The horizon is not so far as we can see, but as far as we can imagine

Learned Hopelessness About Using Government for Good

Seems that some of my commenters think that using government for good would be hard to do. Going with the theory that every comment indicates some number of readers who believe the same, let’s explore this notion in further depth. This kind of doubt is more important than it seems, because it speaks to the weird, modern idea that governments are powerless to control how money is spent by individuals or corporations, when, in fact, it’s dead easy.

The tax system is also set up to catch stuff like this. No income declared from your property? Hmmm… do you have family members living there for free? Go inspect.

You can also supplement this with things like checking meters, checking mail delivery, and checking IR maps to see if the heat or air conditioning is on. (All this before we even get to the government’s real surveillance abilities). I guarantee the salaries of the people doing the inspections will be far exceeded by the fines and the money earned from auctions of seized properties.

This sort of thing is not only dirt easy, actually enforcing it is profitable for government, just as auditing corporations and rich people is VERY profitable. So every time your government reduces auditors your tax service you should ask why.

No, as usual, this is an easily solved problem that people refuse to solve either because of learned helplessness or because it is profitable for them (and politicians) for the problem to remain unsolved.

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  1. EmilianoZ

    There are 2 main reasons why the seizure of empty houses can never happen.

    1) It would send property prices crashing down. The Chinese and others would stop buying and start selling.

    2) Property is the most sacred thing in America. Inviolable property rights constitute the most fundamental cornerstone of American life. One example to illustrate that. For some reason, there is currently a lot of talk about the Civil War over at Naked Capitalism. One commenter noted that after the war some northern radicals wanted to seize the lands of the rich planters and redistribute them to the newly freed slaves. But NORTHERN businessmen would have none of that. It would have set an awkward precedent, wouldn’t it? And so the slaves were set free to die of starvation, without any means to survive except sell their labor to their former owners. If they didn’t do it then, they will never do it.

  2. Ian Welsh

    Properties are seized all the time for non payment of taxes. So just set punitive taxation levels. They can pay 50% of the value of the house yearly, or have it seized for resale.

    But this isn’t just an American problem, I listed plenty of cities outside the US in the original post.

    Besides, your comment is yet again learned helplessness. “We’ve never done the right thing, so we never will.”

    (Freeing slaves was seizing property. Slaves were assets, and seizing them ruined plenty of rich families. One of my best friends families were filthy rich due to slaves at the time. Absolutely wiped out.)

  3. JustPlainDave

    So comprehensive multi-modal surveillance is okay if it’s in support of a policy one supports. Good to know.

  4. Josh (@JoshsPseudonym)

    Given that Ian wrote about ways the government could enforce these laws without using comprehensive surveillance methods, I’m not sure what JPD’s point is. There’s a world of difference between sending someone to a house to see if it is occupied and listening to phone calls, reading emails, etc.

    Ian, I think for a lot of people (myself included sometimes), it is literally impossible to imagine a government/bureaucracy that doesn’t succumb to regulatory capture. It’s all we’ve ever known. (I’m under 30, fwiw.)

  5. Ian Welsh

    I’d rather not do much surveillance at all, but if we’re doing it anyway (and we are), why not do it for this? And as noted, I gave both the non-surveillance and surveillance methods.

    The simplest method is simply to have the tax authority deal with it, then send inspectors. Checking power consumption doesn’t seem over the line, either.

    I suppose people could lie and say they earned income on property they didn’t earn it on, but at least then they’d have to pay tax on it. And these things have a way of coming out, anyway, if you’re doing proper random audits of people worth auditing.

    Add in a criminal penalty for lying (there’s usually one for knowingly lying to tax authorities anyway).

    (The truly rich can have live in servants, or somesuch, but then they’re paying salaries, which is fine. Likewise if they want to have someone live there for free, I’m ok with that, so long as they actually are. The point is to stop places that aren’t being lived in for long periods.)

  6. JustPlainDave

    Well, one of the real big reasons for not doing it (surveillance) is because it would be in local hands. Anyone who’s followed the issue over time knows that the situation most likely to lead to abuse is when the local authorities are the ones driving it.

