I really hate sounding like a broken record but this is just another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses.
The real business of car washes is real estate, it's profitable enough to get 3-4x leverage with a low interest loan.
TBH I think real estate used to have high information asymmetry between local residents and large investors; low property taxes and generous loan terms under this primarily benefited small businesses, individuals, etc. I think the internet and increased observability into far away projects erased this (a ring camera costs a billion dollar PE firm and
Single home owner the same); now the same policies we have had are allowing easy arbitrage between low cost fed/PE cash and predictable "dumb" business categories; car wash, self storage, etc.
I take pride in the fact I haven't been to a car wash in probably 3 years and have likely gone myself less than 10 times total. Rain and the occasional wet rag is good enough for a depreciating asset.
Is there any evidence of this? Companies like Mister Carwash lease nearly all their properties and when they purchase plots seem to alway try to do a sale and lease. Their latest results claim they run 436 sites and lease 427:
What I see in both car washes and the storage business suggested by one of the child posters is low-labor cash flow. I can't speak for all geographies, but locally what I observe is car washes are built on low-value land where these new heavily automated car washes have got to be a cash cow once they are paid off, especially with monthly subscriptions. I do unfortunately see a lot of storages built on what could be much higher value land, which does cause me to wonder what kind of financial engineering I'm not seeing on the surface.
One pattern I have seen in the UK is temporary manual car washes operating in former gasoline stations.
Firstly, the location, visibility and site layout are obviously perfect.
Secondly, the old brown-field gas station has sludge-filled underground tanks that cost a lot to remove, and do a full environmental clean-up. There are long delays to wait for a deep-pocketed developer, or for the site value to rise. In the meantime, lease it out to a bunch of enterprising migrants (in UK, often E.Europeans).
Extra Space Storage will buy your self-storage outfit for cash, or give you “ operating partnership units in Extra Space Storage’s REIT [Real Estate Investment Trust].”
“And although the space they occupy isn’t like normal
space, nevertheless they are packed in tightly. Not a cubic inch there but is filled by a padlock, a garage door, a wheeled cart, the tip of a key code pad, so the effect is like one of those trick drawings and
your eyeballs eventually realize that the space between each
self-storage is, in fact, another self-storage.”
Probably Mister Carwash (the franchise organisation) is leasing out locations to its franchisees, in which case the whole business is absolutely about real-estate.
Somehow the idea of perpetually paying property taxes and land value taxes doesn't sound appealing to me, especially since businesses already pay taxes. I don't understand the argument of designing a system to hurt a specific business type such as low value businesses. If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even. If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing? Introducing additional property and land value taxes might discourage low value businesses, but what are the 2nd and 3rd order effects of such a change?
> I don't understand the argument of designing a system to hurt a specific business type such as low value businesses.
The argument is that good business spots are a limited community resource that it makes sense to tax, like radio spectrum. If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space. If anything taxing space use makes more sense than taxing profits; a profitable business is probably one that's serving the community well, whereas a business that takes up space and doesn't generate much profit is no good for anyone. From the article:
> “A car wash does not provide a lot of jobs for the community, and they take up a lot of space,” Broska said. “If you want to invest your dollars into a car wash, then God bless you. But at the same time, I’m responsible for 17,500 people and have to be cognizant of their wishes.”
> the largely automated facility wasn’t the best use for a prominent Main Street site
> a profitable business is probably one that's serving the community well
This argument reminds of the argument googlers to explain why placing paid ads ahead of organic results is better for the user: they say thay if someone can pay more for an ad than means that can get more money from the user, and therefore the user likes it more. Lol
No, profit is profit, it doesn't mean anything else.
*In a healthy competitive market with a consumer-base that's well educated on potential consequences of their purchases.
I do agree with the principle that a space-hogging marginally profitable business is detrimental to a community. Just that the opposite is not necessarily true; profitability does not imply beneficiality.
Humans do not fit the model of "rational self-interested agent" commonly applied for economic models. Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product. That's a phenomenal waste of labor that favors only well-funded organizations practiced in deception. Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
> Humans do not fit the model of "rational self-interested agent" commonly applied for economic models.
They generally do -- the misalignment comes from analyzing people's behavior according to presumptive interests which have been externally attributed to them, instead of observing behavior in order to ascertain what people's interests actually are.
> Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
No, gambling and addictive substances exist because people enjoy them. Large numbers of people exhibit a manifest preference for short-term pleasure over long-term stability; expecting such people to act in ways that pursue long-term stability over short-term pleasure is itself irrational.
> I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product.
Unfortunately, your attempt at preemption has failed. Only the consumer has the relevant criteria necessary to determine how well a given good or service fits his own particular needs or desires. Being rational, most other people intuitively use the experiences and advice of others as Bayesian indicators of product suitability or unsuitability (even if they don't know what Bayesian indicators are), but they're still using those external resources as tools with which to make their own decisions.
> Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
No, you've reinvented Consumer Reports. Except for the "single org" part, anyway -- there's no single determination that could be applicable to all people all the time, so people will naturally develop a variety of parallel solutions that apply different criteria to the evaluation process.
I take it you view drug / gambling addicts not as people with a mental health issue making irrational decisions, but rather fully rational people that prefer "short-term pleasure over long-term stability"?
Absolutely. People make rational decisions to fulfill the motivations they actually have. But sometimes people, being complex creatures, have multiple conflicting motivations, where fulfilling one impedes another, which leads to psychological and emotional distress. So mental health does come into it, but as a matter of reconciling conflicting parts of ones own psyche, not as a matter of overcoming irrationality.
Or, to put it another way, the irrationality is a matter of having contradictory desires in the first place; choosing to act upon one and dismiss the other resolves the irrationality. The fact that some people make the trade-off in the opposite direction that you would doesn't make them irrational, it just demonstrates that people are different.
I disagree... the diff lies in the definition of "humans" vs. "group". It's like the quote in the movie MIB "Kay : A person is smart. People are dumb, panicky dangerous animals and you know it"
No, it does not. That the users end up paying more in no way means or should be implied that they _choose_ to pay more.
If cheaper options are made less accessible or clearer, and customers are intentionally mislead to more expensive products, as a result they will pay more too.
Also, there is a cost associated with searching. Consumers may intentionally forego the effort for perceived low marginal gains (especially in nominal rather than percentage terms, e.g. "I'm not going to waste my time to save a quarter." even if the quarter is a significant percentage difference). This is one of the factors in the success of Amazon. People "value" convenience.
But people will not pay more than a product is worth to them. The fact that they are willing to purchase the product at a higher price point indeed does imply that that price point is still lower than the consumption utility of the product for them.
Do you always click in paid ads before the organic results? No? Oh because you personally don't prefer them? Oh you mean they're preferred by the minority that does click ads, over alternative paid ads?
> The argument is that good business spots are a limited community resource that it makes sense to tax, like radio spectrum.
I'm not sure I follow the reasoning here. How does the existence of economic scarcity imply that it makes sense to tax anything?
> If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space.
But that's already inherent in the nature of scarcity -- the more demand there is for a scarce resource, the higher the price is. So businesses making use of high-value prime real estate are already paying more for it. The law of supply and demand already does what you are proposing. How does paying additional fees to a separate institution with its own perverse incentives add anything to the equation?
> the largely automated facility wasn’t the best use for a prominent Main Street site
This was the personal opinion of a local bureaucrat who thought his personal opinion should be policy. That's why the company is suing.
> I'm not sure I follow the reasoning here. How does the existence of economic scarcity imply that it makes sense to tax anything?
Land in the right place is not merely economically scarce, it's economic land.
> But that's already inherent in the nature of scarcity -- the more demand there is for a scarce resource, the higher the price is. So businesses making use of high-value prime real estate are already paying more for it. The law of supply and demand already does what you are proposing.
Supply and demand doesn't work for land because there's no new supply. No matter how much the price goes up, people aren't going to make more.
> Land in the right place is not merely economically scarce, it's economic land
I don't see how there's anything particularly special about land that warrants construing it as something fundamentally different from any other scarce resource.
> Supply and demand doesn't work for land because there's no new supply.
I'm not sure that I agree that there is no new supply of land in an economic sense -- developments that increase the productivity of land use are functionally equivalent to those that increase the physical supply -- but regardless, the law of supply and demand operates the same whether the supply on the market is new or old.
“I don't see how there's anything particularly special about land that warrants construing it as something fundamentally different from any other scarce resource.”
I’ve overheard enough conversations between high net worth individuals to say there’s absolutely unique qualities about land as an asset class or they wouldn’t hold so much of it.
read some solid reasons for land focused tax regimes long ago but couldn’t remember deets on why they were compelling so googled helped me remember …
‘Immobility: Land doesn’t move, making it a stable tax base. (Important for local services like deciding whether a town can afford the new school(s) or a road).
Scarcity: No more land is being created, so taxing it efficiently is crucial. (Kind of like capital itself)
Non-distortionary: Taxing unimproved land doesn’t distort transactions.
Local Funding: LVT may be an effective way to fund local government since land cannot be moved to avoid taxes’ (1)
(1) which BTW is the main reason often given why ordinary folks have to pay higher payroll taxes vs capital gains the wealthier brackets ‘pay’ because you know capital will just up and move somewhere else if we ask too much of them.
Well just tax the land, and if the capital holders want to move all their wealth out of the community, fine, but good luck extracting wealth from a local community without owning any land near it.
So yeah. Tax the damn land already. Especially to fund local government and services, which you kinda need to have a functioning society.
I clicked through because I’ve wondered often why there’s a dozen of these new washes in my community with ten more on the way and figured it was some financing/tax write off hack.
> I’ve overheard enough conversations between high net worth individuals to say there’s absolutely unique qualities about land as an asset class or they wouldn’t hold so much of it.
Every asset class has its own uniquely defining characteristics in financial terms. There are unique qualities of stocks, of bonds, of index funds, etc. But I don't see any fundamental difference between land and any other scarce resources in real economic terms, and definitely nothing sufficient to treat land differently as a fundamental philosophical principle!
> Immobility: Land doesn’t move, making it a stable tax base.
Lots of things don't move in any meaningful way with respect to taxing jurisdictions.
> Scarcity: No more land is being created, so taxing it efficiently is crucial.
I disagree that no more land is being created in an economic sense. As I mentioned above, developments that increase efficiency of particular use cases for land are economically equivalent to the supply of land expanding.
And there are even some cases where new land is even being created in a literal physical sense -- see the Netherlands, for example.
> Non-distortionary: Taxing unimproved land doesn’t distort transactions.
It certainly does distort transactions for unimproved land. And what is "unimproved land" in the first place? Whose definitions apply, and how do we handle edge cases. If I purchase a plot of land for the specific purpose of maintaining it in its natural state as a preserve, is it improved or unimproved?
> Local Funding: LVT may be an effective way to fund local government since land cannot be moved to avoid taxes
But there are lots of other ways of avoiding taxes. Still, this purely pragmatic point -- which correctly understands taxation as a means to fund the necessary operations of government, and not a tool to manipulate behavior or as an end in itself -- explains why a large portion of local government funding already comes from property taxes.
I'm not sure what trying to take what already works and reconstitute it according to Georgist principles (which are logically weak and entail a lot of dangerous implications) brings to the table.
> So yeah. Tax the damn land already. Especially to fund local government and services, which you kinda need to have a functioning society.
Property is already widely taxed, local governments are already funded, and society is already functioning, car washes and all.
> The argument is that good business spots are a limited community resource that it makes sense to tax, like radio spectrum. If you can make good use of the space you're taking up, go ahead, but you should compete fairly with other uses of the space.
If it's really such a prime desirable spot then that would drive up the value of the land to the point that the low value business wouldn't have been able to afford it?
I don't understand saying it's such valuable land and detaching that from what a business was actually able to pay for it.
> If it's really such a prime desirable spot then that would drive up the value of the land to the point that the low value business wouldn't have been able to afford it?
The land continues to appreciate, so the business can hold it based on its value. Especially if they've locked in a mortgage at a low rate. The car wash "business" can profit through land appreciation, which they don't pay any tax on (another flaw in the regulatory regime), and free-ride while the spot becomes more valuable through the efforts of others.
You can't just assert that it makes sense when answering why it makes sense. If you are right, then the owner is losing out on money by operating a car wash, which by the way is their moral and legal right. If you think you can provide more value with the same space – offer to buy it.
> a profitable business is probably one that's serving the community well, whereas a business that takes up space and doesn't generate much profit is no good for anyone.
I think that attributes a lot more to profitability than such a metric deserves. Perhaps in a more narrow and ruthlessly capitalistic sense profitability signifies that a business is doing what it's trying to do well, but it's a big leap to get from there to how well its serving whatever is considered to be a community these days. Among other problems, just because some tiny amount of that money conceivably stays around in the region and people can buy stuff does not mean that the cost of the business being there isn't quite a lot higher, hence the term tragedy of the commons and the hollowing out of let's say America
The theory of (LVT) land value tax is that it replaces other taxes. LVT has less or no dead weight loss so it's a more efficient tax.
> If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even.
My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes) and additionally incentives ostensibly designed to encourage real estate development (1031 like-kind, treatment of real estate as depreciating, etc.) are now primarily used to either speculate on existing real estate or build the minimum to gain ownership/interest in speculation. If you take all the cash you have, you can only buy a finite amount of land. If you build a low-capital but profitable business like a car wash, you are only limited by the leverage limits imposed by lenders.
> If desirable high value businesses aren't able to compete with car washes, isn't that the market doing it's thing?
> but what are the 2nd and 3rd order effects of such a change?
Tautology yes, as desired no. Technically yes because the market is shifting towards low-capital and low-regulatory businesses because they have a more predictable ROI. The goal isn't to disfavor the more capital & regular intensive businesses just regulate them. i.e the influx of car washes is the undesired 2nd order effect of some other policy e.g. minimum parking for restaurants and apartments (likely no such rule exists for car washes so now you need less land a car wash vs a restaurant).
Raising regular property taxes (land+improvements) is just easier solution than waiting for far-reaching tax reform like LVT. IMO it's better to correct the market even if it means raising taxes overall in the short term.
I like Georgism but if business taxes were replaced would internet businesses that don’t need a physical location thereby pay much less taxes than those that do have need for physical location? That does sound kinda lopsided, unless we’re also doing a land value tax on prime domain name real estate.
Internet businesses have physical locations somewhere. Even if they are drop shipping than someone else is paying the land value tax for the warehouses they are shipping from. The land use exists somewhere at some level of the value chain and that somewhere would then be taxed.
Not all, for example my SaaS company is fully remote and has no physical location whatsoever. I am cool with paying less taxes and I understand that the purpose of the land value tax is more about utilizing a limited resource effectively and not necessarily about some notion of fairness, but it seems weird that someone like me would not need to buy in besides my own home because of the industry that I’m in.
Then the server farm where your code runs will be taxed. Maybe you run it from your house, in that case then it is part of that.
You are still just moving it around at the end of the day. Presumably as you grow more profitable and wealthy you would relocate to higher value real estate. If not then you are spreading the wealth to lower value areas which is also a good thing. Seems like all good things in the end.
> My claim is that the playing field is not currently even rather it is massively in favor for low-capital, low-labor, and low-regulatory businesses (like car washes)
>Somehow the idea of perpetually paying property taxes and land value taxes doesn't sound appealing to me
Eternal wealth to those lucky enough to have been born and bought in the past or born to families who bought in the past sounds plenty dystopian to me; pay up regularly or let someone else who will contribute to society step in.
It's less about land availability. There is plenty of land at least in some countries. It's more about desirability. As those in the real estate trade like to say it's all about "location, location, location."
And for that theoretical tiny category there are tax deductions and other exceptions to the law (for instance in many jurisdictions sites of religious worship are exempt from property tax). The overwhelming majority of owners do not and should not qualify for this.
What eternal wealth would a guy in a hut in the middle of a land-locked forest have, with no infrastructure, and no community? Why is he forced to provide anything beyond self-sustainability?
> pay up regularly or let someone else who will contribute to society [raze your forest to sell wood chips].
Forcing mountain men off their land to work in the factories, sounds plenty dystopian to me. The Industrial Revolution and its consequences have been a disaster for the human race…
> Somehow the idea of perpetually paying property taxes and land value taxes doesn't sound appealing to me, especially since businesses already pay taxes.
And it doesn't sound appealing to me, as an individual. I don't want to feel like a peasant constantly paying a tax to the monarch/state: so at very least the first property an individual owns should be tax free (not annual land value tax / property tax). I happen to live in a country where that's the case (but it's not the reason I moved there): no yearly property tax.
The days of merely protecting one's property are long over. At least in the US real estate taxes pay for many services unrelated to safety of the property. For example, closing a real estate tax funded senior center is unlikely to result in an increase in crime. Maybe the seniors themselves would be more vulnerable without a senior center, but I fail to see a general crime spree resulting. If anything the seniors would be watching other people's property and call the cops at any sign of potentially suspicious activity.
I live in a US state where I do pay property taxes but there is no income tax. Those property taxes and the overall sales tax are the main sources of revenue for the state.
I don't expect to live in an area without paying something to maintain it.
I don't understand myself how LVT wouldn't result in what you see in many "high value" city centers (where business rents are insanely high) - miles and miles of law offices and banks, and not much else.
Taking up land is an externality, it’s not something that can be solved with a supply/demand curve. So, we tax it to encourage efficiency since our usual method if encouraging efficiency doesn’t work.
> If there's a loophole such as lack of sales tax for car washes, fix that, but let the playing field remain even.
What is even the problem here that needs to be fixed? People have found a business model that is able to generate value from low-cost land that might otherwise lie vacant. Great, more power to them.
