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For decades, rising inequality in the United States — increasing concentrations of wealth in fewer hands — has been blamed on wealthy finance and tech CEOs, the automation and outsourcing of well-paying middle-class jobs and tax policies that some say under-tax investment income.

But Matthew Rognlie, a 26-year-old PhD candidate at the Massachusetts Institute of Technology, believes that rising income inequality has a lot to do with housing policy.

The prevailing view is credited to French economist Thomas Piketty, whose book “Capital in the Twenty-First Century” became a best-seller in 2014. Piketty argues that wealth concentrates in the 1 percent because in the long-run, wealth creates more wealth at a faster rate than overall economic growth. Put neatly by The Economist, “[o]ver time, this relationship increases inequality as the share of national income going to those who own capital (the rich) rises, while the portion going to labour (everyone else) falls.”

Rognlie says otherwise. He asserts that “recent trends in both capital wealth and income are driven almost entirely by housing.” Arguing against Piketty, he says that most other forms of capital actually decrease in value over time. In fact, technology depreciates even faster in the 21st century than it did in previous eras. Rognlie argues in the paper’s abstract that “trends in both capital wealth and income are driven almost entirely by housing.”

The policy implication is that taxing businesses and investors will not solve rising inequality. Instead, policymakers should relax regulations on planning and development. According to Rognlie, measures like relaxed property taxes and pro-development land-use decisions would expand the housing supply and help decrease inequality.

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