Between 2010 and 2025, the median real return on housing equity in the OECD-15 was higher than the median real return on listed equity, which was in turn higher than the median real return on tangible productive capital. Phrased less politely: the most profitable economic activity in the developed world for fifteen straight years was holding land, followed by holding paper claims on land-adjacent firms, with making anything in last place.
This is what r > g produces in steady state. Piketty saw it coming. What he did not emphasise enough was how thoroughly the political class would adapt to it: not by taxing rent, but by participating in it.
The rentier majority
If you are a homeowner in California, the United Kingdom, Australia, or coastal China, your effective tax rate on imputed rent and capital gains is far below your effective tax rate on labour. This is not an accident or an oversight. It is a sustained political equilibrium in which the median voter is also the median landlord.
“The political economy of inequality is, at its core, the political economy of who owns the land.”
What this displaces
Productive investment requires people to defer current consumption for uncertain future returns. When holding rent-bearing assets reliably beats deferring consumption, deferral stops. We are watching this play out in real time.