The Field by John B Keane is perhaps the quintessential Irish drama. Bull McCabe embodies a nation’s enduring obsession with land, an obsession hardly dimmed by the self-inflicted housing crash of 2008-2011. To this day, housing is our most pressing public policy challenge, the property ladder still dividing “the smug from the damned”.
Those inclined to Irish exceptionalism may think “it could only happen here”. Mike Bird’s The Land Trap shows it to be a near universal affliction. Bird, a journalist with the Economist, writes with verve and clarity, tracing land’s role in global economic history, from ancient Babylon to modern-day Beijing. And yes, Ireland is a recurring case study, from the 19th-century Land War to our 21st-century housing crises.
Economists ascribe three defining characteristics to land: it cannot be created, it cannot be moved and it does not depreciate. These same characteristics have made it a durable store of wealth across civilisations, and the basis for vast amounts of debt under late-stage capitalism. These traits also explain why its price is shaped not by productivity or innovation, but by location and expectation – and why gains in land value are often unearned windfalls for owners rather than rewards for effort or enterprise.
Land is also a “zero-sum” asset: you either have it or you don’t. Taken together, Bird contends, this puts land at the root of recurring property bubbles and the deepening divide between asset-holders and everyone else.
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Early chapters recount how colonial economies of the 17th and 18th centuries in the Americas – from Jamestown to the Caribbean plantations – were shaped by a combination of abundant land and scarce labour. In the New World land became both a symbol of freedom and a mechanism for exploitation. The American Revolution, Bird argues, was as much a land war as a tax revolt, pitting a new class of proprietors against the interests of imperial landlords.
With the arrival of the Industrial Revolution, the relative economic centrality of land and agricultural rents appeared to wane. However, Bird argues, the related trend of urbanisation merely shifted the importance of land to housing and infrastructure in growing cities. More than ever, “location, location, location” became the key driver of land values, and with it financial credit and wealth inequality. Early experiments in “land-backed” money and mortgages presaged the modern toxic fusion of land and finance.
From 19th century railway manias to Japan’s 1990s bust and the 2008 global crash, Bird shows how rising land values fuelled credit booms, while falling values triggered economic collapse. The 2008 crisis, he notes, was fundamentally a land-price crisis, as was the Irish property crash that followed.
Land, not bricks and mortar per se, is the volatile ingredient. Yet policymakers persist in treating it as a benign form of wealth rather than a systemic risk. Indeed, the chapter on the rise of “land-backed” credit systems should be required reading in the Department of Finance. We must learn from recent history so we are not condemned to repeat it.
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If the above is the diagnosis, the policy prescription is less clear-cut and raises acute challenges of political economy. The author astutely observes that “governments are trapped between promoting home ownership and defending homeowners’ wealth”. Simply put, there are clear majorities of voters in most western democracies with a stake in the current system – homeowners and landlords. Driving down house prices may create more immediate losers than winners, even if society as a whole would benefit from more affordable housing.
A key character in The Land Trap is Henry George, an obscure 19th-century American economist, philosopher, journalist and activist. Bird recounts how he met Michael Davitt and advocated for land reform in Ireland and elsewhere. George’s big idea was essentially a land or site value tax. Many modern-day economists are enamoured of this approach, which could take the place in Ireland of a reformed local property tax to fund local services. If we taxed land properly, we could ease housing shortages, reduce inequality, fund public investment and even ease the burden of tax on labour.
Another important avenue for reform in Ireland would be to empower local authorities to compulsorily purchase land for housing. It’s now more than a half century since publication of the Kenny report, the implementation of which could have mitigated or even avoided Ireland’s housing bubble, crash and current crisis by ensuring a steady supply of development land for affordable housing. Unfortunately, our housing market remains distorted as a small number of big, private property developers hoard land.
Ultimately, there is no easy escape from The Land Trap. But it does force us to confront an uncomfortable truth: the housing crisis isn’t just about builders, banks or planning delays. It’s about land – who owns it, how we tax it and why we still treat it as sacred. Unless we rethink our relationship with the ground beneath our feet we risk eternal condemnation to Sisyphean toil.
