29:47

Morris kind of portrays

29:50

Henry George as a

29:52

crank. So I'd like to

29:54

hear you in good faith

29:56

articulate why would

29:58

a writer in the

29:59

nineteen seventies, look back at how

30:02

people thought about Henry George

30:03

in the eighteen eighties and think that this guy is

30:06

a crank and there's something off about

30:07

his thought. Right? What what give me that

30:10

context. Right. Oh, there's just a

30:12

beautiful there there there

30:14

I can do it one better even. There's

30:17

a beautiful political cartoon.

30:21

And I know that these are often audio

30:23

only, and I just Yeah. I know it works. We'll put

30:25

we'll put it up. We'll put it on the we'll

30:27

put it on the screen if you can send me the link

30:29

too. Yeah. Yeah. Yeah. But but

30:32

basically, this is this is a great

30:34

political cartoon, and I'm practice from

30:36

my audiobook and describing figures purely

30:38

through audio. Here is a figure and

30:40

here we see a workman and the

30:42

devil is hovering over his shoulder and the

30:44

devil's labeled anarchy. And

30:46

the devil is like conjuring this image

30:48

of like Henry George and like white robes

30:50

holding a cornucopia for the workman

30:53

and out of it comes like free

30:55

lunch, no boss, you know,

30:57

no taxes, you know, and it

30:59

and it talks about how Henry George

31:01

is basically this tamper

31:03

of labor who's filling them their ideas with

31:05

nonsense. Right? And

31:08

And all he has is theories is the other thing.

31:10

That was what everyone was saying. It's like Henry George has nothing

31:13

but theories. Right? And so there's a

31:15

couple of reasons why people like dismiss Henry George

31:17

as a crank at the time. One is because he was on the

31:19

side of labor of the working

31:21

person. Right? And you always gotta suspect

31:23

people like that.

31:24

Two, because at the time

31:27

America still had that America still has the

31:29

frontier mindset now in

31:31

twenty twenty two when the first and the second

31:33

frontiers have closed. So you can imagine in

31:35

eighteen ninety, like, the Frontier hadn't been

31:37

you know, the Frontier

31:39

up until that point

31:40

was disclosing eighteen

31:42

eighty six. It hadn't even formally closed yet.

31:44

It's like, that that idea had not

31:46

worn off. Like, hey, I made my

31:48

money, honestly, I never needed a

31:50

handout? Why do you need handout? Why do you need to change

31:52

the rules? Right? And then also, we have

31:54

just the English system of land ownership

31:57

of what's called

31:59

fee simple land

32:01

ownership where basically you pay some

32:03

money for some land and then you just own it

32:05

forever and you can sell it to anyone

32:08

whatever. That's very entrenched in the

32:10

American system. And it

32:12

just seems really intuitive to people

32:14

that it's like why paid for

32:16

this land? That was the system that was set up,

32:18

and you're suggesting any change at all to that.

32:20

That's very threatening to me. It feels very

32:22

unfair. You know, why

32:24

should I you know, why should I not

32:26

have access to this

32:27

land just free and

32:29

clear and, like, why you should have to share it with anybody?

32:31

Right? That seems offensive to my sense of

32:34

property rights. Wait. So is that

32:36

what George's was and is

32:38

proposing? Like, what what actually is being

32:40

proposed here then? So George, unlike

32:42

the other socialists, was not

32:44

proposing that land should be, like,

32:46

communally owned. Right? So

32:49

George could only really be like,

32:51

I wouldn't consider George a socialist. Like,

32:54

nineteenth century socialism is a very

32:56

different thing than post Marxist

32:58

socialism. Right? Yeah. Where socialism just means

33:00

Marxism. But it was certainly like a

33:02

laborist, let's say. And

33:04

George he did not recommend

33:06

that we confiscate land or that

33:08

we own a communally or make everyone live on a

33:10

big hippie commune, and certainly not that we do

33:12

any central planning. He was very against that.

33:14

In fact, didn't even have any problems with capital.

33:17

He's just like, we need to just find out how

33:19

to share the land. And I think the best way

33:21

to do it is with the land value

33:23

tax. that if we just capture the rents

33:25

of just the land, not the

33:27

buildings, but just the rents on the land and

33:29

we capture that, and

33:31

we share that back with the community, that

33:34

fixes the problem. And

33:36

incentivizes people to stop

33:38

speculating on land that they don't intend to

33:40

use, and just intend to use as an investment

33:42

vehicle. And then those land rents that we

33:44

capture can help make land affordable for

33:46

anyone else. And by driving out the

33:48

speculators that drives down the price a little, And

33:51

so he actually was an early proponent

33:53

of what we would now call the universal basic

33:55

income. It was called a citizens dividend

33:57

in his in his day. I'm not sure wasn't

33:59

the first one to propose a citizens dividend.

