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Free Minds & Free Markets

Government Created the Housing Crisis. Government Can Solve It.

Suggestions from a New York real estate attorney

For an example of how the good intentions of big government can produce extremely bad results, one needn't look further than the rental housing market in New York City.

We have government-sponsored financing for low-cost housing. We have special housing bonds. We have public-private construction projects. We have government agencies to help the private sector and nonprofits produce lower-cost housing. We have inclusionary mandates. Yet rental housing in New York remains more expensive than practically anywhere else in the country and suffers from a perennial "crisis" of affordability.

Earlier this year, New York revived a variation on its previously expired 421a tax abatement, first enacted in the 1970s to encourage new rental housing construction. Today's version offers developers a tax break with a present value equal to one-half to two-thirds of the entire cost to build the project—assuming the developer jumps through some hoops that seek to help labor unions and deliver more "affordable" and rent-regulated housing.

Through these and other measures, officials claim to be trying to solve the problem of high rents. But the discussion always starts from the premise that government should do more. Rarely does anyone ask whether government should instead do less, even though decades of ill-considered policy caused the housing disaster that New York faces today.

Nonregulated rents in New York City are indeed extraordinary. Small one-bedroom apartments in Manhattan cost around $3,500 a month and generally rise over time, although a recent construction boom has led to a slight downward drift near the top of the market.

The culprit for high prices cannot be the free market, because New York hasn't seen a free market in rental housing since World War II. Instead, a panoply of laws, regulations, and programs create distortions, complicate development, and make it difficult to build new housing except at the very high end. If we're serious about making New York and other major cities more affordable for renters, here are a few things to reconsider.

Zoning: About 100 years ago, municipal officials decided to separate different uses of property from each other so we wouldn't end up with slaughterhouses next to nursery schools. From that small seed of good intentions has grown a massive forest of land use regulations that limit and delay development and constrict the housing market, driving up housing costs. In New York City, every discretionary approval for a substantial project creates a veto opportunity for the local city councilmember. These opportunities are often exploited to preserve the values of existing buildings by blocking competition. Thus, zoning and approvals attract a substantial constituency and—surprise—politicians listen.

Housing formats and building codes: Building codes require a certain minimum size and quality of residential units. Anything smaller or of lesser quality simply can't get built. In New York, single-room occupancy hotels once provided affordable housing to thousands of people. Then the city and state made it illegal to build that sort of housing, and also passed laws prohibiting anyone who owned such buildings from raising rents or tearing them down. The building code includes a variety of restrictions designed to improve the quality of housing, such as minimum size standards for apartments, but this makes it impossible to move forward with very inexpensive residential construction. What's wrong with providing very small housing units for people with very small incomes?

Environmental impact review: Many substantial development projects must endure an extended inquiry called an environmental impact review. This process has grown far longer and more complex over the years. It has in large part become a tool for those who own existing properties to slow down or stop the development of new ones.

Landmarking: After historic Pennsylvania Station was demolished in the 1960s to make way for the hideous Madison Square Garden, New York City implemented a robust landmarking program that now preserves by law some 35,000 old—and not so old—structures. When enormous numbers of sites are blocked from redevelopment, the remaining land becomes ever more valuable, and new housing becomes even more expensive. Plus, landmarked buildings create major economic challenges for their unfortunate owners when major repairs become necessary. We should cut back on landmarking, limiting it to genuinely special structures. Perhaps the landmarking experts can redirect their time and energy to identifying the 10 percent of existing landmarks that most merit preservation.

Real estate taxes: New York City has a bizarre real estate tax structure in which multifamily rental buildings pay a much higher annual rate (about 4.5 percent of value) than single-family houses or condominium apartments (about 1 percent of value). For rentals, the city seeks to capture up to a third of the owner's gross revenue just through real estate taxes, an enormous bite. Of course, the more you tax something, the less of it you get. The high real estate taxes on multifamily rentals mean that building such structures, except at the highest end of the market, is economically difficult without tax abatements or other incentives doled out by the government.

