A New York condo sold for $238 million, but the city assessed it at just $15.5 million. Mayor Zohran Mamdani has framed his new pied-à-terre tax as a way to “tax the rich,” but a recent article by Ken Girardin, “The Sheer Absurdity of New York’s Pied-à-Terre Tax,” argues that the bigger problem sits underneath it. Chuck Marohn talks with Urban Three founder Joe Minicozzi and land economist Lars Doucet about how classifications, assessment caps, and decades of special rules can shift the tax burden away from high-value property. If the system is already distorted, does adding another tax make it fairer or just harder to fix?
Hey everybody! This is Chuck Marohn. Welcome to Upzoned. There's a condo in New York City that sold for $238 million, but on the city's property tax rolls, it was worth only $15.5 million.
That gap comes from a property tax system that has been layered with special rules, classifications, and protections over decades of tinkering, and instead of changing the system, New York has now added another layer: a new tax on high-end second homes. A recent article in The Atlantic by Ken Girardin, titled “The Absurdity of New York’s Pied-à-Terre Tax,” looks at a new tax on expensive second homes. Girardin argues that it will bring in some revenue, but not much compared with the city's larger budget problems, and the tax does nothing to straighten out the underlying property tax system that is so messed up.
So here's the question that I want to get into today: When the tax system itself is distorted, does adding another tax fix anything, or does it just make the system harder to reform? Welcome to Upzoned. This is a podcast from Strong Towns where we take a story in the news and we look beyond the headline at the system's trade-offs and assumptions shaping our cities and towns. I'm Chuck.
Joining me today, we've got first of all my friend Joe Minicozzi. Joe is the founder and principal of Urban Three in Asheville, North Carolina. Joe and his team are probably best known for their value per acre models, where they show cities where their tax base is actually productive and how different development patterns perform financially. If you've been around Strong Towns for any period of time, read any article I've written, any book I've written, Joe is my best pal, and I'm so grateful that you're here.
Joe, welcome to Upzonedd.
Thanks for having me. This is going to be fun.
This will be fun. Also joining us is Lars Doucet. Lars is co-founder and president of research and development at the Center for Land Economics in Bryan, Texas. Before moving into property assessments and land economics, he spent years in software and game development, and later helped build the property assessment company ValueBase.
He's also the author of Land is a Big Deal. I had him on the Strong Towns Podcast not too long ago, one of our most listened to episodes. If you missed that, go back and hear it. Lars, superstar Lars Doucet, welcome to Upzoned.
It's so cool to have you.
Oh wow, I'm flattered. I did not know I was a big deal.
Dude, you are a big deal, Lars. I'm going to start with you, Lars, because I feel you can set this article up, and I'm not even going to ask you a question. I'm just going to say, hey, you read this, you got thoughts. What are your reactions immediate to this article from The Atlantic?
So the first thing is to contextualize the article. The headline's a little clickbait. It's a very classic rhetorical move that I can't quite criticize because I've done it myself. Where basically you say we're basically you say this is a really silly thing.
Actually, it's probably like kind of fine, but I'm using the fact that it's in the news to talk about the real problem, which is this other thing, and that seems to be the article's position, which is that the pied-à-terre tax is not like crazy and insane, but it's also not going to do much.
Like the article's position is not that it's bad and that everyone's like super worked up about it, is kind of getting out of sorts, but that we've got a much more important underlying problem, which is just that New York has bent itself out of shape on purpose to make its taxes like as unfair as possible, and that’s what the author identifies as the real problem, So that's basically its thesis, and I largely agree. I think yes, the pied-à-terre tax will be one more complication on top of an already incredibly complicated system.
It affects so few people; it's kind of the least offensive part of the system, and it affects people who don't even live in the city, But New York has some of the most backwards property taxes anywhere except California.
Joe, when Mayor Mamdani announced this, one of the targeted properties he used was owned by a hedge fund manager, and he said, this property just sold for $238 million, and on the tax code, it’s only $15.5 million. Then he went on to say, "So that's why we need this extra tax. I immediately thought of you because you and I, and you, but me looking at your work with you, this is not shocking in any way. In fact, I feel this is kind of.