The idea that people's use of their own property should restricted or manipulated so the government can maximize tax revenue is the epitome of the tail wagging the dog.
I don't see a correlatiopn between depreciation and the cleaning of the asset. My body for example started to depreciate after it was appr. 30 years old, but I still wash it every day. I think cleaning is an operational expense that does not support the lifespan of the object, it merely maintains an experience threshold.
And about experience, I also never washed my car until I got kids: car washes are an experience in its own right nowadays.
To some people, a car is essentially nothing more than an appliance for transporting people and things.
To others, it's a source of pride. They love driving a car that still look factory new despite being 15+ years old.
And others, it's a source of fun.
I'm in both of the latter two. I drive a performance EV because it's fun, and I really like it being clean and shiny. I got it wrapped in paint protection film, then covered in ceramic, to help keep it looking its best.
Will it help it maintain value? Not really. Certainly won't get any of the $6,000 I spend on the PPF and ceramic back. But I don't care. Not everything you buy needs to be considered an "asset" that you worry about losing value on. It's okay to buy things purely because you enjoy them.
Lifespan is a factor in depreciation, not the other way around, although many people believe it is, i.e. depreciated equipment may still have usefulness though some people (businesses) rush to replace equipment once it's depreciated.
In case of real estate, depreciation offers income tax deferral because real estate retains much of its value and sometimes even appreciates despite being fully depreciated. It may be a part of or analogous to the borrow and die scheme of tax avoidance.
When you see a solution here of higher property taxes, is it focused on the raw land value or on the value of "improvements?"
I've never been a fan of taxing the value of raw land, mainly because it creates incentives for destroying natural land and extracting as much value as possible from the space. Taxing structures based on the expected economic value can make sense, though even then if its a business there are more direct ways to tax the business's realized revenue or profits.
To be honest, I think you have it exactly backwards, and a land value tax isn't about taxing "raw land" (that is, land with no improvements), it's about taxing the value of the land without regard to improvements.
The value of the land is not solely based on the "raw land." As they say in real estate, it's all about location, location, location! A half-acre beachfront plot in Malibu is worth orders of magnitude more than a half-acre of grassland in Montana. A lot of the value comes from the beachfront itself, yes, but a lot more of the value comes from all the development around it.
This is the whole basis for the business model behind golf course development. Developers acquire a large plot of land in a nice area and build a golf course on part of it. The rest of the land (surrounding the golf course) is divided up into plots and used to build luxury housing. The existence of the golf course (and all of the landscaping in the area in general) dramatically increases the desirability (and hence property value) of the houses.
If you didn't build the golf course at all you could fit more houses on the land overall. The problem with that is that without the golf course the houses are less desirable and worth less -- and also more capital intensive to build than a golf course -- so the overall profit is lower.
There is that, of course. But good courses also permit real estate companies to hold land for future development at a reduced cost, maybe even a profit, no?
No. The land would be taxed whether it has improvements or not, and in fact would be taxed the same amount whether improved or not. That's how such a tax incentivizes improvement - if you're paying the tax either way, you want to do as much as possible with it to get your money's worth.
The idea of LVT is to put an economic value (i.e. dollar amount) on the fact that you're preventing people from using land. It's a market correction. If you want to express that some values are actually good beyond what the market is equipped to reward, then you need to correct further. In theory, this means that the government - acting on behalf of the public good, or its citizens, or the future of humanity, or whatever your preferred vision for the social contract is - should offer its own contribution to the cost to be paid. In practice, this means there could be a significant tax credit for meaningful nature preserves, commensurate with the value of that preserve. Taken to its limit, this tax credit could mean a negative tax (i.e. subsidy) that's enough to pay for maintaining the land in its natural state, and oh look we just reinvented public parks.
This requires further legislation defining what constitutes a "meaningful nature preserve," how the classification and tax credits work and change over time, etc. The government then has to fund it somehow.
Regulation is necessary in some cases, though it should be the exception not the norm. Regulation that requires yet more regulation should be avoided if at all possible in my opinion.
"Land" is shorthand for all of the natural resources on this earth. That means space, but it also means clean air and anything else extracted. Pollution and extraction taxes are different forms of land taxes.
So the proposal is that people should never be able to use the land they own for their own purposes without the threat of being dispossessed because strangers are willing to pay more for it, even if they don't want to sell?
That sounds like a horrible situation, and it seems clear why real-world tax systems don't take this approach to its ultimate conclusion.
There's also something very objectionable about attempting to use taxation as a tool to manipulate behavior and engineer outcomes. Where taxation is justifiable, it is justifiable solely as a pragmatic means to fund the necessary operations of government, and never as an end in itself.
At the risk of feeding a troll... no, that is not the proposal. The proposal is to make it economically unviable to do socially suboptimal things with common resources.
The underlying principle is that land - including natural resources as a whole - is finite. It's a common good owned by humanity as a whole; or, failing that, at least in common by the nation-state in which it falls. Allowing individuals to hoard those finite resources is bad for society.
Under a land-value tax system, individuals can do whatever they want, but they're appropriately charged for their negative externalities. Just like we should have a carbon tax to disincentivize people using the shared natural resource of carbon fixing without a good reason, we should have a land tax to disincentivize people using the shared natural resource of flat, arable land without a good reason. You can choose to pay your taxes and do nothing with the land, if you have another source of wealth to make up for it - effectively, you need to express to society just how much it's worth it to you to sit on that land doing nothing, and the way that we express the strength of our convictions in a market economy is with dollars.
> There's also something very objectionable about attempting to use taxation as a tool to manipulate behavior and engineer outcomes.
The goal here is not to manipulate behavior for its own sake, it's to use the power of the state to correct for a mispricing in the market. Market forces alone are incapable of correctly pricing deals involving common goods, because most of the people who are implicitly participating in the transaction (i.e., the rest of humanity that is now deprived of that land/air/resource) are not compensated. It's a problem of negative externalities, for which a Pigouvian tax [1] is a perfectly appropriate remedy. In a democracy, the state is how the public as a whole imposes its collective will; having the state "bid" on behalf of the public interest is the most capitalist solution possible to the externalities problem.
> The underlying principle is that land - including natural resources as a whole - is finite. It's a common good owned by humanity as a whole; or, failing that, at least in common by the nation-state in which it falls. Allowing individuals to hoard those finite resources is bad for society.
There's a real risk in attempting to define exactly what "socially suboptimal" uses for land are. Everyone will have a different opinion on how they want land to be used.
Worse still, your definition means that any unused land is socially suboptimal and should be disincentivized through taxes. Given that land is finite, how do we guard against eventually using as much land as possible? And where do we get all the resources to develop and maintain the land as well as all the consumables used by everyone living there.
> There's a real risk in attempting to define exactly what "socially suboptimal" uses for land are. Everyone will have a different opinion on how they want land to be used.
The market is making a decision here via prices, not any centralized power.
It might not be a great analogue, but it's the best one we've got. What people are willing to spend on things, in comparison to each other, is the most direct indicator of aggregate preference within society we have. It's vastly more valid as an indicator than anything generated by any political process.
> The proposal is to make it economically unviable to do socially suboptimal things with common resources.
Well, the resources in question aren't "common resources", they're economically rival resources that already belong to other people.
So the argument is to artificially constrain people from using their own particular resources to do "socially suboptimal" things, but in this case what's being posited as "socially suboptimal" is actually just a normative "ought" opinion posited by a specific faction in opposition to the observable "is" manifested by society itself.
Dress it up in whatever language you like, but the underlying position remains "I want to force people to conform to my preferences at the expense of their own".
> The underlying principle is that land - including natural resources as a whole - is finite. It's a common good owned by humanity as a whole;
That's a very poor principle. Every question in economics and political philosophy deals with the complex interactions of different subsets of "humanity as a whole", so treating humanity as a whole as a singular agent is outside the realm of any kind of useful analysis.
And the concept of ownership is something we apply to economically rival goods -- including and especially land -- precisely because possession and use of rival goods are inherently exclusive. Ownership must be exercised by some narrowly construed party at the exclusion of others, and all of our models of property rights serve the purpose of resolving competing claims to the same resources precisely because ownership cannot be aggregated.
The relation of high-level abstractions you're invoking here might make for a nice slogan, but "everything aggregated into a singular unit is owned by everyone aggregated into a singular unit" is completely useless as a model of reality.
> Allowing individuals to hoard those finite resources is bad for society.
Individuals, in aggregate, are society, and what's good or bad for society is entirely a function of what is good or bad for the individuals who constitute it.
When different individuals have conflicts of interest or divergences in values that bring them into dispute, we need solutions for resolving those disputes in a manner that is maximally favorable to all sides, and which assiduously respect the rights of all individuals involved. Property rights are an important example of doing exactly that.
The moment we adopt a "winner take all" model for resolving social conflict, we raise the stakes of participating in society in the first place, and and up on the road to social dissolution. As high minded as the abstractions you're invoking seem to be on the surface, the practical reality of your proposal is that the state will act as a universal landlord, and put control over how everyone is using their own property in the hands of whichever faction is politically dominant, absolutely leading to a "winner take all" scenario where those most skilled at politics can usurp the property rights of everyone else. It's a recipe for disaster.
> Under a land-value tax system, individuals can do whatever they want, but they're appropriately charged for their negative externalities.
We already have a system of legal liability for holding people responsible for their negative externalities, and it works very appropriately, by making people who cause negative externalities financially responsible to the specific parties who those externalities have harmed.
The approach you are proposing would be universally preemptive, rather than remediative, charging people across the board regardless of what externalities they have or have not caused. And it would put the proceeds of those charges not in the hands of the people who were harmed by the externalities, but rather in the hands of a separate organization entirely, one which may or may not have an incentive to apply those funds toward the remediation of the externality, but might have entirely unrelated purposes that it diverts those funds to.
> Market forces alone are incapable of correctly pricing deals involving common goods, because most of the people who are implicitly participating in the transaction
There are precious few genuinely common goods to which markets are applicable in the first place. Markets conduct trade in scarce and rival goods, but common goods are definitionally non-rival hoods, for which a single unit of production satisfies every disparate instance of consumption simultaneously. A classic example is military defense, where a single army deters aggression against the country as a whole, and does not produce distinct units of defense consumed individually by each resident.
We already typically rely on non-market solutions for common goods, e.g. having them provided directly by political states and funded via taxation. There are lots of problems with this, especially the principal-agent problem, and many people are trying to come up with ways to make pluralistic markets applicable to these goods by disaggregating them. But here you are proposing to take things that aren't common goods, like land, and make them subject to the same failure modalities we experience with common goods.
> In a democracy, the state is how the public as a whole imposes its collective will;
No, this is absolutely false, and is indeed an extremely dangerous idea that twists democracy into a kind of quasi-totalitarian system. Democracy is a tool for ensuring that the political state is accountable to the public generally, as a means of preventing abuses of power. It functions as a brake pedal, not as a gas pedal.
A large and pluralistic society dos not have any sort of singular "collective will" in the first place -- societies are aggregations of lots of disparate individuals, who often organize into subcultures and factions who have very different goals and interests -- and the purpose of law and politics is to mediate between them in a way that enables each to maximally pursue their own particular will within their own particular boundaries without conflicting with each other.
Democratic processes are meant to ensure that that meditative process remains honest and accountable, not to attempt to replace it with some pretended distillation of everyone's diverse values into a single set of principles -- the latter is logically impossible, and attempts to do this invariably result in a single faction imposing its values forcefully onto everyone else.
But I will note that the closest thing that resembles the "collective will" of society as a whole are the patterns that emerge from the interactions of all individuals, communities, and organizations, at all levels of scale and complexity. The behavior of the state, one particular artificial institution within the vast complexity of society, is absolutely not a reliable indicator of the nature of the whole, no matter how democratic its processes may be.
Where does this definition come from? Quite a few localities have rules differentiating between land rights, water rights, and mineral rights to name a few.
So where do the animals pay their taxes so they have some place to live after we make it economically un-feasible to keep land undeveloped by taxing raw land out of existence?
Animals don't get a vote, but just as the government can forcibly set aside land as parks, the government can subsidize individuals to do so where it would be valuable to the common good.
Land value taxes aren't about destroying natural land to extract value.
The point of taxing the value of the land in urban areas is that a lot of the time places essentially squat on land that could be better used. A car wash building will have a low assessed value for its improvements compared to a biotech building. For example, in my city we have a carwash with its improvements valued at $400,000 and a biotech building with its improvements valued at $275,000,000. The biotech building uses only double the land, but pays a ton more taxes.
In my city, there are lots where they're basically abandoned. The owners know that they can just sit on the land and it'll increase in value over time even if it isn't used for a productive purpose. During this time, people need housing, businesses need office space, etc. This isn't "natural land", they're gravel pits.
In fact, lack of a land value tax causes us to destroy natural land. Instead of using land well, we sprawl and pave our way into the suburbs and beyond.
Not all land is equally valuable and land can be made non-valuable from the standpoint of a land value tax like parks and nature reserves. A land value tax isn't really meaningful in rural areas where the land isn't really that valuable due to its location. Where a land value tax is meaningful is in cities where land is scarce and we want to put it to good use.
In a city, we don't want someone keeping an empty lot for decades so they can become richer based off the hard work of others around them - productive investors creating housing and office space, workers and artists making an area more desirable, etc. They sit on their empty lot paying nothing in taxes while others make them richer. A land value tax says: put that land to good use or your investment won't pay off that well. Under the current system based on improvements, they pay almost nothing and leech off the hard work of everyone else.
Land value taxes don't destroy natural land. They'd probably preserve it. A land value tax might destroy surface parking lots in dense cities, but that isn't "natural land". They're a poor use of space. I live in one of the densest cities in the US and around the corner from a lot of 1-story retail. It would be better for the community if that retail had housing on top and a land value tax would encourage that.
The alternative to encouraging good land use is having sprawl. Sprawl doesn't preserve natural land, it destroys it. It also destroys our climate with the carbon emissions from people who then drive everywhere.
A land value tax isn't about taxing all land equally across the US. If you have land in an area where land is plentiful, then it doesn't have a high value (because it's plentiful) and it doesn't need to have a lot of value extracted from it. If you buy land in Manhattan, Boston, etc. and decide that you like it as an abandoned piece of property, that's not good for the community and there should be pressure on you to put it to better use or sell it to someone who will put it to good use. A land value tax is about taxing land in a way that prevents someone profiting off squatting on land.
> Land value taxes don't destroy natural land. They'd probably preserve it.
Consider a farm on the edge of town. Without LVT, the incentive to sell could be considered positive; i.e. the farmer may sell when they're offered sufficient money for it. With LVT, the incentive to sell could be considered negative; they will be charged more and more in taxes from the state as the town develops up to the boundary of the farm until they can no longer afford _not_ to sell. That means that there is a built in sprawl function to LVT - towns will continue eating up the countryside as their centers push value of land up around them.
In some places farms already pay LVT like real estate taxes. Their real estate taxes are based on the value of potential farming operations on the land.
Thanks for all the details! Limiting a land value tax to densely populated areas is a great detail here. Sorry if I end up with a long list of follow-up questions here, this is really interesting.
So my main concern related to destruction of natural land is that there is a disincentive to keep land natural if you have to pay the tax anyway. In dense areas that wouldn't be nearly as much of an issue, but it would still mean that parks would be an unlikely occurrence and likely only feasible when run by the government. I assume most parks in these areas are anyway, so the loss may be limited to smaller neighborhood parks, courtyards, etc.
Finding a clear way to draw a line between what area is dense enough to be taxed and what isn't seems like it would be an ongoing challenge. Not only would you have to define specific measures and thresholds, you would have to eventually move the line as the city evolved. Any thoughts on his this would be done, or already is in areas with a similar tax?
When it comes to "best use" of a piece of land, who decides this? Does that measure really just boil down to whatever spends the most capital to build on the land, without regard for economic or social value, environmental impacts on the land and surrounding area, etc?
It seems like this would lead to a lot of economic and social impacts that aren't necessarily desirable. Is there a clear way to guard this system from building higher and higher economic centers, inflating incomes and forcing even more of a wedge into the wealth gap? In you example, a car wash would be able to employee people at a lower once level in the area where a much more expensive biotech building would mostly employ highly educated people who bring much higher price pressure to the area. Can that be avoided with a tax that incentivizes building more expensive, and likely more technical/specialized, businesses on every plot of land?
Related to that, what's the solution for infrastructure and resource requirements? Large biotech facilities would likely require more power, transportation and delivery access, maintenance, and building materials. If we are simultaneously concerned with environmental impact, creating incentives to build much larger building with much higher resource requirements flies in the face of this. Would we be creating a situation where businesses are pushed to use more energy, concrete, steel, and glass partly because a tax makes smaller businesses less feasible?
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Well that ended up being a bit of a brain dump with questions mixed in. If you made it this far, thanks for playing along!
> So my main concern related to destruction of natural land is that there is a disincentive to keep land natural if you have to pay the tax anyway.
There’s no need to limit land value taxes based on density as that’s what’s giving land its value.
With the property if the tax is say 0.2%. An acre of farmland worth in rural Idaho worth 20k would be assessed as being worth 20k in a land value tax and an acre of swamp might be worth 1,000$. Meanwhile an acre in Manhattan might be valued at 200 million, and the ~5 orders of magnitude difference in taxation would therefore apply dramatically different results.
The farmland’s 40$/year in taxes isn’t pushing anyone to sell, the swamp’s 2$/year in taxes is irrelevant for most people. But eating 400k in taxes on a manhattan parking lot is definitely pushing someone to be more productive with it.