Rent regulation: In an ordinary housing market, people move as their needs change, developers demolish and replace obsolete buildings, and the market adjusts to population shifts. But because New York City has been under a "temporary" housing emergency for 74 years, government officials decide how much rent landlords can charge; property owners must by law offer below-market lease renewals for life; and thousands of buildings are removed from availability for redevelopment. Some owners actually leave apartments vacant because regulated rents can't support the capital improvements needed to avoid penalties for violating housing codes. An ordinary, functioning rental housing market would free up many rent-regulated units that are underutilized or held off the market, and would make new development easier, driving down rents.

Each of these government programs exists for a putative reason. Keeping it in place helps politicians win votes from people who enjoy living in rent-regulated units and generally want to keep things just the way they are.

Housing regulations tend to germinate and take root at the local level. Each program, once established, develops its own constituency. It becomes institutionalized. It grows over time. Government employees develop special expertise in it and take it very seriously.

Rent regulation and some elements of landmarking probably violate constitutional prohibitions on the taking of private property for public use without compensation, although the Supreme Court has historically declined to rule that way. Pending more changes in the Court's makeup, the best solution might be to fight bad local policy with better state or national laws. We might also ask whether it makes sense to release more government-owned land for development, to help promote new projects or even whole new cities, and drive down housing costs.

The conventional wisdom, then, isn't totally wrong. High rents are a national problem, and solving it does require help from government—by trimming, rethinking, and in some cases phasing out the many existing government programs that caused the problems in the first place.

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  • DajjaI||

    Yep. Also you didn't mention low-income housing rules. These are supposedly for low income people to get reduced rates on high-end housing. But it ends up reducing the quality of the housing since they squander it. They don't appreciate what is given for free (this is our nature). The value of high end housing is that people move into it - thereby freeing up middle end housing. But this benefit is lost. Also you didn't mention the Mortgage Interest Tax Deduction, which entices developers to make buyable units instead of rental units.

  • Sevo||

    "Also you didn't mention low-income housing rules. These are supposedly for low income people to get reduced rates on high-end housing. But it ends up reducing the quality of the housing since they squander it."

    Further, in San Francisco, a developer must set aside X% of new builds for 'below market rate' housing, auctioned off (fairly of course?) to low-income people. That means people who would move to a cheaper place if they weren't given free shit.
    Of course, no developer works for free, so the added costs gets levied on those who buy the (now inflated) market rate housing, meaning a higher market rate and a larger mob demanding BMR housing.
    Rinse and repeat.

  • HeteroPatriarch||

    But do you live in BMR housing?

  • Sevo||

    He did, but I threw his ass out.

  • cluskillz||

    I believe BMRs are typically raffled to a group of screened applicants who are given an opportunity to buy at a low price. One if my clients in a suburb near San Francisco built a small infill site (maybe 12 or so units iirc) and two of them needed to be BMRs to gain things like density bonuses. The units sold at a market rate of about $800k+ while the BMRs were raffled off to applicants who ended up paying less than $200k for them.

    So the developer got soaked for over $1.2m just to get the density bonus they needed to make the project pencil. So of course with these massive costs, developers aren't going to be as gung-ho about building until scarcity has ramped prices up to where it makes sense.

  • vek||

    That's crazy. I understand the flawed logic in requiring rental buildings to have some below market rate rentals... But how is there justification in just randomly allowing people to BUY units like that at stupid low prices??? And are there contingencies in there that they have to wait XXXX years before selling at market rates?

    I'd never heard of SOLD units being required like that. It's disgusting.

  • cluskillz||

    It's getting fairly common in California though I think most of the time, developers still choose to pay an "inclusionary housing fee" instead of offering the BMRs.

    Yeah, there is a time restriction before they can sell at market rates but I can't remember what it was. Twenty or thirty years?

    What's funny (and sad) was that the neighbors came out of the woodwork during the council hearings to complain that they didn't want "those people" living around them.

  • What about Sloopy's mom?||

    So the developer got soaked for over $1.2m just to get the density bonus they needed to make the project pencil.

    No, it wasn't the developer, it was the buyers of the other 10 units who were soaked 100K+ each to subsidize the two 200K units.

  • cluskillz||

    Well, yes, for the most part. Due to price sensitivity, they did have to take some lower profit margin on this project (since the cost of inclusionary was higher than expected and they needed to offload the project asap to free up some cash). But it will also cut into the pockets of future home buyers since this will factor into future developers' pro formas.

    So yeah you're basically correct.

