0:33 Intro. [Recording date: May 1, 2018.] Russ Roberts: Glen Wyle ... with Eric Posner, he is the author of Radical Markets: Uprooting Capitalism and Democracy for a Just Society, and that book is our topic for today. Glen, welcome to EconTalk.... Russ Roberts: The book is called Radical Markets, and it's radical in many ways. It's an extremely ambitious vision of how to remake emergent markets from the top down using prices and incentives rather than regulation. The sweep of the book is impressive. It covers property, immigration, voting, data issues surrounding social media, antitrust issues. And it seems monopoly and monopsony as the root causes of many of societal challenges. You want to add anything to that short summary before we dive in? Glen Weyl: I think beyond its ambition, the goal is to create a different sort of political coalition. I think that today's libertarians, and today's liberals and progressives, were, in the 19th century both part of a coalition that saw fighting inequality as allied to fighting for freedom, and, you know, more open societies. And, my hope is to break apart the standard Left/Right divide today and try to re-unite that coalition. So, that's an important part of the ambition of the book. Russ Roberts: It comes through. The book, is, in some ways, an attack of both wings--the progressive and libertarian politic economy visions; but it's also an embrace of both of them in different ways. So that's one of the things that made the book so interesting to me. Glen Weyl: I'm glad. Russ Roberts: So, I want to start with housing and land. You see yourself in the tradition of Henry George, and many listeners will not know who that is. Some will be--he has, still-- Glen Weyl: It's funny, Russ, because when I give this talk, I put up a picture of Adam Smith, I put up a picture of Marx; people get that. I then put up a picture of Henry George and I ask the audience if anyone can recognize him. Russ Roberts: One or two people, maybe? Glen Weyl: Well, the [?] one I got was at Google, yesterday, and it was a guy who runs a podcast or radio show about Henry George. Russ Roberts: Yeah. He has a few passionate devotees; and I hear from them every once in a while asking me what I think about Henry George. So, tell our listeners what he was about, and your proposal for restructuring land and property, and how that builds on his vision. Glen Weyl: So, Henry George was probably the best selling author in the English language other than the Bible for about 30 years. He was--his book, Progress and Poverty, was the namesake of the Progressive Movement. He just had an enormous influence on popular culture and intellectual thought for years. And, his central idea was one that wasn't just special to him, but was really shared by many of the founders of the Marginal Revolution in economics--by William Stanley Jevons, and especially Leon Walras. And, it was a concept called competitive common ownership. And the basic idea was that land does not belong naturally to any human being. It was created by God and can't ever belong to any person because no one created it. And, creating private property over land ends up not just creating all sorts of unjust benefits in the hands of a small number of people, but it also keeps land away from its most productive uses. If you, as actually Walras said, make land in big plots, you'll end up with aristocrats grazing their game; and if you put it in small plots, you'll end up with inefficient subsistence agriculture. Only if you have a duly[?] competitive process where no one person can monopolize land, where it's allocated to the person who is able to best use it in some competitive manner, will you be able to have a true free market. And, Henry George wanted to implement this by having a 100% tax on the value of land, and no taxes on everything else. So, our idea is very inspired by the spirit of his idea--the idea that to have truly free markets, you might have to make the value of property partially common. But, we disagree with him on some important details, which are that: he assumed that there was a clear way to make a distinction between land, on the one hand, and human labor on the other. But, if you think about, like, a gold mine: Imagine you were to tax at 100% the value of a gold mine, but, tax at nothing anything that someone had taken out of the gold mine. Well, then, of course, anyone who got control of the gold mine would immediately strip out all the gold and take it for themselves. In reality, everything in the world is some combination of human effort and natural endowments. And, while we agree with the principle of Henry George, we believe that in practice, you need to have a tax that's broader, and that forces people to fully reveal the value of those assets, rather than trying to have some government bureaucrat, as would have had to happen under Henry George, assess what the value of those assets are. Russ Roberts: Before you go on: The 100% tax--is that once?--the Georgian idea? Is it every year? Is it--what was the idea there? And why is it a good idea. Explain--[] the base. Glen Weyl: Yeah; so the Georgian idea was that you would have--yeah, so, Henry George's idea was that there would be 100% tax every year on the rental value of the land. So, that would be an assessment made by the government of how much that land would be worth if no one was occupying it in rent that year. So, essentially, everyone would every year pay the value that they would have to pay if the government owned that land and was leasing it out to them. Russ Roberts: It's a user fee, essentially. Glen Weyl: Yeah. Russ Roberts: Okay. So, the problem with that, as you point out--one of the problems--is that that ignores the complex complementarity between what people do with physical land and what they do with things we'd call property. Obviously you landscape your home. You do all kinds of things. You put fertilizer in the ground, if you are a farmer. There are all kinds of things you do that make the land and your effort somewhat indistinguishable. But the original idea as I understand it also was that, since land is "fixed," you are not going to get some of the disincentive effects you get with other taxes. So, one of the other selling points of the Georgian vision is that taxing land--you can't export land, in theory; you can't take it--you can't hide it. Unlike labor, other forms of economic activity, it doesn't respond--I would say--as much. It does respond, is a problem; but it doesn't respond as much to the incentive effects of the tax itself. Is that a fair point, also? Glen Weyl: Yes; and I think that the idea of that, that we should put greater taxes on things that respond less to effort, and higher taxes on things that are more unique and therefore more prone to monopoly--I think that that is a deep and important insight. I just think the notion that you can cleanly distinguish between something called land and something else called labor is mistaken. And, the basic principle behind the tax we advocate is to take that principle that you should, you know, tax things that are unique and that don't respond too much to work more than other things--that we absolutely agree with. But, what we disagree about is the notion that there is some objective, completely clear categorical line to draw between land and everything else.

