Rethinking the Economics of Land and Housing

by Josh Ryan-Collins, Laurie Macfarlane, Toby Lloyd

Why are house prices in many advanced economies rising faster than incomes? What is the relationship between the financial system and the price of land? In this accessible but provocative guide to the economics of land and housing, the authors reveal how many of the key challenges facing modern economies, including housing crises, financial instability, and growing inequalities, are intimately tied to the land economy.
 
Looking at the ways in which discussions of land have been routinely excluded from both housing policy and economic theory, Rethinking the Economics of Land and Housing argues that in order to tackle these increasingly pressing issues a major re-thinking by both politicians and economists is required. This is the first comprehensive guide to the role of land in the economy, making this an essential reference for students, scholars, policymakers, activists, and NGOs working on land issues.
 

Genres: Economics, Nonfiction, Urbanism, Politics, Urban Planning, Business, Urban Studies

280 pages, Paperback

First published July 15, 2017

Reviews

[Anna · Rating 4 out of 5]

Reading 'Rethinking the Economics of Land and Housing' gave me a strong sense of deja vu, as I studied much of what it covers as an undergrad, worked within it as a Local Planning Authority employee, and taught it as a postgrad. Thus I read this book because I thought I ought to, rather than because I really wanted to. Nonetheless, I’m very glad I did because it is an excellent synthesis of the problems of land and housing markets in general and their British manifestations in particular. In thorough, systematic, well-referenced fashion, the authors explain how neoliberal economics cannot grasp the specificities of land as a commodity and housing as an asset. As a consequence, neoliberal land and housing policies have promoted economic instability, inequality, and housing shortages. The focus here is on land, which is unusual and critical. Neoclassical economics bundles land in with other capital, leading to the idiotic assumption that, as with other forms of capital, its supply can grow easily. Land cannot in fact be manufactured at will and its ownership thus creates market distortions and path dependencies.

The book begins with a brisk discussion of tenure, noting that it is much more heterogeneous than often assumed. There is a brief history of land use in Great Britain and its political implications. One fact that stood out to me as genuinely shocking was that London had a higher death rate than birth rate throughout the 19th century. The immense growth in the city’s population was therefore entirely due to in-migration, as it was such an appallingly unhealthy place! Whenever I read about Victorian cities, I marvel that anyone survived to adulthood in the face of primitive & unregulated medicine, absent sanitation, industrial pollution, lethal working conditions for children, and the exciting variety of infectious diseases. After explaining the rise of the planning system and the Garden Cities movement, the current situation is described. I particularly liked the explanation of why more social rented and private houses were built in the 1960s:

The years in which the state built most were also those in which the market built most, suggesting that state supply caused little if any crowding out of private investment. If anything, the opposite was true, as relatively small regional and local building firms were able to take contracts to build homes for the council, while financing a few speculative homes for sale themselves. If credit was hard to come, or sales low, these builders could keep themselves in business and their staff in work by continuing to build for the council.

By contrast, the UK state now builds essentially no homes at all and every dip in house prices leads to further consolidation in a highly oligopolistic house builders market. Five large firms build most of the new houses in Britain, consisting of the same poky, ugly, poor quality boxes everywhere. Unfortunately that isn’t just my opinion:

The concentration of the industry and barriers to entry have lowered competitive pressure, and militated against product innovation, with the result that new homes in Britain are widely seen to be unattractive and poor quality, with only 18% rated as being of good or very good design. Fully two-thirds of home buyers say they would not even consider a new-build – an extraordinary indictment of the quality and size of home that the industry produces.

I recently became a first time buyer, an extremely exciting step. When viewing potential homes, I absolutely did not consider new-builds and ended up purchasing a 120 year old tenement flat. This was based on not only my academic background, but also experience of living in more than twenty homes to date. The newest place I ever rented was also the worst in quality: the shower cubicle had been installed upside down, there was practically no insulation, the fittings were shoddy, the walls apparently cardboard, and the paint on the walls dissolved when splashed with water. It was chronically damp and mould grew on the (cream) carpets and curtains. The rooms were small and the garden a tiny shaded patch of tragic turf. The ongoing battle to cope with this slum was definitely a bonding experience for my housemates and I, albeit one we could have done without. While living there, ironically, I was working in local government planning. In the halcyon days before the financial crisis, I wangled a place on a trip to look at good examples of new housing in The Netherlands. The massive gulf between the quality and thoughtful design over there and the Barratt Boxes of Britain was astounding.

