This commentary originally appeared in Investor's Business Daily on August 10, 2015.

Thomas Piketty's "Capital in the Twenty-First Century" revitalized the debate over the "1%" and its accumulation of wealth. Using a wealth of assembled data, Piketty hypothesized that capital would increasingly concentrate because the return on capital was exceeding economic growth. Thus, money would increasingly widen the gap over labor.

Piketty's suggested a global wealth tax to combat the trend that he identified — an especially attractive idea to elites on the left and their populist allies in the Occupy movement.

But, what if Piketty's underlying assumption on the accumulation of wealth was wrong?

Matthew Rognlie, an MIT economics doctoral student, took apart Piketty's thesis last year in a paper titled, "A Note on Piketty and Diminishing Returns to Capital." The gist of Rognlie's critique is contained in a pithy suggestion for a more accurate alternative title for Piketty's book: "Housing in the Twenty-First Century."

Piketty's contention that wealth is concentrating due to higher relative returns on capital is wrong, Rognlie says, because "recent trends in both capital wealth and income are driven almost entirely by housing," which itself is due to artificial scarcity of housing caused by land-use regulation.

If growing wealth inequality is not an issue of the 1% but rather an issue of excessive home equity increases because of government land-use restrictions that restrict the supply of new housing, it changes the debate considerably.

A statistical analysis verifies that Rognlie is onto something important. Running a multivariate regression analysis for 50 states using a state's cost of living as the dependent variable against two predictors — the degree of urbanization and a state's land-use-freedom score from the Mercatus Center at George Mason University's "Freedom in the 50 States" annual survey — shows that land-use restrictions, not the percentage of urbanization, have a large and predictable effect on the cost of living.

In the San Francisco Bay area, notes Cato Institute senior fellow Randal O'Toole, the ratio of median home value to median family income hit 10 to 1 during the height of the housing bubble in 2006. In Houston, it was 2 to 1 in the same year.

After subsiding for a few years during the recession, the Bay Area ratio climbed back to 6.8 to 1 in 2013 while in Houston it was 2.2 to 1. Given the mounting development restrictions in California, now including greenhouse gas considerations, 2006's 10-to-1 ratio has likely already been breached.

O'Toole says Golden State housing prices have gotten so out of control that average Californians soon may need intergenerational loans or 50-year mortgages to buy a house in job-rich areas.

One practical effect of California having the nation's third-worst land-use restrictions, after New Jersey and Maryland, is the depopulation of African-Americans from urban areas. O'Toole notes that San Francisco is seeing the nation's biggest exodus of blacks, with every urban area in California seeing a relative decline in African-Americans except the Riverside-San Bernardino region.

The irony of progressive California and its restrictive development policies harming working class minorities isn't lost on the Obama administration's Department of Housing and Urban Development. HUD is targeting tony Marin County for its lack of minority housing. Marin, where California Sen. Barbara Boxer once served on the Board of Supervisors, is too white and too wealthy, it seems.

And, no more perfect an illustration of how wealthy homeowners infringe on their neighbors' property rights, pressuring local officials not to allow paradise-soiling development, can be found in the saga of "Star Wars" creator George Lucas.

Lucas tried to expand his film studio next to his Marin ranch in 1987 and was rebuffed by Marin County elected officials at the behest of Nimby (Not In My Back Yard) activists. In 2012, frustrated by 25 years of stonewalling, Lucas decided instead to work with a developer to build affordable housing.

Local officials nixed this project too, and the developer backed out. Now Lucas is using his own money to build the proposed 224-unit affordable housing project. If construction is approved, it might be completed by 2019, 32 years after Lucas wanted to build something on his own land.

Predictably, the liberal "solution" to land use restrictions isn't to try to loosen them. Rather, it's work around them with more government: tax credits, housing vouchers, transit-oriented development (served by trains operated by government unionized employees), lotteries for below-market rate homes and government affordable-housing bonds. But these "solutions" can't come close to meeting market demand for affordable housing.

Perhaps they should try the one solution not taken: allowing the market to operate.

DeVore is a vice president at the Texas Public Policy Foundation and served in the California Assembly from 2004 to 2010.