34:01

It was kinda just in the air at the time, but

34:03

he certainly was like, and you could use land by a tax to

34:05

fund a citizens dividend. or

34:07

funding the government or whatever you want. And

34:10

so that was his mechanism for how

34:12

we share the land is you can still own the

34:14

land because he thought it was still

34:16

very important. that you'd be able to own land and control to

34:18

do with it and make independent

34:20

free market decisions about what to

34:22

build there rather than say have government

34:24

owned all the land and the government centrally

34:26

plans it and has all of those kind of

34:28

failure modes. And he says, and then we

34:30

should reduce taxes on everything else.

34:32

because taxes on everything else are a drain on production. This was

34:35

a time when America had lots of

34:37

tariffs and things. So he

34:40

was like, taxes on labor, like income taxes, are

34:42

are, you know, the wealthy can avoid

34:44

those. And it's

34:46

basically just tax

34:48

on work. So we get less work. And taxes on capital, we get

34:51

less capital. That's very inefficient.

34:53

So, but land,

34:54

nobody produces the

34:56

land. So they say if you

34:58

want to tax something if you want less of something

35:00

tax it, well, you can't

35:02

make or destroy land, generally speaking.

35:05

So if we tax land, we won't get any less of it. It's the only thing

35:08

that pretty much behaves that way.

35:10

So this is not only inefficient tax. It's

35:12

also a fair

35:14

way to get around the inequities that private land

35:16

ownership causes. And then it gives us the

35:18

store of value in recurring land rents that we

35:20

then share with

35:22

the community. And then that gives everyone a leg up to restore

35:24

us to the condition of what we would

35:26

have if we had in infinite

35:28

frontier, which

35:30

we don't. If we had an infant mid frontier and we could just generate infinite

35:32

earths, then we could have these simple

35:34

land ownership. But because we don't and the

35:36

frontier is

35:38

closed, we need to find a way to share it, or it's gonna to a head and

35:40

we're gonna have this huge conflict.

35:42

So here's what

35:44

I'd love to hear

35:46

about. I'm curious about how you first

35:48

came around to just discovering

35:50

George's thought, but also just

35:54

how You wear it from discovery to just evangelism. Like

35:56

you said, you're a video game

35:58

designer on paper, you

35:59

shouldn't be messing around

36:02

with eighteen seventies, eighteen eighties

36:04

political and economic figures. What's

36:06

that started the story here? Well,

36:08

it's kind of funny. So, Georgeism had been something I encountered just

36:10

as a background idea. You know, I'm

36:13

an Eastern Orthodox Christian

36:15

and my priest was very into distributism, which is

36:17

kinda this, like, Catholic philosophy. So

36:20

I'm not Catholic, but we're, like, Catholic

36:22

adjacent. And so, like, it was, like,

36:24

kinda, like, this is a GK

36:26

estrogen was a distributist for instance.

36:28

And in distributist philosophy,

36:30

they're very fond of Georgiaism. And

36:32

so I was aware that it existed at all. So that's in

36:34

the back of my mind. And then I'm working in video games and

36:37

I discover recurring housing

36:40

crises in the metaverse

36:42

in multiplayer massively multiplayer online

36:44

games. Virtual worlds have

36:47

been consistently recreating housing crises,

36:50

not just once, not just twice,

36:52

multiple times over the past

36:54

thirty years. And most recently, with all of

36:56

the crypto virtual real

36:58

estate games, like and that was actually my career at the time for the

37:00

last year, is that video games is a really,

37:02

really difficult career. And

37:04

so lately, my day job has transitioned into

37:06

just being

37:08

a consultant And when the crypto bubble, like like,

37:10

got big, everyone wanted, like, people

37:12

to tell them and advise them. And so I

37:14

got hired by this firm

37:16

called Nautic, to basically

37:18

write high priced newsletters for like a

37:20

subscriber base of like

37:22

investors and stuff. And

37:24

I noticed all these virtual real estate games. It's like, hey, I noticed that were

37:26

housing crises in Eve online and Final

37:28

Fantasy fourteen and Ulta

37:30

Online, which is still ongoing. and

37:34

now Decentraland and Acxiomfiniti and

37:36

board at the App Club, the other

37:38

side, and the Sandbox

37:41

all of these games are going in on

37:43

this land model, and

37:44

they're all gonna have housing crises and they did.

37:46

And I was able to, like, measure it and, like, look

37:48

at it. And I was just, like, my

37:50

just my lord where like all of Henry George's theories are coming

37:53

to life before our eyes in the metaverse,

37:55

so to speak. Quick question, you

37:58

define a video game housing crisis? I think

38:00

we have a we have a very visceral

38:02

image of a real life housing crisis.