9:21 Russ Roberts: So, in your vision--which I agree with, that part; I think most people do--in your vision, I would state a value for my property, which would be my house at my current address: I'm a homeowner right now, under the illusion I have private property. Under[?] the social construct that may not be productive, called 'private property,' I own it. And if you want to buy it now, you have to offer me a price that makes it worthwhile. And I'm not interested in selling right now, so you wouldn't even know to bother me unless you went door to door. Which people do, in some neighborhoods. But in general, I can look at what's for sale, decide if it's worth it, negotiate with the owners, etc. You want a very different model of how land and housing and other physical property would be exchanged. So, try to lay that out. Glen Weyl: Yeah. So, every owner of significant private property, and let's put aside personal effects and, you know, things from your, um, you know, your grandmother, or your dog, or whatever. But, any significant private property like a house, you would have to list a value for in a public registry, pay a tax on that value, and stand ready to sell it at that value to anyone willing to pay it. Russ Roberts: And the idea of that last part is to give me some incentive to pick a value that is actually close to what its economic value is. Because otherwise you'd just pick a low value. Glen Weyl: That's one way of thinking about it. But another way of thinking about it is that the whole point of the tax is to get you to stand ready to sell your property at some reasonable price. Because, otherwise, there's no opportunity--for example, developers or someone wanting to build a train--to see the values of properties and choose the ones that are the best value both for themselves and for the owners, to build developments, to build a train, to build skyscrapers, etc. Russ Roberts: So, I'm going to give you a chance to lay out the best case you can make for it, in my view, which is Eminent Domain. Currently is the way that we deal with large projects that have to--like the train you mention that have to buy up separate plots. The problem with that of course is that there could be a hold-out problem; and to deal with that owner is--developers will often act in secret to acquire land. But it's still a challenge. It's still a problem. And as a result, it's still a temptation to use the government just to--because it's more fun to just take somebody's land. And arbitrarily give them some assessed market value. Describe how the process would work with, say, an App on your phone, as you do in the book, in your world. Glen Weyl: Well, I think the best is example is: Elon Musk set up this company called Hyperloop that was trying to build a route from the Bay Area, where I think you are based, Russ, down to LA [Los Angeles], to radically-- Russ Roberts: --in the summer. Yeah, go ahead. Enough. Glen Weyl: Oh, in the summer. I see. Yeah, down to LA, directly. And the project--the biggest problem it ran into was the right of way: trying to buy up all those pieces of land that would stretch you all the way from San Francisco down to LA. Right? And, that's an incredibly complicated process. Now, you could bring in the government to try to expropriate people, and you'd have a bunch of judges, and then you'd have to pay people and who knows what you'd pay them. It would be a whole mess. Under this system things would be far simpler. This system would be one in which, simply, all the land would have a going price on it that the owner or possessor would have set. And, the potential purchaser could just look up all of those values in a publicly available App. And, if they found a collection of plots that they wanted to buy and develop, they could just, say, circle them with their finger or with their cursor, and if they have the funds, they could freeze those properties: make the transfer and become the owner within some reasonable surrender period--like, people have to have to get evicted from their house or their apartment or foreclosed on their house. And they would, upon that purchase pay all that money to the owners: So the owners would be effectively determining their own compensation, if the property were taken for this purpose.

