I heard this on NPR the other day:

RENEE MONTAGNE, HOST: And our last word in business today is: Premium Parking. A parking spot in London is on the market for $465,000. That buys an outdoor location near Buckingham Palace and a 91-year lease.

DAVID GREENE, HOST: The price tag is more than two spots sold in Boston this summer off and go for $280,000 apiece. But with London’s daily parking go fees running at $60, it’s actually a deal actually – at only $14 a day.

MONTAGNE: If you park there for 91 years.

GREENE: If. That’s a big if. That’s the business news on MORNING EDITION from NPR News. I’m David Greene.

MONTAGNE: And I’m Renee Montagne.

(SOUNDBITE OF MUSIC)

First let me say that this is clearly wrong and that, just like any purchase of land or space (two intertwined but distinct concepts) one need not intend to use the parking spot for 91 years; the lease is a proprietary contract that one’s heirs can inherit and continue to gain value from, either in parking their cars or charging others for the privilege. This is a perfectly sensible contractual exchange of land-use rights that just sounds silly to NPR hosts.

But more importantly it goes to some of the points I was fumbling at in this post about land, rent, and political economy. This parking spot is being leased, and therefore is owned; and the individual who owns it therefore has an interest in the value of that spot increasing in real price. A parking spot, especially one on a surface lot, is almost all space-value and no capital-value or labor-value, and therefore its price will be largely determined by the price of comparable space. But we don’t want space prices to go up! As societies get richer the price of land in urban cores will inevitably rise, but the price of space doesn’t have to as long as you increase the space:land ratio, something markets could do if only we would let them.* In a world where policymakers decided that parkingownership was as American as apple pie, one could imagine a vast network of tax incentives and other encouragements set up to allow every American to own their own parking spot, but the political economy of that would end up likely impoverishing us all.

On the other hand, though, economies of scale and access to capital (among other things) would likely lead to parking being consolidated in the hands of a relatively few large operators and developers, which is currently the case – while Bud Doggett seems like he was a really great guy, it’s worth noting that “parking lot tycoon” is an actual thing, and currently you can see that Colonial Parking seems to own a whole lotta lots downtown. This means that most drivers into downtown DC are paying rents to landowners who are getting loaded without actually doing anything terribly productive. This, of course, creates a concentrated interest that can manipulate the political system.

This case, though, which doesn’t include any of the more ethereal questions surrounding homeownership, is a more clear-cut case for just taxing the heck out of land.

*Eventually, of course, having a higher space:land ratio increases the value of the land even more, but this process cannot continue forever; there is probably some socially-optimal ratio one could puzzle out depending on city size and population, land values, and fixed-factors like “do people want to live on the top floor of a 250-storey building?” But that’s the opposite of our current problem.

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