Excellent explanation. I find the argument plausible. My favorite investments are mineral royalties, which are treated unbelievably favorably. In Texas, which has notoriously high property taxes, royalty interests are only taxed when they are producing income, which means no cost to hold forever, which is why they are the best rent-seeki…
Excellent explanation. I find the argument plausible. My favorite investments are mineral royalties, which are treated unbelievably favorably. In Texas, which has notoriously high property taxes, royalty interests are only taxed when they are producing income, which means no cost to hold forever, which is why they are the best rent-seeking investments, and mineral owners (or their lessees) routinely damage the surface because they don't own it, which undermines one of the key benefits of private property, i.e. the care an owner gives to something he wholly possesses. In stripping out mineral rights, the mineral owner has perverse incentives and obscene profits, which is why I like them in my portfolio! In most countries, the sovereign retains all mineral rights, so it's appropriate they're called royalties. My native Louisiana, in the Huey Long era, passed a law limiting retained non-producing mineral rights to 10 years. A similar reform would help re-unify private property incentives in Texas, but in the meantime, I'll keep collecting my juicy rents.
This is interesting. I've inherited some decades-old coal rights underneath a distant cousin's farm that are unlikely to be exploited in the foreseeable future, which I value at approximately zero. But every now and then I wonder if I'm wrong, and if I should be doing something with them.
Excellent explanation. I find the argument plausible. My favorite investments are mineral royalties, which are treated unbelievably favorably. In Texas, which has notoriously high property taxes, royalty interests are only taxed when they are producing income, which means no cost to hold forever, which is why they are the best rent-seeking investments, and mineral owners (or their lessees) routinely damage the surface because they don't own it, which undermines one of the key benefits of private property, i.e. the care an owner gives to something he wholly possesses. In stripping out mineral rights, the mineral owner has perverse incentives and obscene profits, which is why I like them in my portfolio! In most countries, the sovereign retains all mineral rights, so it's appropriate they're called royalties. My native Louisiana, in the Huey Long era, passed a law limiting retained non-producing mineral rights to 10 years. A similar reform would help re-unify private property incentives in Texas, but in the meantime, I'll keep collecting my juicy rents.
This is interesting. I've inherited some decades-old coal rights underneath a distant cousin's farm that are unlikely to be exploited in the foreseeable future, which I value at approximately zero. But every now and then I wonder if I'm wrong, and if I should be doing something with them.