Standard approach, give me your reaction to those numbers and that kind of disparity.
One is, we see it all the time. I've joked at your conferences that we need to start an urban renewal for the Chads and Brads of this world because there's blight that's on their property. We shouldn't stand for it. But what's what's going on is it's an unfair game.
It's an unfair system, and when people react to these things, I hear people say we need to tax the rich. It's like, how about we just tax them appropriately, or just tax them what everybody else is taxed at. So this is we've set up these loopholes and systems, and to be fair to the assessors, they're getting a whole lot more feedback at the wealthy end than the low wealth end. They're getting more appeals, more protests.
Somebody at a higher end property can afford to hire someone like me, an economist or Lars, to go and argue the taxes. So you're just getting more feedback in the system at the upper end, and that's a well known issue inside the assessment world, and that's bad data. So, by the way, I think it was March 2024. The Supreme Court in New York found that New York City’s tax system, and this is their quote from the Supreme Court: nearly everyone agrees that the property tax system is inequitable and opaque and puts a burden on lower income people.
I’m just going to let that sit there for a second. So rather than fix that problem, we're patching a new penalty on it, Does that fix the underlying problem? Hey, go ahead, Lars.
Yeah, the other thing is just to put this in magnitude, with the high end property is underassessed by statute, It's it’s by law required to be assessed because it's according to this different class. You said that example, what was the real value, what it sold for versus like what it was assessed at is some I forget was it was a 10x 100x difference, so it’s doubling or tripling the tax rate is going to do basically nothing if the asset is already assessed at like some microscopic fraction of its real value by statute by law, the first step here is to just stop hitting ourselves.
The governing principle of property tax assessment is this principle called equal and uniform, And this just completely backwards classification system New York City has just makes a complete mockery of that principle before we even get into the details of like how well the job is being done. It's required to be done poorly from the start, And that's and that so almost like the individual effort of the assessor, or how big you want to make the tax rate, is almost like almost pointless when the statute is being like, yeah, and this thing has basically got to be taxed as if it's worthless.
Joe, I've watched you do these J curves, and I don't know if this is where you are going to go or not, but I feel like the system as you all are describing it. There is a in a sense, if you are at the lower end of property value, you actually pay close to or at what your assessed value is. But as you get higher up in wealth as your as your home becomes more expensive. There's that big divergence.
Go ahead and take it where you wanted to go, but to me, that was always the stunning thing about those J curves that you put together.
Yeah, and we modeled those after Chris Berry. Their sales ratio analyzes in really simple, the dumbest possible way to talk about this: If you look at your housing stock as one big commodity, you're going to have a little bit at the low wealth end because there's very few low wealth houses because most people with low wealth rent, and then you have a little bit of stock at the high end because there's just a little bit of rich people.
Most of the housing stock is in the middle, and so if you treat the whole thing as one big pile, it's all just housing, What ends up happening is it regresses to the mean in the center, so it's going to pull the poor up and the rich down just by design of crude math. What Lars just pointed at, you sort of I raised my hand because he sort of just dropped a little grenade and kind of talked about talked it through.
New York City's tax system is even worse than that because it says these people at the high end, you're a different animal, and that we're going to treat you differently, and that's the that's the original sin economically in giving that them that huge discount. So if I'm discounting you, and I'm just throwing numbers out there, we haven't done the math there, but it’s if I discount you from 100% down to 20% you've just got this huge haircut in your value. Now what we're going to do, rather than talk about that haircut, we're just going to go ahead and throw an extra tax.
On you, and maybe it brings you up to 40% Well, there is still a 60% discount there. Did I read that right, Lars?
think you are absolutely reading it right, Lars.
So one of the ways this can kind of creep up is like, so sometimes it's a villain twirling his mustache and being like, "I am going to put through a tax cut for the rich by like changing his classification. In other ways, sometimes it can be an unintended consequence. Sometimes it can be an intended unintended consequence. So, for instance, one of the ways this can happen is through like just these like very inequitous classifications where it's like, well, this is a Class X property, and therefore it's got this other rule, something income capitalization whatever.