38:04

Right? We're both in the middle of

38:08

it. we remember two thousand and obviously, what does it mean in decentral

38:10

land or Eva online? because it's infinite.

38:12

Like, to your point, it's kinda funny you're saying.

38:15

If we could have infinite earth, he wouldn't have this problem by

38:18

definition, virtual land, should

38:20

be

38:20

infinite. Yes. So what happens?

38:22

So in the virtual world, scarce

38:25

land is a choice. So the virtual world

38:27

is different from the real world in two

38:29

important ways. You can opt

38:32

out of existing in any virtual world. Right? You can't

38:34

opt out of being in real life. Well well, you can,

38:36

but we strongly discourage that.

38:38

You know? and we have we have

38:40

hotlines to to help people are struggling with that sort

38:42

of decision. But in the

38:44

virtual world, like, you can opt out you

38:46

can opt out a virtual world. So you don't

38:48

strictly speaking, need

38:50

land like you do in real life.

38:52

But with if you've decided to

38:54

be in that virtual world, you know,

38:56

that that operates. The second one is that they could create more if they want

38:58

to. But what's interesting is that

39:00

we have in a sense infinite

39:04

lands in America and Earth. I mean, it's

39:06

not really infinite, but, like, we have not

39:08

run out of land in Nevada. Right?

39:12

If you wanna go live in a desert in Nevada, you can do that

39:14

basically for free. But

39:16

what really matters is land,

39:19

basically, land values soak up

39:21

the value of communities of other

39:24

people. Right? And so Altamonte line is a

39:26

great example. They have shards. Right?

39:28

Different parallel, complete servers of

39:30

the world. Right? Like,

39:32

exact like, here is Ultimate Online Earth

39:34

one. Here's Ultimate Online Earth two.

39:36

But all the cool kids are on this server, so I

39:38

wanna live there. So Britain, that's a

39:40

big city in Ultima Online, is more valuable in

39:42

the server where all people are. Right?

39:45

that's where I wanna be. That's where all the economic activity is. That's called an

39:48

agglomeration effect. So not only is

39:50

that server more valuable, but the

39:52

land around Britain specifically is

39:54

more valuable. Right? And

39:56

so what it looks like a virtual housing

39:58

crisis is I'll give you an example. When

40:00

I was nineteen and playing like Ultima online,

40:03

you could the way you would build a house is you'd

40:05

like pay for us, you'd craft a scroll for a house,

40:07

and then you would place it somewhere

40:09

on the map. And I could buy the house. I could buy like the

40:11

thing that's like, okay, you can construct a house. But I

40:14

couldn't find anywhere to put it.

40:16

because anywhere you could put a player built house,

40:18

there was already a

40:20

house there. And sometimes it would be like a really cheap crappy one just

40:22

to like take the space.

40:24

Right? You know, so you had virtual

40:26

land speculation. In Eve

40:28

Online, they had it was more

40:30

focused on production, and this was

40:32

specifically in the very, very early days of the

40:34

game. So I don't know how the current game is doing. It's

40:36

been, like, decades.

40:38

So in the early version, there were these nodes you

40:40

can control on certain points of the map

40:42

that would give you the privilege of producing

40:44

spaceships. Right? And

40:46

so they had a full on industrial

40:48

recession of spaceship production. Like,

40:50

they launched the game and then nobody's

40:52

producing spaceships. So nobody likes

40:54

the price of spaceships just inflates massively because they're so scarce. And it turns

40:57

out squatters are sitting on the nodes that

40:59

allow you to build spaceships. There

41:02

and so

41:04

what I realized was there's this class of

41:06

asset that I call a land like asset. And

41:08

in video games, I say that because in a

41:11

video game, you can call your asset

41:14

anything. And so your metaphor might be like

41:16

frogs or

41:17

whatever. But if they're immovable and

41:19

whatever, they could function

41:22

like land. And so a land like

41:24

asset has three properties. It's

41:26

scarce in supply, so you can't make

41:28

more of it, or the developers have chosen not

41:30

to make more of it. And more importantly, you have

41:32

the expectation that there won't be

41:34

more of it. Two, it's

41:36

necessary for production. So some

41:38

features of the game are gonna be

41:40

gate kept. by this asset. And then third,

41:42

it obtains value from its location.

41:44

Right? And this can exist

41:45

on a sliding scale.