  • Telcontar the Wanderer||

    "New York City implemented a robust landmarking program that now preserves by law some 35,000 old—and not so old—structures. When enormous numbers of sites are blocked from redevelopment, the remaining land becomes ever more valuable, and new housing becomes even more expensive."

    In a society where the past is worshipped, the present will be sacrificed.

  • JFree||

    This is part of the land cronyism that Jefferson hinted at. I set out on this ground which I suppose to be self evident, "that the earth belongs in usufruct to the living;" that the dead have neither powers nor rights over it.

    This sort of stuff is one of the ways that land speculators have rigged the tax system in their favor. Get a big charitable deduction for the donation of one thing (usually accompanied by some special ongoing preference for their other land too) - take some land off the tax rolls so the tax base is narrowed - and shift the tax burden for infrastructure to some other landowner

  • Telcontar the Wanderer||

    "Pending more changes in the Court's makeup, the best solution might be to fight bad local policy with better state or national laws."

    This is why I am not a federalist. Neighborhood-level tyranny is no better than national tyranny, and when it tyrannizes hundreds of thousands of people in other states (the fired workers of the Rust Belt) by locking them out of job growth zones with artificial cost of living, the Commerce Clause for once finds its purpose. And because the local constituencies who already live in these places benefit from it, they will *never* change it on their own.

    Call in the feds and crush these Marxist scum, like the Jim Crow laws of old.

  • Devastator||

    Not everyone one who disagrees with you is a Marxist or a scum. Hate breeds hate and dulls the mind.

  • Telcontar the Wanderer||

    "Yes, mom."

    Because I'd never considered such a possibility before you brought it to my attention, of course.

  • MarkLastname||

    People who don't believe in private property rights (like mayor dde Blasio) are close enough.

  • vek||

    It's too dangerous a precedent for just random things... Things that are legit constitutional issues, which Jim Crow laws could be said to be, is one thing... But "We don't like your idiotic law on regulating barbers in your state, so we're changing it" is just asking for trouble. The fact that the states let the feds get away with stupid shit like that on 100,000 other issues is 90% of the problem in this country today.

    I'd rather have a patchwork of laws running from horrible to amazing on any given subject than a mediocre 1 size fits all federal decree. You can never guarantee the top down decree is going to make ANY kind of sense, so even when I disagree with the particular issue, I generally side with the lower level authorities right to fuck up.

  • Telcontar the Wanderer||

    "I generally side with the lower level authorities right to fuck up."

    The problem is that this fuck-up is directly responsible for the opioid, alcoholism and obesity crisis in the Rust Belt, which has caused literally hundreds of thousands of deaths.

    Plus, it's not a "fuck-up": the people in the cities benefit. Rich people get nice home values, poor people get free shit; it's the people locked outside that suffer.

    All of those other misuses of the Commerce Clause are not going anywhere. So let's add one, and maybe prevent another couple hundred thousand people from *freakin' dying*.

  • vek||

    How is it the governments problem that the opioid crisis happened? In a truly free society you should be able to just get all that stuff at the corner store... But whether you think that's a good idea or not, how is the government going to fix that with a top down decree?

    If anything the federal government signing very slanted against us trade deals is what made the rust belt fall apart 10 times faster than it would have under natural market conditions (IMO), so the feds pretty much created the situation.

    As far as the areas where there are more clear and obvious ways to fix things though, I still think it should be states doing it if cities/counties need to be overridden. Every time I think of the feds forcing a good idea onto the states, the other side of that being okay pops into my head, like them passing a law that nobody can get a concealed carry permit without showing a "good reason" for it (and self defense doesn't count) or some such nonsense. I'd rather we be fighting the false application of the commerce clause than using it for OUR sides to get wins.

  • Telcontar the Wanderer||

    It's the government's fault because of this urban cost-of-living inflation. Zoning, landmarking, all the other stuff in the article, plus occupational licensing and non-transmissible welfare have prevented fired Rust Belt workers from moving to the cities where the job growth is, because they can't afford to. That's why they're depressed and turning to opioids and suicide at all: the fact that the Drug War has made that harm vastly worse is an unrelated issue.

