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Overall I think this is a good article, but there were two things which caught my attention. Isn't this article just taking a roundabout way of commenting that

Overall I think this is a good article, but there were two things which caught my attention. Isn't this article just taking a roundabout way of commenting that landowners in highly productive areas are choking growth and more productivity by siphoning too much money off of the non-landowners for use of the land? I understand that they're the Economist so they can't outright say that the rich are hurting the economy by hurting the poor, but come on, at least be a little more clear. Also, a fallacy: "Where workers can be put to use at high levels of productivity labour scarcity will lead to fast growing pay packets. Those pay packets will attract workers from other cities. When they migrate and find new, high-paying work, the whole economy benefits." This is a theoretical economic concept which doesn't really apply to the macroeconomic reality of today, in which worker productivity and time commitment increases but wages stagnate and later decrease, all as a result of a race to the bottom. The exception is probably the software industry, but I'd argue that in light of the anticompetitive no-poaching agreements from the likes of Google and Apple, software industry wages are still actually much lower than they should be, despite the "labor shortage" and "high levels of productivity". Then there's the bit where they claim that the whole economy will benefit from this sort of behavior, which may be true. Keep in mind that from another perspective, this same action is highly destructive brain drain, leaving destitute cities bleeding their talent to more prosperous ones.

creshal 11y ago
> Isn't this article just taking a roundabout way of commenting that landowners in highly productive areas are choking growth and more productivity by siphoning too much money off of the non-landowners for use of the land? I understand that they're the Economist so they can't outright say that the rich are hurting the economy by hurting the poor, but come on, at least be a little more clear. I don't know, the article seems to be rather clear on the matter: > If regulatory limits on building heights and density were relaxed, fewer plots of land would be needed to satisfy a given level of demand. That would reduce the rents collected by landowners, since any uptick in demand could quickly be met by new development. Just as soaring agricultural productivity led to a decline in the relative economic power of rural landowners in the 19th and 20th centuries, the relaxation of strict limits on development would lead to a decline in property wealth relative to the economy as a whole. More of the gains of economic activity would flow to workers and investors.
crpatino 11y ago
> [the Economist] can't outright say that the rich are hurting the economy by hurting the poor,... I don't think that's what the Economist wanted to say in the first place. Rather, it's more a conflict between the capitalist/industrialist rich vs the landowner/aristocratic rich. The poor just find themselves ducking in the middle of cross fire. According to this world view the landowning rich do not produce any Value Added, they just arbitrage the [arguably artificial] scarcity of real state to bleed the capitalist rich both directly (office space) and indirectly (since employees must demand higher salaries for the same work done just to be able to put a roof over their heads).
- roymurdock 11y ago
  These two classes of rich that you are describing probably intersect a lot. Once you make money in business, you need to invest it somewhere that will make you a return. Land is a popular choice.
  - crpatino 11y ago
    That's right, this is not about making a witch hunt (you would not expect economists to do that, I think). But if you think about, let's say, competing aspects or strategies for money management... I think a point can be made that one is more beneficial to society at large than the other. So, it is the same rich people at the end, but maybe you want to incentivize them to put investments in ventures that actually do something, and to tax the arbitraging away.
Kalium 11y ago
> Keep in mind that from another perspective, this same action is highly destructive brain drain, leaving destitute cities bleeding their talent to more prosperous ones. Bluntly put: what of it? I've left destitute cities for more prosperous ones in the past. Did I have some kind of duty to stay?
- cryoshon 11y ago
  Nah, just showing the other side of the coin... if anything, it's a good thing that smart people ditch bad places.
  - Kalium 11y ago
    I have to check these things. All too often brain drain is presented as if the people leaving are traitors or similar.
breischl 11y ago
>>Isn't this article just taking a roundabout way of commenting that landowners in highly productive areas are choking growth and more productivity by siphoning too much money off of the non-landowners for use of the land? Ehhhh... yes, but it's contending that the reason landowners are able to do that is the land use regulation that makes the land valuable. So it would be more accurate to say that regulation is choking growth, by handing landowners a bunch of economic rent (unearned profits).

creshal 11y ago

> Isn't this article just taking a roundabout way of commenting that landowners in highly productive areas are choking growth and more productivity by siphoning too much money off of the non-landowners for use of the land? I understand that they're the Economist so they can't outright say that the rich are hurting the economy by hurting the poor, but come on, at least be a little more clear. I don't know, the article seems to be rather clear on the matter: > If regulatory limits on building heights and density were relaxed, fewer plots of land would be needed to satisfy a given level of demand. That would reduce the rents collected by landowners, since any uptick in demand could quickly be met by new development. Just as soaring agricultural productivity led to a decline in the relative economic power of rural landowners in the 19th and 20th centuries, the relaxation of strict limits on development would lead to a decline in property wealth relative to the economy as a whole. More of the gains of economic activity would flow to workers and investors.

crpatino 11y ago

> [the Economist] can't outright say that the rich are hurting the economy by hurting the poor,... I don't think that's what the Economist wanted to say in the first place. Rather, it's more a conflict between the capitalist/industrialist rich vs the landowner/aristocratic rich. The poor just find themselves ducking in the middle of cross fire. According to this world view the landowning rich do not produce any Value Added, they just arbitrage the [arguably artificial] scarcity of real state to bleed the capitalist rich both directly (office space) and indirectly (since employees must demand higher salaries for the same work done just to be able to put a roof over their heads).

roymurdock 11y ago
These two classes of rich that you are describing probably intersect a lot. Once you make money in business, you need to invest it somewhere that will make you a return. Land is a popular choice.
- crpatino 11y ago
  That's right, this is not about making a witch hunt (you would not expect economists to do that, I think). But if you think about, let's say, competing aspects or strategies for money management... I think a point can be made that one is more beneficial to society at large than the other. So, it is the same rich people at the end, but maybe you want to incentivize them to put investments in ventures that actually do something, and to tax the arbitraging away.

Kalium 11y ago

> Keep in mind that from another perspective, this same action is highly destructive brain drain, leaving destitute cities bleeding their talent to more prosperous ones. Bluntly put: what of it? I've left destitute cities for more prosperous ones in the past. Did I have some kind of duty to stay?

cryoshon 11y ago
Nah, just showing the other side of the coin... if anything, it's a good thing that smart people ditch bad places.
- Kalium 11y ago
  I have to check these things. All too often brain drain is presented as if the people leaving are traitors or similar.

breischl 11y ago

>>Isn't this article just taking a roundabout way of commenting that landowners in highly productive areas are choking growth and more productivity by siphoning too much money off of the non-landowners for use of the land? Ehhhh... yes, but it's contending that the reason landowners are able to do that is the land use regulation that makes the land valuable. So it would be more accurate to say that regulation is choking growth, by handing landowners a bunch of economic rent (unearned profits).