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A Land and Building Monopoly Was Foreseen The streets were not paved with gold in nineteenth-century American cities. But they offered working-class families a chance to earn their way up to a decent standard of living as well as to accumulate the beginnings of some wealth. In 1871 Henry George, a San Francisco printer and self-taught economist, explained why urban America offered opportunities that acted like a magnet to immigrants from overseas. He attributed these opportunities to the competition among the developers and competition among the owners of urban real estate. In his “Our Land and Land Policy,” George told his readers that because the land and building markets of nineteenth-century urban America were competitive, working men and women had opportunities found nowhere in the Old World. Implicit in his exposition of how land was allocated in American cities was the reality that competitive pressures goaded the owners of real estate into improving the living standards of residents and the capabilities of businesses by building and remodeling structures to take advantage of advances in technology. Consider the changes in the pattern or cityscape of development and buildings that have taken place in the last century. Most of today’s urban Americans only know from skits on television and stories told by their grandparents that outdoor toilets were common in the 1920s. Equipping houses with electric fixtures started soon after Edison’s invention of the incandescent bulb in 1879, and updates in wiring has paved the way for an expanding array of electric appliances continuing ever since. Central heating has gone from a coal rarity to oil and gas, and now solar energy is coming into wider use. If we had used the term shopping center twenty years after Edison’s invention , no one would have understood what we were talking about—much less that it would become a common part of the suburban landscape. Jesse Clyde 47 3 Encouraging the Expansion of Land Use . . . and Constraining It Nichols opened the first suburban shopping center, Country Club Plaza, in Kansas City in 1923. Except for large assembly operations such as Ford’s River Rouge plant, most medium to large factories were multistoried buildings with large freight elevators that carried material vertically from one work station to the next. While working my way through undergraduate school in the early 1950s, I visited smaller machine shops with belt-driven equipment connected to electric motors. Shortly thereafter, more efficient manufacturing and processing businesses started to move to industrial and warehouse “parks” built with easy access to recently completed freeways. Today, many of these facilities are considered less than the best because new structures and groupings of buildings are more attuned to contemporary land, air, and sea transportation technology. The future demands of consumers and businesses will require more innovation-adapting investments similar to those exemplified above. As in the past, the innovations and investments made by competing land developers and builders will be required to enhance the viability of agricultural and urban production while being responsive to changes in consumers’ tastes and their ability to pay. Using the term introduced in chapter 2—this will improve the comparative advantages of America’s businesses. Henry George’s understanding of how real estate markets were working in the 1870s and 1880s was insightful and optimistic. But he predicted an entirely different view of how real estate markets would operate in the future. He saw the competition that was a powerful and necessary force for economic good being throttled by successful real estate conspiracies. When he looked ahead, George’s view of how cities would influence America’s economic future and the opportunities they would provide working people turned profoundly pessimistic. He predicted that urban property owners and developers would conspire among themselves to close the frontiers of urban competition—shutting down competition would tilt in their favor the distribution of income from constrained urban development. He believed that, in time, America’s urban landowners and developers would constrain additions and changes to urban real estate, thus raising rents and prices to the point where they could benefit considerably beyond what competing would provide them. George predicted that as competition was throttled by urban landowners and speculators, the same conditions of poverty and despair that led the landless to flee Europe would be reproduced in America. Nine years after the publication of “Our Land and Land Policy,” Henry George explained the primary economic damage done by rising urban land...

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