Personal anecdotes aside, I was impressed by the clarity of writing and the range of empirical evidence marshalled in support of their points. As this is a short book, it didn’t cover every single counterproductive housing policy introduced in the past eight years. Two unmentioned changes are worth noting. Firstly, the softening of local planning authority (LPA) powers to use section 106 agreements to get housing developers to provide or contribute to infrastructure. This was always an erratic way of clawing back some planning gain from developers, dependent upon LPA ability and willingness to negotiate. Cuts to national and local planning departments, together with government guidance than developers should be able to renegotiate S106 if they don’t want to pay, has further stymied its use. Secondly, another recent innovation is the conversion of offices to homes becoming permitted development, not requiring full planning permission. So far this is leading to flat conversions of truly impressive squalor, as discussed in this Guardian article: 'As small as 13 sq metres: are these the worst new flats in Britain?'

After consideration of the planning system, ‘Rethinking the Economics of Land and Housing’ moves onto the banking system and how mortgage lending became motivated by the lure of securitisation profits. This chapter explains clearly how the housing market played into the 2007/8 financial crisis in the specific British context. I’d forgotten how many building societies disappeared in such a short space of time: remember Bradford and Bingley? Alliance and Leicester? This chapter also includes a helpful reminder of one very significant difference between US and EU (including UK) mortgage markets: in the US, you can default on your mortgage, the lender will foreclose on your home, and you can walk away. In the EU, you can default on your mortgage, the lender may foreclose on your home, but even if they do you cannot walk away. If there is still mortgage debt outstanding after the foreclosure, you are still personally liable for it and the lender can collect the debt from your other assets and future income. This appears to deter mortgage defaults in Europe, as borrowers can’t escape. It’s also a reason why the risk assessment of US mortgage-backed securities was incredibly stupid. Obviously if US house prices started to fall and negative equity manifested, there would be a wave of defaults! Assuming that bundling different tranches of mortgages together diffused the risk was deeply misguided. Wilfully misguided, as those selling the mortgage backed securities were making massive profits.

The book concludes with a chapter on inequality in Britain, which has grown with housing costs, and a series of sensible, measured suggestions for reform. As the rest of the book makes clear, the problems of land and housing in Britain are complicated, of long duration, and not amenable to quick or simple solutions. A series of reforms over time could help, including land value taxation, which I remember teaching students about. Given how economically rational it is, I asked them, why do you think it hasn’t been implemented? Who do you think would get the highest bill? I am nearly certain it would be the royal family, followed by members of the House of Lords.

Other proposals borrow from overseas, for example public land acquisition for transport infrastructure-led development, as used in Singapore and Hong Kong. Some of the less ambitious measures were being mooted in local government back in 2007, but then 2010 brought us the Coalition government, local councils were hit with brutal budget cuts, and my entire team was made redundant. All innovation has doubtless ceased, as local authorities now struggle to fulfil their basic statutory obligations. The banking and tenure reforms proposed also seem reasonable, including much better protection for private renters. I likewise appreciated the suggestions that public accounting should not penalise the state for investing in affordable housing and that economics students should be taught that land is not just another form of capital.

All things considered, a well-structured, accessible, and quietly radical book. I highly recommend it to anyone wanting to better understand why the British housing market is so terrible. I wish it had been around when I was an undergrad student. Although the more recent disasters it describes had not happened back then, their causes were already in place. 2003, the same year I started my undergrad degree, home ownership in Britain peaked and has been falling ever since. Whether ownership should be promoted as the politically preferred housing tenure aside, the fact is that in British law it offers security that other tenures do not. The home ownership peak was indicative of social housing stock falling and more of the population being forced into the private rental sector. A trend that continues to this day.