But another way this happens is over time with assessment caps, where people are like, "Oh, property taxes are getting high. Just put a cap on it. That's going to help everybody, I'm going to limit how much your property can grow each year. This is what happened to California, That's what they did with Prop 13.
The problem with assessment caps is it sounds it gives everyone a benefit. No one's property is going to rise more than X percent a year, but guess what? High-end properties grow at a higher rate. So over time, over 1020, 3040, 50 years, that delivers an enormous benefit because it's not just that they're all going up by the same X percent.
The high end is going up at a higher rate. It's accelerating faster, and so over the years, that assessment cap, which is billed as giving an equal benefit to everyone, is actually building in more regressivity every year because the high-end property increases in value more every single year.
Let me ask a follow-up question to that, Lars, because I do feel like a part of this is coming within Mamdani's discussion about housing affordability and how do we keep more New Yorkers here and how do we allow more housing to be affordable. The tax system actually makes housing in New York a great, in a sense, tax shelter or investment. Unlike in California, if I sell the property, if I sell a property in California, Prop 13, in a sense, resets. At least my that's my understanding.
But if I do it in California, I'm still creeping up. This makes California like buying a house and making it sit vacant is actually like a much better investment strategy. Am I on the same page with you, Lars?
You're on the same page. In Prop, the biggest beneficiary of Prop 13 has been vacant land, actually, above um, because it also applies to commercial like all classes of land. But it is true that when you sell a property, its value resets. Unless you keep it in the family, then you just have your feudal empire going, yeah, and you keep your or
put or make it an LLC and transfer that instead of which there's there's tricks around it, but in theory it resets. But in New York it doesn't. It makes New York even a better tax shelter.
Right. Yes. The other thing is Arpit Gupta. He's a great housing economist.
Has written some great papers on this. That this that tax benefit capitalizes into the selling price of the property, because are you willing to pay more or less for a property with a lower holding cost? Well, you're willing to pay more, and so that means if you want to get into the housing market, you got to take out a higher loan, which means in addition you got to pay a higher tax, a private tax, in the form of increased mortgage interest because of this bigger loan you had to take out to your bank.
So in many ways, when you lower the property tax, you're trading a public tax for a private tax, and Arpit has shown that this is like, like has this double effect on housing affordability. So yeah, that you're you're pretty smack on with your with your insights there.
I'm going to the Wayback Machine. One of our early conversations about California, and it was, I think the analogy that I used was almost like watching somebody stab themselves with a knife, but they're really good with putting band aids on, and you want to talk to them about like maybe put the knife down rather than stab yourself some more.
But in California, we'll just have another policy, we'll just have another policy, and it just turns into this policy machine, and you're burying deep the original problem, I think the challenge, in our practice in watching you in Strong Towns and knowing Lars and his work, the three of us are seen as mathletes. Now, I'll say that Lars is definitely a mathlete. I am not. I like to draw pictures, and so my job is communicating how to make it real for people with this kind of abstract stuff about policy and like interest rates and all this stuff.
It gets complex real fast, and when people get frustrated about the complexity, they move to knee jerk reactions like tax rich more or we need to do a tax cap, and it's because people don't understand the inherent problem, and it's this lack of interest of wanting to dig a little deeper and be a little bit more patient, learn about the tax system, and don't just knee jerk on something that feels good because that just perpetuates the problem. Maybe it makes things a little bit more fair, but is it really solving the problem? I think that's. Frustrating thing.
We're seeing this all across the country right now. All these different tax revolts that are going on. Florida is getting super crazy, but my state, North Carolina, was talking about a tax cap. It's maddening because our costs don't cap.
The cost of a road doesn't cap. The cost of a computer doesn't cap. So the cost of our government never does. But we think we can cap the revenue.
That's just nuts.