    All of the methods that you’ve talked about are surveillance of various kinds. Every single one. The only difference is that they haven’t [yet] been flash points for the Internet Wurlitzer because, no universal solvent TLA. Me, lots of knowledge about how int actually works, I’m a lot more comfortable having CSEC potentially screen me in for comms network analysis than I am the ETF poking at FLIR data based on how craptacular my roof insulation is (and the former is objectively a *lot* more dodgy).

    As I originally said, that folks would jump to such methods for dealing with this specific problem says volumes about how willing they are to resort to using a Buick to crush walnuts when faced with a whiff of some rich prick doing better than them. I think we should spend a lot more time thinking about whether the second order effects are going to end up worse down in the ‘hood, unpopular as it might be to bother the middle class with such concerns.

    Policy is seldom as simple as it seems. I’m put in mind of Adam [Vaughn]’s seemingly sensible policy initiative – simply require that a certain percentage of new condo units be three bedroom. Thought was that that would enhance affordability by increasing stock that families might want to live in. Only problem was that there was no enforcement on what the units actually look like – result was an explosion in three bedroom 900 square foot crap units that are only good for renting to Millenials. Combined with nearly free money, all that’s done is make the affordability problem substantially worse (reference your observation on where inflation really resides) because the conspicuously non-foreign, non-elite boomers have bought them up to rent. My advice? Be cautious when it comes to policy initiatives. If it comes to bite in only one unforeseen way, you’re doing utterly terrific.

    As an aside – never, ever assume that audit activity pays off monetarily. Two examples just off the top of my head – IRS audits of tax owing from expatriate American citizens, CRA audits of charities. Both big stories of late, neither one of those has come anywhere close to financial pay off.

  7. hvd

    The reason the IRS audits of expat U.S. citizens don’t amount to much is that they are primarily used to harass citizens who live and work abroad without actually trying to evade any tax responsibilities and rarely if ever used to seek seriously hidden funds for citizens still in the U.S. And, of course, they are never used on U.S. corporations doing business abroad. This is an example of some perfectly good principles being used, nevertheless to fulfill the mandate of the .01 percent while giving the impression of doing something.

    This points to part of the problem re learned hopelessness in an environment where regulatory capture is virtually total by dint of the fact that those rich enough to maintain lawyers and accountants on retainer are able to avoid the consequences of regulation while that regulation is used as a control on the activities of everyone else. Every one is forced to bear the burden of accounting for every single transaction while those whose wealth is great enough use that accounting to avoid and/or benefit from the regulatory scheme.

    Nevertheless Ian is quite right about the need to deal with “investment” based distortions of markets in essentials.

  8. JustPlainDave

    No dispute that one needs to address distortions of the market in essentials. However, if one is to do that effectively, one needs to get the specifications of the problem correct (i.e., far more broadly based than simply elite ownership of luxury properties) and one needs to dial one’s fangs back to avoid unnecessary collateral. I’ve seen more bad policy come out of testosterone than any other single factor.

  9. mike

    Anyone trying to interpret JPD should first read Hirschman’s Rhetoric of Reaction ( which explains all the rhetorical devices conservatives use to defend their anti-policy action positions. In fact, he’d save himself and us all a lot of time simply by linking to the one he’s using at any particular time.

  10. zot23

    I’m going to take a peek at that site Mike once I finish this post, thanks for posting it.

    I am 100% against NSA surveillance without warrants or dragnet style collection, but that is apples to oranges what Ian is discussing above. Checking whether a phone is turned on and that calls are being made is NOT the same as listening in to those conversations. Same thing with checking mail service. Confirming that mail is coming in and out of a house is not an invasion of privacy, opening that mail to read it would be the crime. Heat signatures might be over the line, but certainly confirming whether or not an energy bill is being delivered (and paid) would fall under public knowledge and not be an invasion of personal privacy. Even confirming heat signatures is not necessarily invasive: in the winter here in Denver if I have a video camera that can film in infrared, I can go down the street at night and tell you which houses are occupied by the amount of “hot” I see in each one. I couldn’t tell you how many people are inside, what they are doing, what color their undies might be tonight, but a house kept at 50 degs to keep the pipes unfrozen and one at 70 degs (for human occupation) gives off a decidedly different heat signature. It doesn’t require a multi-million dollar satellite in space to check heat signatures, it’s a simple job with a cheap camera that sees into the infrared. Probably costs a factor less than the taxes collected from one rich person claiming an occupied house is empty.

