It would now cost you over $1-million to buy the average house listed for sale in Toronto. According to Bloomberg, as a ratio to local incomes, that’s enough to make Toronto the fifth most unaffordable city in the world.

This is kind of good for Toronto homeowners and really bad for everybody else.

Much of the recent discussion around wealth and income inequality has been shaped by Thomas Piketty, his book Capital in the Twenty-First Century, and the now infamous “r > g”, which states that the rate of return to capital (r) is greater than the rate of economic growth (g). In this formulation, r includes profits, dividends, interest, rents, and other income from capital.

According to Piketty, this has led and will continue to lead to a concentration of wealth and some consequent social and economic instability.

Northwestern University’s Matthew Rognlie has the best review of Piketty’s evidence, and found that housing prices are “entirely” responsible for the increased rate of return to capital.

“A more limited narrative that stresses scarcity and the increased cost of housing better fits the data,” writes Rognlie.

In his review of Piketty’s book, Lawrence Summers wrote that, “probably the two most important steps that public policy can take with respect to wealth inequality are the strengthening of financial regulation to more fully eliminate implicit and explicit subsidies to financial activity, and an easing of land-use restrictions that cause the real estate of the rich in major metropolitan areas to keep rising in values.”

Unsurprisingly, the rich in major metropolitan areas don’t really want to see their real estate stop rising in values. They make it very clear through their votes and activism that they’ve invested in scarcity and that they’re generally opposed to seeing too much new housing supply undermine that scarcity.

Somewhat surprisingly, progressive city councillors are happy to do their bidding.

Former Toronto city councillor and current federal MP and parliamentary secretary for housing and urban affairs Adam Vaughan recently suggested that any reform that led to a 10% drop in housing prices would be unacceptable. That’s just over 12-months’ worth of gains in Toronto, mind you.

As a result, young people and middle class families are moving farther and farther from the city’s core, in a bid to “drive till you qualify,” contributing both to urban sprawl and lengthy, congested commutes. And there are countless Canadians who view Toronto housing prices (usually correctly) as an insurmountable obstacle to participating in Toronto’s lucrative labour market at all.

Toronto is rapidly becoming Elysium, a super-stratified world of haves and have-nots, aided by politicians who refuse to build a lot more housing to let a lot more people in.

Let’s quickly review how we’ve gotten here.

Housing in Toronto is expensive because there’s not enough of it. In market economies, scarce resources are allocated by price.

There’s not enough of it because the City’s official plan and zoning by-law has designated 88 percent of the land area effectively out of bounds for new housing development, according to Ratio.City. And that’s because that’s what councillors want.

Council could amend the official plan and zoning by-law to allow for much more development, but it hasn’t. And that’s because that’s what the people who elect Councillors want.

It’s hard to see how this gets resolved democratically. Building a lot more housing in Toronto would mostly benefit people who don’t vote in its municipal elections, either because they don’t yet live in the city or because they’re not yet of voting age (or even born).

The process skews very heavily in favour of incumbents over new entrants, and again, at the cost of ever-greater inequalities of opportunity, income, and wealth.

It probably takes a higher level of government stepping in to more fully consider the opportunity cost of restrictive municipal land use rules. Through Bill 108 and some other measures, the provincial government has made some baby steps in this direction.

If we want Toronto to be a city that’s open to and welcoming of young people and middle class families, including new Canadians — that is, if we don’t want it to become a dystopian, restrictive enclave reserved for the rich — it’s going to have to do a whole lot more.

Canadian governments invest a lot of money in higher education.

In 2015, they invested 1.2 percent of GDP, or $30 billion. In that same year, there were over 33,000 tenured or tenure-track professors in Canada who earned on average $140,000, placing them in the 96th percentile of income.

These are just some of many statistics that demonstrate the respect that Canadian governments place in higher education and it is clearly important that they do so. Where else can society turn to expect an impartial understanding of the world around us, policy concerns and policy interventions? Where else can society turn to train future entrepreneurs, employees, thinkers, bureaucrats and politicians on which our future depends?

Equally important is the respect with which the public at large holds higher education, however, since it is with them that support for higher education ultimately rests.

As it turns out, in Canada higher education is the most respected institution included in a recent survey by Public Square and Maru/Blue and provided to The Hub. The others were government, judiciary, media, police and religious institutions and the Public Square study surveyed 1,500 Canadians, Americans and Britons on their respect for institutions, including higher education.

While a good sign, it is not exactly a ringing endorsement of higher education since only one-third of respondents reported that they had a “great deal” of respect for it. This figure is the same as for U.S. respondents. Similarly, higher education was the institution with the lowest proportion of respondents indicating “little or no” respect for it (14 percent).

At the same time, there is concern that academia, and academics in particular, are skewed to the left politically. While various studies have looked at this issue in the past, a comprehensive study including Canada, the US and the UK was recently released. The study documented a general pattern supporting this concern. It found for example that only 7 percent of Canadian professors voted on the right (Conservative or People’s Party of Canada) in the most recent federal election in 2019.

The Queen’s speech last week even laid out the U.K. government’s plan to protect freedom of speech on campus after a series of “de-platforming” incidents in the country. Among other proposals, the plan will allow people to seek compensation for losses due to infringement of speech in higher education.

It could be argued that the political affiliations of professors is not an important concern and that professors can remain impartial, independent of their political views. It can also be argued that the political views of professors will not necessarily influence the politics of their students who go on to work in government, where higher degrees are now almost universally required. While this is possible, it’s also possible that political affiliation of professors matters to the public, which is what the Public Square data suggest.

In particular, while 43 percent of people voting Liberal have “a great deal of respect” (along with 40 percent of those voting Liberal, NDP or Green) for higher education, only 26 percent of those voting Conservative do. Moreover, almost 20 percent of Conservatives have “little or no respect” for higher education compared to only 9 percent for Liberal, NDP and Green voters.

Similar patterns have been observed in a series of Gallup polls in the U.S. They show that in 2018, 48 percent of Americans had a “great deal” or “quite a lot” of confidence in higher education. Like in Canada though, confidence is highly partisan with only 39 percent of Republicans showing such confidence, compared to 62 percent of Democrats.

Perhaps more discouraging is that these numbers are decreasing rapidly, particularly for Republicans. Between 2015 and 2018, Republican confidence in higher education had dropped by a third, three times faster than for Democrats.

To be sure, the reasons for the difference in confidence in higher education by political affiliation are not explained in these studies. At the same time, it’s not a leap of faith to imagine that these findings could be partly explained by the political leanings of the professoriate.

If this is the case, and if the same temporal pattern exists in Canada, it could have implications for how future governments on the right see, value and fund higher education. Calls for the re-evaluation of government funding for universities are already mainstream in the U.S. and similar calls in Canada may not be far behind.

Canadian universities and governmental funding agencies would be wise to consider this in their governance and policies, perhaps even those policies relating to diversity.