Casey Jenkins: not conforming

Melbourne City Council is selling lanes to developers, according to The Age today.

It makes a pretty penny, too, having pocketed $1.2 million from the sale of part of three lanes in the last 12 months alone.

The article sparked an intense debate on the newspaper’s blog.  Sales are energetically supported by citizens disgusted by graffiti and filth.  Equally, another demographic considers ‘our’ lanes a haven of diversity and cultural opportunity.

The discussion ignores key fundamentals that really deserve an airing.

Council will only sell a lane where a private owner amasses all the properties that rely on a lane for access.   New buildings on these amalgamated sites tend to be monoliths – giant structures with large floor plates.

This process of combining small holdings into large ones is called latifundia (wide, estate). This is where large landowners use scale and efficiency advantages to drive out small ones – so later they can charge higher rents.

When land ownership becomes sufficiently concentrated, equilibria may emerge where landlords, behaving as multi-market oligopolists, suppress tenancy markets to drive up land rents.

Not everyone will understand the economics behind that statement, but all appreciate we are being screwed.

Latifundia. It destroyed the Roman Empire. The creation of great landed estates and weak tenant farmers deprived Rome of yeoman soldiers – sturdy independent men who fought for the grants of land at the end of their service, and thus their freedom. The loss of the yeoman class enfeebled Rome and was central to its collapse.

This process continues to this day.  We see it in giant office buildings and those appalling shopping malls. The first is a citadel to commerce; the second a cathedral of consumption.

It will be argued these giant ant nests are owned by widows and h’orphans. That may be so, but they do not control them and the power is in the control.

Government has a great and profound duty to ensure there is enough land for all to live and work. It controls zoning and infrastructure and taxes.  But where landowners come to dominate government, latifundia quickly emerges.

Do we really want to sell our lanes and alleys?