“THE PROBLEM OF RENTS IS EASY FOR A NONECONOMIST, EVEN A sparsely educated low-wage worker, to grasp: it's the market, stupid. When the rich and the poor compete for housing on the open market, the poor don't stand a chance. The rich can always outbid them, buy up their tenements or trailer parks, and replace them with condos, McMansions, golf courses, or whatever they like. Since the rich have become more numerous, thanks largely to rising stock prices and executive salaries, the poor have necessarily been forced into housing that is more expensive, more dilapidated, or more distant from their places of work. ...Insofar as the poor have to work near the dwellings of the rich-as in the case of so many service and retail jobs-they are stuck with lengthy commutes or dauntingly expensive housing.”
In popular discourses, social inequalities are often discussed in income terms. However, as Ehrenreich comments here The lot of the working poor can't be discussed without discussing the major costs they incur. You have to look at both sides of the ledger: the revenue and the costs. One of the most crucial costs, especially in the past three decades, is housing. The increase in rents tend to have marginal effects on the very rich but are the difference between surviving and not surviving for the working poor. In the late 19th century, a social reformer Named Henry George was intently focused on rent. What he observed was the benefits of nature were accruing to a select few, through the institution of land ownership.
By simply owning land, a person could collect an income that didn't derive from the products of their labor (in seeming violation of Locke's justification of private property). To George, this meant “we must ... substitute for the individual ownership of land a common ownership ... We must make land common property”. This did not require public ownership of the means of production ala Marx : “Let the individuals who now hold it retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confiscate rent”. How did he propose to “confiscate rent”?
His suggestion was a land value tax. This is a tax on the value of the “unimproved land”. It is different from normal real estate taxes because it does not tax improvement of the land's quality or property on top of the land. This would prevent property owners from profiting off of a market increase in the land price (that wasn't a result of improvements they made) because increase in it's worth (called site value) would accrue to the government rather then the private individual. Consequently, the incentive for land speculation (which can create self-fulfilling price bubbles) would be removed because they don't profit off of market rates rising.
Henry George provides a comprehensive analysis of the other side of the ledger, the cost of living that only rarely enters popular discourse even after the recent hyperinflated housing bubble. Housing (and George's analysis) provides a concrete case of a relatively few extracting unearned income from the large majority of people that fall especially hard on the working poor. In addition, because it costs nothing for an owner to leave a property idle, the lack of land value taxation allows undermines the quality of neighborhoods and undermines the quality of community services.A close examination of his analysis and his proposals would be useful so that the comprehensive qualities of social inequalities could be pushed out . Also, he's one of those rare social analysts who proposes cut and dry solutions which can also be analyzed and criticized in it's ability to relieve social inequality.
Ehrenreich, Barbara. Nickel and Dimed: On (not) Getting by in America. New York: Holt Paperbacks, 2008. Print.
George, Henry. Progress and Poverty. Levin, N.Z.: W.M.F. Williams, 1969. Print.
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