    Those Rust Belt jobs were mainly lost to automation (50 to 66%), not trade, but it doesn't matter which was mainly responsible: both destroy Worker A's job, but make Consumer B richer by lowering the prices Consumer B pays for the same goods. Having greater wealth, Consumer B thus consumes more, creating a new job for Worker A. The problem is when Consumer B lives in City C with artificially high CoL, such that Worker A can't afford to move there. Consumer B has to spend their newfound wealth on rent and regulatory fees, Worker A has a sad and ODs, and only a few wealthy people in City C benefit. But they're the ones in charge.

    And so it just gets worse and worse, because Worker A doesn't vote in City C's elections, Consumer B doesn't lose enough to notice, and Wealthy Dickhead D watches the vote like a hawk. Which is why federal intervention against City C is Appalachia's only hope.

  • vek||

    I get what you're saying, and agree on much of it. I live in Seattle and am more than aware of what stupid zoning laws can do! That's one of the main reasons why I'm moving out of this communist hell hole before long.

    I still don't agree in terms of principles on having the feds do something like that. BUT I am also an admitted hypocrite/pragmatist because it's not like I fight or actively talk too much smack on fed ideas I do like on the rare occasion they come up. Stuff that comes down the pike I like the idea of I'll usually say "The feds shouldn't be doing it, but that's pretty friggin' sweet!" I may not like it, but I won't usually try to sabotage it either. I'm still not going to try to PUSH for the feds to get more involved in anything though.

    As far as people in the rust belt, there are a lot of reasons it has got to where it is. Automation is big, obviously. However people undersell the impacts from trade because it suits them. They always say manufacturing is a dying industry, and it is long term... However there are more people working in manufacturing than ever before in history, and it's continuing to go up every day, and projected to keep doing so for a number of years. So it ain't dead yet, not by a long shot. We have a far lower percentage of our economy based on manufacturing than a lot of other advanced economies. Bottom line is we tossed out millions of jobs unwisely (IMO) and prematurely, and it has caused major issues in the country.

  • vek||

    After much study on the subject I have come to the conclusion that the free trade theory (and it is a theory) always being beneficial for all sides is true in a hypothetical scenario, but plays out far less so in the real world for a shit ton of reasons. Mostly because real free trade doesn't exist. If it did I believe the theory would function far more like it's supposed to on paper, and be far better than what we have IRL. I've gone so far as to do back of napkin math on some of the premises it is based on, and there are glaring holes that pop up upon even half assed inspection when taking real world facts into consideration.

    One of the biggest holes is that to make the math pencil essentially everyone has to always be employed all the time (not how it works IRL), and when people lose employment temporarily they not only magically find new employment (not how it works IRL), BUT it always has to be BETTER employment in the wealthier country taking advantage of cheaper imports (not how it works IRL).

    This is simply not the case in the real world. Your reasons are part of why those things don't happen, but another that nobody will ever mention is that many of the people being displaced are simply not intelligent enough in terms of IQ to actually move up the ladder. They literally can't do the more complicated jobs that exist. Plenty of farmers from the 1800s would have been smart enough to be computer programmers, but lots of them would NEVER be capable of doing it too.

  • vek||

    It's largely a new problem because in the past there was always new menial labor required, but far less so now. So when we offshore the jobs for less intelligent people and tell them to become rocket scientists or whatever, it just ain't gonna happen for a good grip of those people. EVER. It's a major flaw in the premise of free trade theory, exacerbated by some of the things you mention that prevent even the people who might be bright enough to step up.

    So what happens in the real world? With a welfare state as a backstop, they just rely on that, and turn into deadbeat drug addicts or whatever... So the REAL cost of many of these imports is actually ending up being far higher than the upfront perceived cost savings.

    The other biggun is that there is a virtuous cycle that is created by local (whatever unit of people/territory you choose to use to define that is irrelevant, but national is what I mean in this case) spending and keeping the money floating around in your neighbors pockets. Like it or not MY life and financial success is more tied into and dependent on the success of some guy in Ohio than some guy in India. I'm interconnected to both of them nowadays, but the correlation between any American and another American is far greater due to all of the forced bonds we have economically.

    When we outsource saaay the production of a $100 product (manufacturers cost in USA) to China to be made for $80 the math doesn't pencil out for helping the OVERALL American economy.