[Mike Scialom · Rating 4 out of 5]

An understanding of the role of land in the economy is urgently needed in order to resolve “the paradox at the heart of land ownership”, say the authors of a new book, Rethinking the Economics of Land and Housing (Zed Books, £14.99).
Tracing the history of the sector from the 17th century when enlightenment thinkers developed the notion that land could be turned into property, Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane show how land values have vastly increased since housing replaced farming as its primary economic use.
The result today is that “in the UK housing is by far the largest single source of wealth”, with dwellings (residential and commercial) valued at £4.43 trillion – 58% of the entire net wealth of the nation.
And the values are increasing: “since 1970 housing has accounted for 87% of the increase in the wealth-to-income ratio, and included in the measure of housing is the land that sits beneath the buildings”. Yet this wealth is decoupled from economic activity – rent-seeking involves getting a larger slice of the pic rather than increasing the size of the pie itself – and the result is a nation of housing haves and have-nots.
“There is a paradox at the heart of land ownership,” say the authors, whose fresh look at the topic comes with backing from the New Economics Foundation. “The spread of ownership of land has helped drive economic development, democratised power and spread wealth; yet, we argue, it equally has a tendency towards concentration and monopolisation of resources via excessive rent extraction with increasingly negative economic impacts at the aggregate level, even as the paper wealth of those owning property may increase.”
The issue is this: when the value of land under a house goes up, “the total productive capacity of the economy is unchanged or diminished because nothing new has been produced”. Diminished? Yes, because housing is both an investment good and a production good. We currently have a situation in London where 60% of average wages is spent on rent. This mean less cash is available to spend on goods and services, so the wider economy then suffers – people eat out less, buy smaller cars, take fewer holidays and so on. It’s not just individuals who are the mercy of this equation either – firms have to spend money on rent which could have been used for more productive purposes, such as R&D.
Ignoring the decreased flow of resources to the rest of the economy and only using accounting frameworks which measure the increasing wealth of landowners “has contributed towards the divergence between measures of wealth and the productive capacity of the economy”. And wealth inequality rises further when the previously public housing is switched into private ownership on a large scale because “it narrows the distribution of wealth even if house prices do not change”. That’s why “the average net property of the top 1% of households is £15m”.
The authors present a range of solutions to the issue which include tweaking the banking model towards “relationship banking” which has “stakeholder banks” with regional needs at their core, introducing a land value tax (“the most efficient form of property tax”), plus a shift in planning laws requiring developers “to ensure that part of the planning gain goes towards benefiting local communities”.
Some of these solutions are already being implemented, of course, but the point is that such measures need to be encouraged because if the sector is built solely around making profits for developers, banks and investors, the longer-term outcomes may actually not be in their interests – and there are signs that the current status quo is acting as a brake on an economy facing significant other challenges to its equilibrium.
This review also appears here: http://www.ukpropertyforums.com/8711/...

[Stephen Cook · Rating 4 out of 5]

Excellent introduction to the economics of land and housing, and the implications for public policy.
In brief:
1. The role of land has been mostly overlooked in economic theory for a century or more.
2. The UK's land and housing markets are dysfunctional, which distorts the economy by locking up resources in economic rents that primarily benefit the wealthy.
3. The UK's macroeconomic management is dysfunctional, and this is difficult to fix because of the extensive vested interests in land price inflation.

[Lindsey Buck · Rating 4 out of 5]

"It is quite true that land monopoly is not the only monopoly which exists, but it is by far the greatest of monopolies - it is perpetual monopoly, and it is the mother of all other forms of monopoly." -Winston Churchill. This book does an amazing job of reexamining neoclassical theories of capital, land, and labor. It makes a great argument for restructuring of our housing markets, financial systems, and public infrastructure in order to create a more equitable distribution of wealth in the UK and the US. It also makes an interesting critique of Thomas Piketty's "capital to income ratio," (from "Capital in the 21st Century), by asking for two separate ratios, one of them being a "wealth to income ratio." The authors argue that the different characteristics of land (the fact that it does not depreciate, is immobile, and supply cannot change) make it separate from capital. They even create an interesting graph showing for a "capital/wealth to income ratio" with and without wealth accumulated from housing markets. Ultimately, this book makes a very intriguing argument for supply-side changes such as public housing options, land value taxes, and tenure restructuring. My only complaint is that it got a little dry sometimes and could be slightly more accessible to general audiences. It will make you want to read and become a follower of Henry George. Love, love, love this book and would recommend it to fellow economists.

[Tim Mort · Rating 4 out of 5]

Land is treated like all other capital in current mainstream economics. But this fails to account for the fact that land is scarce, and cannot be created like other forms of capital.

The authors argue that this has caused lots of problems for our modern economy. The key ones including inequality, large amounts of economic rent being captured by landholders (economic rent = not good), and poor allocation of debt to unproductive uses in the economy.