  11. someofparts

    “I’ve seen more bad policy come out of testosterone than any other single factor.”

    May I have you permission to make some t-shirts with this on them?

    They would be fun to hand out if my friends campaign for Hillary.

  12. JustPlainDave

    As it’s apparently not as obvious as I would have thought, this would be the applicable rhetorical device used:

    “There are dangers and risks in both action and inaction. The risks of both should be canvassed, assessed, and guarded against to the extent possible.”

    While I agree, zot23, that the surveillance techniques you highlight are not as far down the continuum as NSA electronic surveillance / bulk collection, etc. they are still surveillance. In order to have any significant effect on affordability they would have to basically be pervasive. A useful thought exercise is to consider what uses the city fathers of Ferguson would turn such programs to.

    Please, T-shirt away with my blessings.

  13. jemand

    It *is* fairly obvious that I am occupying my apartment most of the time, and yet I kept my heat through this cold winter sometimes down to 50, usually 55 degrees, because the costs of anything more were horrendous. I also travel for work and last summer traveled to stay with my parents after surgery. Altogether there are several months in a year I might *not* be in my apartment.

    How do you ensure something that is fair to someone like me, but doesn’t allow people trying to skirt the law to hire some live-in servant just for the day or two of inspection, and then fire them again?

    A third of units being empty in some places, with no actual end in sight, is unsustainable and ridiculous, but I am having trouble imagining the enforcement. Perhaps this is because all I’ve ever seen is a world in which regulation is twisted to apply to those it wasn’t intended to, while those causing the problems get out free.

  14. joe

    A good way to limit speculation is to make policy that makes it risky. Such as was the situation In the U.K. back in the seventies. Their existed squatters rights laws. laws that allowed People to stay in a dwelling If they could prove inhabitation for a given time. London then as now was full of unused speculations in the shape of houses waiting for the market to improve. Many marginalized sleeping on the street, not a pleasant thought in that horrible climate, found the energy mostly from anger to form organizations. They systematically cased the city for unused spaces and occupied them. They documented their presence in a legal manor such as paying the utility bill. Once in, policy was in place which allowed them to remain legally in the building until they decided to leave. The same applied to rural homes. There are currently laws in the U.K. allowing walking trails to stay open which cross private lands. Walking clubs see to it they are. Politicians dare not mess with these laws.

    If you drive around rural USA today you will see a huge percentage of unused homes in rural areas too. Don’t forget about the poor rural folk. They too are victimized by the economic imperialism of the city dwellers higher pay checks but who still can’t afford to buy in there city. They spread the problem for miles out into the hinterlands. Ive seen the same in Mexico. How do you force policy on the rulers that don’t benefit them.

  15. Peter

    It’s odd that Ian would choose such a minor problem for the local governments to target. They are the ones that would be required to investigate these anomalies and we know all regulatory agencies have been cut to the bone in recent years. There are much fatter targets who avoid taxes on a much larger scale locally and nationally.

    I don’t see what this has to do with learned helplessness or using government, which seems to imply individual citizens are involved. The last time I checked the citizens of this country have no real power in or over our government.

  16. Ian Welsh

    If you were to use things like checking heat, they would only be the first sweep: then you’d inspect. As for having servants live in it: great, you’re paying them, someone is living in the place. Brilliant. It is empty places that we should be primarily concerned with. (If you’re worried about 1 servant in a mansion you could put on a very generous square footage per person. Again, this sort of policy is easy enough to do.)

  17. JustPlainDave

    I see two problems with this. One, operational that I know something about (most of the properties are going to be multi-residential, which leaves one dealing with a small roof and many units underneath it, trying to determine if some of them are emitting less than they should – good luck), and a second that I’m sure hvd can elucidate (Kyllo v. the United States).

  18. joe

    Thanks for the thoughts . I Just looked up the term regulatory capture. smelling the stink of it for my whole life i didn’t know there was a word for it. There was a regulatory capture shaped hole in my world. Any more terms like this i should know about. Wonderfuly clarifying to have it defined.

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