The solution to a problem of distribution of wealth cannot be housing: it must be financial. We could perhaps do it, as the countries that knew best how to organize the dividends of their natural resources did: like Norway
In recent weeks, I have argued in these pages that what we call the “housing problem” is actually a conflict over the distribution of wealth. And the fact is that housing is the primary asset where wealth is “stored” in the world and one of the few and most profitable investment vehicles available to families. And why has it become so profitable? Because in the 21st century, cities are the main source of wealth for countries.
And in my previous article I compared cities with industry, but there is a better comparison: cities are to the 21st century what natural resources were to countries in the 19th and 20th centuries.
However, these resources are no longer “natural” but are created by society itself in its broadest sense: with the agreement and collaboration of many different people and institutions.
Thus, we have confirmed over the course of several articles that the income generated by the rental of housing to their owners does not in reality come from the activity carried out by rentiers, but rather constitutes a form of plundering of the wealth produced by the cities.
It is exactly as if in Spain we had discovered oil deposits in the 70s and, instead of putting their dividends at the service of society as a whole, we had distributed licenses to each of the families of that time to extract a little. of oil and sell it.
And even if there were no more families, or even if licenses for this site could still be purchased at a reasonable price, it still seemed like a great idea. But now it turns out that in order for some to continue to make money from the “oil” produced by rentals, others must buy it. And a situation of unsustainable inequality arises.
How to fix it? The solution to a problem of distribution of wealth cannot be housing: it must be financial. We could perhaps do it, as the countries that knew best how to organize the dividends of their natural resources did: like Norway.
Norway was a poor, agrarian country with one of the highest rates of illiteracy and infant mortality in Europe when in 1969 someone discovered oil off its coast. In order not to waste this discovery and “so that oil wealth benefits present and future generations”, the Norwegians created a fund which is currently the largest sovereign wealth fund in the world, with $1.4 trillion in assets. Something like the GDP of Spain in a single investment fund of a country of five million inhabitants.
In addition to being one of the main players in sustainable investment – with numerous citations – in the world, the GPFG, as this instrument is called, offers itself as a form of collective investment in a common good, like a resource. natural.
And this idea, which has given excellent results, could be reproduced to distribute the wealth generated by cities. A fund that would receive, as is the case with the GPFG, a portion of the taxes paid by companies that extract value from cities – such as apartment rentals, tourist rentals, taxis, hotels, real estate companies and establishments that operate in the city – , which would also charge fees for licenses that allow you to profit from the city, such as housing licenses, and which could directly operate profitable businesses to contribute to its annual bottom line.
This fund could be used to invest in public services, as is the case in Norway, and stay there. But it could also be a kind of new universal heritage.
You see, several authors have argued that, to end intergenerational inequalities and create true equality of opportunity for the youngest, a universal inheritance is necessary where a part of the inheritances of deceased people is pooled in a common fund shared between them . all young people and not only those who were going to inherit from their parents.
With these funds, these young people can make decisions in the first years of their lives that will impact the rest of their biography: from buying a house to studying outside their country.
The generation of our parents and grandparents had the privilege of having an enormous universal inheritance in the form of urban land distribution. Between 1960 and 1990, around 50% of the current building stock was built in Europe. Thus, the flow of workers who would constitute a nascent middle class of which today’s young and old are the fruit was welcomed. This is perhaps the most important citizenship-building exercise in history.
But now we cannot leave future generations outside of this huge universal income and there is no more land to distribute – unless we radically change the layout of cities to build high-rise buildings.
A fund that would distribute the profits of the cities and to which the youngest could access as shareholders – with criteria of income, age and assets, exactly as was done during the distribution of millions of officially protected houses in the 70s and 80s – would give these young people and the poorest classes the opportunity to invest in a collective sovereign fund.
And this would have another virtue, which is that we could offer owners the opportunity to exchange their housing for shares in the fund, so that municipalities can have, once and for all, a stock of social housing and families, an investment vehicle other than rental. looting.
And this would have another even greater virtue, which is that it would consolidate the very important idea that we must invest together in the future of all. Because it is a mistake and a fiction that each of us, separately, by buying a small apartment and renting it to a poor unfortunate who has no money for the deposit, will be able to save ourselves.
What do you think of this idea? Would you trade your house for shares in a fund in your city?
