professor claude what hayek would make of this: First, it targets an ownership pattern rather than an externality. The actual problem is vacancy — empty units that impose neighborhood costs. The proposed solution targets second-home ownership above a value threshold, which is a proxy for vacancy but not the same thing. A second home that's occupied nine months of the year generates no vacancy externality. A primary residence owned by someone who travels constantly might sit empty more than a second home. The tax is aimed at the wrong variable. A vacancy tax — targeting units unoccupied more than, say, 270 days per year — would be more precisely aimed at the actual externality. Vancouver's Empty Homes Tax works this way and is more defensible on Hayekian grounds because it's correcting a specific negative externality through a general rule (any unit, any owner, any value — if it's empty, you pay). The NYC proposal taxes who you are (a second-home owner above $5M) rather than what you're doing (leaving a unit vacant). That's the discretionary-versus-general distinction in action. Second, the $5M threshold is politically arbitrary in a way that reveals the proposal's real function. Why $5M and not $3M or $10M? Because $5M is high enough to exempt anyone who might object electorally and low enough to generate meaningful revenue. The threshold exists to make the policy politically viable, not economically principled. A vacancy tax doesn't need an arbitrary value threshold — it applies to any empty unit. The value threshold tells you this isn't really externality correction; it's targeted extraction from a group too small and too politically unpopular to resist. That's the majoritarian-extraction dynamic Hayek analyzed in LLL Vol. 3, and it survives the critique cleanly. Third, the revenue framing reveals the real purpose. If the goal were reducing vacancy, you'd design the tax to be avoidable — occupy the unit or rent it out and you pay nothing. That incentivizes the behavior you want. But the policy is framed around revenue generation ("this will fund housing programs"), which means the city needs the tax to be paid, which means the city needs the vacancy to continue. A revenue-maximizing second-home tax and a vacancy-reducing vacancy tax have opposite incentive structures. The fact that this is framed as revenue suggests it's a fiscal tool dressed in housing-policy language — which is the Chapter 7 problem again. The "merely economic" framing obscures a decision about who the city wants living in its luxury buildings and what ownership patterns it approves of. The constructive Hayekian response. Not "do nothing" and not "just reform zoning" (though zoning reform remains the structural answer and should be pursued in parallel). The constructive response has three parts. First, if the problem is vacancy, tax vacancy directly. A general vacancy surcharge applying to any residential unit — any value, any ownership structure — left unoccupied beyond a threshold number of days per year. This is a general rule targeting the actual externality. It reaches $50M Billionaires' Row pieds-à-terre and $800K investor-owned condos in Queens sitting empty. It doesn't require determining whether a property is a "second home" — only whether it's occupied. Vancouver and Melbourne have versions of this. It's not perfect, but it's more general, more precisely aimed, and harder to game by reclassifying ownership. Second, remove the supply constraints that make vacancy politically toxic in the first place. The reason empty luxury units feel obscene is that the city has constrained supply so severely that housing is a zero-sum competition. In a city that built freely, luxury vacancy would be an eccentric use of money, not a moral outrage. Zoning reform is politically hard — but the political difficulty is itself a product of discretionary zoning authority that Hayek's framework identifies as the root problem. Community boards exercising discretionary approval over building projects is planning in miniature. Third, accept the tradeoff. Some people will buy expensive apartments and leave them empty. In a free society with secure property rights, that's their prerogative. The Hayekian position is that the costs of allowing this (neighborhood deadness, some wasted housing stock) are lower than the costs of the alternative (expanding state authority to judge how you use your property, politically arbitrary thresholds that ratchet, revenue dependence on the problem continuing). The costs are real. The alternative is worse.