  • vek||

    People have this perception that costs are cut by 90% or something when off shoring, but often times the total savings after shipping half way around the world etc are far smaller, often as little as 10% or 20%. We DO save far more on some items, and those are the things that should be outsourced, but we've outsourced almost everything even where the savings are minimal.

    Anyway, individuals who save directly by buying said product do of course see savings, but the US economy overall is actually smaller and weaker as a result, which indirectly hurts even the guy who saved. In theory the magic switching of jobs is supposed to occur here, but often doesn't, which turns it into a true and huge net loss to the overall economy much of the time.

    Why? Because that mere $20 saved costs Americans (whether employees of the final manufacturer or component suppliers) $100 in income, $80 of which is now sitting entirely in China. That $80 difference would have circulated MOSTLY back around into the US economy and created far more than the $100 in that single first transaction in business (Local Multiplier Effect, one things Keynes got right!), and sure as shit more than the $20 that was saved. The $20 saved, even when spent on another $20 in purchases to buy some more Chinese made goods where 80% goes back overseas right off the bat is NOT nearly enough to offset the loss of that $100 in US based income.

  • vek||

    Is this a collectivist way of thinking of it? Sure it is. But we ARE tied together by a legal government, physical land, etc etc etc. That's reality as it stands today. So if Bob in Ohio can't pay taxes and becomes a drain on society, then that actually DOES affect you and I in the present paradigm.

    Then there are the effects of fiat money, foreign currency manipulation, the fact that our competitors are still protectionist and we're not, and on and on. BUT that is totally side tracking from the topic at hand. After all I've read on free trade I just get peeved that people can ignore the obvious differences between the correctly working theory on paper and how it works in the real world. There are a lot of nuances to it, and I'm not at all against outsourcing plenty of stuff, but it needs to be sensibly done, which is NOT how it has been executed.

    Back to Ohio drug addicts, I don't like removing those peoples agency like you suggest. They've been kicked in the balls. Many of them aren't that bright. But I still think they could find a way to move somewhere else where there are at least slightly better prospects. I think a lot of them just choose not to. Maybe they can't move to San Francisco and become a programmer (or cook at a Ramen joint if they're not bright!) but they should at least be able to move to Dayton where they have a somewhat better shot at getting a gig.

  • vek||

    I think a lot of it is stupidity and bad planning on their part. We've screwed the pooch on policy for sure, but many people as individuals have also made the problem 10x worse than it needed to be. I think the systemic problems created the issues, but if individuals were better about dealing with it it wouldn't be nearly so bad.

    I still don't like the idea of the feds forcing zoning law changes... Unless it's a supreme court case that gets all zoning laws thrown out as unconstitutional unless it was agreed on in a private contract :)

  • Telcontar the Wanderer||

    "Unless it's a supreme court case that gets all zoning laws thrown out as unconstitutional unless it was agreed on in a private contract :)"

    If only, brother vek, if only.

  • vek||

    One can dream right? :)

  • Telcontar the Wanderer||

    I think the center of your arguments is the idea that human labor is not perfectly fungible: eg, that fired US manufacturing workers can't just get new jobs. And that's a reasonable position on its face, and if true, would indeed render free trade deficits a bad idea.

    But here's the thing: that all applies to automation, too. And the idea that destroyed jobs aren't quickly replaced by new ones *in a free market* simply isn't backed up by history. The shoemakers, the buggy drivers, the farmers and typists... Their loss did not make us poorer. It does not matter to a fired worker (or his neighbors!) whether a Mexican or a Dalek took his job.

    There might theoretically come a day when human labor becomes "outdated", but I don't think we're even remotely there. There are lots of low-IQ jobs left- dog walker, yoga instructor, carpet installer- and more importantly, even IT jobs like app design and help dep aren't rocket science. I have faith that those ex-factory workers are smarter and more adaptable than many give them credit for. IF they're able to move.

    (Going forward into the future, as AI and supercomputers actually threaten human intellect in earnest, I think genetic engineering and cybernetics will allow us to keep up with what we create, by allowing us to absorb it. But that's decades away).

  • Telcontar the Wanderer||

    Those fired workers aren't getting new jobs right now, yes. And yes, that harm, shared throughout our community, equals out the savings from trade. But it is exclusively a product of government meddling. I don't think that licensing, zoning, landmarking, non-transferable welfare and environmental regulation are "part" of the "problem" with free trade; they ARE the "problem" with it, and if eliminated, trade would have no problem.