Lars. Yeah. Just jumping off of what you said there, Joe. Here in Texas, a big thing that adds to this whole pile is real estate non-disclosure, which does not protect anyone's privacy because there are eight different sets of eyes on any transaction, and they sell it out the back door.
So people are like, people have these like simple intuitions about how we're gonna like make property taxes cheaper, and then we're like, well, if we just screw the assessor and don't give them information, well, someone's gonna volunteer what a middle class single family home like sold for. What they're not gonna hear about is what the high-end commercial and luxury properties went for, and so all these little band-aids we throw on that it’s supposed to help in affordability intuitively is just another giveaway to the high-end.
I feel we're just saying Texas and New York both have their populist rhetoric, and it both screws up their tax system. Joe,
yeah, I think okay. So I just so the audience understands what non-disclosure means is that your assessor or in the state of Texas are called appraiser or appraisal districts, they're not allowed to see what a house exchanges for. 13 states across the country do this. So your person with this with the that's supposed to be putting the prices on real estate is not allowed to see what real estate transacts for. So how does that professional understand what the market price is for something, Because they're not allowed to see the market.
They have to ask real nice and hope, and it's insane. But like a friend came to me in church, is my friend just bought a house and it's prayed for more than what it sold. Appraised for more than what it sold for. How can that possibly be possible?
Was like, is how could the assessor make that mistake? It's like, did he go to the assessor and give him that price? He's like, no, don't they have it? I'm like, no, he doesn't.
He was dumbfounded by that. So when a market starts to get a little bit of affordability and move down. I hope that's an opportunity to start to repeal some of these laws. But anyway, yeah, it's there's all kinds of stuff this, And so New York is not alone.
Where New York is unique in how is in how far they've taken this, and every state basically that has this problem has a way to basically shift the burden to someone else. Don't tax me, don't tax thee, tax the man behind the tree. So, as Joe likes to say, so in California, they've shifted the burden to new residents. We'll tax you at equal and uniform if you just moved in, But long term residents, they're feudal aristocracy; they don't pay no taxes.
In New York, and also in California, to agree. They've also shifted it to income taxes and other things, and all these other things. But like, you have to pay the piper one way or the other. We just think it would be better if we just taxed everyone fairly and in a simple, straightforward way rather than a stupid, complicated way.
being on the panel with Lars at your conference at the gathering, the way that I talk about our panel is it sort of we're basically, and Lars has advocated land value tax. I have as well in the past. It just it seemed like a simple thing for us. The three of us on this call.
I think Chuck, you've done a great. This is going in the going back to 2011 or something you did on the on the white table. Yeah,
drawing on the board. I look like a young kid. I'm like,who is that guy?
Chuck, 16 years old, explaining land value tax. But the thing is, is when the three of us talk to people, you can watch their eyes glaze over, and they're just like, "Whoa, this seems so complicated. It's like, do you even understand the current system, if you even started getting curious about it, you'd see how insane this existing system is, and yet you're too unwilling to like try something that seems a little bit more logical. I don't know.
It's kind of crazy.
Yeah. So exactly that point. We like push for sometimes as a compromise, a split rate property tax with like two rates, higher rate on land, lower rate on buildings, and people that's too complicated. New York has like quadruple, quintuple rate system with like double-jimmy-finger, mixed into the middle of it with like to make a flowchart of how people like professionals tax professionals tell me it’s the taxpayer really should not need to have a textbook and a flow chart to figure out their tax bill and you need a calculus degree in New York.
Let me let me ask this because I feel we're getting to what the article is really trying to uncover, which. Let me summarize by saying, Mamdani is doing a bit of a gimmick here, and I'm saying that we also talked about Texas's gimmick and California's gimmick and Florida's gimmick. This is not a partisan thing, but we're doing a gimmick here when you're spending political capital when you could be looking at the underlying system and actually fixing it and making it work really well. I remember back in, and I want to say this was the '90s, or it might have been the early 2000s.
Do you remember when Steve Forbes ran for president, and his whole thing was the flat tax, and you would ask him, "Hey, what do you think about this foreign policy thing, and he'd say flat tax, and he'd say what do you what do you think about moms and homeless people, and he'd be like flat tax. It was just I am about your taxes should be in one card that you can put in the mail, 15% across the board.