41:47

So I I give an example of like a permit. Much

41:50

like a taxi medallion in real life only

41:52

has two of those. It's scarce and it's

41:54

necessary for production. So if you wanna brew

41:56

potions in cliche quest twelve,

41:58

twilight of subtitles, which I've just made

42:00

up, you need to belong to the witch's

42:01

guild. So I as a say a

42:04

master witch. I have a potion brewing

42:06

permit. You're on a apprentice witch. You can't make a

42:08

potion, but you can use my

42:10

license. I'll let you use

42:12

my permit. and you basically pay rent to me for that. Now, those

42:14

permits are fungible. It doesn't matter where

42:16

they are. So if you add

42:18

location values to it too, then you get a land

42:20

like asset. Now a

42:22

permit is still a speculative asset, but

42:24

land is an even better speculative

42:26

asset because locational values allow you

42:28

to profit from your neighbors without

42:30

doing anything. because if

42:32

I've got a hotdog

42:34

stand in Times Square, I'm gonna sell a

42:36

lot of hot dogs. So if I can

42:38

own land in you know,

42:40

times square somehow, that's

42:42

gonna be very, very productive for me regardless

42:44

of what I do with it. And

42:48

it's the city of New York that's providing all that value. If I put the same

42:50

hotdog stand in Nevada in the middle of the desert,

42:52

I'm gonna sell zero hot dogs. That's

42:54

right. And the

42:56

problem is Like, New York

42:58

City could benefit from something more valuable than

43:00

me taking up valuable space for a hotdog

43:02

stand. You know, I mean, sidewalks not

43:04

with sand. But, like, you know, parking lots in city centers

43:06

is a really good example of this. Like,

43:08

our cities could do much better than that. But, anyway,

43:10

what's really

43:12

funny about what do virtual housing crises look like? Decentral

43:14

lands housing crisis is eerily

43:16

similar to left behind American

43:18

cities. Like,

43:20

it's weird because it's a virtual world. So this is one of the crypto

43:22

video games. And the idea with this is that you

43:24

could, like, buy land. It's kinda like

43:28

dinky version of second life or, like, you can buy land and, like, build

43:30

whatever you want, and it's gonna be, like, great.

43:32

But what you actually have what

43:34

you actually have is that is that of

43:37

the a lot of people just bought the land to just sit on

43:39

it, and you have all these, like, decade projects everywhere. And so

43:41

nothing like physically decays. but,

43:44

like, scripts don't work. There's little signs that are, like, oh, that button doesn't work.

43:46

So I click to just walk through the door. It it

43:48

it you know, I I couldn't be

43:51

bothered. And, like, you come into

43:53

like a little amusement park and like it's like none of the rides work and

43:56

then there's nobody there

43:58

except in one place. They're all

43:59

playing poker.

44:02

in this, like, one central, like, little poker hall. And that's

44:04

the only place anybody is. And so it's, like,

44:06

it it kinda feels like going through one of

44:09

these, like, left behind American towns where

44:13

they're just kind of decayed and run down. And the only people you really see out

44:15

and about are all in like some slot machine

44:17

parlor or liquor store. And it's just kind

44:19

of depressing and scary. And

44:22

so it was really kind of haunting to me that decentralized land. Like,

44:24

usually, like, the parallels are kind

44:26

of academic and abstract. Exactly. But in decentralized,

44:28

it really, like, hit me viscerally.

44:31

that it's like, wow. Everything's decayed. It's a

44:33

ghost town. And the only people left are

44:35

like gambling

44:36

gambling addicts that's scary addicts.

44:38

That's scary. So

44:38

two last

44:39

big questions. So number one, because

44:42

I know folks are gonna be thinking about this. I've

44:44

had Matthew

44:46

Ball on. to talk about meta versus and virtual

44:48

reality and and land.

44:50

What's what are just your broad thoughts?

44:54

on on these digital spaces right now. Just told me aside

44:56

from the land perspective, because as a

44:59

video game designer or someone thinks

45:02

about this, at an academic level, like, what do you think about it? Are you

45:04

excited? Yay, nay. Like, yeah, what's

45:06

here? Yeah. Well, first of all,

45:08

all

45:08

the actually successful meta verses are

45:11

not the ones a lot of people focus on. Right? They

45:13

think of, like, Facebook's horizon and

45:16

they think of, you know, they they focus a lot

45:18

on the VR ones, but the actually

45:20

successful metaverse

45:22

are the ones

45:24

that are just really accessible that

45:26

you can play on like a flat screen.

45:29

And, like, what's really funny is it, what was what was the seminal book that gave

45:31

us word meta versus like Snowcrash? I think in

45:33

that, like, a bunch of poor people accessed

45:36

the OG metaverse just through, like, a regular

45:38

computer with a black screen. only, like, rich people

45:40

would go in, like, the fully immersive mode. And

45:42

so games like Rec Room and

45:44

VR Chat, which, ironically, despite the

45:46

name, you can just access from a regular computer. And

45:48

and then what's the other big

45:50

one? Oh, yeah. Just roadblocks and

45:52

Minecraft and Fortnite are

45:55

kind of Those

45:56

five are like the really big actually successful meta

45:58

versus where people go virtual third places,

46:00

and they have tons of users. And

46:04

Additionally, second life. Second life

46:07

is still around. It's Scott kind of a,

46:09

you know, puts on sunglasses. Second

46:11

life that it's experiencing because

46:13

it it it has, like, I compare,

46:16

like, the daily active users of, like, these

46:18

crypto video games to Second Life and Second Life

46:20

has, like, a really respectable amount.

