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Lars Doucet — Progress, poverty, Georgism, & why rent is too damn high
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One of my best episodes ever. Lars Doucet is the author of Land is a Big Deal, a book about Georgism which has been praised by Vitalik Buterin, Scott Alexander, and Noah Smith. Sam Altman is the lead investor in his new startup, ValueBase: https://www.valuebase.co/. Talking with Lars completely changed how I think about who creates value in the world and who leaches off it. We go deep into the weeds on Georgism: * Why do even the wealthiest places in the world have poverty and homelessness, and why do rents increase as fast as wages? * Why are land-owners able to extract the profits that rightly belong to labor and capital? * How would taxing the value of land alleviate speculation, NIMBYism, and income and sales taxes? 𝐄𝐏𝐈𝐒𝐎𝐃𝐄 𝐋𝐈𝐍𝐊𝐒 * Spotify: https://spoti.fi/3XbdnOI * Apple Podcasts: https://apple.co/3CyfvbJ * Website + Transcript: https://www.dwarkeshpatel.com/p/lars-doucet * Follow Lars on Twitter: https://twitter.com/larsiusprime * Follow me on Twitter: https://twitter.com/dwarkesh_sp 𝐓𝐈𝐌𝐄𝐒𝐓𝐀𝐌𝐏𝐒 00:00:00 - Intro 00:01:11 - Georgism 00:03:16 - Metaverse Housing Crises 00:07:10 - Tax Leisure? 00:13:53 - Speculation & Frontiers 00:24:33 - Social Value of Search 00:33:13 - Will Georgism Destroy The Economy? 00:38:51 - The Economics of San Francisco 00:43:31 - Transfer from Landowners to Google? 00:46:47 - Asian Tigers and Land Reform 00:50:53 - Libertarian Georgism 00:55:16 - Crypto 00:56:50 - Transitioning to Georgism 01:02:30 - Lars's Startup & Land Assessment 01:14:46 - Big Tech 01:20:24 - Space 01:22:39 - Copyright 01:24:36 - Politics of Georgism 01:32:44 - Someone Is Always Collecting Rents
Segments Timeline
The Conflict of Capitalism and Socialism
Lars Doucet introduces the historical conflict between capitalism and socialism, emphasizing the misconception that one must choose between being pro-worker or pro-business. He highlights the paradox of poverty existing even in wealthy areas, setting the stage for a discussion on Georgism and its implications for economic equity.
"over the last century we've had this huge conflict all the oxygen has been sucked up by capitalism and socialism duking it out we have this assumption that you either have to be pro-worker or pr..."
Understanding Georgism
Doucet explains Georgism, a philosophy rooted in the ideas of 19th-century economist Henry George. He discusses the core principle of a land value tax, which taxes the unimproved value of land rather than the buildings or infrastructure on it, and how this approach addresses the historical struggle over land ownership.
"philosophy of a 19th century American Economist by the name of Henry George from once we get georgeism and basically George's thesis is kind of the title of my book that land is a big deal um ge..."
The Paradox of Progress and Poverty
Doucet delves into the paradox presented in George's book, 'Progress and Poverty,' questioning why poverty persists despite technological advancements and increased productivity. He emphasizes the need to address land speculation to resolve this issue and create a more equitable society.
"um control over land is the oldest struggle of human history it goes beyond human history animals have been fighting over land forever um that's what they're fighting over in Ukraine and Russia ..."
The Connection Between Game Development and Georgism
Lars shares how his experience as a game developer led him to explore Georgism. He discusses the phenomenon of rent-seeking in gaming platforms and how virtual housing crises mirror real-world issues, highlighting the implications of land speculation in both realms.
"and George answers that question in his book and I you know expand on it in mine yep yep okay so yeah I'm excited to get into the theory of all of it second but first I'm curious um how much of yo..."
Virtual Housing Crises in Gaming
Doucet reflects on the recurring virtual housing crises in online games, illustrating how these crises replicate real-world land issues. He discusses the implications of land speculation in virtual environments and how it foreshadows similar challenges in the real estate market.
"georgeism is I'd heard about georgiaism before I'd read about it I thought it was interesting but then I started noticing this weird phenomenon in online multiplayer games going back 30 years re..."
Taxing Unproductive Assets
Lars argues for the taxation of unproductive assets, emphasizing the importance of taxing land value to discourage rent-seeking behavior. He critiques the current income tax system and advocates for a shift towards taxing monopolies and unproductive resources.
"and at the time I was working as an analyst for um a video game consulting firm called novik um and I told my employers it's like we are going to see all the same problems happen we're gonna see ..."