> The farmland’s 40$/year in taxes isn’t pushing anyone to sell
I don't think that's an easy assumption to make. Cost of living, average income, and average plot size are very different in rural areas. I don't know Idaho so I can't speak to land value there, but I can say farmable land in rural Alabama goes for between $1k and $6k per acre depending on the land. If you really want to farm it for anything more than a homestead, 40+ acres is a minimum IMO. On the high end that works out to $480/year, but with an average income in the area closer to $25k/year that number isn't insignificant when its a tax just for the right to continue to own land I already bought. Add to that the extreme challenge of even breaking even in farming today, I'd be impressed if anyone farming 40 acres in rural Alabama could reliably turn $25k in profit each year.
Related to that while we're at it, what is the government's justification for taxing the value of land I own outright? Are we classifying land and property ownership as a privilege rather than a right? And in a rural area where land isn't changing hands as frequently and farmland can often sit for sale for months or years, how does the government accurately assess value? In my own experience land value in rural areas is only really adjusted when new structures are built or a specific parcel changes hands, but maybe that is handled differently elsewhere.
> what is the government's justification for taxing the value of land I own outright?
In the 1970's a group of people decided to setup a micro nation on a small unclaimed island. A nearby country Tonga seeing they where not protected by another state invaded, so ended the micro nation.
Ultimately it's the US governments providing a military and police force that causes a piece of paper to have any impact on who controls a piece of land. Such services require payment. Though we charge for local services ie schools, EMS based with property taxes and protection FBI/Army based on people (income tax). Historically this favors land owners, but we could swap in the future.
By favor I simply mean the property tax level required to support a trillion dollar defense + VA + courts + police etc budget is larger than the current property tax rate. And without that type of spending owning the deed to some property would be pointless.
Obviously we could lower defense spending but that's a separate question than simply the justification for property taxes.
> what is the government's justification for taxing the value of land I own outright?
Well, where I live (which is not in the USA) value-based land taxes go to the municipality and the school board. They pay for municipal services I benefit from: fire, police, EMTs, road maintenance, waste collection and processing, recreational facilities like a park, a library, and a swimming pool. Also schools, but that gets more complicated since some funding for education also comes from a higher level of government which collects income taxes.
Now mind, I live of 25 ha of swampland. But I get excellent value for my land-value-based land taxes.
For land assessment, many countries or municipalities assess it regularly. In my country (New Zealand), most city councils re-assess land value and improvements value every three years (and charge council rates based on them).
Its probably more of a rural issue, but assessing value can be difficult when there aren't enough recent comps since the last major economic shift.
I live on around 80 acres (30 hectares?). Our land is a bit unique in the area, and in general there hasn't been a single piece of land sold near us since before the pandemic and all the economic change that came with it. I don't know how the county could possibly know what our land is worth until something similar sells on the open market again.
I just worry if there are valuable trees on a piece of land. It would be unfortunate for someone to own, say, 10 acres of land with redwoods on them. If the wood is valued at a ton of money, that would encourage them to chop it down.
Yes - I think any such system should at least be restricted to urban areas (I’m not sure I’ve seen it proposed otherwise) and you’d need some careful work to have credits for functional ecosystems without having people try to scam it by claiming that the koi pond & tree on their mini golf course makes it a wildlife habit after a duck is spotted there.
I'm not sure why a tree would not be considered a functional ecosystem. Perhaps giving incentives to people growing even individual trees is the thing to do. Otherwise people without trees are just freeloading of someone else's property.
That’s why I said care. A tree as part of a larger garden in an area where insects and animals can reach it probably is good, but a palm tree in a sterile concrete swimming pool zone is unlikely to help and putting in a ton of invasive plants could actually be a problem. Ideally the incentives could be set based on support for native flora and fauna to discourage attempts to game it. If it’s linked to a tax cut, you’ll see every possible bad faith interpretation tried at least once.
The point of land value tax is to charge the same taxes on an empty lot as to a building close by on the same sized lot. Under regular property taxes a speculator might buy a building, tear it down, and sit on the vacant lot for years, as a vacant lot is worth less and so lowers their taxes. With a land value tax they pay the same money either way, which may be higher overall - the general expectation is denser cities would set the tax higher to encourage land to be put to more productive usage - taller buildings, ground floor retail to go with the apartments or office space, etc.
Perhaps this isn't the value of the land as you would like to define it, but rather a way for local government to encourage land be put to more productive usage for everyone who lives or works nearby - without dictating exactly what that usage might be.
The problem with your comment is that you're appealing to a phrase, "land value tax", that isn't original to you. The definition you want to give to it is not compatible with the definition that everyone else uses. (And indeed, isn't even connected to the concept of "land value", making it unclear why you'd want to use those words.)
This allows you to avoid the logical inconsistency in what counts as land value that most proponents commit, at the minor cost that nothing you say has any meaning. What happens when I try to respond to your new point of view and you reply that, actually, you mean something different by "money" than what is normally understood?
What would you think if you voted to establish a "land value tax" and the tax that was put in place comported with the ordinary definition, instead of yours?
Land value tax already has a specific meaning as a class of tax systems. If it's poorly named from your point of view, I'm sorry - but I had nothing to do with the naming.
> Land value tax already has a specific meaning as a class of tax systems.
Yes, that's my point. Your use is incompatible with the existing use. You are not responsible for the conventional use of the phrase "land value tax", but you certainly are responsible for presenting your own ideas under the same name and acting confused when people assume you're using the ordinary sense of the phrase.
You are assuming that all real estate owners are paying taxes.
Also, in blighted areas buying improved land may actually be discouraged by LVT because of demolition costs. Thus vacant land should be more valuable than improved land. Can you resolve the paradox?
Two identical pieces of land, both pay the same in taxes, one requires more work to improve it (as it needs a tear down first). So that piece of land will sell for a lower price than its neighbor.
95+% of the value of land in LA is because it's in LA not because it's on the coast. Just compare land costs vs various properties ~1 mile from the ocean in Florida or Texas far from cities.
Meanwhile you can an awesome spot in central WV with a nice stream an a scenic waterfall perfect view for a family home. But it's not worth much because it's far from restaurants, office paying six figures etc.
That seems like a strange definition to me. It's clear that people are willing to pay higher prices for land with amenities nearby, so by definition the value of the land is increased.
I think wires are getting crossed here on the "useful" or intrinsic value of land versus the market value. The GP was arguing that the land value is separate from outside considerations like amenities.
People argue this over things like gold as well. IMO at the end of the day its impossible to tease apart anything other than the total market value, and I think that's where you are at as well sticking to the land's total market value.
But presumably at least some of the land owners are already paying more through paying for the presumably private amenities. Hence the fairness argument falls at least partially.
Taxation is not about fairness, it's about raising revenue for the rather discretionary spending of the government.
> Is there a clear way to guard this system from building higher and higher economic centers
Sorry, is this a bad thing?
On the social side: In the current system, poor people are forced to live in ghettos and spend 2 hours a day on a round-trip commute. It's too expensive to live near their work. If we had a land tax, the rich enclaves near the city are now financially incentivized to open up their public schools and areas to poor(er) people by building vertically. The current incentives point in the opposite direction.
On the environment side: We will have less sprawl, and by extension less environmental damage. It requires less concrete, less energy, less roads, less driving, less shops, less train lines, etc, to serve a dense area, on a per-capita basis. You are however correct that natural reserves are a public good, technically speaking, and an efficient land tax system will need to account for public goods in its implementation. This is an important implementation detail that I'd defer to economists.
> Related to that, what's the solution for infrastructure and resource requirements?
Use the revenue from the tax to build infrastructure. Obviously it can't be an overnight thing, but we can do it over a decade-like time horizon.
Both of these scenarios are a gamble and not guaranteed.
On the social side: the gamble is that social growth will outpace the increased economic pressure. Meaning, you need the new vertical growth to create opportunities faster than it increases prices further in the area. A land tax alone wouldn't pull people out of poverty, create affordable housing, or open up public school. Those are all just potential avenues for the city to develop, not guarantees.
On the environment: cities aren't isolated enclaves. Resources needed to build, maintain, and feed the city all come from the outside world. The more you build up the more steel, concrete, glass, energy, etc is needed. The more people packed into the city the more food you need to ship in and waste you need to ship out.
Sprawling low density cities consume resources too. Mass transit is less effective, so more people must buy and drive cars. Roads and highways are wider and more extensive. Cars need storage at the origin and destination of every trip, so homes need driveways or garages and businesses need parking lots. Other infrastructure must expand too: power lines, water/sewer pipes, communication wires, and so on.
One million people would need about the same amount of food/energy if they lived in 1,000 sq. mi. as they would if they lived in 100 sq. mi. But the cost per person to house and transport people in a dense city is lower than in a sprawling one.
> On the social side: the gamble is that social growth will outpace the increased economic pressure. Meaning, you need the new vertical growth to create opportunities faster than it increases prices further in the area. A land tax alone wouldn't pull people out of poverty, create affordable housing, or open up public school. Those are all just potential avenues for the city to develop, not guarantees.
There are a lot of ill defined and bizarre things here. What is "economic pressure"? I have never heard such a term before. Why would there be "price increases" (inflation)? I have never heard anyone serious posit a link between density and inflation. It's the exact opposite because economics of scale and scope can deliver services more efficiently. Why shouldn't a land tax contribute towards "affordable housing" when the economic logic predicts it will have a deflationary impact on housing costs? Why do you think I'm saying that a land tax will "open up [new] public schools"? I said there would be a change in incentives away from excluding poor people from your local school catchment area, which has historically driven local resistance to upzoning. Honestly, it sounds like you should read up on basic economics before you form these opinions. The subject matter is primarily economics and such basic knowledge is a prerequisite to understanding the rationale behind one tax or another.
> The more you build up the more steel, concrete, glass, energy, etc is needed.
No, this is forgetting that you have the same number of people in either scenario. It takes more resources to build 1000 single detached homes (and associated roads, train stations, shops etc) than 10 apartment buildings with 100 homes (with less roads, less train stations than the former scenario).
Economic pressure is a pretty common term, I'm a little surprised you would be diving so deep into potential economic impacts of a new tax without knowing the term. Here's a good definition and explanation [1].
Price increases are possible here because it all depends on what is built on the currently vacant lots, or on lots that are cleared when the old buildings no longer make economic sense with the new tax. The example given early in this thread was a car wash versus a new biotech facility. A new, expensive biotech facility wouldn't help with affordable house at all but it would bring in more individuals with higher salaries. Prices could also go up if new construction further increases the city's density or population - more people means more demand and higher prices unless supply increases faster.
Economies of scale aren't a given simply because a new land tax would change building incentives. Economies are much to complex for that and can't be boiled down to a single lever or knob. Changing one thing can have a much different outcome than predicted.
I'm not sure why you would expect a land value tax to have a deflationary impact on housing. There's no direct link between a land value tax and an increase in affordable housing, meaning we can't assume there will be more affordable housing created. What we do know is that land owners now have a new tax to pay, and if you are renting out property on the land you will pass a large portion of the new tax onto them in the form of rent increases. This is literally a concept covered in the intro to economics course I took 15 years ago, if you aren't aware of how businesses handle new taxes I'd recommend you read up on it before pushing too strongly for a new tax.
I also thought this was bad until I gave it some thought recently. I'm not saying that I'm out of that camp completely because I think that the approach in some cases leads to overspending and may increase the overall cost in real, not just nominal, terms.
However, bonding out projects does spread the expenditure in time, more directly charging the future users for infrastructure they use. Sure you could recoup the costs through user fees, but then you're effectively borrowing money from the current tax base, so "bonds" by another name.
On the parks/“natural land”: would you rather land exist as an empty razed dirt field for speculators to wait to sell, or given back to the city?
Taxing the land value means there’s no incentive to own land that won’t be productive. The city or municipality can guarantee land it owns can have natural growth on it, whereas when private individuals own it the state can’t really stop the land from transforming into a parking lot.
As to how to value the land: the market decides. What is the price for the land, if you took away all existing improvements on the land itself? There is usually enough vacant similar land around where this is pretty easy to figure out.
The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
> On the parks/“natural land”: would you rather land exist as an empty razed dirt field for speculators to wait to sell, or given back to the city?
That seems to be jumping to an extreme end, that someone owns an empty plot of land that has been cleared and destroyed to bare, dead dirt. My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land. My earlier caveat still exists, maybe this isn't a concern in dense areas though it would add some blockers for anyone interested in turning developed land back into a park.
> Taxing the land value means there’s no incentive to own land that won’t be productive.
One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
> The city or municipality can guarantee land it owns can have natural growth on it
I can't quite put my finger on a better way to describe this, but it just feels off to me that only the state would be able to allocate land as parks, natural space, sanctuary, etc. Obviously what you are proposing wouldn't block anyone from doing this, but it would create incentives that make it unlikely.
> As to how to value the land: the market decides.
The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it? If so that is at least predictable I suppose, that would be helpful so I know what my future tax burden would be.
> The government can charge for services like upgraded electricity and keep the land value low, or they can bring the electricity to the land and count “lots of electricity available” as part of the value of the unimproved land.
I wasn't just asking about how enough power gets to the land - not sure why the government would be responsible for that unless government and industry merge. I was meaning to ask with regards to the environmental impact angle. Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements. Where does it come from, and how do mitigate the environmental impact?
If anything it's not extreme enough. Consider how much area in city downtowns is given over to paved-over parking lots that are just left to sit there rent-keeping for years. That's worse than just dirt fields, because at least the dirt fields can support life!
> My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land.
...if the taxes are high enough to incentivize them to sell.
If you have an undeveloped plot of land in a city where land taxes are high, you should be incentivized to either sell that to someone who will make use of it, or donate it to the city to serve as a public park, rather than getting to have your own private green space somewhere that space is at a premium for everyone else.
> If you have an undeveloped plot of land in a city where land taxes are high, you should be incentivized to either sell that to someone who will make use of it, or donate it to the city to serve as a public park
Why must land goes used? Is the assumption that we must fully utilize every inch of land in a city, regardless of what people living there or the land owner wants?
Building on as much usable space in an already high density area can and has had downsides that seem to get overlooked in this thread. Higher density means more traffic, higher demand on infrastructure and utilities, and the need to bring in even more resources from outside the city and send out even more waste for someone else to deal with (to name a few).
This assumption that taxing land high enough to make sure that none of it is left undeveloped unless the city owns it is begging for runaway problems, unless these other considerations are factored in. Doing so almost certainly means not having the tax, as the goal of more dense development competes with the other concerns.
> That seems to be jumping to an extreme end, that someone owns an empty plot of land that has been cleared and destroyed to bare, dead dirt. My concern is that the same incentive pushing one to sell a pile of dirt would exist for someone owning an undeveloped, natural plot of land. My earlier caveat still exists, maybe this isn't a concern in dense areas though it would add some blockers for anyone interested in turning developed land back into a park.
If you're not doing anything with land in an in-demand area then it creates an incentive to sell it, yes - that's pretty much the point. Realistically, undeveloped lots in in-demand areas (i.e. cities) are not nice natural landscapes - they're dirt yards at best. It takes a lot of work to maintain a park, and frankly putting a tax on land is more likely to return some of those unused lots to the city who could then open a public parks there, than discourage someone who was maintaining a park privately.
Even in the country, land that's completely untended is rarely pleasant, although in places where land isn't worth much, a tax like this won't make much difference either way.
> One concern I have is the expectation that all land should be optimized for productivity. That goes against my own view on land, I don't think we humans have some innate right yo extract all available value. I also don't like that this likely goes against concerns of environmental impact.
The idea that someone owns land like chattel and can do whatever they want with it is surely worse from that point of view. If you're taxed on the value of your land, you're incentivised to use as little as possible, and leave the rest for the public or nature - e.g. if you can build a factory in half as much space, you've halved your tax bill.
> The market only decides on my land's value when I sell it. Until then, is the land valued at what I paid for it?
No, there would need to be an assessment process, although perhaps backed by a market mechanism (i.e. if you think the assessment is too high you can ask the government to buy you out at that amount, or some such).
> Taxing to create incentives to build as high-value improvements as possible would inevitably lead to a drastic increase in a locality's energy requirements.
It doesn't create a new incentive to build more unless the more you're building is valuable. You can densify by building more in the same space yes, but you can also densify by building the same in less space, and that's what saves you money so presumably that's what people will do (after all, if building more was profitable, wouldn't people already be building more)? For the same amount of economic activity, you'll require the same amount of energy, just in a smaller space, which again is likely to be more efficient and better for the environment (the same number of factories in half the space means fewer cables, less transmission losses etc.).
Now of course if you make business more efficient then maybe you end up with more business, but isn't that a good thing? Again it only makes sense to build more if there's demand for it - otherwise you're better off staying small and cutting your expenses. Land value tax might even help encourage people to not expand prematurely - if doubling the size of your warehouse means paying more tax, maybe you'll put it off a few years until you're actually going to use that space.
> frankly putting a tax on land is more likely to return some of those unused lots to the city
This seems like a really dangerous justification, and frankly one that would be a complete no-go for me. You just made it clear that the goal, at least in part, is to make a tax so high that it more often goes unpaid and the city can take the land away from the land owner. They might as well skip the game and claim eminent domain.
> You just made it clear that the goal, at least in part, is to make a tax so high that it more often goes unpaid and the city can take the land away from the land owner.
Have you ever lived near an empty lot or abandoned building in a city? Yes, I want those going back into circulation, whether via the owner doing something with them, selling them to someone who will, or it falling to the city. You do know we're in a housing crisis? There simply isn't enough space to go round, something has to give; I'd rather see those absentee landowners who don't care enough to do the minimum lose their stuff than have hard working people living n to a room like we do now.
