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On Radical Markets

vitalik.ca

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Re: On Radical Markets

#31

Post by JumpCrisscross »

glifchits wrote: post #15
JumpCrisscross wrote: post #13

> Consider a system where property owners themselves specify what the value of their property is, and pay a tax rate of, say, 2% of that value per year. But here is the twist: whatever value they specify for their property, they have to be willing to sell it to anyone at that price Valuing an asset takes work. The process consumes resources. There is a reason we have brokers for assets where one needs someone standin…

Vitalik acknowledges your point: "... people are not experts at property valuation, and would have to spend a significant amount of time and mental effort figuring out what self-assessed value to put for their house, and they would complain much more if they accidentally put a value that’s too low and suddenly find that their house is gone." The solution: users would choose an AI to generate real time valuations. In…

> this idea could work very well in other types of property markets

Constantly offering to the market is market making. It's a difficult, risky and specialized domain in any asset classes. Most markets cannot support real-time market making for the simple reason that price discovery is expensive and intrinsically tied to liquidity.

Re: On Radical Markets

#32

Post by csomar »

CptFribble wrote: post #11

Wouldn't the self-assessed tax lead to unfair competitive practices? Imagine a small bookstore opening in the same town as a Barnes and Noble. What if there's no tax level that the small store can afford that prevents a mega-corp like B&N from buying out their property? Imagine you live in a neighborhood with deep community or family ties. Someone down the street wins the lottery/makes an 8-figure exit and wants to b…

Not trying to sound an a--hole (maybe I do) but isn't this your problem? If you want something, then you gotta work or provide to have it. Why do you want society to go out of its way, and make laws to protect your "stuff". Now, if many people think alike then it could be beneficiary.

Owning a piece of land is not really owning it. Not in the USA, and most of the world. You are having a "privilege" of using the land vs. paying some taxes.

That being said I don't approve of home taxes in the US. The taxes should be applied equally on all citizens to provide the required amenities (roads, cables, sanitary, etc...) The money should go to maintain the relevant infrastructure.

I'm not sure if the taxes you pay on your home value in the US goes to relevant infrastructure; or else (nor do I really care!)

Re: On Radical Markets

#33

Post by mlevental »

csomar wrote: post #32
CptFribble wrote: post #11

Wouldn't the self-assessed tax lead to unfair competitive practices? Imagine a small bookstore opening in the same town as a Barnes and Noble. What if there's no tax level that the small store can afford that prevents a mega-corp like B&N from buying out their property? Imagine you live in a neighborhood with deep community or family ties. Someone down the street wins the lottery/makes an 8-figure exit and wants to b…

Not trying to sound an a--hole (maybe I do) but isn't this your problem? If you want something, then you gotta work or provide to have it. Why do you want society to go out of its way, and make laws to protect your "stuff". Now, if many people think alike then it could be beneficiary. Owning a piece of land is not really owning it. Not in the USA, and most of the world. You are having a "privilege" of using the land…

... do you think bezos is in the majority or this person (i.e. would society be "going out of its way" for him if it prevents someone like Bezos from being able to do what's described)

Re: On Radical Markets

#34

Post by seiferteric »

notahacker wrote: post #19
seiferteric wrote: post #2

I like the self assessed property tax idea, although presumably if someone wants to buy your property and you are not ready to sell, you should be able to "correct" the assessment and pay the back taxes (for the year only) in order to discover the true price.

That sounds like a case for absolutely everyone to undervalue their property unless and until someone wants to buy it (and speculators have little incentive to try to buy houses when nobody actually accepts offers at the low rates implied by their tax valuations)

If no one wants to buy your house at the current value then it is by definition not undervalued. To your second point, speculators can put in any offer they want, it doesn't have to be at or right above your current valuation. If you claim your house is only worth 200k and they offer 500k, suddenly you have a tough choice, either sell, or pay a large tax bill.

Re: On Radical Markets

#35

Post by glifchits »

zimablue wrote: post #22
glifchits wrote: post #16

Earlier quoted context omitted.

I think the property/personal home example is hard to defend. Consider industrial property, such as a factory or warehouse. The most reasonable application of self-assessed tax would be to any property that can be valued on purely economic/objective bases.

I think the biggest problem with it, even with industrial stuff, is that it's ignoring transaction costs of moving buildings? Eg. I buy a property that I want to use as a factory. Some people who work for me move their own accomodation to be close to my factory. I spend absolutely tons of time and money filling my factory with machines, some of which are bolted to walls or have to be constructed inside the warehouse.…

Recall there are two goals: - allocative efficiency (property belongs to whomever can derive most value from it) - investment efficiency (people have incentives to invest in property, build Gigafactories, etc)

If I understand, your argument is that self-assessed taxes would eliminate investment efficiency.