46:22

And it's kinda, like, been brought not back from the dead,

46:24

but back from being

46:25

ignored. And so I

46:27

think if you really wanna do a

46:29

deep dive into meta versus that

46:31

actually work, There's this guy called GraphCoster. He is the

46:33

original designer of Altamonte Online, and he has

46:35

done Star Wars Galaxy's in a bunch of he's

46:38

got this great series called, I

46:40

think it's called how virtual worlds work. And I'll send you a

46:42

link to it. And it is just the

46:44

best, no BS

46:46

treatment

46:47

of what meta versus will

46:49

actually Because he has thirty years, thirty

46:52

five, forty years

46:54

of experience. of

46:56

seeing

46:56

this play out. So he's not making the same mistakes,

46:58

all the crypto people who came from finance and have

47:00

no Game Dev experience just like made immediately. He's like, yeah,

47:02

we made all those mistakes back in nineteen ninety.

47:05

we don't have to make them again. So the

47:07

second to last

47:09

question then, you've

47:12

contextualized things. I

47:14

think you've described a status quo

47:16

that a person is curious about this space

47:18

could embrace, but what would

47:20

you say in twenty twenty two?

47:23

in Austin,

47:24

let's say, right,

47:25

peak of the COVID

47:28

era housing

47:30

problem. for the foreseeable

47:32

future. What what is the georgest

47:34

agenda? What would you say

47:37

a a city council person should

47:39

do because what's interesting about the housing debate where

47:41

we typically talk about it, it

47:43

comes down to Ymbi

47:46

positions. We should make

47:48

it so that you could develop anything

47:50

on land. We should make

47:53

it so that you don't have restrictive

47:55

zoning. And NIMB would say, oh,

47:57

well, we can accomplish this by

47:59

requiring more affordable housing with an existing thing. Do you

48:01

have to change underlying structure, I think you could easily understand

48:03

the nimbly position. I don't quite

48:06

understand as much what a

48:08

georgest influenced

48:10

candidate. would say a city

48:12

like Austin. With a suburban

48:14

dynamic or a urban place

48:16

at San Francisco, what's the agenda there?

48:18

Well,

48:18

property tax reform is the agenda. Right?

48:21

And I've practiced my pitch a lot on how

48:23

you would sell this to conservatives in Texas because

48:25

that's I mean, That's

48:27

my family background and the people that surround me even if, you

48:30

know, my political valance is gorgeous, which

48:32

is nicely and conveniently not on the

48:34

traditional political

48:36

spectrum. So it would be property tax reform. Move

48:38

to a system where we tax land and

48:40

we don't tax buildings, and we reduce

48:44

other taxes. And what this achieves basically is it destroys the

48:46

incentive to hold land out of use. Like,

48:48

I've seen people hold on

48:50

to, like, acres of

48:52

land next to major city

48:54

centers in my college station or whatever

48:56

and, like, they buy

48:58

it for, like, six figures, sell it

49:00

for seven, ten years later. And in

49:02

that time period, the

49:04

community has been deprived of of the

49:06

benefit of that land. Like, we could have built

49:08

housing on that because we didn't build housing on that.

49:10

Everyone else's house prices went up.

49:12

Right? You know, Houston

49:14

is just filled with downtown

49:16

parking lot. you know, and it just sprawls out for

49:18

miles. Right? And it doesn't

49:20

need to. Like, so Houston lacks his owning. And so

49:22

what's so funny is that Houston

49:24

has flipped. in my lifetime from being this, like, thing everyone made fun of

49:26

to kinda like this, like, model example of.