> The city or municipality can guarantee land it owns can have natural growth on it
Only if the city/municipality has money to do so. A degenerate example is where the city/municipality own all of the land and thus has no real estate tax base. You may think that this is ridiculous, but check out some blighted areas around the US and you'll see plenty of local governments that have a very shallow real estate tax base reminiscent of the "ridiculous" argument.
Lol, that's ridiculous. You can't have a city that's full of biotech labs and nothing else. But, according to your logic, that's what would happen. You're not "preserving" anything. You're encouraging every last square meter of ground to be strip mined for whatever "value" one can get out of it.
> For example, in my city we have a carwash with its improvements valued at $400,000 and a biotech building with its improvements valued at $275,000,000.
That's well and good, but, you know, people still want to wash their cars, and probably don't feel like driving 30 miles out of town to do it.
The pro-land value tax response is that, if someone really believed people highly valued washing their cars in the city, one could open up a car wash on expensive land. If people really don't want to drive 30 minutes but also really want to wash their car, they can pay more to use this expensive in-town car wash. It is of course possible that the economics wouldn't make sense to support such a use of urban land in the densest/highest value areas.
I'm not agreeing or disagreeing with you, but your comment reminded me of this tax loophole, which fills me with rage everytime I see a new self-storage style business being "constructed."
>Relocatable storage units are portable and moveable. Therefore, they can be classified as equipment instead of as a building or permanent structure. Not only does this help self-storage operators bypass the lengthy process of permitting and zoning. But it’s also a great tax advantage when classifying these convenient storage units as equipment. In most cases, the units are eligible for 100% deduction after just one year.
When houses this are you enraged at the storage facility or the legislators and tax authorities?
There are so many loopholes and games that can be played with US taxes that I've gotten to the point where I can't blame anyone for trying. We need a much simpler tax code that can be easily understood and enforced IMO.
In other words, with taxes I ended up landing on "don't hate the player, hate the game"
When the wish for a positive solution doesn't pan out, people turn to the spiteful negative. Turn up the pain on others, that will solve things. Never mind that many real estate tax regimes already include a component based on the land value. Presumably to LVT enthusiasts those just aren't high enough. When the right level of pain has created the perfect incentives, wasteful duplexes will vanish and high density arcologies will spring forth out of the ground!
The real root of the problem was touched upon by the OP - the past two plus decades of ridiculously low interest rates as set by the Fed in support of one talking-head crisis or another. Borrowed money can only be invested in things banksters can understand, which given their limited imaginations is chiefly single family beige spec homes.
> Never mind that many real estate tax regimes already include a component based on the land value.
It's strange, because almost all property tax systems in the US are based on ad valorem taxation.
I'm personally opposed to the concept as a matter of fundamental principle. Society can't function if people's property rights are constantly under the threat of being usurped by someone whose intended uses might generate more tax revenue for the state. People should have a right to use the property they own in the way that generates maximum value for them -- that's the point of property ownership. It's also why real-world ad valorem tax regimes usually include homestead exemptions or something similar.
Some of these LVT proposals amount to just turning the whole of society into a tax farm, and suppressing all variation and outlier use cases in the name of maximizing tax revenue. Georgism is fundamentally flawed in its precepts, and would result in a rent-seeking political state acting as a monopolist landlord.
> Georgism is fundamentally flawed in its precepts, and would result in a rent-seeking political state acting as a monopolist landlord.
Why would a democratic society tax itself needlessly? LVT is by definition limited to a certain proportion.
The entire thesis of my OP is that the last 200 years of protections of property rights are now quickly leading to a "rent-seeking state by a plurality of various oligarchies". At least the political state uniformly distributes power instead of dividing the country between land/home owners and renters.
> People should have a right to use the property they own in the way that generates maximum value for them
A LVT only encourages you to do so efficiently... you could easily move to a rural/undesirable area and have all that freedom and now much lower overall tax rate. If you aren't paying the LVT back to society you are by definition depriving someone else of the very freedom you wanted to protect. It's a fantasy to think that everyone can have the property freedoms you describe.
> Why would a democratic society tax itself needlessly? LVT is by definition limited to a certain proportion.
There is no such thing as a democratic society, only democratic states, where the state is a single institution within society, not some distillation of the whole. Political states are administered by particular fallible humans, operate under a complex of incentives that is not necessarily aligned with the interests of the surrounding society, and operate under processes that are often subject to manipulation by factions with ulterior motives.
The examples of democratic political states acting in ways that are either unrelated to or even antagonistic to the presumed interests of the societies they operate within are endless, and arguably much more prevalent than examples of markets producing outcomes that are not aligned with the interests of their particpants.
> The entire thesis of my OP is that the last 200 years of protections of property rights are now quickly leading to a "rent-seeking state by a plurality of various oligarchies".
I'd attribute that outcome to the last 200 years of erosion of property rights, largely by well-intentioned people making severe mistakes on account of failing to reconcile theoretical propositions with concrete reality.
It seems very bizarre indeed to recognize the problem of a "rent-seeking state by a plurality of various oligarchies" and to propose as a solution that the very state in question should act as everyone's de facto landlord.
This argument sounds backwards to me. Under the common ad valorem property taxes, the tax you pay goes up if you invest in increasing the value of your property, which punishes you for improving it and incentivizes leaving your land fallow. Under a land value tax, building on your land does not increase the tax you pay. That’s the point!
> Under a land value tax, building on your land does not increase the tax you pay. That’s the point!
The Georgist LVT is much more bizarre than that. Your taxes don't go up as a result of the improvements you make to your land, but rather they go up as a result of the improvements your neighbors make to their land, if such improvements lead to increased perceived market value for the entire area.
Ad valorem taxes already do this to some extent, but are tempered by assessment rules and annual caps on increases, to prevent people from losing their own property just because of external fads or the subjective feelings of others.
I guess I just don't get what benefit the LVT proposals are bringing to the table. Ad valorem taxation already exists, it's already well-developed enough to have safeguards against the worst-case outcomes, and all the Georgist LVT would do is reinvent the wheel, but this time using design principles anchored in a fundamentally incoherent ideology that brings along a lot of other dangerous implications.
I have to ask what real-world problem any of these proposals are a solution to, because from my vantage point, I don't really see one. I see devotees of an abstract doctrine going out of their way to contrive scenarios to apply their doctrine to.
I can’t speak for Georgists, but one clear problem I see worth solving in my city is empty lots downtown. And decrepit, vacant commercial property. Our city has a housing crisis. Speculators own these lots on the theory that they’ll be valuable later. Since property taxes don’t go up unless you build something, they don’t have any costs associated with this ownership, even as the need for development has grown more acute. On the other hand, significant property taxes are imposed on anyone who actually builds or significantly improves their property. You tax what you want to discourage. Our current tax system discourages development in general. LVT addresses this problem.
In short, ad valorem taxes land+improvement and LVT just taxes land. Various tweaks that have been made to ad valorem systems could also be made to LVT and don’t constitute a difference between ad valorem and LVT.
The objections you raise about how your neighbor’s development raises your taxes apply to both LVT and ad valorem tax regimes.
Out of curiosity, do you live in a high snow area? I wash my car pretty regularly once the road salt starts coming out, most car washes here do some manner of undercoat to help with the salt rust.
can you please elaborate on this? i don’t understand exactly. “The real business of car washes is real estate, it's profitable enough to get 3-4x leverage with a low interest loan”
The OP asserts (I agree) that the real profit from running a car wash is not the daily turnover of car washing, but the capital appreciation of the land the car wash sits on. The part about leverage assumes you are able to get a loan/mortgage to purchase the land the car wash sits on. In effect you are using the car wash as a reason to justify a mortgage you wouldn't otherwise be able to get for real estate speculation alone.
I suggest getting an undercarriage wash once a year at the end of winter if you live where salt is used on roads, to reduce rusting away of your chassis. Still just once a year so you can keep feeling pretty smug about not washing, but, you get most of the benefit of the wash, which is longer rust free body life.
It has quite an impact -- this is why it's much harder to find intact cars older than a couple decades or so in the north as opposed to the desert west.
> Rain and the occasional wet rag is good enough for a depreciating asset.
I don't think Brown Bear Car wash is taking a loss on $20 automated car washes. Also, Seattle has a rule in place that we can't wash our cars at home, so we have to go to an automated or DIY manual car wash if we want to wash our cars are all, making the business an essential here.
If they someday redevelop the car washes, they will just be replaced with a tall building that has a car wash on the first floor, well, when all cars are electric that will be feasible.
> another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses.
How are other businesses excluded from low property taxes? This is clearly unfair, and could be easier addressed by removing barriers instead of erecting new ones.
The other explanation for the mysterious presence of sprawling low-value business premises in extremely high demand neighborhoods is that planners zone for them explicitly to take up space so yuppies can't have it.
>this is just another instance of how low property taxes and the absence of land value taxes massively benefits low-value businesses
Thank god we haven't optimized that fully. This is how small businesses like local cafes, delis, bookstores, and "mom and pop" stores are able to survive in cities.
I wouldn't want to live in any capitalist shit-hole where land value taxes force high-value businesses.
I used to live in an expensive/touristy area that became more so over time, and it was annoying how every unique shop that closed get replaced by a fancy clothing store.
> This is how small businesses like local cafes, delis, bookstores, and "mom and pop" stores are able to survive in cities.
Nonsense. Those aren't the businesses that take up masses of land - hell, a lot of the best of those are run by people who live above the store, meaning the extra land use is zero. The businesses that benefit from a lack of land value tax are parking lots, drive thrus, distribution centres, that sort of thing.
How about starting with the actual argument to make it less rude?
>Those aren't the businesses that take up masses of land
Which is neither here, not there. They are still types of businesses gravely affected by high property taxes and land value taxes (the parent even spells it out: "low property taxes and generous loan terms" (...) primarily benefited small businesses, individuals, etc"), and are also what the parent calls "low-value business" (low monetary value, of course).
> They are still types of businesses gravely affected by high property taxes and land value taxes
Don't conflate two very different things. A business is affected by land value taxes to the extent that it uses expensive land (that's the point). A business that takes up zero land, such as one that can be run from the same building you live in, ipso facto pays zero land value tax.
>A business that takes up zero land, such as one that can be run from the same building you live in, ipso facto pays zero land value tax.
Local bookstores, delis, cafes, specialty shops, and so on, (a) use "expensive land", and (b) are not, usually, run "from the same building you live in".
I'm not talking about rural shops (those are a whole other thing, and die due to other reasons, like the economic decline and abandoment of rural areas).
I'm talking about beloved shops in major cities, replaced by expensive real estate getting them demolished to build whatever luxury mega-crap, and driving up rents contributing to gentrification.
> Local bookstores, delis, cafes, specialty shops, and so on, (a) use "expensive land", and (b) are not, usually, run "from the same building you live in".
Living over a shop like that is normal where I live, which is far from rural; I've been to many small cafes and similar that were clearly someone's (barely) converted home. Of course if you have dumb zoning it may make that impossible, but, uh, don't do that then.
> I'm talking about beloved shops in major cities
So what's over those shops if not living space?
> replaced by expensive real estate getting them demolished to build whatever luxury mega-crap, and driving up rents contributing to gentrification
"gentrification" is a spook. Making a place nicer is a good thing. The only reason nice places are unaffordable is because you build too few of them.
This doesn't make sense. There are tons of other business which will have higher day to day return and property appreciation. I don't think anyone was craving for car wash subscription and I don't know of anyone having car wash in their checklist monthly item. Those people exist for sure but not in that kind of demand that a town needs even two of them.
I think this is just another instance where private equity is creating imaginary business model of subscriptions and selling it to its investors. The money managers will get huge management fees and will disappear before the whole thing collapses in coming years. Meanwhile, they will run a lot of good and necessary businesses out of town.
It's hard to think of many businesses that require lower capital investment and maintenance than a car wash. The ones I see in my city that look like land banking are a big plot with asphalt covering it (don't even need to mow lawns), a few awnings with some plumbing for hoses and soap and other gear, and nothing else. Even a laundromat would cost more to set up.
These car washes are not simple, nor cheap. They aren't talking about places where you wash your own car, they're talking about the increase in automated ones.
I really don't get what this is implying, commuter cars are essentially self-cleaning. You're driving on roads where the worst that's gonna happen is some salt buildup in winter that isn't worth washing off in winter (and isn't rusting in winter) and then it washes itself off first rain of spring.
This feels like one of those iceberg tips where I'm really glad I'm not in the kind of social circle where having a spotless car matters at all.
I've driven four going on five cars to 200k miles having never gave any shits about car washes and haven't had any problems.
I think it’s pretty normal for people to want to take good care of things they’ve spent hard earned money on. Is driving a filthy car some kind of weird flex?
I live in the PNW where it rains pretty steadily most of the year and my car gets absolutely gross if I don't wash it once every couple months. Not dusty, I mean filthy dirty. Rain does not make the car clean, quite the opposite. All that water on the road getting kicked up brings muck with it.
I live in an area of the PNW where it snows and rains a lot during the winter, and rains more during the summer. Mud loves to stick to everything, and the Magnesium Chloride they use to de-ice roads loves to oxidize the frame of vehicles.
I have everything at home to clean our vehicles, but I can’t just run the hose during the winter when it’s most important because of the MgCl; so I’ll take our rigs to the wash if we are in town (nearest car wash is 60 minutes away) to clean the undercarriage and minimize rusting.
It doesn't get merely dusty unless you live somewhere very dry. I live in the PNW and it rains a good portion of the year. The car gets absolutely filthy during the rainy season.
If my shoes were that dirty, then heck yeah I would clean them. What a mess, it's easy to get your clothes dirty when the outside of your car is filthy. My kid's white dobok is especially sensitive to dirt on the car.
Yeah, it's probably a regional thing. Here in Colorado, most cars don't really get that gross. I take a hose to mine like 3 times a year and dry it with a towel and it looks pretty nearly pristine. They'll only get very dusty if you take them on dirt roads a lot, or keep them in a garage all the time without ever cleaning them. Ones kept outside will keep mostly clean due to the rain, with maybe a little bit of grime under overhangs, and some sun damage on the paint.
I'm perfectly happy to let them have this, I was just curious why someone would deliberately neglect basic maintenance. It's kinda foreign to me, and frankly I'm towards the lazy end of the motivation scale.
Fashion statement is actually a pretty good explanation, thank you.
I live in the UK, where it rains multiple times a week. I mostly drive on paved roads, not too much mud, roads are rarely salted.
Whether I wash my car or not, it changes nothing - the car will get dusty and rained on over and over regardless of what I do. When I first got my car I would wash it sometimes, but it's inevitably going to rain in the next day or so and return to exactly the same state. Washing it once a year is enough to remove any grease/carbon from the roads.
Why bother? I don't think it's actually "maintenance" if it doesn't maintain the car in any meaningful way.
> Why bother? I don't think it's actually "maintenance" if it doesn't maintain the car in any meaningful way.
As usual, it varies. Some outdoor environments can cause pollen/pinetar/birdpoop to accumulate and form a layer of weather-resistant plaque which slowly degrades the paint. Some indoor storage environments are open-air, which can lead to a stubborn buildup of oil/pollution/dust with a similarly negative impact.
Of course, there's also the general idea that, if you baby something, it'll last longer. Inspecting how the car looks on a semi-regular basis might lead one to noticing any number of issues -- a soft tire, a fluid leak, a faulty tail-light, etc. It's not a bad ritual to have if you rely on the good working function of such things.
With all of this being said, I don't exactly practice what I preach... Driving bores me and I'd rather pay someone else to do the associated maintenance even though I've been thoroughly taught how to do it myself. I very much belong to the "carwashes for thee and not for me" school of thought
If you live in an area where they heavily salt the roads washing is important to get all that road salt off of your car as it does speed the process of rusting. Neglecting to do this will result in rust spots on your body. Most of the comments here seem to be taking highly individual situations and assuming it must be the same for everyone.
Exactly. I paid a small amount extra for hydrophobic coating 15 years ago, and basically have never bothered to wash the bodywork since then, and only now are a couple of rust problems starting to emerge. Unless you bought a white car, as foolish a project as wearing white trousers, the everyday dust isn't very visible. I find myself manually washing the windows much more often, though, since there cleanliness actually matters.
I don't get it? When I wash my cars I like to go all out and clay them and wax them. And then the next morning there's a nice layer of dust. And the morning after that the morning dew has cemented that dust on.
Even a 3 year old car that has been washed twice a week at an automatic wash is going to look a lot worse than a 5 year old car that occasionally gets a good hand wash. The constantly auto washed car is going to be full of swirls and maybe even a screwed up antenna or spoiler or rear wiper blade because car washes like eating those.
Plus even the most aggressive automatic car wash isn't going to actually CLEAN a car. Even the laziest 20 minute rinse/soap/rinse/dry is going to clean a car better than an automatic car wash does. And if you use good microfiber towels ($13 for a pack of 36 at costco) and pretty much any microfiber sponge ($5 at walmart or whatever), and something like meguairs gold class wash and wax ($15 for a big bottle at walmart) you're set for at least 2-3 years.
Err anyway... "doesn't take care of their stuff" - I reserve that for people who never clean the inside of their car, people who ram into curbs and mess up their bumper getting out, and people who slam their doors into other peoples' cars.
Depends where you live. In Texas you want to wash occasionally and reapply some type of wax or you'll lose your clear coat in a few years to UV damage.
> There are four full-service car washes in town, with a fifth on the way; three are bunched up on a mile-and-a-half stretch of Route 14. Social media complaints about car wash overkill spurred town leaders to take action.
Four (or even five) doesn't sound that much? What's the actual problem here?
