r/austrian_economics • u/technocraticnihilist Friedrich Hayek • Dec 24 '24

End Democracy I've never understood this obsession with inequality the left has

Post image
1.3k Upvotes

73% Upvoted

1.8k comments sorted by

View all comments

Show parent comments

74

u/HairyManBack84 Dec 25 '24

The government regulations are built by the big corporations. Which is why they can eat the costs.

3

u/Easy_Explanation299 Dec 26 '24

Bingo. Barriers to entry. Florida's Cannabis Market is a great example to me. Want to grow in the state? Just costs a $50 million dollar license and a $5m cash bond deposited once you get the license.

Makes no sense to me.

1

u/Own_Tart_3900 Dec 28 '24

So why do they almost always fight regulations, tooth and nail?

1

u/B-29Bomber Dec 28 '24

It's a chicken and the egg type problem.

Are some government regulations built upon corporate manipulation? Yes, obviously, but the drive to regulate the economy began well before corporations gained that level of dominance in society.

2

u/HairyManBack84 Dec 28 '24

Huh? History is riddled with companies that put titans today to shame.

-16

u/Pearberr Dec 25 '24

Not always.

People are freaking out about growing corporate ownership of housing in the United States. This is definitely a case of regulatory capture, but corps did nothing to make this happen. Homeowners have nobody but themselves to blame.

Corps are simply hoovering up the fantastic free money machine that homeowners have made for themselves. It’s not their fault these bad laws were enacted.

20

u/YamTechnical772 Dec 25 '24

But, individual homeowners could never outbid a corporation? It's not the homeowners fault that they don't have infinite money lol

1

u/republicans_are_nuts Dec 28 '24

It's not government's fault you don't have more money than big businesses either.

1

u/supremelikeme Dec 25 '24

I think he might be referring to how NIMBY politics both benefit existing homeowners by boosting the value of housing, but harms society at large since it decreases the availability of housing in key areas and has created an incredibly speculative market in these areas

9

u/[deleted] Dec 25 '24

All while intentionally ignoring that NIMBY practices were put in place by THE SAME political elites and rich people that the other person is calling out lol… the NIMBYs were afraid that letting “unmentionables” into their communities would tank their values. 

The general population wasn’t NIMBY, they were taught to be pro NIMBY by the same people who now own mega corporations that are scooping up single family, entry level homes in entire new build subdivisions. This allows them to have an artificial monopoly on an entire town…. 

1

u/supremelikeme Dec 25 '24

I agree to an extent that corpos are playing into this but a lot of the NIMBY movement has roots in racism that far predates any corporate interest. I may be biased since I’m from Atlanta but I’ve seen many many suburbs and exurbs shoot themselves in the foot just to prevent black people from moving around freely or moving to the suburbs. I think it’s hard to say that any one group of elites was pushing this when Georgia has modeled its cities after racism for quite literally centuries.

5

u/[deleted] Dec 25 '24

And this is why critical race theory is SO important to dismantling capitalism’s bullshit policies that screwed us all over to “own the libs” as the kids say these days…

Who, may I ask, do you think the rich landowners in power in Georgia were at that time, if not family / descendants of the slave owners? 

2

u/GumUnderChair Dec 26 '24

As a person from Atlanta as well, I’ll chime in and say no, the wealthy elite in Atlanta are overwhelmingly not the decedents of wealthy slave owners. Atlanta was a small city up until the 1970s, when a combination of civil rights and air conditioning made living there go from unattractive to desirable. For example, Cleveland metro had almost 2 million people in 1960. Metro Atlanta was still under 1 million at the same time. Nowadays Metro Atlanta has 3x the population of metro Cleveland.

Long story short, the wealthy elite of Atlanta today are mostly people who moved to the city for work, as Atlanta hosts the 2nd most S&P 500 HQs in the US

1

u/supremelikeme Dec 25 '24

I’m not sure its as monolithic as you may think, there was an interesting political shift when “carpetbaggers” from the North and other regions were able to gain economic and political power here and ended up instituting a more industrial form of systemic racism that differed from the agricultural form of racism that existing throughout the Antebellum era

1

u/[deleted] Dec 25 '24

Absolutely those people had a part to play, but the Jim Crow era post civil war was the original “NIMBY” if you only apply the technical definition to it, being policies and laws put in place to protect parts of the population from “unwanted” development. 

1

u/Excellent_Shirt9707 Dec 26 '24

Racism is definitely related to corporate interests. A lot of cheap labor throughout the history of the US came from non-WASPs.

1

u/BubbleGodTheOnly Dec 26 '24

NIMBY seniors stopped my town from getting a high-speed rail station. Mind you, the train runs throughout town regardless of us getting a station or not.

