FIXING INEQUALITY

by James Webster

If you want to address inequality, income is a major factor.

Apart from state subsidies, the main sources of income are wages, business profits and location – and location often takes quite a big part of business profits (just speak to a tenant in a shopping centre).

Anyone theoretically can make an effort to increase their wages and, with endeavour, business profits – however, land and location are rather different – income from location goes to the owners. Those that own land, especially in good locations, have rather an advantage, they get income (either through capital gain or actual rent) that does not go to wage earners and business owners; often a significant part of what would be a business’s profit actually goes to the owners of location, and as we have heard housing rents can sometimes exceed 90% of a person’s income (for people on Newstart).

Inequality of opportunity can therefore be starkly traced back to inequality of ownership of land, or more specifically to the benefits of land. Unless that is addressed, efforts to reduce inequality of opportunity will go nowhere.

Added to that, there is a theory that is summed up as ‘Land takes the gains’ – meaning that any real improvements in general wage incomes, productivity, infrastructure, viz, any societal good will always inflate land values. What this means is that all the best endeavours to fix anything else (including increasing Newstart) without addressing land income distribution will simply result in land values or rents going up, soaking up the best endeavours to progress.