While I agree with the authors arguments, they prefer increased state intervention to fix the issues. Some other solutions they mention I favour more, such as a broad based land tax, and less restrictive zoning/planning laws.

[Lisa Pontén · Rating 3 out of 5]

While providing some good insights - especially relating to how neoclassical economics blatantly excluded the question of land economics from their theoretical outline and how this has had catastrophic consequences for the world as a whole - it is in my opinion not going far enough to suggest real alternatives.

The first part on history and how the land question came to be excluded in modern neoclassical economics is worth reading; the latter part, with suggestions regarding how to 'correct' this, does not go far enough and the UK focus is perhaps interesting for policy-makers who wish to keep the system as it is today, which is a category to which I certainly do not belong.

[Viktoria Kondranina · Rating 5 out of 5]

The book is truly an eye openers when it comes to the true meaning and the true place of land & real estate in people´s perception of welfare and wealth. It´s an absolute must-read for everyone who wishes to understand why houses prices grow uncontrollably, who is responsible for that and what it means in long-term perspective.

[Krishna Kalpathy · Rating 5 out of 5]

Significantly changed the way I think about a bunch of things, which is usually means I liked a book. The book spends most of its time critiquing the framing used to discuss housing economics. It makes the point that neoclassical economics conflates land with the rest of capital and ignores its unique attributes. This causes a bunch of problems for how we evaluate its impact on the economy. The authors demonstrate pretty clearly the problem of “economic rent” and this why land ownership itself is problematic. My one criticism is that only a single chapter is left for solutions. They present some cool policy interventions, economic models and educational approaches, but none of these is fleshed out or given the benefit of any empirical analyses.

[Patrdr · Rating 4 out of 5]

The use of land and the price and distribution of housing are important matters for economic well-being. Generally I found this to be a well-written, well-argued and informative book.
But I do have some niggles.
1 The authors are definitely glass half empty (and indeed glass prone to shatter catastrophically) when it comes to contemporary market economies. Property is both freedom and theft. They acknowledge the duality, but they definitely vear to the theft side of the pendulum in their interpretation. The reader comes away with more fear of the problems of rent-seeking and monopolistic abuse on the part of land-owners then of the benefit-side of home owning for individual responsibility and democratic institutions.
2. There is a tendency to proclaim a fatal flaw in 'orthodox' economics on the part of people who pick a particular part of the economy and note that undergraduate micro and macro (or even non-specialist advanced micro and macro) do not adequately address the unique characteristics of their special topic. There is a point to this. Sometimes overly simple models are the foundation of policy advice. But I think the answer is probably doing better and more careful economics rather than saying the basic edifice is rotten. And in general I think what the authors do in this book is recognizable as standard economics.
3. All markets rely to a greater or lesser extent on legal and institutional foundations. Land is not unique in that respect. Land use and land taxation are vitally important and they have not been ignored in economic analysis. The authors are somewhat more eager to identify market failures than to recognize the possibility of government failures. They would probably find the government failures mostly in bending to vested land-owning interests (as opposed to well-meaning planners simply botching things up).

[Jfriera · Rating 5 out of 5]

Tiendo a desconfiar de la regulación, en ocasiones está justificada, pero si tengo que elegir prefiero más libertad y menor regulación. Este libro propone algunas medidas destinadas especialmente a mitigar o incluso evitar el potencial papel desestabilizador que tiene el sector inmobiliario sobre la economía por la vía de la financiación. No puedo decir que esté o no en desacuerdo con ellas, total o parcialmente, hasta que no lo valore con más detalle, pero seguro que merece la pena investigar con mayor profundidad las cuestiones que los autores tratan, por ejemplo: ¿son los terrenos (land) un factor productivo diferenciado del capital?, ¿cómo contribuye la financiación de las viviendas por la vía hipotecaria a la inestabilidad macroeconómica?, ¿cómo afectan los distintos regímenes de tenencia de la vivienda a dicha estabilidad?, ¿es cierto que la desigualdad está cada vez más entre los que tienen propiedades y los que no y no tanto en los ingresos de cada uno?, ¿se puede afirmar que el sector inmobiliario se ha financiarizado? (disculpas por el neologismo). Es decir, se trata de un libro centrado en los efectos macroeconómicos de la evolución reciente del sector inmobiliario en el Reino Unido (pero perfectamente aplicable a otros países como España).