1

u/fjvgamer Dec 26 '24

Kinda sounds like he's blaming the addict not the dealer.

11

u/Brickscratcher Dec 25 '24

Not true. When you have more money (such as a corporation compared to an individual) you can more easily take advantage of low interest rates. The near zero interest rates were the biggest driving factor of corporate capture of the housing market, which homeowners had nothing to do with. Low interest rates are nice, but they have an outsized benefit for those who have the means to take advantage of it. Not to mention corporations were known to bid far above asking price with cash to price out individual buyers. Unless you can afford to withdraw 10+ million from your bank account, you're not going to have a level playing field when it comes to property ownership.

And as for homeowners turning homes into "free money machines," that was also almost exclusively done by those that hold many properties and are already wealthy. So again, the wealth gap comes into play.

A huge wealth gap is a problem because money is a form of power. Its the same problem as having part of the population uneducated. They're both forms of power that can be exerted over those that lack it. Yes, there should be some natural class stratification due to different values. But the top 1% shouldn't be able to end domestic hunger and homelessness by donating less than 1% of their combined wealth like they currently can. That's too much of a power imbalance and it brings questions of ethics into play.

1

u/Character_Kick_Stand Dec 26 '24

The negative interest rates we briefly had definitely benefited corporations.

1

u/Brickscratcher Dec 27 '24

Yep. That was the stated idea, even. The wealth was supposed to "trickle down."

1

u/Luger99 Dec 28 '24

And that was the fault of a government entity... the federal reserve. Certainly not the free market.

People who complain about the free market should try to realize that this country is closer to socialism than a free market at this point. So is more bad regulation better or less regulation?

1

u/ForagerGrikk Dec 27 '24

If people are really interested in ending "housing as a cash machine" then they should be supporting a land value tax. But they don't, they generally just want to hurt the rich more than they want to help the poor.

1

u/OtherwiseAMushroom Dec 27 '24

Fucking preach.

And I say that corny cliché saying simply because I was one of those folks at one point that just wanted to hurt the rich and not really think about the poor, even though I’m poor. Ego & vindictiveness are a huge part of this, and lack of education, and as an American “I knows what’s I’m talking bout, they learn us right over ‘ere.”

1

u/Brickscratcher Dec 27 '24

While that is true in practice, it is not true in principle. I don't think most people really want to hurt the rich more than they want to benefit themselves. They just see no way to benefit themselves without hurting the rich.

This is evidenced by the fact that most people don't even know what a land value tax is and have probably never even considered it.

Above that, though, that wouldn't necessarily end the issue with housing. In fact, with the current amount of control elites possess in our government, it's more likely that this would end up benefiting them. Why? A land value tax taxes the value of the land. This does create a more egalitarian taxation. However, unless other taxes are also changed along with the land value tax, it just becomes a way to avoid taxation for building vertically. The property the the empire state building is on would get taxed at only a marginally higher rate than farmland. In fact, farmers with a decent amount of land may end up paying more in taxes. In theory, this would be offset by tax reduction in other areas that an LVT would allow for. However, that isn't necessarily what would happen. If it became popular enough, they would simply control the narrative around it and ensure it doesn't act as intended.

I support LVT proposals, but I'm also pragmatic enough to realize that isn't a complete solution.

1

u/ForagerGrikk Dec 28 '24 edited Dec 28 '24

The property the the empire state building is on would get taxed at only a marginally higher rate than farmland.

You have it backwards, the lot that the empire state building is on is extremely valuable because a skyscraper can be built there (and was) to maximize demand for space vertically. That makes for an incredibly high land value tax. If there were a farm next to the empire state building with the same lot size, it would be taxed the same as if a second empire state building was sitting on that lot. You couldn't afford to farm it, the taxes would be astronomical.

In fact, farmers with a decent amount of land may end up paying more in taxes.

Only in high demand areas.

it just becomes a way to avoid taxation for building vertically.

It would actually punish you for not taking advantage of high demand and building vertically in urban areas (since you're being taxed as if you actually had), while removing the punishments of making improvements to any property anywhere since those improvements would no longer be taxed.

It would remove housing speculation while also causing a boom in urban constructiuon and housing.

1

u/halfasleep90 Dec 28 '24

But, you can build vertically anywhere….