I feel there is a lane here for the equivalent of the flat tax in a property, a property tax standpoint, I feel it's it is a value is a land value tax kind of thing. But I feel there is a argument in Minnesota. We have 34 different property tax classifications. We have a different one for like disabled veterans have their own property tax classification.
What does that have to do? I don't. I don't get it. It feels like instead of all of these weird reforms that we keep piling on for, I think like political reasons, is there a lane here for just fixing the underlying system, Lars?
This is what you do day after. I sure hope so.
and we're gonna find out. Okay. I think what happens is that the system naturally starts to break the more you start to screw it up because brittle,
brittle is right.
there's evidence of this, the Texas CAD system, which stands for Central Appraisal District, emerged from kind of chaos this because you used to get like multiple separate appraisals from every single taxing entity, your city, your county, or whatever. You would you would get different appraisals and a different tax rate from each one, and it was so insane that they're just we just got to like simplify this, and like especially if the inequities get so bad that you push all the businesses out of town, and no service workers can afford to live in your city.
Eventually, it's just it's just you kill the golden goose, And so, at some point, a political constituency builds to just be like, let's just have a convention and start over, and like clear house. Don't know when that if that day is tomorrow or today or soon, but I think eventually the fact that we're talking about it, the fact that it's getting traction, the fact that other people are talking about it gives me hope. Someone will do it first, I hope.
Yeah, and I'll add it is good that okay, is it perfect what he's doing? No, is it adding to the conversation? Are people becoming more aware of this? Will this make them more curious about the system?
I hope so. And it's so in a way, it's okay, I get kind of excited about seeing the conversation start moving now. Whether or not there's the patience for the audience and the reader to become more curious and get deeper into it. That's what I'd like to see, and that's for everybody.
Everybody on is in the audience here is dig a little deeper and look in the system. Also with regard to New York, we kind of skipped right over Oregon. Oregon state tax system is insane because like Prop 13 in New York City mixed together. It's almost there's an incentive to go burn every building down in Oregon because the property value rides with the building.
So you get to enjoy the previous assessor or the previous owner's tax holiday just out of the luck of the building was born. So, if it's pre 1978, it's an awesome building. It's kind of weird their policy.
Yeah, and I will say, just jumping off on like Mamdani, I think he has started a conversation, and like honestly, the Peter tax because it affects so few people, I think it’s the least worst part of the giant Jenga tower, and it’s kind of directionally correct, but it's been really interesting, seeing what's like upset the opposition about it. People were like, "You just doxed us all and like put a target on our backs. It’s these records have been open since colonial times.
Yeah.
in Texas, people are all like, it’s my privacy and everything. It's I can look up where you live, your address, and how much your home is worth, and in fact, my homeowners association uses those records to prove I live in the neighborhood and am eligible to go buy a pool key. This kind of stuff has been around forever. So it's really interesting to like see people's objections.
They're like, "I'm going to leave town. It's like, dude, you've already left town. That's why. Paying the tax, it's just sometimes that can actually be useful to kind of just stir the waters and like bring this conversation to the forefront.
It's why we're talking about it now, so in that sense, it's kind of been a success.
Lars, let me let me ask you this as kind of a way to close out this session, I feel there is a reform conversation to be had. Tim, we share these articles before we have this discussion on the Strongtown's Commons and ask people their thoughts and their reactions. Tim had a question here about the gap between good politics and good policy, and whether there is a viable policy here that can come out of this, and I, I wonder. I'll let you go, and then I'll let Joe finish us up.
Is there a set of good reforms that a state like New York State could do, or a city like New York City could do, that would get at the inequity issue, get at the transparency and fairness issue, get at the budget gaps that they have and the kind of volatility of their tax system. Lars, I'm throwing you the biggest softball of softballs. Please knock it out of the park.
