Excellent thank you so much @beatriceportinari for enabling me
(This is going to be a long one. I uh, realized I had to cover a different headcanon first for this to make any sense at all)
So first, to be clear, absolutely none of this is canon. This is headcanons upon headcanons upon headcanons, because Naruto canon is never once interested in politics beyond "Protagonist and Antagonist have a fight which is actually an argument but it's cooler because they also both have an army" which is not like. actually politics, at all. But I am so I have overthought these things a lot
Step 1: The Founding Of Konoha Was A Trick
So for obvious reasons, it's fairly common for founders fic to include a subplot in which okay, the Senju and Uchiha have peace, Hashirama and Madara want to build a village, but the daimyo/the nobility/the other shinobi clans/someone opposes Konoha's existence, usually because they don't like how it will change the balance of power, and now we have to figure out how to convince them so Konoha can happen. Which makes a lot of sense!
And my favorite solution is: they didn't convince anyone. Quite possibly not even their own clans. Instead, it went like this:
Problem: The Senju and Uchiha have peace now, but they've tried to have peace before, and it's never lasted. Often because the entire rest of the continent wants to hire them in opposition to each other, and neither clan is willing to back down mid-mission when they realize who's on the other side, so even with the best intentions the fighting restarts.
Solution: build a joint mission office (on the border of Senju and Uchiha lands) so that anyone who wants to hire either clan has to show up at the same place and talk to representatives of both. If all missions are accepted at the same location, recorded in the same files, by the same people, it will be easy to just decline any mission that would hire them to go against a mission they already accepted.
Also, hiring shinobi used to mostly be done by going through connections, or in some cases spotting a shinobi and running over to beg them for help. Shinobi tend not to like the latter (both in itself and because often the "shinobi" someone "identifies" is just some bandit/thug, who's likely to damage the reputation of shinobi while taking advantage of the mistake), and the former becomes less accessible the less rich a person is. So having a known, permanent location that people can just show up at and ask to hire shinobi will greatly increase the number of missions, thus increasing income for both clans. (And, due to more ordinary people being able to hire shinobi, this will also reduce the proportion of assassinations and similarly distasteful missions, which is good for morale.)
Problem: the other shinobi clans do NOT like being excluded from all this new business
Solution: invite them to also send representatives to, and accept missions from, the shared mission office. Nearly every clan in the country is at least tentatively allies with either the Senju or the Uchiha, so that's an easy way to bring people in
Problem: now there are a bunch of shinobi hanging around the mission office, both to accept missions and to be available to be sent on them immediately, and their homes are not close enough for a convenient daily commute on foot
Solution: where there's money to be made, someone is always willing to make it. The Senju and Uchiha both carve out some of their land near the mission office, and rent it to civilians who build and run inns. And restaurants. And shops that sell weapons, armor, mission-ready food. Bars, bookstores, and other entertainment for the shinobi that are mostly waiting around to be given a mission. Further businesses to support the civilians running all of the above.
Problem: This thing just keeps growing. We could use some roads. Less haphazard sewers and plumbing. Maybe an electrical grid. The larger and/or more closely allied clans are interested in having their own space, so their own civilians can support their shinobi, and preferably some private training grounds so their shinobi can keep in shape while waiting for a mission
Solution: Hashirama and Madara swearing to the daimyo that they had NO IDEA this would happen, all they meant to do was keep their own clans from going back to war, and then avoid any new wars with disgruntled other clans, but, well... since a village does seem to have developed anyway, by total accident, and it's getting to be a bit too much to manage as adjacent subsets of Senju and Uchiha land, pretty please won't you recognize it now? (Nobody wants to see what will happen if this is forcibly undone. We've all had enough of war, right?)
And so Konohagakure becomes A Thing
(It's possible that, at least at first, Hashirama and Madara genuinely didn't know how this would go. This sounds like a Mito plan to me, though they (and Tobirama) certainly would have caught on to what was happening sooner than most. But anyway.)
As a result of this origin, Konoha is different from most other shinobi villages in a few key ways. First is that since Konoha is, functionally, an overgrown guild, it has literally no authority over internal clan matters. The agreements that brought every clan other than the Senju and Uchiha into this are limited ONLY to missions and directly relevant issues, like creating a uniform ranking system for missions and shinobi so that missions can be distributed efficiently. Anything else, such as the Caged Bird Seal, is None Of Konoha's Business, in the same way that, say, a union can't interfere with their members' kids being homeschooled. It just has nothing to do with them.
(I have a bunch of other thoughts about like, how the Shinobi Academy works in this context, but I am trying to get to the point so let's just say a thing like this tends to expand its authority over time and also administration of this Mess will be Complicated As Fuck, and leave it at that.)