49:28

You know, we've done a much better

49:30

job in Houston. Houston probably the youngest

49:32

city in

49:34

America. where you can just build because there's no zoning. There are, like,

49:36

there are, like, covenants on leases and stuff

49:38

like that, but that's not nearly as strong as

49:41

zoning. And, like, Houston has done

49:43

such a good like, we've reduced

49:46

homelessness by a lot in the past couple years because

49:48

we just build homes. At the same

49:50

time, we've sprawled out and that's very environmentally

49:52

damaging, and it's got all the problems of

49:54

that. Texas, Austin,

49:56

Houston, all of that is is kind of

49:58

difficult. to do George's amendment

50:00

because there is a a

50:02

constitutional provision that

50:04

comes from the nineteen tenth and

50:06

basically that

50:08

forbids us. doing Georgia's own. It's kind of this legacy of the

50:10

Georgia's fight. JJ passed

50:12

Theresa Houston's first Hispanic

50:14

mayor in nineteen eleven passed a basically a

50:16

single tax policy

50:18

in Houston. And he got shut down within two years by the Texas

50:20

Supreme Court on the basis that it's

50:22

like, you can't do property tax that

50:24

way because

50:26

reasons. And we would need to repeal

50:28

that with a ballot measure, but if

50:30

we could do that. And then also Texas is a real

50:32

estate, non disclosure state,

50:34

which means that the

50:36

property tax assessors are not allowed to have

50:38

access to data from the

50:40

realtors of, like like, you're not required to

50:42

send the property tax assessor that make make

50:44

make how much you pay for the house legible to

50:46

them. But we've overcome this recently

50:48

because the realtor is kind of, like, try to

50:50

maintain a monopoly on access

50:52

to MMS. Realtors, it's weird. It's schizophrenic. Like in some

50:54

municipalities, they're great friends with a property tax

50:56

assessor, and other municipalities are bitter

50:58

enemies. I wish they could

51:00

be friends. But in

51:02

Texas, they're not friends. And but

51:04

it doesn't matter because TransUnion has

51:06

access to that data from the

51:08

banks. And so in the past two years, every

51:11

property tax assessor office in Texas now

51:13

has access to real estate transaction data,

51:15

so that they could do the proper assessments to do something

51:17

like a land value tax if they wanted, but

51:19

for the state constitution provision

51:21

that prevents it. And so that

51:23

makes someone like me, I mostly have to

51:26

operate in other states. And just hope that we'll

51:28

eventually build up awareness in

51:30

Texas to get this get

51:32

ballot proposition

51:32

on because it prevents any municipality that wants to experiment

51:34

with split rate property tax or

51:36

land value tax from from doing so.

51:39

but in Philadelphia and

51:41

Detroit. So I'm actually

51:44

moving long term, you know, I'm

51:46

gonna be

51:48

moving into moving from the world of video games to the world of property tax assessment,

51:50

actually. And I'm actually part of a

51:52

research group that's modeling like Philadelphia

51:54

and Detroit. And Detroit right

51:56

now is very interested in split rate property

51:58

tax. A split rate property tax.

51:59

This is how you do Georgia's and by steps.

52:02

Split rate property tax is tax building

52:04

separate at a separate rate from

52:06

land. And obviously,

52:06

the end goal of that is

52:08

to make the tax on building zero and the

52:10

tax on land a hundred percent. You

52:14

know? And and just collect the same amount of

52:16

tax you're doing now. So the same, like,

52:18

milligrams or whatever. Like, the same amount

52:20

of tax

52:22

budget. but from land, not

52:24

buildings. That's very short of the whole

52:26

maximum land rent collection, but

52:28

it shifts the burden to land. And

52:30

it has a lot of good equity

52:32

features that happen. It pushes towards the city

52:34

center, towards commercial real estate, actually

52:37

off of suburban homes.

52:40

Also,

52:41

landlords are under assessed relative

52:43

to suburban homeowners, believe it or not, in a lot

52:45

of places. And

52:48

City

52:48

Center land is under assessed relative to

52:51

residential land. And so a lot

52:53

of us are subsidizing people

52:56

who own the most valuable land. And so that

52:58

is the policy I would follow. Is

53:00

first start by fixing the assessments.

53:03

and I have a lot of initiatives with smart people I'm working

53:05

on with that, and then move

53:07

towards split rate property taxes. And we

53:09

can do that in certain areas

53:11

basically immediately, Detroit is basically just waiting on a

53:14

good land study to be able to do it.

53:16

And and and

53:18

Philadelphia could move toward it. There's various places Pennsylvania that could. Texas

53:21

is forbidden because, like, at the state level,

53:23

but if we could get a ballot initiative to get rid

53:25

of that, then we could start experimenting

53:28

with Texas. When you're operating under those state level

53:30

provisions, even just fixing the assessments will

53:32

get you closer towards it because our

53:35

assessments right now are

53:38

based on what I consider some some fairly outdated methods.

53:40

And if we move to

53:43

assessing land more

53:46

accurately, you'll basically get kind of a partial land value tax and the partial

53:48

effects of that. That's an advantage of George'sism

53:50

that I feel like it has over velocities like

53:52

Marxism. So you don't need a revolution

53:55

to get started. partial implementation gives you partial

53:57

results. And then if you see those and they're good, then

53:59

you go for a little more partial. Then you go for

54:01

a little more

54:04

partial. and I'm hoping that we can get some wins

54:06

in some other states that are currently friendly

54:08

towards it or even other countries.