You think I'm going to say land value tax would fix this, but I'm going to say something that might surprise you a little. The policy playbook we need comes from the far exotic hinterlands of New York City in the 1920s. New York City in the 1920s already had like a good playbook for this. So first of all, well, first of all, should go without saying that they should just make property taxes equal and uniform, that would move you in a net land value tax direction, just by repealing the anti-land value tax they already have in place.
So they should do that for starters. But in New York City, you don't even have to go as radically as a land value tax. You can just reproduce what New York City did in the 1920s under Lawson Purdy and Governor Al Smith, which is I've written about this. I call it Dalt, Depreciation Assisted Land Value Tax.
It's just a 10 year abatement on the improvement value, not the land value, the improvement value of new construction. I've shown that this gets you kind of 8020, most of the value of a land value tax. It's way easier to administer because it's so easy to figure out the value of a building when it's new, and so it’s less work for the assessor. It gives you most of the economic value.
New York did this, and that is the decade during which it was active that they built the most buildings in New York. It still taxes the land, which is where the real value is, and where that where that regressivity gradient comes from, and it's it was such a big effect that it effectively like still is an archeological strata in the New York skyline, So we don't have to like go to like some weird foreign country for precedent. New York can just go back to its own history for like a decent policy playbook here, and then just sensibly have like a normal undistorted property tax system.
Even if we just got that, if we just stopped hitting ourselves, as as Joe was saying, stabbing ourselves. I guess he was saying, a little more on the point. I think that would be yeah. The doctor says, it hurts when I do that.
Well, don't do that. Yeah.
Joe, I feel like as a maybe a last question here. That there are these things called computers and spreadsheets and even algorithms that can calculate things. What? Why is this so hard?
Why is it so difficult? Can is there a reform that we can actually do here that would get us to something more sane.
Yes, we try to get people to think about the cost of service. I actually sent you an article in North Carolina where our state—I had no idea—swoops in and protects struggling municipalities. Yeah,
I shared it in our News Digest last week. It's insane.
know they do that in Pennsylvania. There are over 200, or back when I was talking with I think some economic development director for the state. I want to say it was 1015 years ago. There were 200 cities in Pennsylvania that are in state receivership, where they're essentially going bankrupt.
But the state, because it's a Commonwealth state won't let them go bankrupt, so the state swoops in and tries to fix their books. They try to clean them up. They try to get better practices. My state of North Carolina is doing that for under a dozen cities.
So I didn't know that in North Carolina. So is that where my state taxes go? So am I in the city of Asheville, paying for some town out in Graham County that's made bad decisions. That my state is going there to help them, and I care about people out in Graham County.
I don't want to see them fail. But what was interesting is when they were talking to all the mayors, they were all talking about the police department. Is a significant cost. We used to get this early on with cities.
They're like, "Well, what about the police department, the fire department? I'm like, "Well, that's what's using a lot of your budget, but that's not where all your costs are. Have you done the cost of your roads? Do what you own?
It was mind blowing to me how few people were doing what I saw in Chuck Marohn in circa 2010 when you got up there and did the cost of roads, I was like, "Why aren't more people doing that? And it's just kind of comical. It's like, and it's just habits. It's habits of government.
It's practices, and we keep on repeating the same kind of. Let's just go and throw another layer on this cobbled together jalopy of tax system that we got, rather than just address the jalopy with a loofa and just kind of scrub some things off of it to see what happens. So, I don't have the historic knowledge that Lars has. I want now.
I want to read that post that he did on 1920s New York. That sounds awesome, but for us, it's just let's just put the cost of the city on a map, so people can see it, and yeah, the GIS technology is there to do it. We've done plenty of those models. You've presented them numerous times, so it's just.
I think again, again, we're in this sort of, and I will say this: let's be positive about this. I support the article that is out there, and what's incredible. Let's just think about this, and go back to early Strong Towns. Could you imagine that we'd be sitting out here and having a contemporary conversation about taxation, and people are actually interested in having more knowledge about it?
This is yeah, this is pretty good.