    The idea that we should be "selective" in our trade deals with other countries strikes me as queasily similar-sounding to the way people say we need "middle-ground" or "common-sense" restrictions on what kind of guns are sold or what narcotics should be legal. The Non-Aggression Principle is not "case-by-case". It is not subject to the whim of "experts". It is universal. And protectionism is one of the oldest, best-studied, and most discredited violations of it. Tariffs are acceptable only as retaliation for another nation's tariffs, no different than naval cannon fire or nuclear exchange.

  • vek||

    As far as trade protection, in a perfect world I would advocate for real free trade. I think that's what Trump is trying to force. However in the real world where economics is warfare, when somebody is putting a gun to your head I don't know that you can always leave yours in the holster.

    In any event, if we want China to drop trade barriers for our businesses they have to BELIEVE we will really pull out. I think with Trump they think we might. I would in fact do it too if they tried to call our "bluff." As I said we don't need them. There are lots of low wage countries in the world. They do NEED us for now still though. So forcing them to play fair is not a bad idea. If we have to slap them down for a period of time before they cave, then so be it. We let them bend us over for the last couple decades, which wasn't playing fair... So why should we give a fuck about returning the favor?

    It's a means to an end for me. Realpolitik in action.Thankfully rising wages in the third world are actually eating at their cost advantages anyway, as will better automation. So the long term long term it won't be as big a deal, but we still need to force them to drop their protectionism if we want to revive our economy. Manufacturing will never go away. Employment might shrink, but the buildings required to house it, the energy to run it, etc will always be spillover boosting the economy that houses the robots! And that's a good thing.

  • vek||

    Not PERFECTLY is correct. I'm not saying there's no elasticity, but just that it isn't absolute, and certainly not at the drop of a hat. Obviously millions did move on. There are too many things to even type out, but I think it is clear that things did not go as smoothly as all the "experts" and theoreticians said it would. That's basically all I'm saying.

    Additionally, with trade versus automation taking jobs away, they are largely the same, but also they differ in how the accumulated profits are distributed. For a big public company, the profits might be split by shareholders all over the world. But a great amount of that work is actually small/mid sized private companies. If a rich guy automates his plant in Ohio and cuts employees by half, that still keeps all the money in the states. If he shuts the whole thing down and sends it to China, it doesn't.

    There is a lot of nuance in the math and how capital flows through the economy that comes into play, and really is one of the biggest marks against total free trade from a national perspective. That recirculation of money is absolutely essential to the whole thing, and is always ignored in a classical free trade explanations. Again one can always go to the extreme libertarian individual right angle to support it, but most people simply don't care. LOL

  • vek||

    As for low IQ workers, I'm not saying we're at the absolute tipping point right this second... But I'm a big technology geek, and it's very conceivable that we're going to start hemorrhaging jobs faster than we can invent new ones. That's the same old tired argument of course, so it's not unwise to take it with some skepticism. I certainly was for a long time myself. But then some things started clicking in my head. The pace of change has simply picked up so quickly that it's really hard for even smart people to stay on top of it. We're going faster than "human speed" with the changes essentially. A person retraining once in a career is pretty easy. But every 5 or 10 years? Some things are literally rising and becoming obsolete that quickly nowadays, and many tech experts even are warning that it's too fast for many people to stay on top of it. I would add especially slow folks.

    The only way that we will be able to soak up the number of jobs being lost in coming decades are likely:

  • vek||

    1. Way more random pointless jobs that people will pay for just because the new aristocracy has money to burn. Things like personal maids, chefs, valets, etc coming back into vogue essentially. Likewise with the yoga instructors, or perhaps going out to eat or get messages more often. This largely depends on the spending habits of those that HAVE all the new cash though. If they decide to buy 5 Teslas (made almost without human intervention now, probably zilch in the future) instead of hiring a maid, then no job for that person. So this kind of stuff is not guaranteed, but possible. Many labor rights types have talked about this, and of course mentioned how it is like going back to the days of aristocracy in Europe. This to me is a somewhat bleak future in a lot of ways, but it beats people not working at all.

