Summary: Building &amp; land-use regulations are creating an artificial scarcity of land in large cities, driving prices up and creating an artificial &quot;shadow tax&quot; that distorts labor markets.<p>According to a recent study, if the Bay Area got rid of its building&#x2F;density regulations, the local economy would be able to support 5x the area&#x27;s current population, which would boost the US&#x27; yearly GDP by $2tn. In 2009, the US GDP was 13.5% lower than it otherwise could have been if land-use regulation had been abolished in 1964. [1]<p>The solution? Dissolve land-use regulation, pay residents to allow developers to build new structures, and distort the market in favor of the renters by levying a land-value tax. Theoretically, this would allow for an increased supply of housing while penalizing the owners of the least-productive parcels of land, such as those who squat on empty plots in New York.<p>The author hints at the political problem of adopting a land tax near the end:  <i>But there are practical problems with a land tax — perhaps the largest of which is that by its very nature it hits the well-connected rich hardest.</i> So we may very well never see this regulation brought up or passed given the current, money-greased machinations of the political machine.<p>I was disappointed that the author of an otherwise well-researched and informative article did not get to the heart of the issue: <i>who owns the land</i>? Yes, it is obvious that urban landlords are making a killing in this market, but who exactly are these landlords? What percent of real estate in London, SF, NY is owned by actual residents vs. holding companies vs. foreign interests vs. the government? Is it a small, concentrated number of buyers in each city? Is collusion possible?<p>Also, how are we going to induce growth in sectors other than tech, consulting, and finance? Or do we not care if young talent continues to accrete in these fields, driving the (currently extortionate) growth of the city? Is this the best plan for long-term growth and prosperity?<p>[1]  Perhaps this paper assumes that there is an infinite supply of highly-skilled tech workers who have taken jobs elsewhere due to high costs of rent? Seems a bit far-fetched to me.