The property owner should factor transaction costs into their own value of the building. This would increase their assessment of the land-value, and increase their taxes. This works because, keeping land valuations constant, the one with the highest transaction costs is the one who can derive the most efficiency from the land.

Re: On Radical Markets

#36

Post by glifchits »

bildung wrote: post #20
glifchits wrote: post #15

Earlier quoted context omitted.

Vitalik acknowledges your point: "... people are not experts at property valuation, and would have to spend a significant amount of time and mental effort figuring out what self-assessed value to put for their house, and they would complain much more if they accidentally put a value that’s too low and suddenly find that their house is gone." The solution: users would choose an AI to generate real time valuations. In…

* > The solution: users would choose an AI to generate real time valuations.* Sadly this isn't a solution, it just adds another layer of complexity to the decision making process. AI isn't magically unbiased, there's a multitude of ways for human bias/ particular interests to enter the model, from feature selection to model layout up to interpretation of the results. So now people have to be both experts at assessing…

Normally I would agree with you completely, indeed AI is (very) far from perfect. However, I think we're hung up on the home property example. As Vitalik suggests, this proposal works a lot better in situations where the underlying property is more fungible, and the participants in the market are more or less equal. The property example I like from the article is radio spectrum licenses.

I'd also add that using an AI also doesn't necessarily mean something opaque. A hand-made decision tree would be preferable to a neural net, for example. The decision tree could prompt you for your human decision if it encounters an outlying, uncertain instance.

Re: On Radical Markets

#37

Post by Barjak »

>However, markets are socially constructed because they depend on property rights that are socially constructed, and there are many different ways that markets and property rights can be constructed, some of which are unexplored and potentially far better than what we have today.

This would be an interesting hypothesis to explore with swarm reinforcement learning. It seems to me that rights have a lot to do with optimal/stable cooperation strategies in certain types of games, and maybe RL can uncover better strategies, or maybe not.

The simplest well-studied problem of this sort is the iterated prisoner's dilemma. The strategies we have today are remarkably similar to the Axelrod's original strategies three decades ago.

Re: On Radical Markets

#38

Post by csomar »

mlevental wrote: post #33
csomar wrote: post #32

Earlier quoted context omitted.

Not trying to sound an a--hole (maybe I do) but isn't this your problem? If you want something, then you gotta work or provide to have it. Why do you want society to go out of its way, and make laws to protect your "stuff". Now, if many people think alike then it could be beneficiary. Owning a piece of land is not really owning it. Not in the USA, and most of the world. You are having a "privilege" of using the land…

... do you think bezos is in the majority or this person (i.e. would society be "going out of its way" for him if it prevents someone like Bezos from being able to do what's described)

If his house price increases, then Bezos is the majority. A single person won't have any effect on the price of a certain region.

Re: On Radical Markets

#39

Post by zeveb »

zimablue wrote: post #22
glifchits wrote: post #16

Earlier quoted context omitted.

I think the property/personal home example is hard to defend. Consider industrial property, such as a factory or warehouse. The most reasonable application of self-assessed tax would be to any property that can be valued on purely economic/objective bases.

I think the biggest problem with it, even with industrial stuff, is that it's ignoring transaction costs of moving buildings? Eg. I buy a property that I want to use as a factory. Some people who work for me move their own accomodation to be close to my factory. I spend absolutely tons of time and money filling my factory with machines, some of which are bolted to walls or have to be constructed inside the warehouse.…

> I think the biggest problem with it, even with industrial stuff, is that it's ignoring transaction costs of moving buildings?

Then maybe the rule is that you will be forced to sell to anyone who pays you N × the value you self-assessed at, where N > 1. E.g. if transaction costs average 20%, you have to sell to anyone who will pay 1.2 times your self-assessed value.

Re: On Radical Markets

#40

Post by TheCoelacanth »

baddox wrote: post #28

> As it turns out, it is absolutely possible to have a system that contains markets but not property rights: at the end of every year, collect every piece of property, and at the start of the next year have the government auction every piece out to the highest bidder. I know this is just a hypothetical example, but...the government takes all property at the end of the year, except for money? Since presumably people n…

This is basically just a system with no ownership and maximum of 1 year leases for everything. If you rent an apartment with 1 year leases, you don't have an incentive to try to sublet your apartment for the last day of the lease every time the lease comes up for renewal because no one will pay you very much for one day's use of the apartment and you wouldn't be able to use the apartment for that day.
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