There’s a bit in the film Crocodile Dundee when Paul Hogan says of the aboriginal peoples of Australia ‘they don’t own the land; they belong to it’. Uncomfortable colonialist thinking aside, there’s a strong moral argument than none of us can really own the land under our feet. It’s not even something that we can own collectively. Because it’s not really ours to own at all. Unfortunately, though, nobody told the economists.
Perhaps inevitably, the late nineteenth century neoclassical economists were keen to include land in their new economic models. But they didn’t do it very well. And we’ve been living with the consequences ever since. Thankfully, Rethinking the economics of land and housing is here to set the record straight.
The book is written by Josh Ryan-Collins and Laurie Macfarlane, economists at the New Economics Foundation (my favourite think tank) and Toby Lloyd, from the housing charity Shelter. And it’s the most engaging economics book that I (a non-economist) have read for quite some time.
To be honest, I’ve been meaning to read it for ages. My wife bought it for me for Christmas back in 2017, shortly after it first came out, and it’s been languishing on my ‘to read’ pile ever since. I’d got a bit cross that friends of ours born in rural and coastal areas were unable to buy houses of their own (or even to find somewhere to rent) in the places where they’d grown up because of the high property prices. And I wanted to learn more about what the problem was and what we could do about it.
This book, it turns out, was exactly what I needed. It starts by considering what land is and why it has value, before charting the history of land ownership and private property, globally at first and then focusing on the United Kingdom. It then explores the role of land in economic theory and how this role has developed in the modern era. And it considers how land has become increasingly financialised and how this has led to increasing inequality between those who own land and those who do not.
A key theme throughout the book is the idea of economic rent. This refers to the ‘unearned’ value that landowners accrue by virtue of owning a particular piece of land, such as its location (like when they opened a Waitrose down the road from me and all the house prices shot up), the ability to charge people to access it (such as a country estate or a toll road) or the granting of planning permission to build houses on it.
One of the most significant weaknesses inherent to our existing economic models, the authors argue, is that economic rent is captured by the owners of land, even if this increased value is the result of wider societal efforts and should probably belong to all of us. And it’s difficult to change this because those with political power (or who have influence over those with political power) have a tendency to, ahem, be significant landowners – and so have a vested interest in maintaining the status quo.
There are, however, things we can do about it. And in the final chapter of the book, the authors explore a range of actions and initiatives that could help to address our flawed economic approach to land and the negative consequences that it has wrought on our society. This includes consideration of different land ownership models and tenures, reforms to the tax system and planning systems (including the idea of a land value tax, which has gained traction in the years since this book was published), and changes to the way we measure and account for land value at a national level.
The book might sound a bit technical, but it’s actually written in a reasonably non-technical way, so that while it will no doubt appeal to economists, it is also accessible to those (like me) without an economics background. It follows a clear structure that creates a strong argument for change. And it provides comprehensive references to other publications for those who want to learn more. I, for example, will most definitely be looking in more detail at the idea of community land trusts and at how communities can better harness the value created by planning gain.
So if you, like me, want to learn more about the economics of land and housing and how we can address the challenges created by the way land is treated within our existing economic models, this is the book for you. Just don’t take as long as I did to getting around to actually reading it.
You can buy Rethinking the economics of land and housing from your local independent bookshop. If you don’t have a local independent bookshop, you can order it from Alistair and Chloe at Books on the Hill in Clevedon, Somerset, which is my local independent bookshop.