13:57 Russ Roberts: So, that's, I think, the most attractive story: which is that this system would reduce the costs and challenges of developing large projects over large geographical areas. The rest of the story, I don't find so compelling, both on practical grounds and, I'm not sure, on, even on so-called welfare grounds. First, let's talk a little bit about efficient--investment efficiency versus allocative efficiency, as you do in the book. Explain what those issues are and why they are relevant. Glen Weyl: So, the first thing I would say is that, even though the literal geographic of eminent domain is the most eye-catching, there's many other cases where something like this arises. So, in the spectrum, for example, for years, much of the spectrum has been fragmented among people who use over-the-air broadcasting. And if you want to do WiFi or if you want to do 5-G, you face a very similar problem of trying to put together a bunch of spectrum licenses. In intellectual property, there's lots of cases where there are individual patents. Together they can create a new product, but on their own they are not useful. So, in many of these areas you run into this general problem of assembling complementary goods. And, that is one. But there are other examples of the problem of allocative efficiency, which is that: Assets can be owned in a way that is not the best potential economic use--those assets. And that can happen because of hold-out problems, but it can even happen for simpler reasons. You know, the current owner of the asset is going to be interested in earning a profit if they sell, not just selling for the minimum that they'd be willing to accept, but they'll be interested in persuading someone that the asset is really valuable. This is why we end up spending any time we close on a property or buy a used car or any time a company buys an asset: There's always a long and drawn out and complicated process of negotiation which gets in the way of innovation and the best use of assets. So, that's allocative efficiency. However, the tax that I'm describing would limit investment efficiency. So, what's that? That's the idea that if I think that the value that I invest in improving and asset and building a skyscraper, is just going to be taken by somebody else or is going to be taxed away by the government, I will expect less profit on that asset, and I won't be willing to invest as much to improve it. So, our tax, while it improves allocative efficiency, always it reduces investment efficiency. And the optimal tax rate has to trade off between those things. Russ Roberts: And your goal of--just let's--I want you to finish this story and then we'll dig back down into it--the goal is to: Everyone would state the value of their physical property. And let's just stick with houses and ownership of land for the moment. So, I have a vacant lot in Detroit; I'd have to post my--and I'm waiting to see if Detroit does better in the future before I invest in it--and nothing's happening with that land right now, so I'd have to post a price at which I'd be willing to sell it at. The home that's been in my family for 200 years and 12 generations, I'd have to post a value of that. A retail strip mall, the owner of that land would have to post, the owner would have to post the price they'd be willing to sell-that is, their assessed value. And then you are going to tax all that at a particular rate. And then you are going to do stuff with the money. So, talk about what you think the right tax is going to be, approximately. And of course this is going to be on top of local taxes. This is going to be a, presumably a Federal property tax. And what you want to do with the money. Glen Weyl: So, the tax rate would vary by different types of assets, so it would be different for land and intellectual property and so forth. But it would be on average about 7%. And that's a little hard to ponder as a property tax rate. But if you think it through it would roughly mean is that two thirds of the value of all major capital assets would be taken as tax revenue. And, that would raise about 20% of the economy in tax revenue. By comparison, the government currently raises at all levels about 20-30%. So, you could use that revenue to eliminate all other taxes on capital, including the corporation tax, the property tax, to eliminate capital gains taxes; significantly reduce income taxes; pay off much of the national debt. So, that's what we would do. We would do things like that with about half of the revenue. And then, the other half of the revenue we would use as a social dividend of some sort. It would be divided equally as payments to every citizen. So, that could--you could think of it as Universal Basic Income [UBI], or as an ownership stake in the national capital stock. That would even just put half the revenue--generate about $20-25,000 for every family of four in the United States. Russ Roberts: So, just to clarify the numbers for a minute: 7% of the value of the land would be about 20% of, say, GDP [Gross Domestic Product], or somehow like that. Glen Weyl: Right. Russ Roberts: So, the land value--because that might seem impossible, how you can tax 7% of something and get 20% of something. Where does that number come from? Why do you think 7% is a good--what's good about 7? Or that ballpark? Why not 20? Why not 3? Glen Weyl: The rate is based on the turnover rate of different assets. So, the ideal tax is roughly equal to the rate at which assets turn over to new owners every year. And the reason is that when you are thinking about setting your price, if you want people to set it at their true value, you know, one force that makes them want to set it above their true value is that, if they end up selling it, they'll get a higher price if they set a higher value. Right? And that force affects their incentives at about the rate at which assets turn over. And, if you tax at the same rate on that value, that exactly offsets their incentive to set a price that's above their value. So, the turnover rate would rise in our world, because as you set the tax, people lower their values and there will be more turnover of assets. But we think that roughly the current turnover rate strikes a reasonable balance between allocative and investment efficiency. And, the turnover rate of houses in the United States is roughly once every 13 or 14 years, which is about 7%. Other assets have different turnover rates, so that's not meant to be uniform for everything. Many business assets turn over more frequently than that. And the other hand, personal property turns over much less frequently than that. We might want to exempt that entirely or charge a much lower rate. So the rates vary across different asset classes. But, 7% we think is a good representation of what would be typical.