Lo que no encontraréis es un análisis microeconómico del sector y de las políticas más comentadas en los últimos años como son la dificultad para los desahucios o el control de las rentas de alquiler.

Aunque uno sea más bien liberal, su lectura es muy interesante y cuanto menos hace necesaria la revisión de la teoría económica y de las experiencias internacionales para bien rebatir o aceptar sus principales conclusiones y la políticas propuestas.

[Otto Jacobsson · Rating 3 out of 5]

I was initially very excited to read this book as I thought it would be hard look at the role of land in the current affordability crisis, from an economics perspective. Whilst this is true, unfortunately the authors seem more willing to engage in bank-bashing than criticising the truly vested interest in land - e.g. property developers.

For example, on p. 131 the authors try to explain how banks fund their lending activities besides deposits. Not an easy topic, but they manage to make a complete mess out of it. First of all they restrict themselves to money markets, which, as they correctly point out, usually involve instruments maturing within one year. They fail to describe the bond market.

Another problem is that there seems to be no understanding of the difference between a covered bond and securitisation generally, as the former is not explained but mentioned together with the latter. An uninitiated reader might expect the two to be the same. Ironically, Denmark’s covered bond market is later used an example of a well functioning funding market!

Finally, in the the proposals section the authors celebrate the hyper-local German banking market as an inspiration for the U.K. I guess they are not aware of the immense pressure in Germany to consolidate the banking sector as it’s seen as too inefficient.

I applaud the authors attempt to bring land into focus but the book has some serious drawbacks which I can’t help to think are politically motivated.

[বোন রোদ · Rating 3 out of 5]

6.5/10

Well, damn. I did not come in here expecting to enjoy this book as much as I did. Let’s be very clear here, this was a textbook. It was assigned reading for my real estate module. And yet, it absolutely blew me away, multiple times, and has completely changed the way I think about land and housing. In that way, it has certainly achieved its goal set out in the title.

Now, let’s be very clear. This isn’t written as an entertaining book. It’s not like Happy City or Architecture of Community where there’s personal stories or illustrations throughout to keep you engaged. But it was by no means a slog to get through. It could very easily have lost itself in academic and technical jargon, and become inaccessible to the layperson, but I am very happy to report that at very few points throughout the book did I feel like something was going over my head. In general, this is a book a secondary school drop-out could pick up and still understand everything.

And yet, the beauty of it is that a university student studying planning could pick up a book about housing, and still be shocked by how much new information it’s dropping on me. Truly, this book should and can be read by anybody.

Don’t be fooled by the relatively low score (but relatively high by my books). Just because it didn’t exactly move me to tears doesn’t mean I’m not very grateful and happy that I read it.

[Jonas · Rating 3 out of 5]

Would have loved to give more stars given the super interesting topic and all the different comparative, historical, political, legal and economic insights the authors bring together.

However, a few things increasingly bothered me.

1. The undifferentiated and repetitive bashing of "neo-classical" economics. This was fine and interesting as a separate chapter, but the authors increasingly built
a strawmen (e.g. picking out specific assumptions in simple reductionist economic models without putting them into context) and framed themselves as going against the establishment in a way that was unhelpful for the discussion, became annoying to read and felt unnecessarily populist.

2. Some of the economic arguments just didnt make much sense to me. E.g. the alleged crowding out effect that housing credit by banks has on other productive investments. Very little research is cited here and the economic argument is not clear in a world with low interest rates. Would have rather liked to see the authors acknowledge this point than to claim that the housing problem explains UK productivity underperformance.

[Adam · Rating 4 out of 5]

Rethinking the Economics of Land and Housing is about what conventional economics gets wrong about land, and how that affects us today.

In short:

Land derives value from its use, which has evolved over time: agriculture, industrial production, concentration of knowledge work in cities, etc
Land (and the rights to it) are finite and last forever, unlike other assets (cash, stocks, bonds, etc) which are finite.
Thanks to deregulation and derivatives, banks now prefer mortgage lending over lending to businesses.


The result is a “financialization of land” that has cause land values to explode while diverting bank lending from productive uses like lending to businesses.

The core message is very important. This would be five stars, except that it’s repetitive in some areas, and far too light in others. I would have liked more discussion of how mortgage lending was deregulated, along with statistics about mortgage vs business lending.

