Everyone wants to be close to everyone else to do good business effectively. Like Silicon Valley for example, smart people want to go there and be close to other smart people in order to start a successful business.
But as soon as they get close to each other, imagine that they all have to pay this extremely high rent. Simply once they get close to each other. They can't all move house at once to a new city. That's too difficult. So this network effect forces them to concentrate in one place.
They want to be close to each other, they are attracted to each other. But once they get close enough this really high rent emerges below them.
And they have to pay a lot of money towards this rent. This "rent" isn't just the actual technical rent. It's money they pay in mortgages to buy their house. It's money they pay in groceries to a grocery store which is paying high rent. And money they pay the government in taxes to pay for a hospital which pays a lot for buying (or renting) the property, especially if they have to expand.
And so they pay this really high rent. Which greatly reduces their wealth, the viability of startups, and so forth.
And where does this rent go? I wished it went to some mystical "landlord" class. Who then become rich. And that it's a zero sum game, these people lose a lot of money, but someone else gains money, so in the end it's okay.
But no, it doesn't go to some mythical landlord class, unfortunately. A more practical understanding is this rent is money which someone throws at random into a crowd.
They stand on a high building and throw it all down.
At first a few lucky people pick up the money and become happy. But once news of them becoming rich breaks out, more people from far away say I want that too, and arrive to pick up the money. And they all become rich, causing the news to make more people come. And more people come. And finally, it reaches equilibrium. So many people are coming to pick up this free money, that a lot of them loses money, and on average they are no better off, their job is no easier than other jobs, due to the extreme competition picking up this free money. It costs people so much time and resources to get this free money, due to the competition for picking it up, that in the end it's no more efficient than any other career. It is no longer free money. It is money spent paying for useless work.
And so it's not a zero sum game. It's a negative sum game. The rent paid does not go to some mystical landlord class who are now extremely happy. The rent paid is burned. Into doing useless work.
It goes to a million different things people spend time and resources on to win as much as they can in the real estate game. Advertising. Speculation. Bureaucracy. Education in the bureaucracy, some of which goes to people who never find suitable work.
So how do we fix this problem? One way is to build a city where the government owns the land, rents it only for the maintenance price, and chooses people by letting neighbours vote who gets to fill in each vacancy.
I'm not sure if this post fits the Effective Altruism forum. It sounds like a pretty known problem and I except the tractability of possible solutions to be extremely low.
I think it's currently intractable because a lot of people (and probably policymakers) have the wrong intuition that high rent isn't extremely wasteful, it's just money flowing from tenants to landlords, and if they offset that with wealth distribution in the other direction then little is lost.
If they see that a lot of work is lost, they might change things.
I'm not sure the assumption "awareness of problem -> people will change" holds (though probably a necessary condition), especially when there are strong and entrenched power dynamics in place, with the opposing side having a lot to lose. At a minimum, you need an alternative model to point to that works.
So it's part of the problems I place in the category "too hard, let's focus on something else".
You're probably right, and I admit I'm not planning to devote very much of my life to solving this problem either :/
But from the point of view of costs and benefits, it (probably) isn't that costly to make a few policymakers aware (of the enormous economic waste due to high rent). And even if the new city idea is stupid, it's plausible policymakers will change their behaviour sufficiently that rent prices actually will go down by a bit.