Economic Anxiety and the Critical Role of Land
The populist moment is here, driven by a large population living paycheck to paycheck. To understand it, we must understand the role of land.
Hello,
This is the first article I am publishing as part of a series of articles I plan to publish on land. I plan to publish once every other week telling different stories and examining different policies related to land. This first post sets the scene for why I believe the time is right for this examination. In future posts, I hope to dive more into the implications of understanding land’s role in our economy.
I invite comments, questions, and ideas: greg [at] tomjohnson.org.
Prices have soared, with housing costs leading the way—fueling the economic unease that shaped the recent election. As the largest expense for most households, housing has become the defining pressure point of our time, driving financial strain and widening inequality.
In post-industrial cities, tenants scrape together rent for crumbling homes that fail to meet their basic needs, while owners next door shoulder higher property tax burdens than the vacant, neglected lots down the street. Young professionals navigate urban cores, trading steep rent hikes for apartments branded as luxurious but maintained as afterthoughts. Families, once dreaming of a home, now face bidding wars with well-capitalized asset giants. Single-family housing developers, driven by the lure of leasing profits, further strain the already limited supply of homes for sale while multi-family housing developers navigate restrictive zoning and face backlash on development. And in mobile home parks, residents struggle with impossible choices following private equity acquisition: pay extortionate rents or forfeit the roof over their heads.
This is the plight of the renter class—millions of people surviving month to month with limited ability to translate earnings into assets. They are the ones most impacted by rising costs, particularly in housing, their largest expense. Yet no prominent theory fully explains this economic unease. With the absence of proper diagnosis, we resort to half-measures like eliminating taxes on tips rather than addressing the fundamental forces shaping our economy.
The late 19th century had a similar wave of anxiety associated with inequality following decades of exponential technological progress. In the face of it, journalist Henry George asked: Why, in spite of an increase in productive power, do wages tend to a bare-living minimum?
His answer: land. By land, George refers not to the structures or improvements built upon it—houses, factories, or farms—but to the location: the fixed, immovable resource whose value stems from where it's situated.
Land’s worth (the worth of a location separate from the improvements upon that location) rises not because of the owner's labor but because of societal development. A vacant lot in a thriving urban neighborhood may be worth millions, not due to any effort by its owner, but because of nearby businesses, public infrastructure, and population demand. As development occurs around it, the vacant land increases in value. This unearned increase in value creates immense wealth for landholders and is not unique to vacant land. Land values increase everywhere, and those profits accrue to private landholders.
Land, unlike labor or capital, is inelastic. It cannot be created, moved, or hidden, and its value is determined by what people are willing to pay to access it. This explains why, even as technological progress increases productivity and overall wealth, much of that wealth is absorbed by landowners in the form of rising rents and land prices.
Yet, despite land's unique role, modern governments primarily rely on taxes on labor and consumption—both of which are elastic. Workers can reduce their hours, and consumers can cut back on spending, shrinking the tax base. Land, by contrast, is fixed: it cannot be hidden, moved, or diminished.
By shifting taxes to land, we could unlock trillions of dollars in labor and consumption.
While property taxes do exist, they penalize developers for improving their properties rather than capturing the underlying value of land itself. Even then, these taxes are currently insufficient as large profits from land speculation still exist today.
A land value tax is one of the big policy ideas that comes from theories related to land, but before getting to the large policy ideas, we need to start by understanding the current moment is driven by land. Understanding land’s role reveals the hidden dynamics driving today’s economic frustrations. The renter class exists because land profits have been privatized
Tenants in post-industrial cities are renting land, not houses, and homeowners in those same cities pay higher taxes for improving their property than speculators pay for leaving land idle. Young professionals pay the dividends of land speculation to urban developers. Families seeking homeownership face inflated prices as land values rise from out-of-state bids, or families settle for leasing, forfeiting land value appreciation to distant investors. Multifamily housing development meets resistance from homeowners eager to preserve the wealth embedded in their land. And mobile home park residents must either own the land underneath them or remain vulnerable to predatory action.
In the decades after Henry George, the populist movement found success with trust-busting and regulatory reforms, but George’s ideas on land failed to gain sustained national traction. Today, the revival of the antitrust movement, championed by leaders like FTC Chair Lina Khan and DOJ Assistant AG Jonathan Kanter, signals a renewed appetite for populist economic reforms. Now, with economic anxiety rising and inequality deepening, the populist moment requires us to re-visit the role of land in our economy.
Greg Miller is the President of the Tom Johnson Foundation, focused on increasing education, research, and advocacy on land value taxes and communal land use.