Saturday, May 4, 2019

The Real Real Estate State and Artificial Scarcity, Technology and Planning

Henry George had this stuff nailed, see after the jump.

From Real Life Magazine:

Built to Shill
The fiction of convenience makes cities less livable
Building to Code is a monthly column about how we live among cities and each other. It regards cities as what they’ve always been: not systems of capitalist resource management, but the stages that society plays out on.
Consider the humble city planner: a dutiful servant whose job it is to make the city more livable through judicious use of regulation, design, and public engagement. Perhaps they want to improve a neighborhood with some bike lanes and a community playground: two pieces of city infrastructure that benefit people who may not be able to afford a car or have a backyard. The nicer you make those bike lanes or that park, however, the more likely you are to spark gentrification and with it, the displacement of the poor whose lives you wanted to improve.

Samuel Stein, an urban geographer studying at the CUNY Graduate Center and teaching at Hunter College, wrote Capital City: Gentrification and the Real Estate State as an elegy for his beloved planning profession. Early figures in urban planning saw their practice as a peaceful means of transitioning capitalist cities to egalitarian planned settlements. What happened instead, over the last century, was the tactical deployment of urban planners by elites to manage contests over land and power in industrial cities and post-slavery agricultural regions. Planners brought life-saving sanitation and dignified housing to countless city dwellers but also prevented the seizure of land by native, formerly enslaved, and working people.
Because the real estate state isn’t about constructing buildings so much as owning land, 
it makes sense that the complex is deeply invested in the burgeoning “smart city” market
The challenges faced by millions of modern urbanites are imminently solvable problems of logistics and design and yet “capitalism makes the best of planning impossible,” Stein writes: “any good that planners do is filtered through a system that dispossesses those who cannot pay.” Such is the fate of anyone living under what he calls the real estate state: “a political formation in which real estate capital has inordinate influence over the shape of our cities, the parameters of our politics and the lives we lead.”

At the heart of the real estate state lie the finance, insurance, and real-estate industries (collectively referred to by the appropriately destructive-sounding acronym FIRE), the fastest growing sectors of the economy. These industries exist to increase the price of land and extract rent from what gets built on top of it. Providing shelter, safe places to work, and efficient means of getting between them comes second. The consequences are predictably cruel: vacant homes outnumber the homeless three to one and self-sustaining neighborhoods succumb to the economics of chain retail and corporate rents. City budgets wither away as they take on all the financial risk of financing construction and maintaining infrastructure while developers build cheaper, flimsier, more self-similar buildings.
Because the real estate state isn’t about constructing buildings so much as owning the land under them and charging people rent, it makes sense that the complex is deeply invested in the burgeoning “smart city” market. FIRE industries’ success come from betting on the outcomes of their own investments. Will this neighborhood gentrify in the next decade? Will that building flood within the next 30 years? Getting profitable answers to these questions require both information and finely-tuned control over human behavior and resource allocation. Increasingly, Silicon Valley’s familiar brands are finding revenue streams in the real estate state’s constituent FIRE industries.
Whereas elites of the 20th century had to actually neglect, demolish, and rebuild physical buildings to manipulate the price of land, the new titans of the FIRE industry can create artificial scarcity — from Uber availability to who your roommates are — with algorithms. With the surveillance technologies built into their Toronto and Hudson Yards projects, Google does to these buildings what they made billions doing to the internet: monitoring for advertising opportunities. Meanwhile, the We Company has grown from a humble but trendy co-working space to a globe-spanning real estate empire. Their recent smart cities initiative was introduced as part of a commitment to “globalization, urbanization, and climate change”; it is easy to imagine members-only WeCities as literal oases surrounded by guarded gates to keep out climate refugees. Big tech is poised to take the inscrutable filtering and sorting methods used on your Facebook Newsfeed or your Google search results and apply them to the streetscape....
...MORE

Henry George was an economist and journalist in the latter half of the 19th century who proposed cutting through all the cronyism and rhetorical B.S. of various tax regimes.
A few of our mentions of this very interesting guy:

February 21, 2016
Forgetting History: "Nothing Like This Has Ever Happened Before"
Back in 2012 there occurred one of those eruptions of comment* that seem to happen for no discernible reason other than some combination of network effects and echo chambers.

The eruptions peak and die away as the crowd moves on leaving almost imperceptible ripples where there had been much thunder and fury.

This is a reflection on one of them, Henry George and the land tax, updated for current values and valuations.... 
September 6, 2017
The Obscure Economist Silicon Valley Billionaires Should Know  
December 31, 2017
On This Date in 1935 the Game "Monopoly" Was Patented (economist Henry George does a cameo)

"I think it's wrong that only one company makes the game Monopoly."
—Comedian Steven Wright

Even by the time we posted "The Economist Calls for More Taxes on Land" in July 2013 the commentariat was moving on:
They are a bit late getting to the party, this discussion has been pursued in relation to the means of production for years and as far as our little corner of the www goes, we made mention of the FT Alphaville robo-rentier commentary back in 2012's "The Road to Serfdom: Where the Robots Are Taking Us":
Not Hayek's "The Road to Serfdom". Rather this is a journey back to medieval society where all income is subject to taxation by the Church or the manor or both. At least in the current case it is freehold rent which is paid in cash rather than the labor rent that villeins and serfs owed their liege.

Let me explain....
In September 2013's "Ben Franklin on Labor Economics (or how to create an underclass)" I intro'd with:
The easiest way to create a dependent class is to price them out of the real estate markets.
In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single....
In the United States The Land Ordinance of 1785 set the cost of land purchased from the government at $1.00 per acre in sections of 640 acres.

This price was raised to $2.00/acre in 1800 but purchase was paid for in four equal annual payments.
In 1820 the price of Federal lands was reduced to $1.25 per acre with payment in cash.
An alternate conveyance in the 1862 Homestead Act maintained the $1.25 price.

Compare  the wages various craftsmen could command:

In 1785 a journeyman carpenter in New York City was paid  $1.12 ½ per day.  
Here are the average hourly wage for various years, note the post Civil War inflation in the 1870 numbers and the decreases of the latter 1800's deflation:...
By January 2014 it was just a few stragglers:
"Land Value Tax Won't Fix San Francisco" 
The first thing I thought of when I saw Mr. Smith's post was "Zoning" (it wasn't some flash of brilliance on my part, we've been down this road before)
Yglesias at Moneybox:...
 Finally, our final post, in May, 2014:
Last Word on Piketty
The headline is probably a lie.
Readers who have been with us for a while know I'll see something, somewhere, sometime in the future and want to save it to the blog. I'll do so and lose any pretense to statement/action integration. Which word probably has the same Latin root as integrity.
Oh well.

Hell, I can already foresee a future post that will require making a lie of the headline:

If we are going the route of a Piketty wealth tax we need to look at doing one of these:
https://opendomesday.org/media/images/cropped/13122-1.png
A Domesday Book!
(online and translated!)

RANDOM ENTRY: [OLD] TUPTON, Derbyshire
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