Executive Summary
A 2012 email discussion among eight Georgist economists on the reliability, mechanism, and policy implications of the 18-year real estate cycle, triggered by the confirmed accuracy of Harrison’s and Foldvary’s 2008 predictions. Participants debate: how confident can we be in the pattern’s regularity, what are the theoretical underpinnings, what exceptions exist (1911 — why no crash? Japan?), and how should the Georgist movement use this moment. Gaffney’s ecological analogy (“fireweed after a field burns”) and Foldvary’s caution (“just a statistical average”) are the key tensions.
Key Arguments
On Reliability of the Pattern
- Harrison: “We can be sure of the repetition of the 18-year periodicity (+/-), subject to the absence of relevant overwhelming shocks: (1) world war, or (2) a reduction in the privatized portion of rental flows.” None of the post-2008 responses altered “the DNA of the capitalist system.”
- Foldvary: “The average period, 18 years, could well be a coincidence… I think the period can be different, and was different sometimes, so we should not get too hung up on the number 18. It is an average, probably nothing much more than that.”
- Gaffney: “Moderately confident… It’s like watching fireweed take over a field after it’s burned over.”
On Exceptions and Anomalies
- Why no crash in 1911? Gaffney: “I think it was the rise of property taxes and frequent reassessments” — led by progressive reformers (Purdy, Johnson, Pingree, etc.). This is direct evidence that LVT works.
- Why was 1857-73 only 15 years? “Something speeded it up” despite the Civil War.
- Japan: No 18-year cycle because “the Japanese banks did not clear their bad debts” — policy can alter timing.
- 1970s disruption: WWII prevented the 1940s boom; 1970s had high inflation distortion.
On Theoretical Foundations
- Harrison: The 18-year cycle needs theoretical underpinning beyond empirical pattern, or “skeptics can get away with saying ‘the future will be different this time.‘”
- Foldvary: Policy can alter timing; the pattern is real but not mechanically exact.
- Dodson: Globalization of property markets has strengthened rather than weakened the pattern.
- Sullivan: “It’s not so important whether the cycle is always 18 years… The important message is that these crises are not precipitated by recent events” — recent bad actors (Enron, Madoff) are consequences of the cycle, not causes.
On Triggers vs. Causes
- Pollard: “The dozens of theories of depression are actually theories of triggers — the events that send us over the brink.” Land costs are always pressing against the margin; any shock tips the system. This is the key PSE point: geopolitical events, pandemics, etc. are triggers, not root causes.
On Media Impact (Harrison)
- BBC World Service coverage of Harrison’s predictions
- Mark Dampier (Hargreaves Lansdowne, £10bn AUM): “These things work in 18-year cycles and it was very predictable. The cause was land prices being too lightly taxed.”
- Vince Cable MP cited Harrison’s book in his credit crunch book
- John Calverley (Standard Chartered Head of Research) acknowledged the 18-year cycle insight in his book When Bubbles Burst
- Financial advisors now use the framework: “the 18-year formulation is entering the analysis of financial advisors”
Harrison’s Critique of Georgist Movement
- “The Georgist movement is locked in a time warp, collectively lacking the imagination and drive to exploit the economic crisis to advance the agenda of fiscal reform.”
- Schalkenbach Foundation described as “frightened rabbits frozen in the middle of the road.”
On the Cause of Regularity
- Achenbaum: May relate to “forgetting curve” or generational turnover of who is at prime investing age
- Gaffney: Boom regions receiving capital inflows bust more extremely; “dull” regions (Dakotas) have much smaller amplitude cycles. Capital-exporting regions may move contra-cyclically.
Predictions Made
- Writing in 2012, all participants implicitly validated the next cycle would follow — next peak ~2026 (+/-)
- No explicit date forecasts in this panel
Notable Quotes
“History says people don’t learn; their lust for unearned increments takes them over after a while. It’s like watching fireweed take over a field after it’s burned over.” — Gaffney
“The 18-year prediction has not only secured me publicity in the UK’s national media, but also international media like the BBC TV World Service.” — Harrison
“The Georgist movement is locked in a time warp, collectively lacking the imagination and drive to exploit the economic crisis to advance the agenda of fiscal reform.” — Harrison
“The average period, 18 years, could well be a coincidence.” — Foldvary (important caveat from one of the cycle’s strongest advocates)
“It’s not so important whether the cycle is always 18 years, or sometimes 17 and sometimes 19, except to the speculators themselves.” — Sullivan
“The dozens of theories of depression are actually theories of triggers — the events that send us over the brink.” — Pollard
Cross-References
- 18.6-Year Real Estate Cycle — the subject of the entire panel discussion
- Mason Gaffney — key participant; his “fireweed” ecological model of the cycle
- Fred Harrison — documents mainstream media penetration of the 18-year thesis
- Fred Foldvary — important caveat about the pattern being an average, not a law
- Economic Rent — root cause being discussed throughout
- Land Value Theory — policy implications
- Property Tax as Cycle Stabilizer — Gaffney cites 1911 absence-of-crash as evidence property tax works
- Geo-Austrian Synthesis — Foldvary’s framework referenced
Source Notes
- The 2012 panel coincided with the CGO (Council of Georgist Organizations) conference in Cleveland
- Format: email discussion among eight Georgist economists, excerpted and published
- All participants are identified Georgist economists/analysts — this is an internal Georgist movement discussion, not external academic peer review
- The panel was written 4 years into the post-2008 recovery, validating the 2008 prediction retrospectively