How is a local politican supposed to determine what is the correct density of any particular type of service within her juristidiction? Assuming all other laws and ordinances are being complied with, and that there is no actual "nuisance", why should a politician need to step in to regulate, rather than letting the market decide?
Last night I stayed at a hotel very close to London Heathrow Airport. There, on the Bath Road, there are (literally) dozens of hotels, one right next to another. This is a feature not a bug! Apparently, there is lots of demand for hotels at that location, which isn't exactly a surprise. If the market were too small, the weakest would fail, right? Right?
> If the market were too small, the weakest would fail, right? Right?
I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent."
> why should a politician need to step in to regulate, rather than letting the market decide?
Because the market doesn't price in externalities. Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs.
It's a fair question to ask if you're building too many of a certain service, especially when the ones that fail leave behind abandoned husks and unemployed people. Ya know, the people that the local politician is supposed to help. Local leaders should be at least thinking about these questions.
The ones that don't get torn down and replaced with something else. no big deal so long as you allow people to try things and fail.
The irrational market isn't a problem for politicians it is for investors: people with money, let them learn their lesson. As for the jobs lost, at least the rich investors paid them while the wash was running, they will move on. The jobs are not high skill so no real loss when they are gone.
This ignores the opportunity cost of a more productive business throughout the time period of the low efficiency business: one that may hire more workers and provide more value to potential customers in the locality it serves.
Under this comparison, the foolishness of an investor has resulted in a comparative net loss for themselves and the community.
And late stage capitalism with boom/bust cycles is good for the community and customers too? At least for the 1% it's doing great.
The point is that a "Local" government deciding on how many of one kind of business shows up in one spot isn't optimizing from the top (you could consider that the state or federal government). Instead you could consider it optimizing it from the middle. The local people are electing officials and having them implement their will. Trying to call that communism would be... odd.
The way most municipal councillors in English-speaking countries optimize everything to retain homeowner's real estate value while keeping property taxes low doesn't exactly imbue confidence.
Nothing else solves that problem either. Sure you can pass the buck from investors to someone else, but they also don't know what is correct. Everyone is guessing - they often have various evidence but it is never complete enough to be 100% confident in your decisions and so there is always someone guessing.
The difference is here the people making the guess are also taking on the risk of what if they are wrong. When someone else makes the decision they don't have the risk and thus less incentive to get it right. Also that "someone" making the decision tends to be making a lot of decisions and so are unlikely to spend enough time researching it, or alternatively since they don't feel any pain they will spend far too much time on research. (there is no objective way to say what is enough time in research)
Yes, and the entire point of capitalism and why it succeeds so well is that the individual profit motive is enough for investors to, in aggregate, not invest in low efficiency businesses.
As opposed to a central planning model in which a foolish planner can cock up the entire thing because they are usually far less accountable for failure and recieve little reward for success other than continued survival.
I wish people wouldn’t say that any market interference is communism as though the US isnt Keynesian while simultaneously pretending china is even close to communist.
You should live in a country without a culture and legal framework for competitive markets, or try to talk to someone first hand who has such experience. I suspect you're a good person who just misunderstands how markets and individual rights interconnect.
If the local government can simply declare "there are enough X, no more are allowed" then the rich, powerful and well-connected elite can solidify their privileged positions forever. Raise prices, lower wages, provide poor service - it doesn't matter, their buddies on the city council will guarantee no one is allowed to open a competing business.
If you want to protect the lower class and middle class, you don't want to hand the elite a tool to turn their business into a local monopoly for the price of a campaign contribution.
Right, I get it, monopolies are bad and this is something I completely agree with. At the same time those well connected elite will commonly band together to create monopolies via predatory pricing, so it turns out that no matter what way you do it you have to have regulatory markets that seek to benefit the consumer.
The elite have all the tools they need already, they always have had that. Representative government is the modern change that keeps them from dominating everything.
I’m not a free market maximalist. I just don’t see how some random local politician is more qualified to determine how many car washes are permissible than local business owners who have bought and permitted car wash businesses.
And for whatever it’s worth there aren’t nearly enough car washes where I live.
A politician may be more or less qualified than the business owner, but they don't have the obvious conflict of interest and are more likely to act in the interest of the locality as a whole
Isn't it? Elections are for political institutions, so what you're describing amounts to having political control over land use decisions. OTOH, the market is another, much more direct expression of the intent and values of the local people, so why not just stick with that?
> amounts to having political control over land use decisions
This exists in America, in ways that have generally escaped the label of "Communism". The most basic example of this most will be familiar with is zoning laws, but there is significant precedent otherwise. There will always be a gradient of control, and claiming that a singular government action in expansion is therefore communist is not intellectually honest.
s people object to zoning laws for exactly the same reason. Have Jacobs won renown for pointing out exactly how zoning laws undermined the emergent nature of cities, and destroyed value for their residents. Whatever label you call it by, the critique is the same: central planning is far worse than organic emergence.
Markets have failure modes, but not nearly as many failure modes as bumbling politicians thinking they can decide for the rest of society how many car washes belong in their town. Oh no, who will ever do anything about the abandoned husks and unemployed people left behind when we let people build too many car washes!? Let’s just make it borderline fucking illegal to build anything at all and let every busybody in the world get a veto before anyone sets up something as potentially hazardous as a car wash.
The irony is that car washes are the result of regulation in the first place because if you eliminated parking requirements, ridiculously low insurance minimums etc there'd be a lot fewer cars that needed washing.
It's kind of odd to frame intervention in anything car related as an intrusion on the free market when it's one of the most artificially and politically constructed sectors to begin with.
This looks like a claim that car owners should be required to have even more insurance, which seems inconsistent with your claim that widespread car ownership is the product of onerous regulation.
All in all I think this is a pretty glib take that I’ve seen enough times that I’m bored with it. Suffice to say that most of the regulations you’re complaining about mostly postdate the widescale adoption of cars. Nobody was instituting parking minimums or insurance mandates ahead of time in order to encourage car ownership; instead, as soon as car companies figured out how to make cars cheaply enough that even their own factory workers could afford them, governments made regulations in response to the overwhelming number of cars that everyone ended up buying.
But that’s a fundamentally different mindset. Back then, living in a democracy where everybody was buying cars meant that the government’s job was to notice that people wanted to drive cars and work to accommodate that. These days, people think the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do.
>which seems inconsistent with your claim that widespread car ownership is the product of onerous regulation.
how is this inconsistent? Insurance raises have to be approved at the state level, again this is not a free market, and for political reasons many states have kept insurance rates at decades old price levels. Insurers actually lose money in most places because they cannot raise prices. (https://www.economist.com/united-states/2024/01/18/why-car-i...) and as a result often health insurance and other institutions have to cover the cost, which is to say the public pays.
Just to see how absurd this is. Minimum liability in a lot of states is 50k. In Germany and much of Europe minimum liability is seven million.
It's the governments job to take externalities into account and design urban environments rationally, not to coddle car obsessed consumers and have everyone else pay for the cost they impose on others and the environment.
> Just to see how absurd this is. Minimum liability in a lot of states is 50k. In Germany and much of Europe minimum liability is seven million.
Without regulation, minimum liability would be zero.
> It's the governments job to take externalities into account and design urban environments rationally, not to coddle car obsessed consumers
Finally your true colors come out. You believe the government’s job is to decide for us what we should want and then shape the regulatory environment in such a way as to shape our behavior, because they know better than we do. You’re the authoritarian trying to redesign society. Just own up to it and be honest with yourself instead of cynically and disingenuously trying to argue based on principles you don’t even hold.
> Sure the market will figure out which car washes live. But what about the ones that don't and the people who subsequently lose their jobs
There's a lot going on in your statement to dig through.
The article specifically says these car washes barely add jobs.. but let's ignore that.
When a business opens and starts to hire people, there is no guarantee it will exist long term. When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job.
Are you proposing we shouldn't allow "risky" business to start and hire people because there is no certainty they will be around in 1-5 years? Of course that doesn't make any sense.
If a business fails, people will lose their jobs, but that is not a reason to prevent business from starting. In fact, if we did prevent them, those jobs would have never existed!
> When a person applies for a job, they need to do some due diligence researching the business to see if it sounds like something that will be around as long as they want to have a job.
This is a nitpick as I agree with the rest of your comment, but most people are absolutely not qualified to make that assessment. (In fact, it's debatable whether anyone can make that claim with any amount of certainty. Even the most successful investors are often wrong.)
Most people do this. People will work for a brand or company that is well known with a history over something new with everything else being equal. People will ask friends who work if company is a good place to work.
Yes. And for fast food.. coffee shops and many other minimum wage jobs. Someone is applying to McDonalds over Big Jim's almost edible meat 9 times out of 10.
This needs a source. If you just mean that this is happening because far more people know about McDonald's and are therefore less likely to know that Big Jim's is hiring, then sure, but I don't buy the idea that 9/10 people working low wage jobs are actively thinking about the relative stability of the employers they apply to.
> People will ask friends who work if company is a good place to work.
I 100% agree with this, but that has nothing to do with what we're talking about.
It sounds like you are saying it would be better for those people to have never been employed (i.e. some of the carwashes never being built) than employed for a while and then losing their job if the carwash goes out of business.
Consider whether the alternative to a car wash being built is leaving the land idle or some higher-value business using it. Part of the problem is that failed businesses often leave a durable footprint - if your car wash fails, in many places it’s just going to sit idle while the land owner tries to find another car wash or someone with enough budget to demolish the old buildings and clean up any dumped chemicals. It probably will happen unless the local economy has completely cratered but it might take a decade and in the meantime it’s just sitting there dragging down the value of adjacent properties.
The entire point of working for a living instead of e.g. subsistence farming is that you can simply switch jobs if it's not going well.
As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere - probably overcommitting to expenses based on assuming that your income is guaranteed.
The mindset that someone should be stopped from even offering a job because it might not be forever is completely ass backwards. It's never forever, act accordingly.
Not an expert on the financial market, but this article may be worthwhile to consider, 'Actually, Most Americans Can Come Up With $400 in an Emergency' [1]
That's due to poverty... calorie dense, highly processed food is cheap as hell due to mass production efficiencies, but high quality food? Groceries? Ain't no one got the money for that, or they live in "food deserts" [1].
For poor kids, it's even worse, because all they have other than sub-par school lunches is whatever microwave meal their parents can afford not just financially but also time-wise. Cooking for a family takes time and energy, both scarce when you gotta work two jobs to make ends meet.
This completely ignores issues like food addiction (which is a hell of a drug - some of the, say, top obesity candidate genes are expressed in brain), an overabundance of sugar in the diet, and lack of anything that resembles a decent food culture. It is absolutely possible to maintain a quick and healthy diet on low budget - there are infinite reddit threads and substack articles on the topic.
> and lack of anything that resembles a decent food culture.
Yep. I mean, I'm European so I'm a bit biased - here over the pond, we associate American food culture with "tons of fat and sugar".
> It is absolutely possible to maintain a quick and healthy diet on low budget - there are infinite reddit threads and substack articles on the topic.
It is, if you have the resources: a car to get to a place where healthy food is sold, most especially, and time and energy to cook.
It simply is not possible to drag oneself out of poverty by the bootstraps. Most of these "live on a frugal budget" peddlers are highly privileged: they can afford to buy in bulk when stuff is on sale, they can afford to store bulk supplies without them going bad, they can afford to drive a lot just to get the best deals. Take these three points out of the equation and most "frugal" influencers get revealed as patronizing scammers who I believe have zero right to exist and bullshit others on the Internet. And the politicians who reference to these bullshit peddlers should be thrown into jail and be served nothing more than dry bread and water for a few weeks, just to get some humility into them.
I'm sick and fucking tired of all of that. Fix poverty instead of patronizing those who are in direst needs.
> They can afford to buy in bulk when stuff is on sale, they can afford to store bulk supplies without them going bad, they can afford to drive a lot just to get the best deals.
In my experience, none of those three are that key at food cost cutting anyway. The key is choosing what to eat. If you make food at home out of cheap, nutritious ingredients, you will do well. The bag of beans that is only 1 lb and is at the expensive convenience store, is a much better deal than the 40 lb Costco crate of frozen pizza or something.
Beans, rice, potatos, eggs, oats. Start with staples like these and it really doesn't matter whether you are getting the name brand or the bulk discount....
> and lack of anything that resembles a decent food culture.
...ah, but here's the problem. If your food culture consists of habits around pizza and burgers, around eating fast food and heating frozen things in microwaves ..... if you never even learned to cook beans, in fact, never learned to even enjoy them and are grossed out by them, if you have no idea how to make a raw potato edible and delicious in 5 minutes.... then... yeah, you won't have any good mental "software" to help you easily feed yourself with stuff like the aforementioned. Instead you'll have to expend valuable time and energy on experimenting and learning new habits and recipes. Until you spend that time you are locked out of the cheaper food and locked into the expensive processed food trap.
> I'm sick and fucking tired of all of that. Fix poverty instead of patronizing those who are in direst needs.
And I'm sick and tired of both sides of this argument. Yes, fix poverty rather than patronizing thoese in need -- but acnowledge the real poverty is primarily cultural, not monetary, and tailor solutions to that, by somehow helping people relearn cultural food skills that were lost during the 20th century industrialization program.
> Beans, rice, potatos, eggs, oats. Start with staples like these and it really doesn't matter whether you are getting the name brand or the bulk discount....
You're still ignoring the point that it can be very hard to even get access to basic staples, and I'm not just talking about the financial aspect but moreso about "how to get to a grocery store", especially in areas with no or derelict public transportation.
> but acnowledge the real poverty is primarily cultural, not monetary
Way over half of Americans can't cover an unexpected $500 emergency bill [1]. America's greatest problem is widespread poverty and income insecurity, everything else stems directly from that.
I agree. Reports from Pew Research Center and CDC show that the cause for obesity is complex and cannot be pinpointed to just poverty. The studies are a decade old, but are still prevalent.
Agreed, but tackling the poverty/food access issue is a pareto issue IMHO - get the wide masses out of poverty and provide equal access to healthy food supplies will get rid of a large chunk of the issue.
> As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewhere
Especially considering that back when "we all" farmed, the common amount of savings to have was an entire year's worth, since that's how long it is between harvests (in some climates -- perhaps half a year depending local variation)
Eh, this also seems backwards from how most cities actually work...
Most of the time they are looking into bringing businesses in that will have long term staying power, and backing that by offering low interest loans or tax breaks via a number of different programs. No, cities do not want boom/bust type scams that are going to eat up real estate and leave a dilapidated building in the future.
>As an adult if you can't weather a couple of weeks of unemployment you've seriously screwed up somewher
Or rent/housing/food/healthcare has exploded in cost in the past few years and you're like a large percentage of the country living paycheck to paycheck. But hey, screw them anyway, "let them eat cake", what could possibly go wrong.
We have five or six car washes in town (I think...we're pretty spread out, so there might be a few I've never noticed). One is fully automated, no humans touch it. One is low-staff: a couple of guys running wet mops over the exterior before the car goes through. One is pretty full service, with a squad of guys pre-cleaning, minor detailing, hand waxing. The last two (and part of the full-service wash) is four or carport-like stalls with hoses and soap, the driver does all the work.
As the article says, automated or even semi-automated car washes don't provide much employment or sales tax revenue. On sunny days, some of these washes have vehicles sitting in line, waiting their turn...most with their engines idling.
I live in an apartment so managing my own washing is impractical, and is actively discouraged by the landlord. My 15-year-old car goes through the wash three or four times a year, and it's finish is still fine, thanks.
> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent."
How can the market be irrational? People either are purchasing enough of these services to make the business viable, or they are not.
> Because the market doesn't price in externalities.
Legal liability for harmful externalities factors directly into the market for insurance and other operating expenses. Preemptive regulation is usually unnecessary, and often entails its own deleterious effects.
Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1].
However, the saying about "the market can stay irrational longer than you can stay solvent." is that even if you can point out that say Enron / Wirecard / FTX are fraudulent, good luck making any money on that. Michael Burry nearly messed up his timing for '08 and could've lost to an investor revolt [2]; but he has messed up timing for Tesla (peak 400, current 200) and many other stocks causing him to exit those positions before making money.
> Business are in general not solvent in their first years. Even some business such as Uber took 15 years to generate a profit [1].
This is true, but it's not clear to me how it relates to either the discussion of whether markets are rational or the discussion of whether common-law liability is more effective than preemptive regulation. Can you explain the connection?
If the implication is that people choosing to bear risk in the expectation of achieving a long-term profit is irrational, then I'm not sure how to respond, because this seems almost axiomatically false to me. In fact, given that we live in an observably stochastic universe, where cause-and-effect is best represented by probability models and not deterministic logic, I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.
> This is true, but it's not clear to me how it relates to either the discussion of whether markets are rational or the discussion of whether common-law liability is more effective than preemptive regulation. Can you explain the connection?
Its tangential. The Market-Irrational quote is all about how even if you know the stock market is wrong (especially due to large scale fraud by that company) you may not be able to profit from that knowledge because the market can continue to buy that stock (be irrational) longer than you can afford to have the contrary position (be solvent).
People (probably myself as well) use it to describe other situations though. Such as a Taxi-like company selling 20$ car rides for 10$. No matter how irrational having your only revenue source be a loss-leader for decades; if you bet against Uber at IPO you'd be out 30/share right now (current 70, IPO 40).