    2. The one I prefer! MASSIVE increase in per capita consumption. This to me is the one that might pad out employment in the most healthy way, although hippies are against it because they don't realize we have virtually infinite resources available on earth if we're smart. But imagine if everybody in China had a standard of living BETTER than we have in the USA today. And we in turn had a better standard of living than them. China at that level would be consuming about as much as the entire world is today. Throw India in and double that etc. If you say 5 fold consumption, even if you make EVERYTHING 4 times more efficient per man hour, you're still gaining employment.

  • vek||

    3. We can also create "make work" projects out of doing cool "nice to do" things that aren't really needed just to keep people occupied, while also doing something people will somewhat enjoy. Think massive infrastructure, or restoring wild lands or WTF ever. We can come up with tons of pointless stuff to do that'd be cool.

    The thing is though, that none of those are a given. Rich people in 2030 might not feel the need for a private chef. Maybe the hippies win and convince everybody excessive consumption is evil. Maybe people don't want to do massive, cool, but pointless projects. Then what? Universal Income? Who knows. I am not 100% certain most people with less than a 120 IQ will be jobless in 2050, all I'm saying is I wouldn't 100% rule it out either.

  • Telcontar the Wanderer||

    I don't claim to know what China is doing to mess with our exports there, but like I said, I consider tariffs to be an appropriate response to the other guy's tariffs. The problem is that Trump, Bannon & Co. clearly aren't interested in using tariffs to "guarantee" free trade; they hate it in and of itself.

    And whether there's a difference between a rich guy automating his factory or sending it to China A, depends primarily on whether *he* moves (if he's still living here, then he still consumes and spends here), and B, more importantly, is mostly irrelevant, because it's the increased wealth of the *consumer*, not the owner, that produces that new consumption and jobs. Trade and robots increase the wealth of consumers, not by having them be paid more, but by lowering the costs of goods proportionate to their preexisting income. And a trade deficit by definition indicates that the newly wealthier consumer is in the same nation as the fired worker, which means that the worker will be able to move to the city or region where the consumer is consuming... Assuming there are no artificial barriers to doing so.

  • Telcontar the Wanderer||

    As to automation and jobs, I think your 3 points pretty much make the argument for not being worried about it, because I think all of those things will come true, with a vengeance. More people buying "humanely raised" (read: overpriced) beef and chicken, more theme parks, more cosplay, more enormous region-encompassing LARPs of Harry Potter and Lord of the Rings... Humanity's capacity to waste money wasting time is limitless. And remember: humans are *the only economic actors that demand wages*. The sum total of all wages ever paid to robots is 0.00$. So as robots take more and more over, humanity will only have more and more cash money left over to pay to the only entities they can- each other- for whatever absurd reason catches their fancy.

    And so I don't think it even matters if robots become "smarter, faster, stronger" than humans in the next century, or decade, or month: we'll lose all our "relevant" jobs if that happens, sure, but since those "humanbuster" robots will demand no wages, that'll just leave us a whoppin' amount of cash to spend on charity, favors to friends and family and whatever meaningless jobs humans can still do.

    But I don't see that happening. Like I said: cybernetics and CRISPR will let us absorb the "OS upgrades" to our iEconomy. And a UBI would disincentivize R&D and "early-adopters" in that sector, which is why I strongly oppose it.

  • Devastator||

    End zoning, end the crazy amount of regulations it takes to build something new and all will fix itself within a decade. If you can't afford to live downtown but have a job there, you will have to find a new job. If you can afford to live downtown but you company can't afford to have offices there then work remote or move closer to your job. The market will adjust and fix itself. Government subsidized housing always fails in the long term.

  • Juice||

    These 13 House Reps sponsored a bill to legalize mass surveillance on Americans and called it the USA Liberty Act

    On October 6th, House Representative Goodlatte and 12 other Representatives proposed the USA Liberty Act (H.R. 3989) – which would renew the currently active NSA's mass surveillance programs. We've known for the better part of a year that the Trump Administration intended to renew Section 702 of the Foreign Intelligence Surveillance Act (FISA) which would otherwise expire at the end of this year. Section 702 is used by the National Security Agency (NSA) to justify its controversial UPSTREAM and PRISM programs, which were revealed by Edward Snowden in 2013.