54:11

and then do case studies there and then study

54:13

those case studies and use those to advocate

54:15

it in other places. That's another value of

54:17

assessments is that you have to do the

54:19

math ahead of time to be able to even for this policy. Because people will come at you

54:22

with, like, crazy objections like, you're

54:24

gonna bankrupt farmers and

54:26

you're like, Actually, there's

54:28

an exponential growth towards the city center. So your

54:30

farmland is really not worth a lot. You're

54:32

probably gonna get a tax break,

54:34

mister Farmer. you know, but if you done math, you quiet

54:36

that, what seems like a reasonable instinctive

54:38

fear because they hear land tax

54:40

are like, that per acre? It's

54:42

like, no, it's it's it's per value per square

54:44

foot. And your your your land just isn't that

54:46

valuable. So that is

54:48

kind of in a

54:49

nugget. I know that's firing off a lot, but, like, how do

54:51

you actually practically get there? That is

54:54

kind of my policy proposal. And it's

54:56

frustrating that in

54:57

Texas. It it, like, it it's kind of out of my control

54:59

at the moment, but I would love to see it done here

55:01

in Texas. I like to say, bring back bring back the

55:04

Houston plan. Bring back the pastor

55:06

Visa plan. So

55:07

the last question that

55:09

kind of comes from what you just said about

55:11

the farmer and the

55:14

agricultural any change from a status quo is gonna have

55:16

winners and losers. Could you

55:17

articulate who the

55:20

winners are where

55:21

the losers are. I rent

55:23

right now. Wanna buy

55:25

a house with

55:26

a more gorgeous austin

55:30

Austin. at an individual level be a win or a loss

55:32

for me. It would be a win for you

55:34

because

55:34

one thing we found about land value

55:36

tax and this is studied empirically.

55:38

It's in it it's a major

55:40

section of my book, is that land value

55:42

tax, not just theoretically, but empirically,

55:44

can't be passed on to tenants.

55:46

And it's the only tax that can't be passed on to a consumer that way. And

55:48

it has to do with the fact that land is

55:50

is inelastic and supply that you

55:52

can't make more or less land. And

55:56

so so renters would would

55:59

benefit.

55:59

But Well, Landon,

56:00

could you pretend actually, I'm pretend

56:03

this is true. I gotta I

56:05

didn't even make it through high school icon. Explain this to

56:07

me. Yeah. Yeah. So It's the last time I

56:09

was scotcha, we're ten of

56:12

the six. And no no no So

56:14

let's say I tax oil or

56:16

cigarettes, like things like that. Right?

56:20

why does the price go up for the consumer? How does it get

56:22

passed on to the consumer? The the way it

56:24

actually like, price is a function of

56:27

supply and So if the price is gonna go up after

56:29

a tax, for that to actually go all the way down to the

56:32

consumer, it means

56:34

that the

56:34

the demand

56:35

has stayed the same, but the supply has gone down.

56:37

Right? Uh-huh. And so why is that? When you

56:40

tax oil

56:42

or cigarettes, there's

56:42

a marginal tobacco farm or a marginal oil well somewhere

56:44

that was making like one cent per unit

56:46

of profit. And so if there's a one cent

56:48

per unit tax, it's like,

56:51

we're breaking even or losing money shut down. Not

56:53

all of it shuts down because there's more productive wells

56:55

and more productive farms than that, but the marginal

56:58

ones shut down. And

57:00

then that decreases the supply. Demand

57:02

is fixed and the price increase per

57:04

unit goes up by an amount almost exactly

57:06

equal to the tax. That's how

57:08

you know, because because people will always try to pass taxes on.

57:11

Like, they don't do it out of the

57:13

goodness of their hearts. But they're not able

57:15

to because the market won't let Like,

57:18

people will accept that because the supply has been decreased.

57:20

But with land, because the landlord

57:22

has to pay the tax whether they're renting

57:25

a unit or not, and they can't

57:27

increase or decrease the amount of land. And so land tax is

57:29

one of those things that can't be passed on the tenants.

57:31

But even if you don't buy

57:34

the theory, just a bunch of empirical studies that show that it just doesn't

57:36

happen. That when you alleviate

57:38

land tax, that tax is

57:40

fully capitalized into

57:42

the price. which means

57:44

that because it's land

57:46

income that drives land

57:48

selling price rather than the other way around,

57:50

So, like, here's a rock I'm holding. This is a plot of land, and I

57:52

can make, I don't know, ten units

57:55

of money a year on

57:57

it. Right? I have some

58:00

the the the buying price of it is the net present value. Like, I have some

58:02

discount rate over ten years. Like, if I wanna make

58:04

my money back in ten years, I'll pay ten times

58:06

what I can make in a year.

58:09

by holding this for it and then hope to hold it for

58:11

eleven years. Right? And

58:14

so if it's suddenly producing half as much,

58:17

I'm pay half of what I

58:19

was willing to

58:20

pay before because it's producing half as much.

