Doom Loop

So, let me posit an argument: As long as the accessibility supplied by highway outstrips the dis-accessibility of congestion, urban areas can keep expanding. As long as the supply of urban land keeps growing at the same rate as demand, land prices remain low. When this ceases, the price of existing urbanized land begins to rise. As those values rise, fewer and fewer people are able to buy, and the rents from that land ownership accrues to fewer and fewer people. This rents enable the purchase of more land, so there is a self-reinforcing feedback loop. Over time, fewer and fewer people own their houses.

Now, this cycle has two possible outcomes: Socialism or Communism. In the Communism case, you get violent revolution by a oppressed proletariat renter class. The US is largely immune, because we have a functional democracy, and can enact 'regime change' non-violently.*

In the socialism case, governments recognize housing has outstripped private ownership for the majority of the population, and start producing 'social housing', where the government owns/rents the land. This is basically where Europe went with post-war welfare states (Britain, Germany). Britain sold off all of it's social housing under Thatcher, permitting people to buy it. It created a one-off surge of Tory home-owners. But now the same problem has re-occurred: The population needs housing, the land is owned by rentier land-lands, and the rent is too damn high.

Fools (conservative and liberal) would like to believe that this dynamic can be fixed by making it easy to buy homes: downpayment assistance, subsidized mortgage rates, mortgage interest tax deductions, home owners property tax deductions. It's foolish because it ignores the underlying dynamic: A fixed supply of land driving increasing land rents.

It's also grossly inegalitarian; it disproportionately benefits the wealthy. Having money (enough to become a landowner) should not be reward by a government handout. Arguably, if it reaches enough people, it's re-distributive. But what share is that? And how shall it be measured? Using the home ownership rate is almost criminal in its duplicity: It reflect people who could buy homes in the last 50 years, not people who can buy houses now.

To my mind, the solution is Georgist: The value of land is not created by private action, but by public investment in transportation. Those outlays should be recouped, in proportion to the degree of value they have created.









*Assuming we have fair boundaries, rather than 'pocket burroughs' owned by one party through gerrymandering....