The Case for Land Value Taxation
Doucet discusses the rationale behind land value taxation, arguing that it promotes productive use of land and discourages speculation. He contrasts this approach with traditional income and capital taxes, advocating for a more equitable tax system that prioritizes societal contributions.
"long time ago he was comparing taxing land to taxing unimproved labor or unimproved Capital um and you know it's an interesting concept right like should I so I have a CS degree right should I b..."
Moral Principles of Taxation
Lars explores the moral principles underlying Georgism, emphasizing the need to tax unproductive rent-seeking rather than productive labor and capital. He argues for a tax system that encourages value creation while addressing the inequities of land ownership.
"and you produce value your work produced that value right and if you save money and accumulate capital in order to put that Capital to work to receive a return you've also produ you've also prov..."
The Complexity of Opportunity Cost Taxation
Doucet examines the complexities of taxing opportunity costs, questioning the feasibility of such a system. He advocates for simpler tax structures that focus on land value and other monopolistic assets rather than subjective assessments of individual productivity.
"it can come from a much better somewhere so let's start with that yeah yeah so I guess um if it was the case that we've implemented a land value tax and we're still having a revenue shortfall uh a..."
Incentives for Property Development
Lars discusses why property owners in desirable locations may not be incentivized to maximize land use. He explains the concept of land speculation and how existing tax regimes can discourage development, leading to vacant properties in high-demand areas.
"you know absolutely then then move on to you know the bad taxes what is the severance tax Severance tax is a tax on the extraction of Natural Resources is what Norway does with their oil with th..."
The Economics of Land Speculation
Doucet elaborates on the economic dynamics of land speculation, explaining how property owners optimize for returns on land rather than investing in development. He highlights the impact of property taxes and market conditions on land use decisions.
"you know you're actually incentivized to invest in vacant land or a teardown property because the building of a teardown property is like worth negative value so the Lane's cheaper because there..."
Scarcity vs. Abundance Mindset
Lars challenges the scarcity mindset surrounding land use, advocating for an abundance mindset through Georgism. He discusses historical attempts at land expansion and the importance of sharing land to unlock economic potential.
"sure I could build it now but I might have a lot of land Parcels I've got and I don't need to build it now because I think the prices might go up later and it would be better to build on it later ..."
Urban Agglomeration and Land Value
Doucet explains the concept of urban agglomeration and its significance in land value. He argues that specific locations are non-fungible and that the value of land is tied to human relationships and proximity, emphasizing the need for equitable land distribution.
"um because it's an asset that you know if the population ever starts growing it's going to keep its value better than almost any other hard asset you have yeah yeah I I guess another like broader ..."
The Frontier Mindset in America
Lars discusses America's historical frontier mindset and its implications for contemporary land use. He contrasts past periods of expansion with current challenges, arguing that the closure of frontiers has led to economic stagnation and inequity.
"unlocks the abundance mindset let me talk about the frontier we have done Frontier expansion that is why immigrants came over from Europe you know and then eventually the rest of the world um to..."
The Limits of Sprawl and Innovation
In this segment, Doucet critiques the idea that technological advancements, like flying cars, could solve urban housing issues. He argues that while innovation can expand frontiers, it often comes with significant costs, such as environmental degradation. Doucet emphasizes that the closing of frontiers leads to renewed economic pressures and housing crises.
"homes you fully price in the value of the benefits you're able to accrue by having that proximity to a city but still being able to live over here through of course Ricardo's lot rent yeah but I..."
Speculation and Land Value Taxation
Doucet addresses the role of speculation in the housing market and critiques the notion that land value taxes could harm economic incentives. He discusses the empirical evidence from Norway's oil taxation model, arguing that a well-structured land value tax could alleviate speculation while still encouraging productive investment.
"of Zoom houses like this over in Austin have gone up in value because there is demand for them um there's demand for people to telecommute and so anyone who has so so the ability so the increased ..."
The Case for Incremental Change
Doucet argues for a gradual approach to implementing Georgism, acknowledging the potential shocks to the banking sector if land value taxes were introduced suddenly. He draws parallels to historical economic shifts, emphasizing the need for a balanced transition to avoid destabilizing the economy.
"can be used to productive ends right yeah I know so I've read that paper so first of all um the first author that Zachary gouchner yeah I'm I've not been able to pin him down on what exactly mea..."
Understanding Land Value and Competition
In this segment, Doucet explains Ricardo's law of rent and how it applies to urban areas. He discusses the unique nature of land as a non-renewable resource and how competition among tenants drives up rents, particularly in desirable locations. Doucet illustrates how landowners can increase rents as more land gets privatized.
