De-Commodifying Housing

What to do when the free market can’t provide a basic right

The Steps:

Removing the profit incentive

The first step in this process is perhaps the most crucial, but also the most controversial. Once the profit incentive is removed, any opposition to providing housing more equitably becomes a matter of ideological belief rather than self-preservation. But that initial hump is difficult to get over. Home ownership has served as one of the primary forms of wealth-building in America for years, and that would have to be something that could be replaced, or at least supplanted with wider economic security. There is also the matter of real estate’s place in global financial markets, but their existence there is part of the problem to be solved in the first place.

Democratizing the housing supply

One of the nice side effects of a land value tax is that it creates a lot of revenue, and this can be used to do a lot of things that were not possible before. Perhaps the most important thing to do with that money is to start build public housing.

Taking housing off the market

Up to this moment in history, there is yet to be a single country that has implemented a true non-market housing system for any extended period of time. Even the Soviet Union had at least a partial private housing stock. So, while I try to lay out a general plan for how the next steps would work, there are fewer analogs to existing policies.

Answering Questions:

But seriously, why not just have housing on the market?

There are currently more vacant homes than there are homeless people, and people are spending larger and larger portions of their paycheck on rent. Our housing system is deeply broken, and the market system is a major reason for that. It also generally has deepened inequities in our society, and as an egalitarian kind of guy, I am generally not a fan of that. The main goal of all of this is to find a way that people can still own their homes in a functional sense, while still removing the opportunity for exploitation.

Tell me some more good things about the land value tax.

Of course! The land value tax does a lot more than just reduce profit incentives. In fact, a whole movement known as Georgism (after its creator, economist Henry George) has existed since the late 1800s based off of its merits. The idea itself was created to prevent the boom/bust cycle by reducing land speculation, and it has a variety of other side effects. It encourages development and density, which is useful in areas that suffer with urban sprawl. It is also the most economically efficient tax, since all of the initial value is transferred to tax revenue, unlike most taxes which have deadweight loss. The wikipedia page has a good overview of other benefits and links to more in-depth sources.

How would a land value tax be administered?

This is probably the most complicated part of the land value tax, as there are many ways it can be done. When it comes to determining value, most states already split property valuation between the structure and the land itself, so those existing measurements could be used. This is the system that most cities that tax land at a different rate use. However, it is expensive and time-consuming to redo these valuations regularly, and an out-of-date value could allow a landlord to still extract extra value from their tenants, as they would only have to pay a percentage of the real value of the land if it has gotten more valuable. In these cases, the market value of the land in that transaction could be used to update the existing land value.

How would a land value tax have stopped the mortgage crisis?

It wouldn’t have, really. While it fixes a lot of rent-seeking, there are other profit incentives that would have to be fixed later on. Generally, mortgages that people get on large houses are completely different from paying rent to a landlord, so it would have to be solved with general ownership transfer. However, the land value tax would affect the power of the banks and other mortgage holders enough that the transfer could be done more easily.

How would a government actually fund public housing?

For a more in-depth idea of how public housing funding would work practically, I suggest reading People Policy Projects’ report on social housing, which is very thorough. I differ from their suggestions in that I believe that a land value tax should fill some of the costs, but they lay out how higher rents can subsidize lower rents.

How would the government acquire the land to build public housing?

This can be done a variety of ways. First, since the profit incentive for sitting on land has largely been removed, acquiring land from landlords should be significantly easier than it is now, so that is one option. Second, many cities and counties already have some form of land bank or a non-profit may have a community land trust, and land from those could be used to build public housing. Third, and this is a last resort, eminent domain could be used to get land from particularly stubborn owners that were misusing land that would be better for affordable housing. As long as they were fairly compensated.

How would neighborhood or apartment building tenants buy their communities?

While the details would come down to whatever legislation laid out the process, it would probably be similar to how residents could buy out a landlord now, just subsidized by a local government. Ideally the process would be done through some sort of tenants union, allowing it to proceed in an organized way.

How would a resident-owned community function?

I should say that the term resident-owned community is already taken by a type of organization that typically deals with mobile homes, but it fits perfectly with the type of organization, so I am still going to use the term. That being said, it would different from neighborhood to neighborhood, apartment building to apartment building. However, the structure should be less like a home-owners association, which tends to drift to petty tyranny, and more like a limited equity housing cooperative, which tends to be more democratic and applicable to the situation I describe here.

What about the homeless and other people who are actively not housed right now and couldn’t afford any sort of home?

This is probably the biggest issue before housing is taken off the market entirely. The short answer to this is that the steps listed above should not be taken as completely comprehensive. There should also be programs that help get homeless people off the street immediately. This can mean either treating any sort of addiction or mental illness they might have or simply giving them a home until they’re able to get a job and support themselves. Homeless and housing insecure people are not a homogenous group, so the solutions would depend on the individual. Something like Norway’s Housing First model would be a good model.

If someone couldn’t get any of the houses they selected what would happen?

This is one of the biggest potential issues with the suggested distribution system. While it is a problem that exists in the current system, just based on money rather than choice, it should still be figured out. I hate to invoke the algorithm again, as it is not a thing that exists yet, but there are ways to tell if houses are similar to each other, and an algorithm could put someone in a similar home to the ones that they requested and did not get, whether that be based on amenities and location. And if too many people were getting rejected from the houses they want, that’s a sign that more housing needs to be built.

Wouldn’t centralizing the housing system be a violation of privacy?

This is definitely a concern with any large data scheme, and security would have to be at the center of any technological project like this. However, it is not much different than the information the government already has on people, so it should be manageable.



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