Yeah, I agree. I'm optimistic too because I do feel there's a window here, and Mayor Mamdani is doing some interesting things. I think that's the fourth different way I've said his name today, so I apologize to all you New Yorkers. It's not a Minnesotan name, so I'm struggling.
Lars is a good Minnesotan name. I can say that one. But no, I feel there is an opening here now to talk housing policy. There is an opening here to talk transportation policy.
There is an opening here to talk city budgets and taxation, and really it all kind of comes back to a lot of the same things. A lot of the work that you're doing, Joe, to highlight the return on investments that cities are dealing with, where their financial, where their land pattern is financially productive. A lot of the work that you're doing, Lars, in illuminating these underlying systems and letting people see that there are options. They're not scary.
They would actually solve multiple problems at the same time. I'm optimistic because it feels like if we did some policy tweaks, we could actually have the wind at our back instead of in our face and make solving a lot of these other problems so much easier. Let's switch into the down zone. This is the part of the show where we invite our guests to talk about anything that they're reading, watching, or engaging.
People are interested in the topic, but they're also interested in what is informing you in your world. I'll go first just to give a little preview. I spent a week last weekend or a day last weekend working in the yard, and I listened to Money GPT by Jim Rickards. I've Jim Rickards is a he is a very interesting guy who stretches credibility sometimes.
I think when I when I've listened to him, also is a guy who if you listen to him on an interview, you'll ask him a question for a one minute answer, and he'll talk for 10 minutes. So he's an acquired taste, but I have found his insights to be really fresh and very interesting and actually well informed. People who are working on financial systems actually invite him in to kind of stress test things, and that gives him a real interesting perspective.
This book is about the intersection of AI, the kind of blockchain technology that has permeated prior to the kind of the AI revolution and what he sees as they're coming together to change our financial system. On one hand, it's really freaky, and on the other hand, it kind of is, I think, an informative step to take. So I would recommend it. I'm.
It's not probably not going to make my top five books of the year at the end of the year, but it's definitely worth on double speed the five hours that you put into listening to it when you're mowing the yard and weeding the trimming the verge. Joe, you have a down zone for us this week.
I have a couple. We're moving into the last quarter in a business. We usually end the year. With the retreat, where we've been, where we're going, who are we as a company?
As a CEO, you want to talk about the why of Urban Three, and we, it's fun to kind of interrogate ourselves. It's a little bit therapy, really, but there's a couple of books that have really kind of grabbed me. One is I'm gonna misspell or mispronounce his name, but Subtract by Leidy Klotz. Yep, and this is all about the reduction.
We present visually. Anybody who's seen our work, and it's really it's a lot. I'm presenting like 200 slides in 45 minutes, and it feels like a lot, but you don't. But it's really a reduction of information for a community, and so we also reduce information on the slides too, so you could read it faster.
The other book is "Made to Stick" by Chip Heath and Dan Heath, and the thing that's important in that book is you want to take the abstract and make it concrete for people. So we're showing finance, we're showing spreadsheets and computer software, but no one sees that. You see a model. So what I'm showing you is something that's concrete and real, rather than talking about a spreadsheet, and it helps communicate.
So for those on this watching this, if you're in policy and you're doing work around policy, spitting out numbers is not-you're not going to catch the audience with that. You need to help them see what you're talking about, and that's the beauty of both of those books. They feel a little tufty, both of them. Yeah.
Lars.
Yeah, it's more articles, I guess. Well, there is one book that I've read recently. I think I might have mentioned this on our last podcast, but one that has really influenced me in the last couple months is this Norwegian book by some researchers called "The Natural Dividend. One of the ways in Texas that we deal with property tax reform is we just have like a state surplus.
Where does that money come from? Oil.
So Texas actually has like a much, a kind of not as good version of the Norwegian sovereign wealth fund, and so this book is all about the history of not just the Norwegian sovereign wealth fund, but the animating principles behind it, and it's basically applying the same principles that led me to land value tax, but to all natural resources in specific, and it talks about how Norway's hydropower system in the 1900s, which was influenced directly by the ideas of Henry George, basically came up with this way because the country was newly independent in 1905, and foreign speculators came in and bought up all of the waterfalls because they knew it's hydropower time, and so they're like, "Okay, we've got a problem.