[Joni Baboci · Rating 5 out of 5]

An amazing book dealing with the financial and economics aspects of land, land use, housing, and urban economics in general. It's a fantastic compendium of information on these topics, dealing with the historical details of private property, criticizing the neoclassical approach to dealing with land simply as capital and delving a bit on future potential financial and fiscal approaches. It's a bit particular and grounded in British history and examples, but still most of the topics are easily generalizable, and using the UK as a baseline works because of their idiosyncracies and fairly complex land system. Highly recommended!

[Tommy · Rating 5 out of 5]

Really good summary of the history of economic thinking in land; why land was ignored for so long as a unique input to production; and how that ignoring led in part to the problems today of housing unaffordability, economic stagnation, and inequality. The dialectic thinking about land as both "freedom and theft" really hits.

I am becoming increasingly convinced that all of society's problems are essentially the result of poor land use and bad institutions around land ownership. The policy prescriptions at the end were interesting. The most obvious is a land-value tax but there was more.

Read the book and take the land pill!

[Martins Untals · Rating 5 out of 5]

For years I have had this nagging feeling inside that something is wrong in the state of denmark, scratch that - in the way how real estate influences everyones life, how important it is and how detached from daily sense of fairness anything related to property often feels.

This book has done very good job in exploring darker sides of real estate, land, mortgages and ugly side of externalities that we all endure with it.

Must read for anyone trying to improve knowledge about history of public policy, taxation and finances in the field of real estate.

[Winmonroe · Rating 4 out of 5]

This is a superb book on one of the most pressing economic challenges of our times. Much like Ryan-Collins book on money and banking, this book provides an excellent and accessible overview of the economics of land and housing. It contains a thoughtful and balanced challenge to orthodox theory and policy in addition to useful historical and political context. The economics of housing and land continue to be an increasingly critical issue as the cost of living has increased and this would be one of the first book I would recommend to anyone interested in the subject.

8/10

[John NM · Rating 3 out of 5]

Lots of very interesting history and institutional details as well as some important aggregate facts that don't get enough attention in the mainstream literature. But ultimately the core conceptual framework is just a bit of a rehash of Georgism/classical views on land. Those aren't completely wrong, but I'm not sure they're sufficient to grasp all the important mechanisms operating in contemporary housing markets.

[Sean Thompson · Rating 3 out of 5]

I thought this book offers a really good challenge to neoclassical economics' completely inadequate/wrong approach to Land and housing - and especially the relationship to finance - but the book is still very much a product of British economic thinking, which lead to a really weak section on alternatives. There are many examples of effective housing approaches around the world, and I think some exploration of these would have been much more compelling

[Tim Staub · Rating 5 out of 5]

Overall this book does a very good job at reminding us that land plays a significant role in the worlds wealth and power structure. This should be read to all those who see themselves as armchair economists and believe that deregulation or taxing capital will resolve the deeper issues.

[Luca · Rating 5 out of 5]

One of the most interesting books I found in the last years. It helped me realising that land should not be considered a  normal asset, and that it is a major contributor to the imbalance of western economies. The recommended solutions are a bit disappointing, but it is a great book nevertheless

[Emma Walters · Rating 5 out of 5]

Really enjoyed this - a good balance of explaining economics concepts, historical analysis and building up an argument for the state of British housing today. The policy section could have been a little longer, but can understand why they felt it was better to keep the speculation brief.

[Jawwad Khan · Rating 5 out of 5]

Excellent

[Jakub Lupták · Rating 5 out of 5]

Very good, concise and informative with a balanced view on the issue. Recommend to everyone.

[Max · Rating 4 out of 5]

A well structured book presenting a strong argument, with lots of citations to useful research. I did, however, spot a few minor factual errors which pulls it down to four stars

[その人 · Rating 3 out of 5]

I guess it works as a good introductory text to the topic. While it is good at curating the insights of others and provides a good overview on the problem of housing, it offers nothing revolutionary on its own and I thought it was a bit ambiguous on what has to be done about the issue.