To get back to the actual origin of this tangent [1], although Uber still exists but imagine you only had a Taxi industry and Uber comes in and all the Taxi drivers get fired. Then Uber goes bankrupt and all the Uber drivers are fired. Now all you have are a bunch of unemployed people. Society did not benefit here. That's the scenario being described in the origin of our tangent. In these situations there might not be somebody with a large pile of cash that they feel like investing into re-starting the taxi industry so that region may just not have taxis anymore or just the richer parts of the region have a rebirth of the taxi industry and the poorer parts are un/underserved. So it would be rational for people to have a NIMBY approach to something that in the long term will only cause problems.
> I'd regard that rationality itself includes probabilistic decision-making, and that attempting to preempt all risk is itself highly irrational.
Betting with 1:-1 odds is irrational unless you're running a money laundering scheme. If you think that a region can only support 4 car washes then as a local government official you should prevent the 20th from being built because it's just not sustainable (or at least force them to prove 20 can be supported).
> > If the market were too small, the weakest would fail, right? Right?
> I find it interesting that we have sayings like this, and sayings like "the market can stay irrational longer than you can stay solvent."
To be fair "market" is referring to two different things in those two sentences. Different markets can have different characteristics.
Having a slab of asphalt in the middle of a city instead of something more useful, like an office building, shops, or a block of flats, is a negative externality.
While acknowledging the reality of those externalities, it's also fair to point out that empowering politicians to attempt to override the market and deliberately police the negative outcomes of those externalities in favor of supposed social goods (the determination of which is, in itself, problematic) has never, ever worked in the history of humanity -- though it has been tried over and over in disparate societies around the world.
In practice, the politicians supposed to be looking out for the externality damage instead merely redirect outcomes to benefit themselves and their friends.
The result is invariably worse than whatever damage is wrought by the open and free market.
This is not a failure or shortcoming of any one particular attempt to corral the market towards social good; it is an inevitable and expected broken-by-design outcome of attempting to do so.
> has never, ever worked in the history of humanity.
I think you'll find that the majority of humanity (those who aren't libertarians) actually agree that policing the negative externalities of business should be part of government's function.
Stuff like "we're destroying the ozone layer," "L.A's air is mostly smog," and "this factory keeps tearing children limb from limb" were effectively solved by government policing these negative externalities, not by "the market."
It's a long way from "this factory keeps tearing children limb from limb" to "there are too many car washes in this town."
I specifically said externalities are real problems that bear addressing.
The problem is that once politicians are turned loose, they never stop. They cannot stop. They can't say, "well done, problem solved, let's pack up and go home." That would mean giving up their hard-won power -- and the concominant benefits to themselves and their friends that came with it.
So they must always seek yet another supposed outrage to feed their power. When they can't find one, they manufacture one, to increasingly absurd and implausible lengths, eventually wrecking the system.
But even if I grant you the argument that the same system that bans child labor necessarily leads to the neoliberal brainworms of "let's create a 3% tax credit for businesses that used to be car washes," I'm still very happy we addressed the real problems. And I'd say that government intervention worked, even if some of the laws they pass are stupid or trivial.
> empowering politicians to attempt to override the market and deliberately police the negative outcomes of those externalities in favor of supposed social goods (the determination of which is, in itself, problematic) has never, ever worked in the history of humanity
It's just so absurdly naive to think that the market acts this cleanly and quickly, it's probably the worst "brain worm" that economics has given us.
Maybe it helps to consider the idea that the government (which already has considerable influence, positive and negative to markets) is part of how preferences are expressed.
No one said anything about quickly and cleanly until you introduced those words. If your argument is that the government tends to act more quickly than the market, I would be interested to see something backing that up.
For something like a car wash that doesn't really affect the people around it much, why would we need to regulate that? Oh no, there are more car washes than some people on Nextdoor think are necessary? Who cares?
If there is sufficient demand for car washes that all of them stay in business, then they'll stay, because the local area wants that many car washes. If they aren't binging in money, they'll close. Or just pay out to their employee and landlord indefinitely.
This is why the US has a few trillion in infrastructure debt.
"Oh no, the city had to put in a few million in pipes to supply additional water to an area that had a huge demand spike taking a long term bond on the issue... and now they are all out of business and earning no taxes to pay for the expense. Too bad we didn't actually plan for reasonable growth and resource usage. Hopefully someone can bail us out"
Tends to? Absolutely not, but nor is it required to? Though I'd definitely give "the government" some credit for net neutrality here; I heard the term in govt spaces well before it was much of an issue.
As for "doesn't affect the people around it."
Oh, sigh. So I'm pretty familiar with local governments and the work they do, and one thing is abundantly clear; very very many people have no clue "what affects them," until the thing they're used to changes.
A TON -- probably the overwhelming majority -- of local government work is "invisible stuff that the people never notice precisely because that local government is doing its job correctly."
If it’s anything like the 3 that have opened in my town of 80k in literally the last year it’s because they’re huuuuuuge. The wash itself is 100+ft long, and tons of parking, vacuums, etc.
Just one of those things takes up the space of 3 or 4 normal gas stations.
The crazy thing is that after a small wave of initial enthusiasm, they hardly ever even have customers.
Then we get to look at ugly shell of it for years. Commercial real estate is not exactly booming. Most of those places are probably borderline superfund sites with all the chemicals that leach into the soil, anyway.
A bunch of the same business also takes away space from the sorts of businesses that your region probably lacks which would make the town more self-sufficient, interesting, and/or economically productive: a butcher, a jeweler, an audiologist, an independent insurer, a pub, a gardening store, a glassmaker, a theater, a brewer, a computer repair shop, and so on.
My hometown of 40,000 has five; one which replaced the only movie theater in the county (a one-hour radius) that closed at the end of 2020. The local government remarked the car wash will provide jobs. Three employees are needed, according to the "local" news. (Actually, the local newspapers were replaced years ago by a nationwide chain of "independent, regional" news sourcers.)
I'm glad I got away from that place. The most fun you could have on a Friday night was meeting friends at Walmart and then driving to an empty parking lot.
> Especially true in the American two-party system, political parties want to maximize vote allocated to their candidate. Political parties will adjust their platform to comply with the median voters’ demand. The Comparative Midpoints Model represents this idea best: Both political parties will get as close to the competing party’s platform while preserving its own identity.
On the contrary, the ever increasing dysfunction in US politics is largely because the players have hacked their way past the constraints of this model.
Four or five doesn't sound like much, but the article buries the lede by hiding this fact in a caption: "The omnipresence of the car wash in American life may be underappreciated: There are twice as many car wash outlets as McDonald’s and Starbucks locations combined" and in the article itself "the sector has been expanding at roughly 5% annually, with some forecasts predicting the market to double by 2030. More car washes were built in the last decade than all the preceding years combined."
Seems a bit much?
The concerns over land use and pollution suggest that the car washes are not paying for negative externalities, removing a natural cap on their proliferation. Smells like market failure. Why wait for the businesses to fail?
Just because we don't have Georgism doesn't mean we don't already tax land a ton. Annual property tax revenue for the entire US is ~$600 billion. By comparison, federal income tax revenue is about $2.6 trillion annually.
Also helps keep prices in line. Perhaps a local car wash owner wants to maintain their monopoly (that was actually alluded to, but not greatly discussed, in the article!)
Four or 5 car washes for a city of 17000 people? That’s 1 per 3000 or so people, of which I’m sure only _some_ actually own cars to wash (vs, say, children). Assuming one uses a car wash for 10 minutes maybe once a month, the 5 car wash locations have capacity for something like 144,000 washes a month. Basically 10x the need for a town of that size.
There’s another car wash being built in my neighborhood right now. There are now 5 within a 10-15 minute drive from my house.
A few years ago, mattress stores were popping up all around my neighborhood. Today most of them are gone. These things seem to come in waves and I’ve never understood what drives it.
One reason to limit the number is to prevent them all dying out - I saw a situation near my house years ago where there was a successful laundromat, another opened nearby and both were doing OK but not amazing, and then a third opened up - and all three ended up dying. There was no laundromat for awhile and finally a new fourth one opened up nearby.
I'm in south Orange county, California, and... Yeah. Maybe this is car wash mecca? I can think of 6 within a 2 mile radius of my home without even trying. 3 of them are full-service places, too, and they've been there for longer than I've been here (2016, so not that long) and they're always serving cars.
Or, more likely, there are legitimate concerns had by part of the town even though another part of the town uses and appreciates them. Both groups can exist at once without astroturfing!
A new car wash recently popped up on the main road near my house, and it has definitely had a substantial negative impact on the traffic patterns surrounding it. Basically every time I go that way I have to maneuver around people clogging up the road waiting to turn into it.
It's not enough to cause me any real pain, but it's definitely enough to make me feel less than kindly towards the proliferation.
The article does mention that, but only in passing! I'm surprised they didn't dig more into it, since the most vocal opponents to more competition would probably be existing businesses!
One hotel (hub) with differentiated service levels could be more efficient, effective, and ecologically minded. Think Vegas casino property without the casino.
This doesn't make sense. You are arguing that a monopoly (1 hotel in an area) would be more efficient than a dozen in an area who compete strongly?
For customers the area that has many hotels that compete with each other will be better than the area that just has one. The area with one hotel would have a single hotel that would have no incentive to be efficient or effective.
I do realize this is getting into "is Gene Roddenberry's post-scarcity society even possible starting from capitalism?"
When deciding whether competition is the best governance should take into account system scope or level for that competition. Are you competing at the level of hotel rooms and restaurants within a hotel, at the level of hotels, at the neighborhoods clusters of hotels are in, at sectors of ecosystems like hotels versus transportation versus other people uses of land and resources.
> the best governance should take into account system scope or level for that competition. Are you competing at the level of hotel rooms and restaurants within a hotel, at the level of hotels, at the neighborhoods clusters of hotels are in, at sectors of ecosystems like hotels versus transportation versus other people uses of land and resources
I think there's competition at all of those levels, and that's a good thing.
Isn't this just true about everything? Having a bunch of shipping companies makes way less sense than having a single globally-integrated logistics solution that everyone uses that could therefore know about and plan around far larger scales.
What I'm trying to say is I don't understand your point.
Admittedly, the local bus services around the airport which used to be free of charge (prior to 2021) are now chargable, but at less than £2 per trip the services are hardly expensive and are fairly fast and very frequent ... unlike the Hotel Hoppa services which seem primarily designed to rip off unsuspecting visitors.
Is this in the article? I just read through it twice trying to find a reference to how many were there 10 years ago, but couldn't find anything.
Even if it were true, I'm not sure that that shows there are too many car washes, just that consumer behavior surrounding car washes has changed dramatically in recent years.
The answer is private equity "roll-up" strategies of "boring businesses". You're going to see this accelerate in tons of other things that PE thinks can be easily consolidated, the gold rush has already started for dental practices, primary care providers, coin laundry, HVAC companies, landscaping, etc.
American small businesses are disappearing because that's what consumers want (what they vote for with their dollars, as opposed to what they say in polls).
I don't think it's necessarily what consumers want. Sometimes it's what business owners want (eg when they retire and sell), and consolidation gives the new owner the benefit of local monopoly or decreased competiton.
Absolutely no one in my area likes trends in veterinary care, for example, but there are only so many options.
PCP and dental practices are much harder to roll up. The doctors start a competitor, and bring their patients, the second the non-compete ends wiping the practice that was bought
I would have assumed its from the rise of gig workers using private cars. Uber/Lyft need to keep cars pretty clean to not be dinged stars, and even package and food delivery can create more mess which may require cleaning (but mostly taxi service I think).
I skimmed the article and don’t see mention of that?
> I would have assumed its from the rise of gig workers using private cars. Uber/Lyft need to keep cars pretty clean
True, I believe that’s the reason too, a while ago I used to park in an underground parking with a free washing area, the car next to me used to be clean all the time and the guy washes it every day, one time I asked him about such dedication, he said simply he is an uber driver!
>> I would have assumed its from the rise of gig workers using private cars.
It is not in West/Fargo. There is almost no rideshare capacity (there are a couple people) and the taxis use their own wash. Even Google does not capture the new 12 washes that have appeared in the last 18 months. Some of them can't staff and are closed much of the time. Especially during winter, when you want washes, it seems like land improvement. Add sewer, power, water, network to undeveloped land as a "business". Hold for a decade. Profit.
The last cab company I worked for had a car wash in the yard that usually managed to make the car dirtier than it was before it was washed. But that was their 'standard', it was free and I really didn't care so...
All the dealerships out here give free car washes that are better than the automated. Granted, they are clustered in specific areas and sometimes there's a wait...because it's a dealership with paying service customers.
This surprised me when I was on my local government and we had an application for a 24/7 carwash. When I asked why they thought it would be profitable to be open overnight with staff they said that the local car dealerships would book dozens of cars in every night, they were actually busier from 9pm to 6am than the rest of the day.
When people use an Uber instead of owning a car, they will never ever sit in a car that hasn't been recently washed. When they drive their own car, the threshold for good enough is so much lower for all but the most fanatic washers. Chances are their own car, on average, will not only have seen more time pass since the last wash, but also more miles (more miles will certainly be much closer to a tie though)
If you can get by without a car where Uber makes sense, you likely didn’t need a car anyways nor drive it often enough to wash more than seasonally.
You aren’t commuting daily in an Uber, nor driving kids to school and activities with all their gear and car seats. Those are the activities which might have moved the needle on needing Uber level frequency of car washes (but even then, I assume an Uber is washed every other day or so, or perhaps I just have a cynical view of humanity keeping the inside of taxis clean).
Unless you are rich taxi/uber is not an alternative to car ownership. (rich call it a limo). Those are alternatives for when something else covers most of your needs but once in a while it is lacking. If you own a car you need a 'i'm drunk' option. If you take transit you need a 'i'm going where transit doesn't or is too slow' option.
I'm not saying taking an uber everywhere is an alternative to having a car. It's part of the system. There's public transport (tube, DLR, overground, trams, busses), there's rental bikes, rental scooters, there's uber/taxi, there's walking. You use the "car ownership alternative" (or a combination of them) that works for each given situation.
I think the point the OP is making is that the burden of car ownership in somewhere like London is already very high. So those who can do without by and large do. The remaining folks who do still have a car do so for a reason (job, primarily) and are unlikely to get rid of it just because Uber exists.
Automated ones are fine, but what I've really missed since I moved to New England have been the ones where a team vacuums the inside, hoses off your mats, wipes your windows and dashboard inside, etc.
Growing up in the West and Midwest, these things were absolutely normal for the first 30 years of my life. Some of them would even change the oil too. But I haven't found anywhere within 50 miles of me that will do it here. I'm not talking "detailing." This was $35 including the oil.
These are still normal where undocumented workers are willing to hustle for low pay and tips. In Queens I got a hand wash and interior detail for less than $50. Where I live now $225.
Sounds fantastic sadly it's easy to see why it doesn't exist.
Oil changes require following environmental regs, careful disposal, paying for same and it makes a 1000x more sense to integrate them with a business that actually works on cars and can capture additional dollars for other maintenance and repair.
You also want a comparatively skilled and trustworthy individual not someone who moved up from vacuuming to oil changes and a business than can easily write a check if their employee does mess up your expensive asset rather than an owner who will have to decide between writing you that check and paying their rent and employees. This is also why you don't want to get your oil change at walmart.
If you could have it the oil change would have to cost $50-$60 to justify its existence because there would be no chance of capturing additional revenue. If it had full service and 2 people spent 15 minutes we are talking about another $30. This is only true if you can actually keep relatively busy and aren't implicitly bearing the cost of labor while people are waiting for customers.
Then there is competition from both auto repair who are offering 29.99 oil changes and 5-9.99 automated car washes.
"Quick lube" stations are everywhere too though. $20 and out in 10 minutes. This was more like "quick lube plus car wash," not "oil change, free 97 point inspection, and upsell on six things that aren't even wrong with your car."
Yeah some of the oil change places in my town don’t even require you to get out of the car. You just pull up, read the news for a few minutes and then pay and drive off.
PDQ!!! Still love that place, and they pay surprisingly well too. The wash is automated near me, but they do the hand-finish after, vacuum out, all the good stuff. I still get my car detailed once a year but PDQ is great between that.
I've lived in TX and FL and these types of services are everywhere. Even many of the automated carwashes where you vacuum your own car after the wash will usually charge an extra fee if you want the inside cleaned by staff.
I can find them in Georgia (far and few in-between) and they are super useful, if I must say - if not for folks across the border, hand carwashes will entirely disappear from US.
That may depend on region. These still exist in the suburbs outside Birmingham, AL. Last I saw the prices varied from $15-30 for a wash, wax, detail, and hand dry.
They don't offer an oil change though, I've never seen a wash+detail+oil change in the area. At scale I'd assume they could do it for closer to $50, if $35 was a 2005 price that's on par with inflation and beating inflation for some industries like food.
My most recent reference was $35 in Indianapolis in 2017. It doesn't surprise me that it'd be up, but it surprises me that it doesn't exist in New England. $60 wouldn't seem out of line to me, given that a quick lube station will change my oil for $20 and an automated car wash is another $17.
This is a big thing in the UK, too. The official narrative here is modern slavery with undocumented migrants. It's the same with sex work, with which is harder to separate between conservative propaganda and reality.
I expect the main difference between the US and UK versions are that the latter are typically set up in disused urban plots with pop-up tents and temporary chain-link fences rather than having any investment.
Either way, if you're getting 3-5 people washing your car for a tenner, the people you're handing you money to are probably receiving minimal pennies on the dollar.
In my specific region of the US, you're more likely to see something between a small 'automated' facility where your car is pulled along a sort of 'assembly line'[0][1] or a somewhat larger 'DIY' car wash where you might have to do your own start stopping or are practically given a squeegee cleaner, some colo(u)red water that may or may not have cleaner, a mounted pedistal shop vac of some sort, and a race against the clock based on how many quarters you put in.