"hey it all your r d is free all your Discovery is free if the problem is Discovery we just subsidize Discovery and then the oil companies are like okay that sounds like a great deal we don't have ..."
The Wealth Disparity and Land Ownership
Doucet tackles the misconception that billionaires primarily accumulate wealth through labor or capital. He highlights that many wealthy individuals are involved in hedge funds and banking, which often capitalize on land ownership. This segment underscores the systemic issues of wealth concentration and the role of land in economic inequality.
"regards to speculations like even if I just bite that bullet it's like okay speculation is good actually I don't think anyone's made the case that speculators need to capture 100 of the rants to b..."
Understanding Property Values in San Francisco
Lars Doucet explains the dynamics of property values in San Francisco, discussing how landowners can charge rents based on productivity and subsistence levels. He highlights the disparity between high-income earners and lower productivity residents, illustrating how this affects housing affordability and the movement of people within the city.
"high but I don't feel like they're that High where the software Engineers were working at Google are living at subsistence levels neither are they at like the margin of production where it's like ..."
The Wealth of Billionaires and Land Ownership
In this segment, Doucet addresses the misconception that billionaires primarily derive their wealth from land ownership. He clarifies that while some billionaires own land, many accumulate wealth through capital and labor, emphasizing the role of hedge funds and real estate in the wealth distribution of the richest individuals.
"that's very interesting that's actually one of the questions I was really curious about so I'm glad to hear an answer on that another one is so yeah the idea is you know Capital land is soaking ..."
The Hidden Costs of Rent
Doucet discusses how rent extraction impacts working-class families, arguing that the wealth generated from productive labor is often siphoned off by landowners. He highlights the struggles of service workers who cannot afford to live in the cities where they work, pointing to a systemic issue in wealth distribution.
"Rich no no I I guess my point wasn't that um like I'm not complaining that your solution would not fix the fact that billionaires exist I also like that there's billionaires what I'm uh pointing..."
Land Value Tax: A Shift in Burden?
This segment explores the implications of implementing a land value tax, suggesting it could shift the financial burden from upper-middle-class landowners to wealthier, more productive individuals. Doucet discusses the potential economic efficiency of such a tax while acknowledging its regressive nature.
"weird patterns essentially especially with like service workers who can't afford to live in the cities where their work is demanded yeah okay so what do you think of this take this might be econ..."
Commercial Real Estate and Land Value Tax
Doucet emphasizes that the majority of land wealth is concentrated in commercial real estate, particularly in urban centers. He argues that a land value tax would primarily impact those who are not actively using their land productively, thus addressing inefficiencies in land use.
"do that well no I don't quite agree with that because it's like although there are a lot of upper middle class Americans who own a lot of the land wealth it's not the case that they own where th..."
Land Reform and Economic Growth
In this segment, Doucet references historical land reforms in Asian economies that led to significant growth. He discusses the importance of land productivity and how distributing land to those who work it can lead to better economic outcomes.
"those are people who are neither you know nice you know nice friendly upper middle class Americans nor are they hard-working industrialists you know making cool stuff they're people who are doing ..."
The Transition to a Land Value Tax System
Doucet addresses the challenges of transitioning to a land value tax system, particularly the fairness to current homeowners. He proposes a gradual approach that would exempt buildings from taxation while maintaining revenue neutrality, ensuring that no one is unfairly disadvantaged.
"one of the things uh I think Joseph studwell was go out there what are the things he talks about is so he's trying to explain why some um Asian economies grew gangbusters in the last Saturday 20..."
Funding Public Services with Land Value Tax
This segment discusses the potential revenue generated from a land value tax and how it could fund essential public services like Social Security and healthcare. Doucet emphasizes the flexibility of using this tax to replace existing taxes or fund new initiatives like Universal Basic Income.
"will be a signal to the landowner to increase the rent because of Ricardo's law of rent yep okay and that's exactly what happened in Ireland when um and George talks about this in progress and p..."
Libertarian Perspectives on Land Value Tax
Doucet shares his thoughts on how a land value tax aligns with libertarian principles by reducing the tax burden on productive activities. He discusses the importance of reforming existing property tax systems to create a more equitable taxation framework.
"it's up to you like that's a policy decision of whether you want to spend it on spending whether you want to spend it on offsetting taxes or whether you want to spend it on Ubi I think the the b..."
Government's Role in Land Ownership
In this segment, Doucet critiques the government's role in land ownership and taxation, suggesting that it often protects the interests of landowners. He discusses the historical context of land ownership and governance in America, highlighting the need for reform.
