Your Landlord Is a Drag on Growth

After many decades of essentially ignoring the role of land, economists are starting to reconsider. Some are worried that landlords are hurting growth by making it too expensive to live in highly productive cities. Now, some are starting to think about how land figures in the rise in inequality.

The basic idea is that landlords use their local political power to stack the deck. Using their money and connections to sway local elections, they can influence politicians to enact land-use regulations that keep out other people and businesses. That gives them a so-called first mover advantage that shuts out the competition. At first, people who want to move to for work or to start a business can move to other, newer cities where local landlords are not as politically entrenched and regulation not yet as onerous. But eventually the country fills up with powerful landowners, and the options for cheap relocation become limited. Stuck in dying cities or far away from job opportunities, potential employees languish in poverty.