Or, sometimes a combination of the two.
The setups for the DIY shops are usually fairly cheap IMO (Just looking at what's going on at them and the BOM) and the main thing outside of market saturation is having a good ingress/egress setup (If one sucks to get in and out of, folks won't come back.)
That's not to say that there aren't hand car washes as well, however I only tend to see those where I grew up (not too far from here, mind you,) or when it is some sort of school/church/etc fundraiser.
The weird thing you can run into in some cases, even at the automated shops though, is either weird 'implied consent' about extras by folks on one end or another of the line, or in the case of any of them, 'memberships' that are priced to where you'd really be following that 'one wash a week' rule to get your money's worth.
[0] - Often with a warning that they are not responsible for damage to vehicles older than X years and/or with more than Y miles
[1] - These can be surprisingly small, to the point some gas stations have one on the side and a purchase gives a 5/10c discount per gallon. Which, to the general point of 'pennies on the dollar' they made money on long term.
I think this article is referencing the common trend of drive through automated washes which would make sense if large investors are in the picture. The big automated ones are pushy with their subscriptions which the article also talks about.
These big wash machines are typically staffed by only 2 or 3 people hence the complaints that they don't even create jobs.
That being said, I wish there were more automated washes near me. We find ourselves making excuses to drive by the one we pay a subscription for.
It's likely just that they haven't done the legwork to properly support it yet, or don't want to be a whitelabel service. Even the little gas station washes by me push subscriptions now. My agency has built out a few of these services in the past and they aren't cheap, even the off-the-shelf ones.
As an aside, the entire experience is awful. "Pay $25/month and get as many $8 washes as you want!" ...but I only get a car wash every 2 months and since you're tracking my license plate, you already know that.
I couldn't imagine ever paying a subscription to a car wash! I barely even pay for Spotify, how often do you go? And how often would you go if you weren't paying a subscription?
Reputable shops I more often see do something more like a 'Prepaid' discount where you get X washes (maybe in the next Y months) for Z dollars, and ideally it's something like you get one wash a month at a 10-20 percent discount.
The profit-gouging ones, either do a 'assume 3-4 washes a month to see real benefit' or assume you are washing once a week in their sub... or do all the other 'tricks' above schemes can allow.
It can make sense if you don't have a garage, and there's a lot of pollen and whatnot where you park. If I don't wash my car ~twice a week, it ends up looking pretty funky.
I was referring to the parent comment "The official narrative here is modern slavery with undocumented migrants". Some of the people working in these hand car washes may not have the legal right to work in the UK, which makes them ripe for exploitation.
s/they work hard/somebody decides to tip which may or may not reflect any effort the worker put in because some people just don’t tip and depending on tips is a shitty way to scrape by/
I volunteer at a refugee charity. In my experience people given the right to stay will take whatever work they can get, which is often crappy work at low wages due to lack of transferable skills and/or English (e.g. security guard).
I think generally it should not be allowed. A big component of soap is phosphates, which promote algae growth so you really don't want it in your rivers.
Some cities have combined or separated sewer systems. Even if combined, it may be designed to overflow during heavy rain, so it's not a guarantee that car wash water with dirt, soap and oil will not go into into a stream somewhere although in that case you're also sending literal shit there. Also when combined, there may still be old infrastructure that drains to a stream or river so a blanket ban is a good idea.
Typically a car wash would be required to have an oil-water separator (with maintenance records and occasional checks) and discharge effluent to the sanitary sewer. Not sure about everywhere but in Vancouver (I have experience working in water treatment there) you also need to have the car wash covered and send collected rainwater to the storm sewer.
Perhaps there could be a middle ground where you're allowed to wash in your driveway but only with a specific soap, and not allowed to degrease your engine bay. There's basically no way to enforce that though,.
Also might as well note here that in Vancouver storm drains that connect to the storm sewer have little fish stenciled by them.
> I think generally it should not be allowed. A big component of soap is phosphates, which promote algae growth so you really don't want it in your rivers
That's fair, but it doesn't explain why the bylaw won't even let you rinse the mud off your car with nothing but water
I operate an auto detailing shop. As part of that I've done some research and spoken with my local city (100k+ pop.) officials about this. It's actually quite logical.
First, there's a distinction between sewer vs. stormwater. Sewer lines go to a treatment facility that's built specifically to take all the bad stuff out of the water before flushing that treated water into your local streams. Washing your car into a sewer drain, all good.
Stormwater drains shuttle water directly into your streams.
Stormwater drainage is purpose-built to handle the overflow rain during storms, and only that. In fact, the first goal of stormwater management is to not drain it at all! You want the stormwater to flow through your local ecosystem naturally, generally as groundwater. Nonetheless, storms conspire to drench our non-porous surfaces (asphalt, concrete, etc.) at a rate or duration above the designed for drainage of the system, resulting in overflow. Overflow leads to things like flooding or public safety hazards for cars driving on undrained roads, so a secondary goal of stormwater management becomes shuttling excess water out of the local ecosystem.
What's all this have to do with washing the mud off your car? Well, the first goal of stormwater management is to keep it in your local ecosystem. So, if you can ensure the runoff from washing your car goes into your grass or a specifically designed catch basin, then you're all good. But, if you wash it off into the stormwater drain, well then you're using that drain for a purpose it wasn't built to serve. Your water is neither excess nor should it bypass your local ecosystem. As far-fetched as it may sound, that mud may have local nutrients, pollen, chemicals, etc. that could serve your local ecosystem, and by bypassing that you are disrupting your ecosystem's natural cycles.
A note to the astute reader that says well, we already disrupt our ecosystems with other human activities. Yes, you are correct. That doesn't mean that we can't nor shouldn't take actions to minimize or eliminate further disruptions when they are within our sphere of control. We must strive to find a balance in ecological systems.
There's also an enforcement aspect, too - it becomes significantly harder for police to determine the difference between "I was hosing it down" and "I was hosing it down and washing it with soap" so they just ban all of it.
> Some cities have combined or separated sewer systems.
I wonder how many cities still have a combined system. At least where I live, I could totally see the amount of water coming from the sky regularly beating the amount coming from household drains. Along those lines, our city is spending money replacing private sewer laterals (normally a 10-20K job the homeowner is responsible for) just to cut down on the water intrusion the old laterals (especially party lines) let into the sewer. It's cheaper to pay for the new laterals than it is to build a larger treatment plant.
>I think generally it should not be allowed. A big component of soap is phosphates, which promote algae growth so you really don't want it in your rivers.
Shouldn't we ban people showering under the same logic? I use about the same amount of soap to wash my car as I do in the shower, but I shower a lot more often.
It makes more sense if your run-off and sewage are treated separately - assuming the car washes get theirs treated.
My understanding is that the UK has a combined system where rainwater and waste go into the same system and is all treated the same. More because of history than because anyone now thinks that is a good idea. Maybe someone who knows more about this could confirm?
I'm in the UK and our privatised water companies seem to mostly just pump stuff into the nearest river or coastline, untreated. Treating the sewage or building infrastructure would eat into their dividends and bonuses. Trebles all round!
In some cities in the PNW this law is to protect the fish and wildlife, because storm drains connect to the streams. You're allowed to wash your car in your driveway so long as it drains onto your lawn or the sewer.
In the northern foothills here bordering Phoenix, Arizona, to the north, there are an understandable number of automated carwashes.
However, i've found no manual (pressure wash sort) carwashes, which are easy to find in California and Illinois, for two examples. I don't know why this is.
Could it be that single family homeownership is higher there?
I can kind of speak for some of L.A.'s use of manual car washes. There's many who live in apartments or places that don't have places to wash at home. Manual car washes fill the void for people that want to clean their own car but don't have space.
it might be. It might also be a water conservation thing, somehow, but I can't see how that would work unless they filter the water used in teh carwashes that are automatic and reuse them in some way not feasible with the power-wash-for-quarters sorts of stalls.
The pay/pressure wash systems I've ever seen are all older, I don't know how many new ones they're building. I suspect automatic washers are cheap "enough" now that you can't build a new pay to wash that comes out substantially cheaper.
When I was a kid it was $2 for the power wash for quarters type, and $10 for automatic or by hand, now it's $8 for the automatic decades later.
In Chicago, it's always good to rinse the salt off your car to prevent rust. I recall doing this several times during many winters there. Never had a problem with rust on any car I owned.
Yes but they still degrade relatively quickly when managed correctly so a burst of pollutants whenever it rains is better than a constant low level exposure from people washing their cars all the time.
Regions where it rains frequently like the PNW have rain gardens, vegetated swales, catch basins/filters, and other mitigation strategies all over the place whereas e.g. California might just have them throughout the drainage system like at the end of the LA river.
> In my city you're not allowed to wash your car in your driveway
How does this even get enforced? Are the police driving by everyone’s house regularly, looking for those dastardly hoses? Or do they rely on nosey neighbors ratting on each other? I can’t imagine this is the most important crime for the local law enforcement to be investigating.
In Sweden washing a car at home is discouraged and depending on how you read the law can be illegal (it is not illegal per se to wash a car at home, but it is illegal to to let out untreated water into nature - and since waste water from car washing is not untreated and probably contains oil and metals, it is most likely illegal on this provision).
Enforcement is on a council-by-council basis, but of course in urban areas I imagine this is pretty hard to enforce. In rural settings it must be pretty much impossible. Having said that, I haven't really seen many people at all washing their car at home. Maybe it depends where you live, if you have neighbours who do it a lot it probably feels like everyone does it.
In the last few years, there have been a load of "wash your own car" car wash stations opening up. They're cheap (you can do the car for <100kr - $10 or so), way less than the drive in station, and have things you wouldn't have at home (e.g. cleaning underneath the car, handy for washing off the salt that has come off the road in winter). Not really enforcement but a pretty effective way of nudging people to doing the "right thing".
In my area it’s mostly done by the water department itself. They have people that drive around documenting violations, and the owner is directly billed. This is mostly done overnight.
They also have a hotline for tattletales and HOAs and the police can also report you.
IMO someone would have to be pretty anal retentive to get bent out of shape over just hosing down your car with a hose. That's not really any different than what happens when it rains hard. My local jurisdiction only cares about the car wash soap you use. Even then, they just ask that we use phosphate-free soap, not that we don't wash the car in the driveway at all.
You'll never need to worry about this if you try using Optimum No Rinse waterless wash. It cleans and details your entire car with 2.5gal of water. I've been using thus for over two years now and will not wash our cars any other way.
I can wash my car in my driveway, but last summer when my city implemented water use controls (due to drought conditions), they didn't allow it. Oddly enough, they didn't restrict commercial car washes.
Consider this: If I were to say, “In Tokyo, people stand on the left side of the escalator and walk on the right side, opposite to Osaka,” would you automatically assume I'm a Tokyo resident? Probably not, right?
Had the initial commenter simply replaced “In my city […]” with the actual city name, it would likely have been interpreted as general knowledge they picked up along the way. Sure, some might mistakenly assume they hail from or currently reside in said city, but in reality, it’s not a big deal. Take me, for instance—I live in Copenhagen and I’m 100% sure no one will be able to do anything useful with that information.
Providing context is key, especially in online forums like this. Simply stating the city name would have enriched the discussion far more than leaving it ambiguous.
> would you automatically assume I'm a Tokyo resident? Probably not, right
For something that you can pick up just by visiting? Maybe not. For information like this, about specific bylaws that are relevant for homeowners or car owners? Yeah absolutely I would assume they live there
Depreciation is available for any company that purchases equipment; the "unique" thing as described in that article is simply that most of the value for car washes is in the equipment, so depreciation strategies are very important, but any business can and should write off equipment, or any other expense against net profits.
> The Tax Cuts and Jobs Act (TCJA) of 2017 made a significant change in this area, currently allowing businesses to write off 80% of the cost of qualifying property in the year it's placed in service
Why depreciate over 39 years when you can do 80% in one year.
> The industry’s growing footprint has not gone unnoticed. Complaints have erupted about traffic tie-ups, noise and chemical odors around locations, among other issues... City leaders have a limited number of car wash countermeasures at their disposal, such as withholding special use permits and enacting zoning changes to limit new locations.
A nice summary of why things don't get fixed. There are legitimate problems with car washes: traffic tie ups, pollution. Instead of regulating to fix those problems, they regulate to limit the number of locations instead. So, the demand that exists isn't met, and nothing gets better because the existing businesses can continue being nuisances just like always.
Not joking, Ivy League graduates who might have went into finance, have started raising capital and funding small cash returning businesses. It is now seen as a legitimate career path, sometimes called a "search fund". An HBS graduate might aspire to buy and run a blue collar business as a way to understand the market.
There are private equity funds that might aquire 50 of these businesses at 2-5M each, roll them into an index, and sell the index. Same with doctors/dentist practices.
Its not that much different from raising 10M (with nothing but an idea) to build some generic type of software that already has a market. A big secret, raising huge amounts of capital to be an "Entrepreneur", isnt really Entrepreneurship, its being placed into a management position of executing on an already existing (usually proven) idea.
VCs certainly see it this way, and so do the pedigreed people they fund. The only people thinking its different, are the ones on the outside looking in.
I've been thinking about this same phenomenon. I reside in Norway, where, interestingly, five different car washes opened in 2023 within a 2 km radius of my local neighborhood. Remarkably, four of these are clustered within a 300m stretch inside a commercial park. Our local area has a population of roughly 5,000 to 7,000 people.
Each car wash is operated by a different entity, offering unique apps and subscription plans.
It's hard to imagine this being profitable given the circumstances. But what do I know, I wash my own car.
Honestly I bought freezer food bags recently and even they had a bloody app. Each one is stamped with a QR code and you can use the app to record what's in each one. Absolutely bizarre. I continue to use a Sharpie.
There is one by me that lets you pay wirelessly with an app. They have an unlimited wash subscription plan you can only get with that. I am not really sure how it works (bluetooth?) but I guess it would speed things up.
I would try it to puzzle it out, but its one of those spinnybrush antenna destroyers and I'm not gonna risk it.
The article doesn't mention it, but I read another article about car washes that argued they're used as a way to speculate on commercial real estate in cities because the car washes provide just enough revenue to pay for the purchase of the land and property taxes. Then when the land becomes valuable they can sell it to another developer.
I think there are companies that build/sell turnkey carwashes. I don't think it's very sophisticated to be honest. It's really just a couple of high pressure sprayers, some soap/foaming sprayers, and a track that pulls the car. It's all technology that's been available for decades. I bet there's a factory in China just pumping out car wash components.
You can buy them out of a catalogue, and if you need it in a building I think the building requirements are simpler than most other retail space. I used to work in the railroad industry and even train washes, a much rarer thing than car washes, were purchased practically as turnkey things.
There's a lot of unseen plumbing there, though, mostly underground tanks to handle storing graywater (cities have fairly stringent rules about discharge rate, so you have to store and slowly release a lot of water over time), plus (increasingly these days) reverse osmosis systems and graywater scrubbers for recycling. Most of the cost there goes into construction, not components, of course, but it's considerably more complex a build than older setups.
There’s a car wash in my area that is one of the “upscale” hand wash places. At that point, you’re just paying for people to do the washing and some standard water hookups. No fancy machinery, just a few buildings and some basic equipment.
They also have a giant sign in front of the building stating it’s for lease.
The machinery is all commoditized and the same. Plumbing as a trade has been around for thousands of years. The level of sophistication here is limited.
Absolutely. I can think of a few storage units that are in prime real estate locations that make no sense--like right across the street from Oracle Park in San Francisco. Has to be some of the most expensive real estate in the entire city/state and it's being used for storage units...
How about in the heart of San Francisco at Otis and 13th? Then again, the Walgreens at 16th st Bart is still sitting empty, as well as the burger king next door to it, so there's something fucked with incentives and regulations and zoning that means we're not making use of some of the most lucrative real estate in a highly desirable market. Calle 11 on 11th is another that's sitting unused for unknown reasons.
I have actually briefly considered opening a car wash.
They seem like just about one of the easiest businesses to run. Minimal employees, low variable costs, likely a reasonable long term investment in the actual rental estate.
In many ways, this the same as gas stations, convenience stores, and CVS/rite-aid/walgreens. People don’t want to go out if their way.
That might actually be part of it. If you go to YouTube, things like laundromats, vending machines and CAR WASHES are pretty big with the passive income "movement".
We're seeing more car washes opening up around here, but I think that is just as much about having the area under services for ages. Now I don't have to wait in line for 45 minutes, or risk a fine for cleaning my car in the drive way (which I don't think you should be doing anyway).
I think they're popular because they create induced demand. Most people only seek out car washes once they reach a certain dirtiness threshold but if the car wash is on the way home or at their favorite gas station, they tend to wash their cars much more frequently. There's four car washes within a half mile radius of my house that have been around for years but each of them is on a different artery connecting to the freeway so they cater to different markets so to speak. The area could probably support few more if the real estate weren't so competitive.
IMO that's also why they all have monthly memberships with unlimited washes. The vast majority of their customers are regulars driving by on their way to work so the subscription makes sense for everyone.
On the contrary, the TV show was inspired by car washes used as drug fronts—not so much money laundering as selling drugs. Cash changes hands, and the attendant gives you a wipe for your dash, but he could just as easily hand you a bag of coke if you'd given him the right amount of cash.
From what I've heard the current way to clean cash is to buy gift cards and then use them to buy items from Amazon/Steam. Sure, the store fronts take a cut but having a 1099 from Valve looks way more legitimate than reporting thousands of dollars of cash.
From what I understand the scheme works like this.
