The solution to a problem of wealth distribution cannot be housing: it has to be financial. We could do it, perhaps, as did the countries that best knew how to organize the dividends of their natural resources: 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 main asset where wealth is “kept” in the world and is one of the few and most profitable vehicles for investment that families have. 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.
Only 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 throughout several articles that the income generated by renting housing to its owners does not actually come from the activity carried out by rentiers, but rather is a form of plunder of the wealth produced by cities.
It is exactly the same as if in Spain we had discovered some oil deposits in the 70s and, instead of putting their dividends at the service of the entire society, we had distributed licenses to each of the families of that time to extract a little bit of oil. and sell it.
And while there were no more families, or while licenses for that site could still be purchased at a reasonable price, it still seemed like an excellent idea. But today it turns out that in order for some to continue making money with the “oil” produced by renting, others have to buy it. And a situation of unsustainable inequality occurs.
How to fix it? The solution to a problem of wealth distribution cannot be housing: it has to be financial. We could do it, perhaps, as did the countries that best knew how to organize the dividends of their natural resources: like Norway.
Norway was a poor, agrarian country with one of the highest illiteracy and infant mortality rates in Europe when in 1969 someone found oil off its coast. In order not to squander that discovery and “so that oil wealth benefits both present and future generations,” the Norwegians established a fund that is currently the most important sovereign fund in the world, with 1.4 trillion dollars in assets. Something like the GDP of Spain in a single investment fund of a country with five million inhabitants.
In addition to being one of the actors that are leading sustainable investment – with many quotes – in the world, the GPFG, which is what this instrument is called, is proposed as a form of collective investment of a common good, such as a resource natural.
And this idea, which has worked with excellent results, could be replicated to distribute the wealth generated by cities. A fund that would receive, as happens to the GPFG, a part of the taxes paid by companies that extract value from cities – such as apartment rentals, tourist rentals, taxis, hotels, real estate companies and the establishments that operate in the city -, which would also charge a fee for the licenses that allow you to enjoy the city, such as housing licenses, and which could directly operate profitable businesses to contribute to its annual result.
This fund could be used to invest in public services, as they do in Norway, and stay there. But it could also be a kind of new universal inheritance.
You see, several authors have argued that, to end intergenerational inequality and create true equality of opportunities for the youngest, a universal inheritance is necessary where a part of the inheritances of people who die are mutualized in a common fund that is shared. distributed among all young people and not only among 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 our grandparents had the privilege of having an enormous universal inheritance in the form of distribution of urban land. Between 1960 and 1990, approximately 50% of the entire current housing stock was built in Europe. Thus, the flood of workers who were going to make up an incipient middle class of which the young and not so young of today are the fruit were given a home. This was perhaps the most important citizenship-building exercise in history.
But now we cannot leave the following generations out of this immense universal income and there is no more land to distribute – unless we radically change the configuration of cities to build high-rise buildings.
A fund that would distribute the benefits of the cities and to which the youngest could access as shareholders – with criteria of income, age and assets, exactly the same as was done when millions of officially protected houses were distributed in the 70s and 80s – would give these young people and the poorest classes an opportunity to invest in a collective sovereign fund.
And it would have another virtue, and that is that homeowners could be offered to exchange their homes for shares in the fund, so that town councils could have, once and for all, a public housing stock and families, a investment vehicle other than rental plunder.
And it would have another even greater virtue, which is that it would consolidate the very important idea that we must invest in the future of all, together. Because it is a fallacy and a fiction that each of us, separately, by buying a small apartment and renting it to some poor unfortunate person who does not have money for the down payment, will be able to save ourselves.
What do you think of this idea? Would you exchange your house for shares in a fund in your city?
#solution #investment #fund