21:37 Russ Roberts: Are you taking into account the fact that--I don't like to move? Aren't I going to pick a higher price than the "value" because I don't want to endure the transaction costs of finding another property? Glen Weyl: Well, the value--first of all, you have to understand that we mean is not some objective value, like a real estate assessor would come in and tell you now or some government bureaucrat would decide upon. The value is what it's worth to you to stay in that property. And so, yes, absolutely, that would take into account your value of staying there. But an important thing to realize is that for a typical family, this would be an incredibly good deal. So, a median American household has about $90,000 of net equity in their home. And they have, on the other hand, the average family of 4 in the economy--if you take an average of the assets of everyone, they have about a million dollars of net assets. So, the revenue raised by this and redistributed by a social dividend would, on net for a family like that if they priced their property at market values, generate about $21-or so thousand dollars in income. Now, if they decided that they really didn't want to move--so they are going to value their property at 5 times market value--then they would still, on net, make about $15,000 dollars. So, they can get as much stability as they want by raising the price. And, you know, stability always costs. In our society, stability is costly. The wealthy live in, um, homes they own outright in areas that aren't disaster prone. The poor live in areas that are disaster prone and they often rent and can be evicted if the area improves. And so, in this society, too, you would have to pay for more stability, or what would be different is because of the social dividend: Everyone could have an equal chance to afford the amount of stability they want. And, the rich, whose stability costs so much in terms of opportunity to others would have to pay a reasonable price for the externality they create. Russ Roberts: And you are presuming--because we are in a fantasy world right now, or a hypothetical, if you want to be more appealing-- Glen Weyl: yeah-- Russ Roberts: You are assuming that that social dividend would actually be paid. It wouldn't then--the revenue from this wouldn't be used for "other purposes." It wouldn't be like, the Alaskan situation where citizens of Alaska get a dividend based on oil ownership that isn't just, goes into the government coffers-- Glen Weyl: Yeah. I would, I want it to be automatic. You know? I like to think of institutions that you can implement without any or very little need for any discretionary government authority. So, I would think of it--you don't even need to think of it as being raised by the government at all. You can think of there being a corporation that everyone would own shares in that would collect this. And, so, people would be entitled to dividends. Russ Roberts: Yeah, I like those kind of programs, too. It's just that the government doesn't always tolerate them so well; and they like to take control of them, which is sometimes not so good. And, of course it can be: It depends on the situation, institutions, and the structure.

25:09 Russ Roberts: But, I want to get at the underlying argument that you make, which I find implausible. So, I want to challenge it on why this is a, there is a problem here. So, I certainly agree there are resources that are underutilized. Certainly, people who hold property--they might have a home that they only live in a few times a year, that that's inefficient in some dimension, in some definitions of inefficient. There are a lot of things you could argue are not great about the current market for land. And, of course, one way to fix that--the Georgian way--doesn't have this self-assessment. Doesn't have to have this self-assessment piece. We could just raise a--you could just argue we could just put a Federal tax on land that would make it more costly for people to have, you know, abandoned lots that they're not doing anything with. And we could take that money and re-allocate it. But, the essence of this argument: There's two pieces to it. One is, that my home is up for sale at all times--in theory. And that price, that it would sell for is set by me. And, underlying this is an argument, though--and then, there's a redistributive element. Which is that the larger, more attractive properties would presumably have higher values attached to them by richer people who don't want to have to move. And then that is creating this social dividend for the average, for the median person, say. For a large proportion of the public. But underlying this is an argument that I don't understand, which is an argument that the current market for land has a monopoly element. So, defend that. Explain why that's an issue and why your solution is dealing with it. Glen Weyl: So, the argument, which really goes back to George and Walras, but has a lot of work in the 20th century, is that land is unique. There can be competition between different places to live, but it's very rarely the case that you have truly comparable pieces of land. You know, I just bought a house in a quite liquid market in Hoboken, New Jersey. And, for the apartment that we found, we could find only one really comparable unit that had sold in the last 3 years. And, if we hadn't bought the one unit that we had been interested in, we probably would have ended up renting in New York City. That was our next best alternative. So, that homeowner, you know, had perhaps not the widest reaching monopoly. But, it wasn't as if I had a bunch of closely competing alternatives to that one piece of land. And that is true for a wide range of land uses. And it can lead to lots of potential waste where current owners charge enough to deter a potential better owner of that property from buying up and using that land. And, that may sound abstract. But there's actually a fascinating startup called City Builder, which, what they do is they tell you what the value of different collections of land could be worth if you were to buy them up together. And, for typical contiguous blocks of land, something like 3 times its current value in most cities. So, this is not a--and that's holding fixed zoning regulations, and so forth. So, this is not a, I don't think, a trivial issue. I think that this is quite prevalent, and that there are a huge number of opportunities for making our cities work better, for making our spectrum work better, for making businesses run more efficiently, for building innovative products that are blocked by intellectual property protections. All of which could be addressed if we didn't have this fundamental rigidity that is created by private property standing in the way of assets being turned over to their best use. And, as I mentioned, this argument that I'm making: It's about as classic of an argument in economics as exists. It was first made in the 17th century by the Physiocrats, who were the, you know, founders of modern political economy. It shows up in various forms in Smith. It's very prominent in Walras, who is the, you know, one of the Marginal Revolutionaries. And it also shows up in Jevons, who is another one of them. It's the central theme of Henry George. It was really a central dogma of the field from the 1880s through to roughly the Cold War. And it's fallen out of fashion. But, it's confirmed by Nobel-Prize winning work in a whole bunch of areas of economic theory recently, and by a whole range of empirical work, including but not limited to the App that I was telling you about.