58:22

And that's so so renters will win. So

58:24

get back to the actual question. Who wins,

58:27

who loses? Well, anyone

58:29

who

58:29

is

58:31

basically making

58:34

lands their

58:36

investment vehicle exclusively loses. But this doesn't

58:38

mean that every landlord necessarily is just

58:40

completely host. There'll still be landlords in the

58:42

Georgia's Utopia

58:44

Right? They will just be property lords, building lords instead of

58:46

landlords. You know? So, like, people say, well,

58:48

my landlord maintains the property. They

58:52

you know, they helped me when the AC went out last summer. It's like, that's labor. That's

58:54

capital. You know? They'll still be allowed

58:56

to get a return on that, but they

58:58

won't get a return on say

59:01

a slum lord who just holds a property and

59:03

does the absolute minimum it takes not to go

59:05

to jail, that person's gonna be like,

59:08

well, this isn't a productive asset. I'm gonna

59:10

sell it. And the only person who's gonna buy it to someone's like, well, I'm gonna build a lot of

59:12

units here. I'm gonna keep these maintained, you

59:14

know, because otherwise it's not worth it because of

59:16

the tax. And so

59:20

and it'll have a beneficial productive stimulus

59:22

effect on building, which creates more

59:24

units, which means there's more housing for

59:26

people, which

59:28

means that you know, we'll we'll we'll be able to address the

59:30

housing crisis. And if you wanna live

59:32

in the suburbs, if you want more

59:34

nature, it's gonna

59:36

drive that density

59:37

in. So this is not everyone

59:39

has to live in the pod situation. It's

59:41

like if we were to convert some of

59:43

these downtown parking lots, into,

59:45

like like, big multiunit

59:47

things that should be there,

59:49

that

59:49

means you're not gonna have to sprawl

59:51

so far out So if you

59:53

want your nice house in the suburbs, the suburbs are not gonna be so far away from

59:55

the city anymore. Right? Like,

59:58

there shouldn't be

59:59

single family homes smack

1:00:01

Dab

1:00:01

downtown. That's an incredibly

1:00:03

wasteful use of land. And

1:00:05

because we have both restrictive

1:00:07

zoning and a lack of a

1:00:09

land value tax, everyone else is basically subsidizing that

1:00:11

person for excluding everyone else from that band.

1:00:14

We're basically all paying

1:00:16

for that. and they

1:00:18

should be paying everybody else.

1:00:20

That's the reverse effect. But who wins,

1:00:22

who loses? Anyone

1:00:24

who's using land very unproductively is

1:00:26

gonna lose? It depends on how high the land value

1:00:28

tax is and how extremely it's better. If you just

1:00:31

do a revenue neutral property tax shift

1:00:33

to land, pretty much everybody but the

1:00:35

worst actors comes out ahead. And so

1:00:37

that's your politically viable, like, strategy. Like, I did the

1:00:39

calculations, you know, and, like, for my own

1:00:41

home and I'd,

1:00:44

like, make plus five bucks on my property taxes. You know?

1:00:46

But the people downtown have

1:00:48

a very unproductive land, they're gonna

1:00:52

get soaked. Those downtown parking lots are gonna get soaked. If you move more towards

1:00:54

Georgia's ideal of a hundred protect land

1:00:56

value tax, that was like transformers

1:00:58

society would be net good for us in the

1:01:00

long run. but there would

1:01:02

be, like, you know, holders

1:01:04

of not perfectly used land,

1:01:06

but, like, poorly used land who would be

1:01:08

forced to sell. And there would be

1:01:10

some gripes and some transition and a lot

1:01:12

of political horse trading probably just

1:01:14

make it so it's like you don't have to pay the tax

1:01:16

right now. just when you die, we can attach it as a lien to the house

1:01:18

or whatever. We can defer the payment.

1:01:20

You know, for for, like, the whole, like, I'm a

1:01:21

widow. I don't have an

1:01:24

income situation. There's a lot of over

1:01:26

that, but that's maximum Georges, and that's not on

1:01:28

the table. And so just the revenue neutral

1:01:30

property tax shift to land, I think, would be

1:01:33

very and have a smaller number of constituents

1:01:35

who lose than than the rest of it.

1:01:38

That that's my take on it,

1:01:40

at least. I think that's a

1:01:42

helpful place to leave, but the book is

1:01:44

land is a big deal, where rent is

1:01:46

too high, which is too low, and

1:01:48

what we can do about it. Bars, this has

1:01:50

been really great. Thank you for coming back

1:01:52

on the realignment. I appreciate it,

1:01:54

Marshall. Thank

1:01:55

you very much. Hope

1:01:57

you

1:01:58

enjoyed

1:01:59

this episode. If you learned

1:02:02

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1:02:04

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