Micro Georgism
How to Fairly Split Rent and Chores
In our last post, we made a bold conjecture: that Georgism will be realized starting on small scales and propagating upwards in a grassroots manner. In that post we focused on one step down from the scale of a city: the smaller city-like centers of location value such as malls.
In this post, we’ll take up this same thesis again, and step a few more layers down the scale ladder to look at where Georgism has the answers for fairly splitting shared resources between as few as only two people. Consider this problem:
You and I rent an apartment together, with two bedrooms. One is nicer than the other, and we both want it. How do we fairly determine who gets it?
Feel free to take a moment here to consider what your course of action would be.
You might say that we should resolve this with a coin toss, or that the first person to arrive on move-in day gets their pick. Neither of these methods fixes the underlying issue: the person who gets the worse room is excluded from using the nicer room without compensation for their loss.
Your intuition might have led you to answer that the nicer room should command a larger share of the rent, and this is the right direction. Georgism tells us that common resources should be rented at their value.
We could try to determine this by market prices for the rental of similar rooms, but this is merely considering the average value that people in the neighborhood would give to the room. What actually matters is how much the two of us value it, because it’s one of us that’s going to be excluded from it. Here’s how we figure that out.
We start by taking the base rent we owe to our landlord and splitting that cost evenly. We now consider the rooms as a common resource that we just need to split between each other. Next, we find how much rent is owed to the person that is excluded from the nicer room by auctioning it.
Individually, we decide on how much we value the nice room: the amount of monthly rent we’d be willing to pay for having it, but above which we’d rather take the cash and accept the worse room. The winner is whoever bids higher, and they owe a monthly rent to the other person that is equal (or close) to the loser’s bid. An English auction is a good informal format here: bids climb higher until one person is no longer willing to bid more. The winner pays a value that is just marginally higher than the second-highest bid value.
Like in Georgism, the common resource is rented at whatever society values it to be, where society in our scenario is just the two of us, and the value is determined by how much anyone else would be willing to pay to have it.
A wonderful thing about auctioning the nicer room is that it can be repeated whenever people’s values change. If the person with the worse room decides a few months later that they actually value the nicer room more than they’re being compensated for, they can ask for a re-auction. Same thing is true if the winner feels that they’re paying too much for the nicer room. After the re-auction, the rent is set to whatever its new value is, with the winner being whoever now values it more.
This method also works for more than two people. Start by auctioning the best room, with those monthly rent proceeds being evenly split among everyone that doesn’t have a room yet, then move onto the second best room, and repeat.
We can also apply this to the use of space in common areas: space in bookshelves, the pantry, the fridge and freezer, the shoe rack, etc. Splitting the resource in equal fractions is always an option, but often there is a difference in the amount of value that each person places on the resource. In these scenarios, the auction provides the key for fairly splitting a resource in unequal fractions.
How about chores? We can again find answers from Georgism, where the creation and consumption of value are viewed as continuous flows in time, unconfused by the effect of temporally bunching value into capital. Here’s the idea:
All the housemates pool a fixed amount of money each month, say 5% of rent, that is used to reward the completion of chores. Within this pool, percentages are determined for the various tasks of cleaning dishes, taking out the trash, vacuuming, etc.
Now, consider these monthly rewards to be continuous flows of value. If $15/month is set aside for taking out the trash, then that’s the same as $0.50/day. When the trash is taken out, the person that does the chore claims all of the reward that has accumulated since the chore was previously completed. So if it has been a week, they claim $3.50. If it’s only been two days, the reward is $1.
This way the reward grows linearly with the amount of time that has passed since it was last completed, and the size of the reward flow can be tuned to encourage a higher or lower frequency of chore completion.
If everyone does exactly their fair share of the chores, there is no net exchange of money. But if someone doesn’t, the people that pick up their slack get compensated for their greater contribution.
There is often an aversion to using methods such as these in friendships. Money, we are told, sours relationships. And it’s true. Money often does sour relationships. But such issues usually arise not just when money is involved, but when money is involved and not talked about.
If I claimed the nicer room, and then we decided that we’d figure out how much more rent I owe “later,” then we’re setting ourselves up for a very difficult discussion when do attempt to settle the issue. I may have viewed the nicer room as being worth $50/month more in rent, while you might have thought it was worth $200/month.
Whatever happens, one or both of us is going to have to accept a perceived monetary loss, and one or both will suffer from a perceived lack of generosity. These issues can be forgiven for the sake of the friendship, but it’s not always easy.
Or, if I let you have the nicer room, and never ask for compensation, then there’s risk that the perceived inequality will simmer in the back of my mind and subtly degrade our friendship.
At the end of the day, money is nothing but a medium for the exchange of labors, a proxy for our limited time and energy on this planet. If anything is to have a value in this world, it should carry a price.
Can this help move the needle on larger scales?
Applications of Georgism on large scales are arguably harder to achieve so long as individual people don’t recognize the value of justly sharing scarce resources. First-in-time is still the dominant lens through which people justify low-fee land ownership. Claiming the nicer room on move-in day applies the same first-in-time ownership story.
If people don’t see the value of telling a better and more equitable story in their personal relationships, how can they reason about its value in something as complex as the economy? The small scales are the low-hanging fruit: where the benefits of Georgist thinking are most obvious, and where the fewest number of people need to be convinced for a mutually-beneficial outcome to occur. This is where good ideas have the greatest potential for spread. Tell your friends!
Aha! I had thought of the nicer room issue, as settled by Georgism, before. Even tried using it to explain Georgism to a friend. I hadn’t applied it to chores! This is great. It reminds of an oft employed board game mechanic where, after everyone has chosen squares on a board, you place resources on unchosen squares on a board as an incentive to choose those squares in subsequent turns. Those extra resources pile up on the undesirable squares until someone selects that square.