The fundamental problem with equity in the world's cities is law that permits the privatization of the rent of land. Every parcel or tract of land has some potential annual rental value. This value is societally-created as a result of aggregate public and private investment in infrastructure and amenities. This investment creates locational advantage converted into higher land rents. The failure to publicly capture land rent via taxation results in the capitalization of rents into credit-fueled and speculation driven land prices. Governments then impose taxation on earned income, on capital goods (which includes housing units and all other buildings) and commerce. Such taxes carry with them significant deadweight losses harming economic outcomes. On a moral level, the privatization of land rent is a redistribution of income and wealth from producers to a non-producing "rentier" class. Adam Smith, David Ricardo, Anne Robert Jacques Turgot, John Stuart Mill and Henry George would not be surprised that the problems of the cities -- and the concentration of income and wealth around the globe -- have only worsened with time.
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The fundamental problem with equity in the world's cities is law that permits the privatization of the rent of land. Every parcel or tract of land has some potential annual rental value. This value is societally-created as a result of aggregate public and private investment in infrastructure and amenities. This investment creates locational advantage converted into higher land rents. The failure to publicly capture land rent via taxation results in the capitalization of rents into credit-fueled and speculation driven land prices. Governments then impose taxation on earned income, on capital goods (which includes housing units and all other buildings) and commerce. Such taxes carry with them significant deadweight losses harming economic outcomes. On a moral level, the privatization of land rent is a redistribution of income and wealth from producers to a non-producing "rentier" class. Adam Smith, David Ricardo, Anne Robert Jacques Turgot, John Stuart Mill and Henry George would not be surprised that the problems of the cities -- and the concentration of income and wealth around the globe -- have only worsened with time.