30:43 Russ Roberts: Well, the City Builder app, it's clearly the case that multiple persons, multiple parcels could have higher value if they were put together; and there's transactions costs of putting things together. I don't think that's literally a monopoly problem. But, just in general, it doesn't strike me as plausible. Your story about Hoboken, it's interesting. It could be true. My example--I moved to Potomac, Maryland 14 years ago and we looked at 20 different houses and we didn't like any of them. And, we finally found one we liked, after--we rented for a year. And then we found one we liked. It was the only one we loved. But, I don't think the owner had any monopoly power over us. They didn't know it was the only one we loved. They were in competition in their own mind--correctly so--with all kinds of parcels that they had no idea what their value was to me or the myriad of people that would be coming in to see them. What's the--try to give me the intuition of why the fact that it's not exactly the same house, exactly the same property gives them market power over me. I don't understand it. Glen Weyl: So, the definition of monopoly power that's used by the antitrust agencies, which you may agree or disagree with, is that if a firm controlling a certain market can raise prices above their marginal cost by 5% for one year, then that constitutes monopoly power. Now, the analogy in a property market would be: If the owner of a property can raise the price above the amount that they'd be willing to sell it for, for 5% for one year, that would be a monopoly power. So, I think it's pretty hard to imagine that that isn't the case for most land. And, in fact, there have been a number of attempts to estimate this that suggest that it's about 15%, is the typical margin that's charged for transactions above the willingness of the seller to accept. But it varies dramatically; obviously it's much greater in these hold-out situations than it is in other situations. So, I think by the standard definition of market power, most land has significant market power over it. And the same thing is true in most corporations. So, when most corporations sell to a, in a merger or buy-out, usually you get 20, 30, 40% premium above the value; and usually it's a long and complicated process, to consummate that. So, I think that it's pretty clear that that sort of market power over assets is quite rampant in the economy. And, in the case of spectrum, I can tell you some quite clear and dramatic examples of precisely that phenomenon. Russ Roberts: Well, spectrum, I don't know anything about. So, I'm going to leave that alone. What I do know about is buying and selling houses: I've done that a few times. I don't know a lot about it. I know a little about it. I've experienced it. And I think many of our listeners have. And, having been on both sides of that transaction--the buyer and the seller--I don't feel like either a monopolist when I'm selling, or the victim of a monopolist when I'm buying. Of course, there's negotiation and uncertainty, and there's a debate between sometimes an owner and an agent about what the true value of the house is. Highly hard to know. It's really hard to know. And I think that's the source of the uncertainty. I don't feel like a victim. I've never felt like a victim. Maybe I'm a fool. I feel like I have lots of choices. And, in fact, I think most people do. I don't see why it being any different than any other market. But I think you probably think monopoly is more rampant in lots of other markets. Glen Weyl: No, I agree. I do think monopoly is pervasive. And I think we accept a fair bit of monopoly. And if we could purge that from the system we would have much more efficient markets. I mean, you know, you look around you: Most things don't have a liquid price on them. It would be very complicated to try to buy them. If we lived in a society where most assets were: you would, you know some price was the going price for them, you would have just a much more competitive dynamic entrepreneurial society, because there would be much more opportunity for using things for better uses.