We've got to develop these. We don't have capital. We need the foreign capital. We need the investment, but what we don't need is for our country to be sold out to foreigners right as we just got started.
They found a way to like kind of thread this needle of not doing the whole like Venezuela style like nationalization, and then everyone with expertise just runs away, and then you set the ocean on fire like Mexico's nationalized oil system PEMEX, but at the same time not just selling your country out by completely privatizing it the capitalist way, and so it found this like great way to like thread that needle so that like now all the waterfalls are in public hands, but the capitalists still were allowed to get rich in order to like invest.
Then in the 70s, they repeated this process with the oil system, and an Iraqi petroleum engineer who was married to a Norwegian woman was instrumental in like helping them go back to their own roots and like reapply the system to petroleum to capture the natural dividend, but still ensure investment. Basically do this thesis, antithesis, synthesis with like kind of left and right, And it was kind of revelatory, revelatory to me to this book, and now with AI, everyone's talking about who's going to capture the AI dividend.
Bernie's talking about, okay, we need to like tax the frontier companies, but if they don't capture the AI dividend because they just get commoditized, then we've just created regulatory capture, So maybe that's the wrong idea. So we need to think about who's going to capture the dividend, and the more I look into it, and especially thinking about this book, it looks more and more like land and natural resources will ultimately capture it. If it doesn't kill us all and it like lasts long enough, even these hardware companies, even these software companies are likely to get commoditized.
But what's going to happen is they consume land and natural resources, and that's already starting to happen in Seoul and in San Francisco, which are the epicenters of the AI boom. Real estate is spiking again. It's hard to imagine that real estate could spike any more in those two places, but it's already spiking again because all these AI millionaires are pouring all that money. Right back into real estate, and so it's been a really revelatory book to me.
It's called The Natural Dividend, and I'm even seeing like Oxal Sterry, who is a leader at a prominent Norwegian think tank, is already like talking about these principles because they're very concerned about what AI is going to do to the economy, and so I think it's something that we all should be thinking more about beyond just land value tax and stuff that. Is the natural resources question and like things that fundamentally remain scarce, even if we get the super intelligence we're all scared about. And we're still going to be stuck with a question of can we share the Earth, in all of its forms,
I'm interested if we get the superintelligence. If they can figure out the property tax code in New York City, then that will be a superintelligence,
you'll be happy to know that the our AI overlords already seem quite urbanist andLVT-based.
Yeah.
Who's the author of that book, Lars?
Yeah, it is Anne-Margrethe Brigham and Jonathon Moses. So Jonathan with an O instead of an A at the end, and then Moses is probably the easiest thing to search for. It's kind of a specialty book. I think it's Oxford University Press.
If you just Google the natural dividend book review, you'll find my book review of it, which will tell you most of the big deal, and then it'll include a link to the book.
Hey, Joe, can I can I show you something, Lars? If you don't mind, I've actually gone back and played this for my wife and my kids, but I still can't do it. My family name on my mom's side, much and Nygard, and I can't say Nygard the way a Norwegian does, but Lars does it. Incredible, Lars.
Do you mind?
Yeah. It's it's Nygård, Nygård, yeah. The little I call that letter å, the A with a circle over it. So in English, when it's transliterated or Ellis Island, it's usually rendered as two A's, or they just drop one of the A's.
But it's Nygård, and it means new land or new farm, new land.
that's my family, so it's beautiful. I wish I could. I wish I wish my mouth enunciated it as good as well as you do. Hey, that's it for upzoned.
If you're listening and you want to be part of the conversation, you can go to the Strong Towns Commons, commons.strongtowns.org. There's a discussion already going on there, and it will only expand once the episode is out. Which, just so we release it there first. We will be back next week with a new article and a new team to chat about it.
In the meantime, thank you, Joe. Thanks. Thank you, Lars.
It's been a pleasure.
Thank you, everybody, for listening. Keep doing what you can to build a strong town.
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