That's a pretty weak consideration. Even if `give people the ability to store wealth' was an overriding imperative, what's wrong with letting them buy a lump of gold or Google stock?
I have nothing against vesting the wealth into gold. I'm not keen on relying upon secondary markets for wealth storage; bond markets for that purpose are more aligned to what I advocate. I'm on the fence with tying energy storage to wealth storage, still reading up on a thermodynamic basis of economic structures.
I see lots of negative externalities to using preferential credit instruments in a debt-backed monetary system securing land as a store of wealth, especially for late-stage generations like the Millenials and later are experiencing first-hand. The process takes many generations to play out the stage we're at, so it builds up vested interests until some final set of bag holders gets the sucker punch. They (Millenials and later) are on the wrong side of an asset inflation to wage inflation ratio curve function that looks ugly and not resolvable without tremendous disruption to world asset markets.
In an agrarian or even industrial development era, it makes sense that land is a large direct contributor to output profits, and to ascribe wealth storage to it as the improvements that sit on top are enhanced. To my unsophisticated and untrained layman's sense, this reasoning starts to fall apart as industrialization is increasingly mechanized and automated, but there is still a tiny shred of reasoning. I can't find even a slim reasoning for continuing the practice when the land itself doesn't contribute directly to the economic output, which I sense is the case when cognitive effort is the majority input to economic output. Land value then in a commercial real estate context starts to reflect a proximity to supply chain networks where the supply chain is for physically-located talent (SV). That makes sense, though I'm interested to see the impact if VR/AR matures and virtual offices with startlingly-realistic telepresence become feasible (I predict the first 3-6 generations of that tech won't have an impact, and only the later generations will).
Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages. Effectively modeling median housing prices as a put option: term length the duration of the median mortgage, strike price the wage earner's expected career earnings over that duration lining up with the house price (or some appropriate fraction thereof). That didn't happen, so I'm misinterpreting something, or don't understand something about using real estate as a store of value, or the market is just staying irrational longer than I am expecting.
I dunno, just rambling here, please correct what is certainly my poor interpretation of what's going on here. I'm just a layman trying to figure out why residential real estate prices seem decoupled from median local income in so many geographies at the same time. I started wandering down these ponderings when I realized that as a remote worker in the US, only some pretty far out places had escaped the residential real estate inflation, whereas in the 70's driving only an hour out of town led to a drastic 75%+ drop in per acre prices. I ended up staying pretty close to an urban area, and paying off my property as quickly as possible, but I feel terrible for the younger generations getting completely screwed.
We can not get an `ought' from `is` statements alone. But we can derive a complex or interesting `ought' from a simple `ought' and a bunch of `is' statements.
I want a tax system that can finance a welfare state without burdening the real economy. I care about real gdp, low unemployment and to a small extent equality of after-tax income. I don't care about `storage of wealth': the private sector takes care of that just fine.
Given those `oughts' and a bunch of standard orthodox text book economics, you get a free market laissez faire economy and a state financed by land value tax as a good first order answer. Land value taxes do not disturb the ecomony, since land is a perfectly inelasticly supplied good. (See https://en.wikipedia.org/wiki/Tax_incidence for who actually ends up paying for taxes on goods and services, and for who can pass them on, and to what degree. It's all about elasticity.)
As a minor point, you want to add some sin taxes like eg carbon and alcohol tax, where you actually actively want the change to demand and supply that the tax causes: less carbon dioxide release, less alcohol consumed.
I don't see how agrarian or industrial development era makes a difference here. Eg Australia is an advanced economy, but relies on resource extraction and agriculture a lot, and a land value tax would make sense for them too. (They actually have one on the books, but it's mostly toothless with a small base and low rates.)
Ultimately, thermodynamics might be able to explain a lot about biology, society and economics. Alas, I don't think that science has advanced well enough for that grounding, yet; yet alone our laymen's understanding of it. Mostly, the thermodynamics that we have a good handle on is equilibrium thermodynamics, or at best near-equilibrium. Economies are thermodynamically very open systems with matter, energy and entropy flowing in and out. (Even in the confusingly similarly named `economic equilibrium'.)
And in any case, such a re-interpretation must `save the phenomena'. Ie just like the statistical mechanics explanation of thermodynamics makes the same predictions as the older macro-scale traditional thermodynamics.
> Where the reasoning really decouples for me however, is residential real estate. There, I would have expected pricing to essentially follow median wages.
I would expect land prices to follow basically average disposable income:
Basically, people use their income left over after taxes, groceries etc to bid up all available residential land for either paying rent or paying mortgages on. This sets the monthly cost of land, and a look at the prevailing interest rate on mortgages will tell you the value: monthly cost per square metre * 12 / yearly interest rate == capital value per square metre
(Where a eg 2% interest rate goes into the calculation as 0.02, ie a multiplicative factor of 50.)
Feel free to send me an email to continue the discussion. My address is in my profile.