"are good basically capital and income but my concern is the way I'm guessing something like this would be implemented is it would be added on top of rather than repealing those taxes and then um..."
The Future of Taxation in a Crypto World
Doucet speculates on the implications of cryptocurrency on taxation, particularly how it could lead to a greater reliance on land value taxes. He discusses the challenges of tracking income and capital gains in a decentralized financial system.
"parking lots downtown in Houston are going to be paying most of the bill yeah by the way what do you make of is there like a Georgia's critique of government itself in the sense that uh governme..."
Transitioning to Georgism: Challenges Ahead
Doucet addresses the complexities of transitioning to a Georgist economic model, particularly the need to consider the fairness to current landowners. He emphasizes the importance of a thoughtful approach to reform that accounts for existing investments and societal impacts.
"how many shell companies in the Bahamas you've like obscured your identity with just put the check in the mail Mr address you know whereas the income tax needs to do this full anal probe on ever..."
Land Value Tax Implementation
Doucet elaborates on the practical steps for implementing a land value tax, suggesting a revenue-neutral shift that exempts building taxes while taxing land. He discusses the importance of careful assessment to avoid disadvantaging homeowners and ensuring that the transition is smooth and equitable for all stakeholders.
"right so there's this issue called that I have to Grapple with which is called Gordon tolex transitional gains trap right so if you think about taxi medallions in like New York City right you kn..."
Challenges of Land Valuation
In this segment, Lars Doucet addresses the challenges of accurately assessing land value, particularly in the context of fluctuating market conditions and the impact of potential land value taxes. He discusses the importance of continuous assessment and the use of technology to keep property valuations up to date, ensuring fairness in taxation.
"a poor sympathetic Widow who has no income and but has a high value home you just make it so she doesn't have to pay the land value tax until she dies or sells the estate yeah yeah yeah um and l..."
Introducing Glan Solutions
Lars introduces his new startup, Glan Solutions, aimed at improving municipal property tax assessments. He explains the need for better methods to separate land value from building value and how his startup plans to leverage recent research to enhance the accuracy of property assessments across the U.S.
"estimate what is the actual like capitalization about you know so are you concerned about like this the societal effects of the depreciation of land prices are you more concerned about just the ..."
Addressing Property Tax Inequities
Doucet discusses the inequities in property tax assessments, highlighting how landlords are often under-assessed compared to homeowners. He emphasizes the need for reform in property tax assessments to ensure fairness and reduce regressivity, particularly for marginalized communities.
"that yeah this might be actually a good point to talk about uh your new startup this is actually something I don't know about either so yeah what what is the what is the idea what are you up to ..."
Transparency in Land Valuation
In this segment, Lars Doucet advocates for increased transparency in land valuation processes. He argues that open-source models and accessible data can help prevent corruption and ensure fair assessments, allowing property owners to verify their tax assessments against their neighbors.
"um most um property tax assessment offices even use uh even use multiple regression a lot of them are using the cost approach which is basically where you uh it's what Ed Glazer talked about in ..."
Concerns Over Land Value Taxation
Doucet addresses concerns regarding the implementation of land value taxation, particularly the potential for corruption and the murkiness of land valuation. He argues for the need to establish clear guidelines and transparency to mitigate these risks and ensure a fair system.
"be over assessed that's why property taxes are sometimes called regressive is the assessments um need to be fixed I see um I I guess because if you have more property getting your rate changed f..."
Mineral Rights and Land Value
Lars discusses the complexities of mineral rights in relation to land value taxation, particularly in states like Texas. He explains how mineral rights are often separate from land ownership and the implications this has for land value assessments and taxation.
"corporations or you know whoever they want so that's a really that's a good argument but the reply to that is that we did need to move towards more transparency right because land value follows ..."
The Role of Government in Property Rights
In this segment, Doucet explores the relationship between government actions and property rights, addressing concerns about trust in the system. He argues that changes to property taxation should not undermine the rule of law and that Georgism aims to enhance fairness rather than seize land.
"than how income taxes work none of it's like open to potentially even the government itself right um but okay so another concern is uh that's fine for things that are like above ground and legible..."
Georgism and Economic Change
Lars Doucet concludes by discussing the broader implications of Georgism on economic systems. He emphasizes that while change can be daunting, it is essential to adapt and improve systems for the benefit of society, drawing parallels with historical changes in asset classes and economic policies.
"to be captured because it's the heritage of the British people the opposite of this is the Spanish government whenever someone finds a ship full of a galleon full of gold doubloons on the bottom..."