35:32 Russ Roberts: Well, I'll just say one more try on the home ownership issue: So, you are suggesting that, when I go to sell my house--let's say, I decide to leave the Washington, D.C. area, which is where I live right now, and I want to live, say, full time, in the Bay Area. And I want to sell my house. And I can--I'm excited because I'm going to be able to get a premium over and above the value I really have for it, because other people are going to be stuck buying it. The person who falls--I have to say: the person who lives across the street from us has the exact same house we have. Literally. Physically. Glen Weyl: Yeah. Russ Roberts: But they did something different. The owners before us, they added an addition in the back. And the people across the street, they re-did the basement. So, they're not anything exactly alike at all. They are very different. They have a slightly different parcel of land. It's shaped a little differently. But, the physical house that started was the same; but now they're different. And someone could walk into my house and fall in love with love it; or could not like it; they could go into their house and say, 'Wow! A finished basement. I've always wanted that. It's great. It will be great for guests,' etc. The person across the street said to me, when they were selling, that they were going to charge a certain price, that I knew was well above or thought was well above the market price. And I said, 'Wow. That's a lot.' And they said, 'Well, it only takes one person to want that house.' And that's true. But it's really hard to find that one person. You don't know who that one person is. In fact, the odds that you would find them are almost zero--that you are going to find the one person who loves the finished basement. So, in what sense does that person across the street have an ability to charge above the price they're willing to accept? It seems unlikely given that there's lots of people willing to sell them-- Glen Weyl: Above the price that they are willing to accept for the house? Well, I mean, you sort of know almost immediately that that's the case, precisely by the process that you described about what will the market bear for this. You set your price not on what you'd be willing to accept for it, but what the, what you think you can get away with charging someone. Russ Roberts: Absolutely. Glen Weyl: So, that is precisely the principle of monopoly. I mean, the principle of competition is, you set the price that you can, you know, that's not based on what you think you can get someone to pay eventually but instead, based on what you'd be willing to accept for that property. Russ Roberts: No--you set the price--and I'm sure there's some real estate agents listening. You set the price based on what are called the comparables. Glen Weyl: Yes. Russ Roberts: You look around at houses that are like yours, and you set a price similar to yours. You don't say, 'Well, I can get more than that because I'm the only one selling this one.' You set the one that you think is comparable. Is that a foolish game we're playing? Is there really no comparable to my house, because it's unique. Glen Weyl: I'll give you another example. One of the places we were considering--just saying--had been on the market for almost two years, even though it was new construction. In a hot market. Because they had tried to get a price that was much better than what, I think, the market would end up, you know, comping that place at. And it's very common. Because the market is relatively thin. And there aren't always those comparable houses available. They went about--they ended up coming down about 10% or almost 20% on that place, over the course of that year and a half, and they still haven't sold it. So, clearly that is a waste of resources. Houses lying vacant for an extended period of time because they were attempting to use the uniqueness of what they had to offer to extract a rent. And that leads to waste. And it adds up across the economy. And it gets much larger, of course, in these hold-out situations we were describing. Russ Roberts: 3928 Well, what I agree with you is that markets for housing and land work imperfectly, because there is uncertainty about the future. And people get overly optimistic. Especially when markets heat up, as you suggested: and people think, 'I can make a lot more.' And it's true that in those settings sometimes it's harder to find a house, if you are moving into that area. But, of course, I'm not sure your setting of that price, self-assessment, is going to solve that problem. Because, in a market where I think there's a lot of demand and people are desperate to move into it, I'm going to pick[?] higher and higher prices, potentially, for my value. Of course, I'm also going to pay a cost in the form of the tax. That's going to discourage that, I suppose. Glen Weyl: Yep. And, not only that, but because the value of all assets would factor in this tax, the value of the assets would fall dramatically. And so, it would be much more like rental. There would be much less up front cost. And, as we know, rentals turn over much more quickly to their best uses than sales do. Sales is a much more cumbersome, burdensome process, precisely because people are thinking about all that speculation on the future, and several other things.

40:39 Russ Roberts: Let me ask one more practical question, and then we'll turn to a different topic. So, you or I, we both talked about moving into a new area. So, I wanted to move--you wanted to move into Hoboken or somewhere near Hoboken; and I was talking about moving into suburban Maryland. How would I do that, practically, in a world where--every house, potentially is available to me? Kind of exciting? Right? I don't have to wait for a house I really love to go on the market-- Glen Weyl: And, you know all the comparables. You know. You are talking about comparables. You would have so much more information about comparables, because everything would have a market price. Russ Roberts: Yeah. Well, Zillow does that now. It doesn't--we could debate whether it does it well. Glen Weyl: Yeah, it's not so great; but, anyway-- Russ Roberts: Yeah; it's flawed. As would this process be, by the way, I'd have my own challenges to try to figure out my own price. I assume institutions would emerge with brokers that would help me fix it. Help me decide it. But, how am I going to look at a house, in this world? Glen Weyl: That's a great question. So, the idea is that you could freeze the price of a house and pay an inspection fee to the owner to come and look at it in a reasonably timely fashion; and they couldn't change their price once you'd expressed interest. But, you wouldn't be obliged to buy until you completed the inspection of the house. Russ Roberts: So, anybody can come inspect my house any time they want. Glen Weyl: In exchange for a reasonable fee and, you know, on terms of not being intrusive and so forth that are consistent with the way that inspections work for home purchases right now. Russ Roberts: So, one of the things about this idea that's troubling to me is it ignores the cultural norms that have evolved--which is one that you're mentioning now. The idea of somebody coming into my house to look at it whenever they want by paying me a fee, I find--unappealing. Most people do. Yes, when I want to sell a house, that's part of the deal. But in our current culture, the idea that someone could come look at my house--because it's mine. I have this weird idea that it's mine; and you provocatively suggest that that's not a healthy attitude-- Glen Weyl: Yeah-- Russ Roberts: in all kinds of ways, by the way: I want to let listeners know that you don't just say, 'All property is bad.' You have some interesting, very thoughtful ideas about why it would be a better world if we didn't feel as attached to our houses. But right now, we do. So, that's going to be a tough change. Glen Weyl: Yeah. Yeah, I agree it would change culture in a lot of ways. We have a lot of arguments about why that would make culture better; and in fact, we think it addresses many of the most common criticisms of the way that capitalism, you know, pushes people towards possessiveness and a focus on material possessions rather than on communities, a focus on taking advantage of people in negotiations rather than just having mutually beneficial interactions, etc., etc. But, yeah. Those cultural changes would take a while, and that's why we don't want to implement this overnight. This is why we think we could apply it to--and I think you wouldn't object--to applying it to spectrum, intellectual property, natural resource rights, etc., first. And, you could already get to 20% of the capital stock that way. So, that's not nothing. And then you could move on to business assets next, and commercial real estate. And then, you know, gradually walk your way towards this. You could get 50, 60% of the benefits before you'd get towards anything that would really challenge some of these notions of personal attachment. And then, yeah--you've got about 40% of the way to go that would require progressively changing the culture on these things. But, hopefully, by that time, people would already have some exposure through their business dealings to arrangements like this. Russ Roberts: Yes; I like some of those applications. And you are right: those would probably be an improvement. I would just mention--even though I agree with you that we are probably too attached to material items-- Glen Weyl: yeah-- Russ Roberts: and possessions, that our homes might be in a different category. I don't think it's capitalism that makes us possessive of our hearth. I think there's something deeper, more primal there. But, that's probably-- Glen Weyl: Well, yeah. That's a conversation for a longer discussion-- Russ Roberts: Yeah, it's beyond the scope of this.

