Issue #21 ‘Power’ has arrived, you can buy a copy online or visit one of the stockists listed here. “Most…
We’ve been travelling for forty minutes on unpaved road to get here and I’m expecting splendour, a Garden of Eden. The real estate pamphlet reads, “one of the most enchanting places on earth”, and there’s an image of a Japanese maple and a shimmering watering hole. The property backs onto National parkland, guaranteeing seclusion and protection from the ‘developer types’. Could this be home?
But as we turn the bend, and head up the drive, a hand-built timber hut stands to our right, planted on flat ground looking at nothing much. The original owners crawl out to look us over.
One of the few board games we played at home was Monopoly – a training ground for adult life where property ownership was the mark of success and security. In Australia it’s called ‘the great Australian dream’. Buy land, develop houses, and then buy more land and develop again, and keep on doing this, piling properties into a portfolio like rabbits into a hat.
In Monopoly, you shore up title deeds on the properties you own – yellow, red, purple, green – which outline how much rent you can charge tenants, and the number of houses you can squeeze onto a single lot.
But unknown to me as a child, the original game – developed by Elizabeth Magie in 1904 and titled The Landlord’s Game – was advising against this sort of property speculation. “Let the children once see clearly the gross injustice of our pre-sent land system and when they grow up, if they are allowed to develop naturally, the evil will soon be remedied,” she warned. In short, Magie developed the game to demonstrate the gross inequalities caused by unfettered greed for property – a game that privileges those who buy property first, over time pushing newcomers to the periphery of civilisation as renting nomads or as homebuyers living in huts in the middle of the forest.
The home we surveyed on the edge of civilised land was indeed a makeshift kennel. Each timber-framed room stood adrift, separated by open-air paths, the final path leading up to a raised outside toilet, where we could behold (we were soon to discover) the “best” view of the surrounding shrub. The owners were keen to sell; they wanted to travel, perhaps to France, and around Australia. But to squat on land, in much the same condition as the very first settlers did, was going to cost us, in today’s dollars, $980,000. How times had changed.
If you’ve ever had the misfortune of attending a microeconomics lecture, you would have encountered a world severely shrunk in size: one producer, one consumer, one product, and so on. Microeconomics reduces the knotty world of everyday life into micro units because small worlds, like board games, tell us a lot about the economics of the day, and the times in which we live.
Let us assume, therefore, that at the beginning of the Monopoly game there are just three players: Top Hat, Wheelbarrow and Boot. And all players set forth upon the board with $1,000 in cash each.
Within no time, properties are purchased in quick succession: Regent Street, Park Lane, The Strand, Vine Street, Piccadilly, Leicester Square, Mayfair, and others. And once title deeds are stored away, the players set to work on developing their respective sites using borrowed money from the bank, building houses and hotels. For the three players on the board, success is a mixture of skill, hard work, and luck.
One day Boot dies. His fresh-faced son pulls up a chair at the Monopoly table and picks up the pieces of his father’s takings. Boot junior continues to play head to head with the ageing Top Hat and greying Wheelbarrow, wheeling and dealing on the property board. But what about Scottish Terrier, a newcomer to the game, who stands at Go with just $1,000 in cash? How will he fare?
The young Boot watches Scottish Terrier push out onto the board with the naïvety of youth. In a land of opportunity where skill and hard work are the ingredients of success, Scottish Terrier throws the dice with confidence. He lands on private land; he rolls from Piccadilly to Park Lane, shelling out landlord fees and coughing up rent. Before long his $1,000 has dwindled to nothing at all, and he calls from the board: “Nothing is affordable!” But his cries are muffled by property bidding as the established players battle it out for Leicester Square.
Scottish Terrier turns to the others: “This is unfair!” he exclaims. Pointing to the auction presently underway for Leicester Square, a loud voice retorts: “If property wasn’t affordable, no one would be buying it.”
Two hundred years on, and player Thimble stands at Go with $1,000 in her hand. She peers up at the teetering houses and hotels rising up from each square foot of space – the tall rents commanded for “prime space” – and she moves onto the board with hope fading fast, and gets whacked so hard on Coventry Street’s rental charges that, on the first roll of the dice, she is locked out of the game.
Indeed, it doesn’t take an economist to figure out that the housing game is not fair, that it’s not equal. The odds of winning for Thimble are, well, zero. She can’t win. She can barely remain standing on the board without being driven deep into debt.
On a visit to New York in the 1870s, political economist Henry George observed something rather contradictory: poverty was worse in more developed regions of the country than the less developed; somehow areas of techno-logical and social progress corresponded with rising levels of poverty. In his 1879 book Progress and Poverty, George wrote that the “great cause of inequality in the distribution of wealth is inequality in the ownership of land”.
“In the new settlements, where land is cheap, you will find no beggars, and the inequalities in condition are very slight. In the great cities, where land is so valuable that it is measured by the foot, you will find the extremes of poverty, and of luxury. And this disparity in condition between the two extremes of the social scale may always be measured by the price of land. Compare the same country in different times, and the same relation is obvious.”
This observation was not new. Back in 1656, James Harrington, in his book Oceana, proposed limiting the amount of landed property each person could acquire, a simple solution to the problem no doubt, but one that would surely make the majority of readers of this article gasp in unison. Heaven forbid, what a suggestion! “This is ours; we’ve worked hard for it.”
And indeed, this was the crux of George’s argument: while increases in land earned by labour should indeed be retained by the owner, price gains due to population growth, or from technological and social progress, belongs to the community. Why should landowners benefit from rising population growth – a societal issue that all residents bear equally?
In Owning The Earth, Andro Linklater writes: “Henry George made a clear distinction between the increase in the value of land that was earned by labour, and the unearned rise in its price that came from growing demand created by a larger population. The latter, he argued, ‘represents a value created by the whole community… so it necessarily belongs to the whole community’. To recover the value, this unearned profit should be taxed at 100 per cent, leaving the owner only with the value of what-ever improvements he’d actually made. George estimated that the money raised would be enough to abolish all other taxes. And with the escalating ingredient of speculation removed, the price of land would drop to a level where anyone prepared to work hard could once more afford it.”
Sadly, today 51 per cent of NSW residents and 52 per cent of Victorian residents have given up on the ‘dream’ of home ownership, according to a recent Nielson study. Without a place to call home, these Australians are either permanently nomadic or permanently out of here: the number of Australians permanently leaving the country has ballooned by 18 per cent since 2004, according to the ABS. Nearly a quarter of all people leaving permanently in 2010 were at home-owner age, between 30 to 39 years, many with children. This new breed of homeless Australians may well become a wandering herd, a swelling tide of nomadic peoples that future societies will read about in history books.
At any rate, Magie was certainly on the money when she called her precursor to Monopoly a “practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences”.
“It might well have been called The Game of Life,” she concludes, “as it contains all the elements of success and failure in the real world.”