monopolly law

Imagine a world in which all major private wealth (every factory, patent or plot of land) is constantly for sale at a fair price and where most of the value of this property is paid out equally to all citizens as a social dividend. While one might be tempted to believe the wealthy would dominate such a hyper-market world, in fact most private wealth would become social wealth and would be shared equally by all. With most value of assets accruing to the public, every asset would become cheaper to (partially) own, democratizing the control of assets and offering everyone new opportunities to start businesses or households. At the same time, because there would be a price on every asset, large scale projects, like high speed trains, would become far easier to develop as holdouts could no longer block the right of way.

We propose a new property system, called the Common Ownership Self-Assessed Tax (COST), that would make such a world come true. Every citizen and especially corporation would self-assess the value of assets they possess, pay a roughly 7% tax on these values and be required to sell the assets to anyone willing to purchase them at this self-assessed price. This tax would raise enough revenue to eliminate other taxes on capital (such as on inheritance, corporations, capital gains, property and so forth), significantly reduce income taxes and pay down much of public debt, while at the same time funding a large social dividend (of roughly $24,000 for a family of four in the United States) or funding critical public infrastructure. At the same time, unlike most taxes, it would actually grow the economy by 5%. Beyond these economic benefits, a COST would create a healthier relationship to property, teaching us to detach from our material possessions and stop trying to exploit one another in commercial transactions, instead seeking to increase the value of common wealth and strengthening the bonds of community. And while such a dramatic change may seem like a speculative pipedream, it is a natural way, even in the near-term, to govern public resources like the radio spectrum.



Property Is Monopoly
CREATING A COMPET ITIVE MARKET
IN USES THROUGH PARTIAL
COMMON OWNERSHIP

As a child fascinated by Elon Musk’s Hyperloop Alejandro Espinosa often pictured himself in the cab of the first supersonic train, sitting side by side with the

conductor. It never occurred to him that these trains

would have no conductors. Yet the topographic and

economic maps displayed in the holographs he was

peering at clashed even more powerfully with his childish

dreams.

Espinosa grew up to be the head of OpenTrac, a new

venture that would fulfill his lifelong ambition. The

company was making plans for its supersonic train to run

between Los Angeles and San Francisco, but before tubes

could be installed, magnets laid down, and vacuums

prepared, a route through the Central Valley had to be 

selected. The other sections of the train’s full route, those

through the East Bay and the San Fernando Valley, offered

very limited choices, but there was a wide range of

potential ways through the Central Valley.

Espinosa wanted to move fast. If landholders in the

Central Valley heard about the project, some of them

might be tempted to raise the price of their property.

Doing so, however, would be a risky gamble: a price

increase would impose a higher tax burden on the owner,

while the probability of being on the selected route would

be low.

Narrowing down the large number of possible routes

was a headache, even with the Cadappster app displaying

the listed value of each plot—every plot’s value is posted

there for anyone to see. It made Espinosa’s head spin to

imagine what planning a project like his must have been

like before the institution of the common ownership

self-assessed tax. He would have had to choose a route

before he had any idea what landowners along it would be

willing to accept as payment, and then he probably would

have had to endure years of negotiations and court fights

to obtain all the property. He knew he was lucky that

finally there was a transparent, liquid, and honestly priced

market for property. He would not have to endure the

guilt and the public relations disaster of having to force an

elderly woman off land that had been in her family for

generations. These days any such resident could post a

high price and deter the purchase, or sell and be richly

compensated.

To find feasible routes, OpenTrac’s computer scientists

used many approximations. They focused on the number

of topographical obstacles that would confront the

Chapter 1

engineers, such as the rockiness of the area and the

heights and depths of its hills, mountains, or gorges, and

used simple rules of thumb to narrow the selection.

Espinosa instructed them to generate the five most

promising routes.

All five selections had roughly similar land prices and

offered reasonable tradeoffs in engineering cost and

speed. Back when trains ran at slower speeds, the views

along each route might have influenced the decision, but

nowadays, even if the tubes were transparent, passengers

would see only a blur. After a meeting with several of his

top engineers and one marketing expert, the group settled

on the route with the cheapest land costs, and felt

confident that they made the best choice.

Espinosa’s treasurer immediately opened Cadappster

and confirmed OpenTrac’s willingness to purchase each

property along the route at its posted price. This

automatically secured OpenTrac’s ownership: having just

raised a new venture round, OpenTrac was flush with cash

and made all payments on the spot. With residents

scheduled to move out within three months, groundbreaking could begin by the end of the year. As the new

holder of the land, Espinosa merged the whole route into

one plot and posted a value several times the sum of the

purchase prices to ensure the security of the route.

Developers today face great challenges. When asked what the

largest barrier is to implementing Hyperloop One, co-founder

Josh Giegel replied, “We really need a right of way.” The interviewer responded, “Some constituencies, such as private

landowners . . . could see holding this up for quite some

time.”1 There is an obvious incentive for a landowner to hold out for a high price when such a valuable project is coming

through.

Suppose that each of 2,000 landowners along the route

would normally be willing to accept $100,000 ($200 million in

total) to cede right of way. Giegel believes that, net of other

costs, Hyperloop can yield $500 million of operating profit.

Now suppose that after the developer has bought the right of

way on 1,999 pieces of land, the two-thousandth landowner

learns of his plan. Rather than sell for $100,000, that homeowner might insist on a much higher price. Giegel would have

no choice but to pay up: if he does not buy, he has lost his

$199.9 million investment in the first 1,999 pieces of land. In

principle, the landowner could hold out for nearly the entire

$500 million. Even if she set the price at $400 million, the developer would do better by accepting the offer than by turning

it down since $100 million is better than nothing. But if the

developer anticipates holdout, he would not embark on the

development in the first place. And remember that the developer has to contend with all 2,000 individual landowners, any

of whom might decide to hold out for a high price. Several

holdouts would quickly squash the project.

At present, developers minimize the holdout risk by taking

costly precautions when they buy up land—for example, by

acting secretly through shell corporations. But they still must

engage in lengthy and expensive negotiations with individual

sellers, which can cause delays and increase risk to intolerable

levels. That is why governments often take the lead, using the

power of eminent domain to create new commercial or residential districts. But eminent domain is often unfair and always politically controversial.