Georgism in the Digital Age
Doucet introduces the concept of applying Georgist principles to digital assets and virtual worlds. He defines 'land-like assets' and discusses how the principles of land value taxation can be adapted to the digital economy, exploring the implications for platforms like social media and online marketplaces.
"um not like with the Indians especially but also like all sorts of international treaties um and you know I mean for like um we we've made all kinds of times where we've like changed rules on th..."
Georgism in the Digital Age
Lars Doucet explores the application of Georgism principles to digital platforms like Facebook and YouTube. He discusses how user-generated content can be seen as a form of land-like asset, where attention and engagement are the new currencies. Doucet emphasizes the need to consider how these platforms extract value from users and how Georgism can inform policies around virtual real estate.
"um okay let's move on to the dessert let's move on to like some some more fun interpretations and um applications of georgiaism sure so um one I think burn Hobart had this blog post on the diff I ..."
Virtual Real Estate and Land Value Tax
In this segment, Doucet defines 'land-like assets' in virtual worlds and discusses how principles of land value tax (LVT) could apply. He uses examples from gaming and domain names to illustrate how scarcity and location can create value in digital spaces. Doucet argues for a thoughtful application of Georgism in virtual economies to prevent speculation and promote equitable access.
"doesn't necessarily mean just do lvt it means that you know so first of all let me Define what I mean by a land-like asset a landlike asset has three properties it is scarce and Supply it is neces..."
The Challenge of Copyright and Patents
Doucet delves into the complexities of copyright and patents in relation to Georgism. He raises questions about the intrinsic value of ideas versus the improvements made by creators. Doucet critiques the current state of copyright laws, suggesting that they often favor rent-seeking behavior and hinder innovation, advocating for shorter copyright terms to benefit the public domain.
"Worlds and stuff um that was more in these more kind of literal simulacra of the real world in these like Virtual Worlds than kind of the things you're talking about of like YouTube accounts and ..."
Interstellar Georgism: A New Frontier
This segment discusses the implications of Georgism in space exploration and colonization. Doucet highlights the Outer Space Treaty and the need for a governance framework that prevents monopolization of extraterrestrial resources. He argues for the application of Georgist principles to ensure fair access and investment in new worlds, avoiding the pitfalls of terrestrial land ownership.
"another juicy um implication that you were just talking about which is space there is like this idea I mean eventually hopefully Humanity Will Conquer um space and like the rest of the Galaxy so..."
Disneyland and the Governance of Private Cities
Doucet addresses the unique case of Disney World as a private city and its implications for Georgism. He discusses how large landowners can internalize value creation and the governance challenges that arise. Doucet emphasizes the need to rethink land ownership and taxation in the context of private cities, suggesting that they operate similarly to governments.
"which is that's a really interesting and complicated area because it's hard to think of what is the intrinsic sort of value of the land of the idea and what is the Improvement you've made right ..."
The Future of Georgism and Municipal Solutions
In the final segment, Doucet shares his vision for the future of Georgism through practical applications in municipal mass appraisal. He discusses his startup, which aims to modernize property assessment practices, making them more transparent and efficient. Doucet believes that these advancements can advocate for Georgism and improve local governance, ultimately benefiting communities.
"reducing copyright terms yep yep uh let's talk about the political feasibility of this idea so um uh I mean I just means land value tax in general do you think it'll be something that will get p..."
Geoland Solutions and Georgism
Doucet shares his entrepreneurial journey with Geoland Solutions, a startup focused on municipal mass appraisal. He highlights the importance of accurate land valuation in advocating for Georgism and discusses the recent funding led by Sam Altman, emphasizing the practical steps towards implementing Georgist principles.
"to advocate for it because you know in the Edward Glazer interview you know one of the pretty I'm super happy to have Glazer's endorsement even if he thinks georgeism is in a Panacea yeah one of..."
Changing Perspectives on Economics
Lars reflects on the impact of his book, 'Land is a Big Deal,' and how it challenges conventional economic thinking. He shares insights on the importance of land value measurement and how it can reshape discussions around economics and policy.
"there for anybody to be able to pick up yep yep awesome okay so the book is land is a big deal um and where else can people find you yeah so you can find me at a couple of places um one the webs..."
Engaging with Critiques
In the closing remarks, Doucet expresses his appreciation for challenging discussions that push the boundaries of Georgism. He emphasizes the importance of exploring practical solutions to economic problems and invites listeners to engage with the ideas presented.
"awesome okay uh thanks Lars thanks for coming on today and thanks for making all your way all the way over here to do this interview live yeah well thanks for grilling me thanks for all the hard..."