45:02 Russ Roberts: Let's move on to some of the other areas in the book. Let's move on, which I'm actually intrigued by rather than skeptical of, which might be more fun--or less fun--which is immigration. And, you make the point--you and Eric Posner make the point that, on the surface, the allocation of human beings to different geographical areas is extraordinarily inefficient. That, there is an enormous benefit potentially for humanity from people moving where they live. And yet, it doesn't happen. There are barriers to migration that are severe. And you suggest a very thoughtful way of getting around those. Describe it. Glen Weyl: Our argument is that the basic inhibition against the sort of value that you are describing from migration is the fact that most middle class, lower middle class people in wealthy countries don't really benefit very much from migration. Whether they actually are harmed by the competition in labor markets or not, is a topic for debate and we don't take a strong position on that. But, it's pretty clear that most of the benefits of migration go to the migrants themselves. Or, to people who live in wealthy cities, where migrants bring diversity via[?] food, and culture, and so forth. Or, more importantly to the employers of those workers, who benefit from access to, you know, competitive labor force. [?] And that, those employers are mostly the owners of capital, or wealthier people. And, because most people in the country don't own a lot of capital, they are not directly benefiting from migration. So, what we want to do, is create a new system of migration where every citizen could benefit more or less equally from the chance to sponsor migrants. And to negotiate with the migrant for a share of the benefits that she would receive from coming to the United States. And, we calculate that, roughly, that would be something like $5000 or $6000 a year, if you sponsored a temporary migrant, possibly more if you sponsored a more permanent migrant, for every migrant sponsored. So that could be a significant source of income for many American workers. Russ Roberts: And, what would sponsorship involve? Glen Weyl: So, sponsorship would involve helping the migrant find a job; living in proximity to the migrant--because we want to foster not just economic value transfer, but a sense of responsibility, cultural exchange, and community with that migrant. So that we, he[?], have a gradual opening of people not just to the economic opportunity that migrants offer, but also to the cultural value that they potentially offer, as well as a sense of responsibility where people wouldn't want to bring in those that might potentially cause cultural conflict or violence and so forth. Russ Roberts: So, how would that work? How would I--how would it work, practically? Glen Weyl: So, you could imagine a variety of arrangements. There could be corporations that set up boarding houses within cities. And, you might not, every day see your migrant; but you might interact with the migrant that you are sponsoring every, you know, couple of weeks; but they would live in some area in your bayou. Or you could imagine putting them up in your home, subject, of course, to some regulation and inspection, because you wouldn't want people to be abused by a potential host. But, you know, there's a program called the Au Pair program where people host migrants in their homes to take care of their children. And, effectively you could think of this as expanding that to other economic functions other than just caring for children. Which only a small part of country can afford someone to full-time care for their children. So, those are a couple of ways that you could put someone up. And, in terms of the economic arrangement, I can imagine several different ways. You can imagine something where the migrant agrees to pay a fixed amount to the sponsor in order to stay in the country--sort of like a visa fee, which, you know, in many contexts, migrants already pay fees like that. Or, you can imagine that they would say, 'Okay, in Pakistan I make $500 a month. In the United States, I might make thousands of dollars a month. Some share of that increase in my wage, I'll share with my host in exchange for putting me up.' Russ Roberts: So, again--I think there's a lot of practical issues here. But the idea of it is interesting. Wouldn't--a lot of people have proposed a simpler version of this, with less potential, I think, for abuse. And I want your reaction to it, which is: Let's just sell the right to come here. So, you know, right now--say, to the United States--of course, we're not the only country people want to come to, but it's the one that's on the minds of a lot of Americans right now. And, right now there's a lot of debate about Mexican immigration. The idea of a wall. I happen to be more of an open-border kind of guy, but I understand that people are concerned about, say, American culture, or they are concerned about the economic impact. I think those effects are small. But, reasonable people can disagree somewhat about those things. So, why don't we just say that anybody can come here who can pay a $10,000 fee? And provide some--and you have a certain amount of time to find a job; and if you don't find it, we send you back? But that opening fee would then be given to people who are concerned at least as some form of compensation. Because that's really what we're talking about, here. We're trying to find ways--you are really suggesting compensating people for accepting migrants. And, of course, that's not going to make other people happy, who would say other people shouldn't be allowed to do that, just like they don't like the idea