Create a very basic "game" that technically meets Valve's requirements. As long as it runs well enough then it won't be blocked. Have people buy Steam gift cards with cash, then buy the games you have published.
Valve takes 30% and you get a nice check with a verified source of funds from a legitimate company.
Probably way easier and more scalable to setup something offshore than doing a scheme that can literally be thwarted by a guy with a clipboard standing outside
A lot of money laundering involves traceable transactions, no? The point isn't to hide the transaction but rather have a plausible explanation for it that's difficult or impossible to verify. I'd think a larger issue would be that you can't plausibly charge very much per swipe. I'm betting there's much easier ways to launder cash these days with so many digital goods and services with basically arbitrary profit margins than brick-and-mortar storefronts can provide.
Granted, there are benefits to laundering money with literal cash, but you still want some legitimate money trail even if you don't actually hand over the claimed goods or services—enough at least to cover the actual expenses of the business, i'd presume.
Interesting observation. I do use a car wash, not frequently enough as my car is more often dirty than clean, but I have only ever paid cash! For context, I currently live in Austria.
I'm surprised no one here has mentioned rinseless washes like Optimum No Rinse (ONR) as an option for washing your car. You dilute it with water in a 1:256 solution in a bucket, and then you use a slightly-dripping microfiber towel or a rinseless-wash-specific sponge to clean your car. The rinseless wash itself acts as its own drying aid, so you can wipe your car dry with a microfiber drying towel afterwards without having to rinse off the car (hence the term rinseless).
I would say this is the cheapest, simplest, and (arguably) safest way to wash your car, especially if you buy the rinseless wash concentrate by the gallon. It's easy enough that it allows me to wash my car nearly every week. I only need about 3 gallons of water and 1.5 fluid ounces of ONR to fully wash one car.
A whole article that doesn't touch on the real reason there are so many car washes, laundromats, and nail salons.
It's because the cars aren't the only thing being cleaned. If you have a lot of illicit cash that needs to wind up in your bank account, these are the kinds of places you need to own.
In my area, the home of Tommy Car Wash[1], they are explicitly testing out how many car washes in a city are sustainable given a certain population size, so yeah we (Holland, MI) are surrounded by them.
$20 is 2 car washes. Around here moo moo car wash chain is all over and you cat get unlimited washes for like $30/month. Anywhere there is a moo-moo’s there is also a line of cars. Some people get obsessed with keeping their cars squeaky clean here.
Why assume there is a line? I spent like $1500 just for the tickets twice last year to take my family of 4 to Disneyland which is mostly standing in line.
I was when I lived in MN. I had a subscription for unlimited car washes (I did the "medium" level). When I commuted in winter I would wash my car at least once a week, sometimes twice. Summer, maybe once every other week. It just took two washes to break even, 3 was coming out ahead. There were times when it was really dirty that I would go through twice back to back.
There was hardly a time there wasn't a short line to go through and many had the subscriptions, you can tell because the attendant just guides you into the track and there was an RFID tag on your windshield and if the attendant didn't have to take payment you knew they had the subscription.
To answer question 1: older people, from my experience. They don't want to have to buy a new car so they take exceedingly good care of their current one. This includes car washes almost weekly.
I used to wash my car every few weeks, but with an unlimited model, I now wash it every few days. It literally takes 2 minutes to pull in and through the car wash.
No doubt, and it seems the Kia EV6 has worse paint quality compared to prior cars I've owned. It's definitely in need of a paint correction. For now though, my water quality at home is terrible, so it's a lesser of two evils for me (due to health reasons, I really don't have the stamina to wash it the right way) The hard water not only makes it hard to wash without spots, but it's a double whammy when my sprinkler system hits my car and spots it up.
I've spent $200 - $350 on car detailing as a service several times now. They drive to your home and work on your car for several hours to get it looking brand new.
As someone who drives an SUV, has dogs in the car frequently, and gets my vehicle muddy on the inside, this is a fantastic service.
A bunch of my neighbors use the exact same service.
me. i went into one of these car washes, got the hard sell from some poor person standing outside, didnt realize it was subscription - to cancel you have to call a phone number between 8 and 5, which of course i forget to do for several weeks ,
> Such “destination” facilities can offer […] electric vehicle charging
This seems like the most likely reason to me. It's a way to hold on to land in a way that normalizes gas-station-like traffic patterns without the "gas station" stigma. They can be easily converted in the future once electric cars are a large enough percentage of cars that everyone will come to accept fueling as a 30-minute activity instead of a 30-second activity. If they tried to just buy land and keep it empty they would have a hell of a time convincing NIMBY types to tolerate the introduction of charger traffic patterns where none existed in the meantime.
IDK, I used to drive all over the Phoenix valley pre-covid in my cab and most of new business construction I would see was either a car wash or coffee shop. I was messing around on google maps one day and there was something crazy like seven starbucks within reasonable walking distance of my apartment including two in the same shopping center.
I always thought the car wash construction boom had something to do with water conservation, Phoenix being in the desert, but apparently not.
Anecdote: I went to a Starbucks just today (in a Tesla!) that had a huge bank of superchargers outside and zero seating inside.
I'm sure the beancounters love the idea of everyone using Starbucks as their 30-minute car-fueling-and-now-also-drinks stop. It solves all of the (from the corporate point of view) downsides of running an actual store with, like, chairs and shit. It practically guarantees each "seat" turns over in that amount of time since the act of showing up to use the charger implies they have somewhere else to be. Nobody's sat there for hours on their laptop. No problematic h̵o̵m̵e̵l̵e̵s̵s̵ ̵h̵o̵u̵s̵e̵l̵e̵s̵s̵ unhoused people shooting up in the restroom unless they happen to be living out of an $80000 car. Corporate wet dream lol
Possibly, and carwash and charging are value add to the consumer. If you wash your car for 5 minutes after your weekly 30 minute super charge, and before or after every long trip, you're going to have a nice looking car.
I don't understand why we can't just let the market decide which businesses make sense based on their revenue vs. leasing the land. Presumably if car washes are so profitable it's because consumers want to use them, so why are we artificially restricting their expansion? It also provides a free subsidy to existing car washes who get to charge higher prices than they would in a competitive market. Restrictions to entering trade generally hurt consumers.
FWIW, I've used a paid car wash <10x in my life so it doesn't matter that much to me.
Someone opens a car wash in a central area. They self-declare a tax value for the land and its improvements.
We also allow that anyone can forcibly buy that land by paying that same self-declared tax value + X%. The sale can't be blocked.
We've ended the monopoly of land ownership, and imposed a free market on land purchasing.
Car washes that are a waste of the land they are placed on will get bought out and converted to other uses. If they are not, they will remain.
This, by the way, is very close to a land value tax, and all we've done is force a fair appraisal of potential value for a parcel, rather than the current, possibly underutilized value.
I don't get the hostility to car washes. I've owned cars for 40 years and I'm pretty sure I've never hand washed one once. Life's too short. I like and need car washes.
How does an article like this not mention that if you rent you probably don't have a water spigot and area you can wash your own car. I'm not saying this is causal, but it seems like a reasonable question that I'd want addressed. Is it related? Bloomberg has not previously been shy about discussing the decreasing rate of home ownership and renting.
What decreasing rate of home ownership? Nationwide the rate was only ever higher during the housing bubble [0], and the Midwest specifically (which is where this town is located) tends to have the highest affordability in the country [1].
There are certain areas in the country that are struggling with low housing affordability and high rates of renters, but that can't explain excess car washes in the Midwest.
Actually, why don't apartments offer a spigot and outlet somewhere nearby where you can park a car?
In my mind, it's kind of like how above $20/hr or so (and >= 5ish employees), it's a no-brainer for businesses to pay for lunch. It's more cost effective for the business to pay, and it results in less dead time and more camaraderie. The experience of automatic or manual car washes is bad; your car doesn't get that clean; it's shockingly expensive for what you get; you don't have the proper tools/time to clean the interior or wax and dry the outside; you have a variety of quickly deprecating fake-currency scams (where the unit costs are a prime number not dividing the amounts you're allowed to use to pay for the fake currency, and the fake coins only sometimes work in the machines and are replaced every 2yrs or so to deprecate anything you may have bought in the past); and so on.
Like, I average $5/mo or so cleaning the cars in my household. Doing it at my apartment with my own tools would be a strictly better experience. Most tenants I've talked to agree. In our complex, that's a (ballpark) >=$12k/yr opportunity. Is it that expensive to place a spigot and outlet close to a private road? Have bad actors made this infeasible? What actually keeps landlords from providing that amenity?
I guess technically I have had a spigot in some apartments I've been in. But I'd need like a 200 ft hose to reach my car and I'm not sure how I'd wash it without getting every other car wet and block all my neighbors while doing so. But other than that, I guess I totally could have been a main character and cleaned my car "at home."
I don't know why there are suddenly so many, but I do know that a large majority of them are a complete waste of time and money. Only use a car wash if they have filtered water -or- you have salt on your vehicle (i.e. driving on salted winter roads). Paying for anything else is a large waste of money, as your car will still look dirty when it dries. Yes, that under spray is the most important part of the wash if you are driving on salted roads. Don't skip it.
This kind of thing has been around for a long time.
The classic method was to build a trailer park or a drive-in theater. You could keep steady cash coming in until you were ready to build something more substantial, then simply evict the trailer owners (space rent was typically month-to-month) or tear down the movie screen and grade the parking lot flat, in both cases with very little demo cost.
Trailer parks and drive-in theaters were both way bigger than car washes. These guys are pikers.
Have they actually increased though or just replacing the “laser wash” that almost every gas station uses to have and everyone thought was crappy. I see those mostly boarded up as out of service now. I definitely don’t see as many full service options as I used to but undocumented workers in Texas are commanding the most pay they’ve ever been able to the last decade or so.
Pretty interesting read but seemingly doesn’t hold super well in some real world situations. Extremely few goods have Inelastic demand and are purely differentiated by location - even car washes will have slightly different prices and services. (Even branding alone is a differentiator). But also the political section could not be further from the current climate:
> Especially true in the American two-party system, political parties want to maximize vote allocated to their candidate. Political parties will adjust their platform to comply with the median voters’ demand. The Comparative Midpoints Model represents this idea best: Both political parties will get as close to the competing party’s platform while preserving its own identity
According to several sources, car washes seem highly likely to damage the car, and are also usually unnecessary (the car works fine even if dirty, unless visibility is seriously impaired, and eventually it rains and the rain automatically washes the car if you park it outside).
Probably a lot of people are conditioned that they need to have a clean car.
Year after Year, I kept thinking this was a fad and would crash. But years go by, and now they are calling it a 'boom'. 14 billion dollar market. For Car Washes?
Isn't this an indicator that economy is fine, people are fine, since they can spend this type of money on car washes? How can something this worthless be booming, if people are struggling.
If you live in a place where roads are salted, washing your car is generally recommended to reduce rusting and paint damage. I don't go to the car wash often and I only use the one at my local gas station, but it's rare that I go there and there aren't already at least two cars in line. And I live in a very low population density area.
At 1 car every 14 minutes on average, a single bay will easily clear $1,000/day of revenue.
If any of the fancy new car washes in my town were only clearing $1k/day, they'd be folding shop pretty quickly. I don't know where you live, but the wash by me (JetSplash) does between 500-1000 cars a day at over $20 a pop. So you're off by a magnitude or more.
Yeah, not around here though. My estimate is based on how long a wash takes and allowing for people not washing as frequently at night at the wash attached to my local gas station. This is a rural area.
However my neighbor used to own a chain of car washes in the suburbs and going by his 11,000 sq-ft house, I'm guessing it was pretty profitable!
1000 cars in 12 hours is 42 seconds each. Does JetSplash really move them through a single stall that fast? The wash I go to in the spring (salt removal) takes about 600 seconds. Just asking since that makes it more like a factor of 2 than 10.
I don't know the gear JetSplash uses, but the link below looks roughly the same as what I've seen them use. They claim 400-800 car per day.
I've seen other sites state up to 120 cars per hour. Assuming 750/day @ $20 wash, that's an annual gross of about $5.5M. I doubt they're running at that rate consistently, just at peak. But I would be surprised if $2M wasn't the average in town. That's pretty good for a low labor enterprise.
My local car was has a $20/month subscription for unlimited washes. These aren't exactly luxury services--they're priced similar to a Netflix plan. If you have a car, it's worth it if you value our time at all.
salt on the roads destroys cars. If my car can last a year longer before falling apart that is a lot of monea saved for me. I drive my cars to the end most of the time. Plus a clean car makes my wife happa which is itself important.
It is so simple to come up with excuses. It is raining. No need to go. We are in spring and here it means the dirty season, no need to go. Or it is negative temperature outside, it probably does not dry...
It takes roughly five minutes depending on how long the queue is, so when I'm out running errands I'll stop in. Keeps the road crud (and most importantly, salt) off the car so it lasts longer.
Only if you insist on a spotless car… we haven't actually cleaned ours in years to basically no detriment, and we're im the Central Valley. I'm inclined to agree with gp.
People still use automatic car washes in the US? They've almost completely disappeared in the UK. I've never used one in my life. We have hand car washes and self-service car washes instead (a jet wash). I thought it was well known the automatic ones ruined your paint work.
It’s funny that in Greece we have a similar situation with take away coffee places. There are just too many almost on every corner. And to make it relevant to the article, the last couple years people open coffee-hybrid businesses, like barber+cafe, car wash+cafe, and so on. :-)
Because our country is ultimately designed and developed by urban sprawl madmen with a highway fetish and zero vision for a better way for humans to live and operate.
I love how we hyper fixate on stupid questions about car washes while pretending like car dependency isn't the problem.
The moves to the suburbs was orchestrated. The moves to newer suburbs from the existing ones was orchestrated. The encouragement of driving everywhere was orchestrated.
Not to cause us to need more car washes. But it was by design.
Some of each. There are people opposing efforts to make things better. However there also is a lot that ever step makes things better for someone in particular who thus cares more than the more generic society that got worse.
I thought it was odd to see so many pop up in my small town. They're really "bling" and damage the small town peaceful look. It's really an eye-sore and wasted space.
My car washing consists of occasional use of the gas station scrubber.
How can car washes in the US still go for $10 in these inflationary times, or a fraction of that with a subscription? Here in Australia you're generally looking at A$25 and up ($17-ish at current exchange rates, more until recently).
Because after paying for the equipment and maintenance, the marginal cost of the wash is whatever soap it uses, the electricity, and a few gallons of water (with a recycling car wash).
Selling a teaspoon of soap and 4 gallons of water for $10 is a darn good deal. And if you're already paying all the fixed costs, you want to sell as many as you can.
Interesting, I have had this conversation many times about Montrose, Colorado. There are more car washes there in terms of its size than any place I have ever been and there are more under construction.
It's not just car washes. So many small towns are just gutted by bank branches. Beautiful historic downtowns that used to host shops and restaurants, half of which are banks now.
Will it really be like the coffee market? I don't think so.
Gen Z has the least intent to buy properties, buy cars, how will cars washes sustain in the future?
I live in Florida, where these subscription-only car washes proliferate like kudzu; they’ve crowded out the good old gas station stalwarts that you might or might not get stuck in for several years now.
And the cause for their spread has been widely and publicly known for years: somebody found out that these things print cash. You own the land, you pay for one or two employees on-site max. Once PE woke up to the “strategy,” it was game on.
PE gets excited and overdoes it, wealth extraction hearkens enshittification, corner car washes are the new dollar store.
So I almost didn’t read past the subtitle, what’s actually new here? Oh:
“The omnipresence of the car wash in American life may be underappreciated: There are twice as many car wash outlets as McDonald’s and Starbucks locations combined.”
That’s almost unbelievable. Twice as many as McDonalds+Starbucks!
(Another concern: Who’s on the hook for all the PFAS cleanups when the scheme goes bust? Because you know it won’t be PE.)
McDonalds + Starbucks is a weird connection. You'd think the first thing to compare them to would be number of gas stations ...
186,000 gas stations vs 60,000 car washes.
And a quick sanity check of my town - we have more gas stations than car washes (though some have car washes) and way more burger joints than car washes, and also more coffee shops than car washes.
Psychics are lucrative. They prey on people in the most desperate times of their life and often make off with their life savings. That's why there's one right next to the Louboutin store in Beverly Hills.
"Credit card only" is a sure sign of money laundering: it's a way to game the cash vs credit ratio.
(Edit: maybe "sure sign" is a little bit hasty, but I think the other possible reasons for a "credit card only" sign are actually worse morally than money laundering)
Walter White is dead. More likely that most people with cars no longer own driveways and car washes have been completely automated, so they’ve become a good, economical choice over the years. It’s a lucrative business now.
The real cause - a "turn crank, make money" financial model:
> But the industry’s biggest recent innovation involves its business model, which has increasingly focused on membership and recurring revenue.
...
> Now, washes can take just 90 seconds, labor costs have been automated down, and recurring revenue from memberships has eliminated weather risks. Plus, the tax reforms enacted in 2017 by former president Donald Trump allowed car wash owners to claim 100% depreciation on new equipment — a generous subsidy to further investment. While that incentive was written to shrink over time, the tax proposal currently in Congress would restore the 100% depreciation allowance.
...
> In analyzing usage patterns, the industry soon found that the convenience of wash memberships translated to higher profits. A typical non-member may come in three or four times a year, while a typical member gets that many washes each month. But at $20 a month, that’s a huge jump in annual spending — more than enough to cover the costs of accommodating heavy users who may scrub their SUVs dozens of times a month.
SO - at least where I live, the number of monthly payment/unlimited washes car washes has exploded in recent years. Even so, there's often a line (of very new, very expensive) vehicles waiting at them.