[Chris]

Though I struggled with the econo-speak, the coded language of Economics, this book was an excellent analysis of the housing crisis, how we got here, and how we might create a way out.
How we go here is through random economic theories, universally applied and assessed without equal weight given to those the theory du jour doesn’t work for.
Through lumping capital and land together as assets. Land is finite—there is not more of it to be made—and infinite—it is eternal, does not disappear (though this may need to be reconsidered in the time of climate crisis and rising sea levels). Capital: buildings, equipment, vehicle depreciate. This disregard for the particular nature of land in personal and business accounting has created economic cycles that increasingly generate growth based on non- production. Banks create money by creating loans backed by land which are then used to boost consumption. Banks are decreasing the amount of loans to productive work. This cycle drives the price of land and housing up while keeping wages stagnant.
Deregulation through the 1980s precipitated the financial collapse of 2008 and the current housing crisis.
The authors offer a number of solutions to rectify the inequity of current policies. One solution is to account for Economic Rent—any return deriving from the posession of a scarce or exclusive factor of production, in excess of the cost of bringing it into production. (Land has no cost of production so any payment for it’s use is economic rent).
Another solution I was personally intrigued by is the Land Value Tax (LVT). Such a tax would lower land prices while diminishing buying land for speculative purposes. Also, since land cannot be moved or hidden, it is immune to the tax reduction and evasion practiced by corporations in our globalised economy.
There would be a windfall loss for owners of land with the institution of LVT, the author presents numerous ways the effects of that loss can be mitigated.
Another solution is tax reform that would make various types of tenure ( ownership, lease, rent...) equally advantageous.
And most importantly, particularly here in the US—the majority of examples and descriptions in this book are from conditions in the UK, though there is quite a bit of overlap—is the establishment of a robust social safety net— national health care and education— so households are less prone to invest in housing to pay for their retirement or to fund care in old age.
Reading this history of economic failure and prescriptive for its remedy, a remedy that faces political challenges before it will be implimented, I read this line from Gina Apostol’s “Insurrecto”: “...what the fuck is the point of knowing history’s goddamned repetitive spirals if we remain its bloody victims?”
Rethinking The Economics Of Land Etc... is valuable for the possible routes it lays out to a more equal, more just, more humane, society.

[Sung Won · Rating 4 out of 5]

감정을 배제하고 데이터와 논리에 기반한 경제학책임에도 불구하고, 다른 어떤 격정적인 소설보다도 더 나를 격정의 소용돌이로 몰아넣었던 책이다. �� 책에 따르면 땅값이 소득보다 빨리 오르는 이유는 땅과 금융의 피드백 때문이라고 한다. 금융 규제 완화로 은행은 부동산 담보 대출을 많이 해주게 되면서 사람들은 빚을 내어 집을 살 수 있게 되어 집값이 치솟는다. 집값이 오르면 사람들은 "부동산의 사다리"를 올라가기 위해 더 많은 대출을 받을 수밖에 없고 결국 은행만 이득을 본다. 그러면 은행은 더 많은 채권을 발행할 수 있고 또 부동산 가격을 높이게 된다. 지대가 높아지면 임금과 생산적 투자가 성장에서 차지하는 비율을 낮아진다. 증가하는 집값과 가계부채가 원인이 되어 경제가 충격에 취약해지는 악순환에 빠지고 2007년과 같은 금융위기가 오게 된다.

주류 경제학에서는 땅의 고유한 특징을 경시하고 자본과 땅을 생산수단으로 묶어버린다. (상품, 노동, 자본의 공급은 수요에 따라 쉽게 조절된다고 보지만, 땅은 당연히 그렇지 않다.) 그 결과, 다른 생산수단은 시간이 지나면서 감가상각이 발생하지만 땅은 주위 인프라의 발전으로 가치가 오히려 높아짐에도 불구하고, 땅과 자본의 차이를 간과한 현재의 세금정책은 임대사업자에게 감가상각에 따른 세액 공제를 해준다. 자본이 존재하려면 공간과 시간이 필요하지만, 땅은 공간 그 자체이며 시간에 관계없이 영원하다.

[Shawn Frey · Rating 5 out of 5]

Really great, informative read. Very clear and educational to an economic layman.

This book gives an excellent overview of economic policy that has affected land today and historically and examines the link of those policy decisions to the economy as a whole.

It examines property hoarding, capital gains, and collateral as creating a perfect storm to drive the wealth gap that we are currently seeing quickly expand and proposes realistic solutions should current economic and social conditions shift enough - as they are, with the rapidly growing percentage of the population who are renting.