that corporations or employers should be allowed to do that now. What's wrong with just charging a fee to get a--a big fee? Because right now people pay large fees to get smuggled here. Why wouldn't one want to capture that for the public? Glen Weyl: So, first of all, I agree with you, Russ. I think that would be a major improvement. And I'm quite sympathetic to that idea. And in fact, we mention that idea in the book as an initial foray. But, the reason why we propose--and, by the way, we're not 100% set on the precise structure that we're describing. It's much more important to us, the broader idea--which your proposal would also accomplish--of channeling the benefits from migration more broadly. So, I think we are 90% on the same page. The question is in the details of the proposal, the real difference between yours and mine, is that yours has more of a centralized structure, where you[?] put more of the responsibility of vetting onto some sort of a central agency that would monitor; and you allow it to be a purely economic transaction where people wouldn't really get to know migrants. And so forth. And our perspective is that, that addresses much of the issue, but not all of the issue. I'm worried about people feeling that they don't know exactly where this money that they are receiving is coming from. And, I'm worried that, to build support for migration and for a diverse society, people need not just to receive some economic benefit that's quantitative: they also need to be exposed to the people that they are receiving these benefits from. Because it will make it much more vivid for them. And it will open their minds. And I think that that's what has happened to people like you and me. Probably the reason people you and I are so sympathetic to migration is we spent a lot of time living in, you know, relatively cosmopolitan big cities, where we get lots of benefits from migrants. Not just direct, simple cash, but also, you know, we learn things from them; we have different sorts of food. We enjoy opening ourselves in the context of a mutually beneficial economic transaction. And we think that those cultural aspects are important, as well. And, that the ability of citizens to express their preferences over the sorts of people they want to open their community to. Within reason. You don't want too much blatant racial discrimination or something like that. But, people may have preferences over the languages that people speak in their community. You'd have to think about whether you want people to, you know, have preferences over religion and things like this. But, allowing a little bit more of a decentralized market process for those sorts of determinations rather than forcing it all to just be 100% filtered just through money, we think would be important to dealing with some of the cultural and social aspects of making migration work.

55:11 Russ Roberts: Y', I don't see that working at all. Let me just say why, respond to your observation about myself. Glen Weyl: Yeah. Russ Roberts: My love of more open borders than we have now is not based on my personal experience--at least I don't think it is. Of course it could be, subconsciously. I do have a Guatemalan housecleaner and have a Vietnamese handyman. And I benefit because they do a good job, and their prices are lower than they would be, I think, if we didn't have a more open society, [?] even less open. So, I benefit financially from it. Culturally, I happen to like lots of different kinds of music--and, so I think there are some personal benefits. For me, it's just a simple matter of justice. It's a reflection of the fact that I'm alive because my ancestors came here in the late 19th century rather than staying in Eastern Europe where I would have been killed--they would have been killed--by the Nazis and I wouldn't exist. So, I'm a big fan of choice. And freedom. So, I think it's really good that people be allowed to live where they live. At the same time, I understand the concerns that people have about culture and its vulnerability to large changes due to large influxes of immigrants. I happen to think, as you do, that many of those changes in culture are healthy. But, I understand why people might not agree. And I don't think your proposal is going to solve that problem. The people who are most alarmed about it are not going to sponsor an immigrant. Not going to come into contact with them. They are going to resent their neighbors for bringing them in. And making money off of them. How do you answer that? Glen Weyl: Well, so, first of all, I think that the economic opportunity will attract many people who are currently hostile. But, second of all, I would allow communities to regulate this. I wouldn't want it to be a one-size-fits-all policy that would be imposed by the Federal government on the whole country. I would prefer it to be, at least partially regulated by communities determining how they want to allow people to exercise these rights within their borders. And then people could move to different communities that had different attitudes based on this because of the opportunity those communities might offer. So, that would give a chance to people to take advantage of things by embracing a more open, cosmopolitan culture. And I think many people would be attracted by that. Not everyone. But, if you think about the number of people who moved to cities from rural areas in response to industrialization and all the opportunities that that offered; and they have moved in China, in response to those economic opportunities, and the way that's changed their culture, and so forth--I think that economic opportunity like that could be a tremendous attraction.