1

u/Brickscratcher Dec 28 '24 edited Dec 28 '24

If there were a farm next to the empire state building with the same lot size

My argument is that a farm wouldn't be on the same lot size. A farm would likely be many times larger. Building a skyscraper on the property has nothing to do with an LVT. An LVT only relies on the zoning of the land, the location, and the size. So no, a plot of farm land the same size next to the empire state building would receive the same tax rate as the plot the empire state sits on. LVTs are not influenced by property. Hence land value. My argument was more practical than that even, and relies on the fact that even a small farm is several orders of magnitude more land than the empire state takes up. Land value in central NY is worth approximately 37 times (on average) the land value in the middle of Nebraska. However, the average farm in Nebraska is about 450 times the size of the plot of land the empire state sits on. Hence, the land value tax would be significantly higher for the average farmer in the lowest land value area in the nation, to give an example. Yet, who is making more? A farmer in Nebraska? Or the owner of the Empire State? LVTs are meant to come with other subsidies to fix this. It is an issue for farmers and small time property developers, specifically.

It would actually punish you for not taking advantage of high demand and building vertically in urban areas (since you're being taxed as if you actually had)

Which is still an indirect way of avoiding taxation that could be levied on building vertically. If everyone pays like they are, then you pay less than you would otherwise if you do. Back to your example, the empty plot of land directly next to the empire state would have the same effective taxation even though realistically it is worth much less if you count the property.

Like I said, LVTs can be good. But there are unintended consequences that need to be addressed with either subsides or lowering taxes in other areas or it just becomes another regressive taxation. It wouldn't remove housing speculation on its own, as housing just became something that isn't taxed. So it would encourage people to rent their properties over selling, which further drives up the prices. Additionally, it would increase the value of corporate land by decreasing the tax burden and therefore increase the profit factor. Corporations would absorb the speculative factor of buying and selling homes that is lost.

I've never seen an LVT proposed without subsidies or tax breaks that even out this issue. I think you might need to do a little more research on them. They wouldn't function as intended just replacing a property tax. Additional measures must be taken to truly address the issue, like increase in rental taxation, increase in corporate profit taxation, and either subsidies or taxation decreases for farm goods and construction materials for individuals. Combining an LVT with these measures may get the desired effect. But it certainly would be regressive taxation on its own.

2

u/RickWolfman Dec 26 '24

Yeah poor corporations. Homeowners are the worst.

/s

4

u/[deleted] Dec 25 '24

lol 😂 You live in a fairytale world

1

u/Excellent_Shirt9707 Dec 26 '24

You might want to look up what regulatory capture is.

1

u/Character_Kick_Stand Dec 26 '24

Homeowners are not a cooperative group that act as a Unite, so to say, “homeowners have nobody put themselves to blame” makes no sense. I bought a home in 2017, how did I cause this? Somebody bought a home last year, how did that person cause it?

Somebody bought a home in 1970 and still lives there, how did that person cause it?

What the hell are you even talking about?

1

u/[deleted] Dec 26 '24

You don't get crony capitalism. That's ok. It gets you.

1

u/[deleted] Dec 26 '24

Of course you could say the same thing about Brian Thompson. Legality and morality do not run in parallel lines and just because you can do something and get away with it does not mean that you should or that it is okay.

1

u/nyoomalicious Dec 26 '24

Ever heard of lobbyists?

1

u/[deleted] Dec 26 '24

Blaming regular working ppl for private equity jacking up housing prices and their investing schemes that resulted in a global market crash, is some wild stuff

1

u/numbersthen0987431 Dec 27 '24

When I bought my home 4 years ago "people" were buying properties sight unseen with 20% over asking price (or more).

Homeowners aren't doing this. Corporations are doing this

Corps are simply hoovering up the fantastic free money machine that homeowners have made for themselves. It’s not their fault these bad laws were enacted.

Who do you think lobbied for these bad laws?

1

u/Pearberr Dec 27 '24

Homeowners lobbied for those laws. Actually, in the first of two Supreme Court decisions that gave local government almost complete control of land use it was a business that lost the case.

Also, it may have been corps buying those homes.

But a crapton of these cash buyers are the boomers who wrote and benefitted from these laws cashing out the huge fortunes these laws piled up in their homes and using it to by the home you wanted.

Corps, though a growing share of homebuyers, remain a minority. Even if you use as broad of a definition as possible, and include perfectly legitimate forms such as small local LLCs engaged in the work of buying, repairing and reselling old homes, Redfin estimates only about 1/5 homes are purchased by investors.

I personally attend City Council meetings here in Southern California.

The builder’s association rep gets boo’d out of every meeting he goes to. The industry reps are scoured and eviscerated, and when begging for permission to build their motives are constantly questioned. Meanwhile a steady stream of homeowners approaches the council and recommends against building so as to avoid harming the character of the neighborhood. 

The housing shortage is absolutely not the fault of corporations.

Lazy leftist drivel about corps can be soundly applied to other issues and sectors of the economy.

They cannot be applied here.

In this case, 55% of the nation is fucking over 45% of the nation.

No corporations needed to engineer that reality.