The other key point is that all the land that makes up Konoha actually belongs to either the Senju or the Uchiha. Everyone else is renting from them. Which means that, should a political disaster occur and war resume (or should Konoha just be invaded and destroyed by outsiders), every other clan can retreat to their old lands, while the Senju and Uchiha are stuck. But in the meantime, the Senju and Uchiha are Profiting, because they can prettymuch charge what they want for rent. 1 single competitor is not much better than a monopoly in that way, especially when those competitors are friends.
But... there's the question of what happens to the land and the village if either clan dies out, which Hashirama and Madara probably didn't consider, but the daimyo's people would have when making the village official. And the agreement they all came to was: if a founding clan dies out, that land then belongs to the village.
Now, by Minato's time the Uchiha are still going strong, but the Senju are down to Tsunade, who wants nothing to tie her to Konoha or ever make her go back to the place again. Since she's the only Senju and her boyfriend died before she had children, the Senju are going to be totally gone as soon as she dies. It wouldn't be hard to talk her into signing something to declare the Senju clan officially dead and gone and their land passes into Konoha's control a bit early. Maybe Konoha pays Tsunade a certain amount each year/month/whatever (and funds her gambling) but mostly she's just free of the place. Maybe this was even Tsunade's idea.
But for Konoha, now half of the village isn't paying rent, they're paying taxes. (I mean, some of them will still be paying rent. But a lot of people aren't, and now there are a bunch of landlords that own one or a few buildings each, instead of two clans owning Everything.) Meanwhile, the other half is still paying rent to the Uchiha.
This is the sort of situation which can be used to manipulate public opinion.
Specifically, Danzo manipulates it by convincing Hiruzen to lower taxes, and pass laws to keep rent (and any similar expenses) low in the half of Konoha that used to be the Senju's. Like, by a lot, so that the difference is pretty noticeable. This encourages people to view the Uchiha as greedy and selfish, and blame them for any financial problems anyone has. Also, anyone who can moves to the (former) Senju half of the village, physically isolating the Uchiha. And, well, that certainly wasn't the main cause of the Uchiha massacre... but it didn't hurt.
(Minato raised taxes while he was Hokage, because wars need funding. But then he died and Hiruzen was back in power and everything was lowered again.)
Of course, post-Uchiha massacre, Sasuke is still alive and absolutely NOT signing any 'my clan is officially dead, you can have all our stuff now' contracts, so Konoha doesn't inherit Uchiha land then. But once Sasuke leaves to join Orochimaru, officially leaving the village is probably enough for Konoha to assume ownership of Uchiha lands as well, at which point the rent on former-Uchiha land might take a sharp short term dive as existing laws kick in, but then it's all going to start creeping up. Wars need funding, and all.
But until then, all those lowered taxes mean Konoha's budget has gotten Tight. So they need to take more missions, send more shinobi, bring in more money. Shinobi are more worn out and overworked, both on missions and on the paperwork side; it's easier to hide convenient accidents, extra missions (Root), and secret experiments (Orochimaru) or organizations (Root again) when no one has time or energy to look because Konoha can only afford to pay half as many filing shinobi as they actually need.
But when Konoha assumed ownership of what had been Senju land, it also assumed all the responsibilities that clans usually handle. Most relevantly, that would include arranging support for orphans, elderly and/or disabled people, etc. The actual shinobi clans on that land handled their own people, but all the civilians and clanless shinobi would have been the Senjus' responsibility, and now they're Konoha's.
Konohagakure is an overgrown business venture, with a side of "plausibly deniable excuse to make everyone live together". It is not equipped, structurally, to provide social security and organize soup kitchens. Retrofitting those functions in is awkward, and also pretty rushed in a the-last-second-was-last-month, 'oh shit that is our job now I guess?' way.
And when Konoha doesn't have the budget for everything, well, it's easy to cut the funding for stuff that isn't really on the mind of anyone at the top. Like orphanages. And when an orphanage doesn't have funding, ultimately that means there is a limit on how many kids can be taken care of. So the rest (maybe the oldest, maybe the least liked, maybe the kids that anyone has shown some interest in because surely that anyone will step in when there's no other choice, right?) have to fend for themselves.
(While the people who can afford to were moving their homes and businesses from Uchiha to formerly-Senju land, a lot of retirees, both shinobi and civilian, moved from formerly-Senju to Uchiha land, because the Uchiha clan has been taking care of their elderly members and injured shinobi for generations, and they have systems in place to make sure that gets done, while people who need help on Senju lands just have to go without. But this means the Uchiha systems are overloaded, so the support they provide is more and more likely to be bare minimum, so there's more resentment, and also the Uchiha need more and more money to support the entire village's elderly and/or disabled population, so they keep having to raise rent instead of lowering it.)
Anyway so that's how the "how do we found Konoha despite anticipated political opposition?" question enabled Danzo to cause both Sasuke's and Naruto's awful childhoods via making taxes too low.
And now it's 4 AM so I'm going to bed.