    With a name like that, they should have added the bump stock ban as an amendment.

  • HeteroPatriarch||

    Well, it's a bipartisan piece of shit, anyway.

  • Gaear Grimsrud||

    The real estate "market", at every level is so distorted by government, at every level, that no one has any idea what an arms length transaction would look like. The purpose seems to be ensuring that all of the rent seekers get paid. Except landlords of course.

  • Longtobefree||

    And the left calls the right fascist.
    Bring on the Ministry f Truth.

  • Finrod||

    The old saying has come to pass: fascism has come to the United States calling itself anti-fascism.

  • Len Bias||

    "For an example of how the good intentions of big government can produce extremely bad results, one needn't look further than the rental housing market in New York City."

    I know Reason likes to be diplomatic by using phrases like "unintended consequences" and "good intentions," but I disagree, I see less and less of either good intentions or unintended consequences in these situations.

  • C. S. P. Schofield||

    In the 19th century, when the market did something unusually stupid looking, there were good odds that some swine like Jay Gould. In the 20th century when the market does something unusually stupid looking, it is almost always traceable to some idiotic government meddling, and this trend seems likely to continue in the 21st century.

    Of the two scenarios, the 19th century one is preferable; Gould's manipulations could be and were opposed effectively. Government meddling is (apparently) forever.

  • vek||

    So once upon a time while reading on Wikipedia, I was looking at the page for some city or another. Anyway, it has the population growth on there. I noticed it shot up by like 100 something thousand people in less than a decade. I have since seen this on a TON of cities. San Francisco and Chicago are examples. Sometimes they doubled or tripled their populations inside of a decade. This tended to happen in the 1800s and early 1900s. Chicago added 600K people between 1880 and 1890. HOLY BALLS. Then it magically stopped everywhere later in the 20th century. Almost nowhere has been able to add housing as quick as they did back in the day. HOW DID THEY DO IT???

    No bullshit regulations. They could just build what was needed, when it was needed. Not that there wasn't property speculation and stuff in these boom towns, there was, but I don't think they ever had the same out of whack with incomes thing going on as we do nowadays either.

    Houston has had zero zoning regulations (although they have state building standards still) since forever, the largest city in the country to have this. Magically housing is dirt cheap there. Such an obvious fix it's just insane people can't grasp it. ONE of these fast growing/expensive cities should just throw all the BS out the window and let builders go crazy, and then when housing prices flat line, and ultimately decline they can go "The market, it works. dildos." But they're all lefty cities, so it'll never happen.

  • JFree||

    For rentals, the city seeks to capture up to a third of the owner's gross revenue just through real estate taxes, an enormous bite. Of course, the more you tax something, the less of it you get.

    This is wrong. Land taxes do NOT distort building/property improvements. Only property taxes do that. Pretty much everyone from Smith to Ricardo to George to Friedman to WF Buckley to David Nolan understood that basic Georgist idea. Land was here before humans were species and the same amount of land will exist when we go extinct. The only question is who will be the rentier. Right now govt grants land monopoly/title to private individuals - and gets NOTHING in return for that extraordinarily valuable continuing service. The private owner gets all the value of increased public infrastructure value - all the value of ownership enforcement - all the value of withholding that land from use in order to speculate. And those owners also get the dual cronyist advantage of both ensuring that govt regulation favors speculation over development - and that all govt spending gets paid for by others.

    There's a reason that Henry George almost won the mayor's job in NYC in 1886 - when he pointed out the solutions to housing problems LONG before there was much regulation of anything. And there's a reason that bankers and land lenders and land speculators who have always been so powerful in NYC made sure those ideas were killed off there and then buried even in academia.

  • JFree||

    The current land usage in NYC is an example of how screwed up things can get when you have anti-land tax system:

    23% of land in NYC is 1/2 family residences
    22.5% is streets
    16% is open space and recreation
    10.5% is multifamily and mixed residential/commercial
    10% is vacant
    7% is industrial
    6% is public/governmental
    4% is commercial

    Regulations don't create the weirdness. They reinforce/support/protect it. A true land value or location tax doesn't need regulations. And if streets, vacant, public/govtl, and 'open' (55% of current land) also have to pay their land rent too (or at least that portion that doesn't increase neighboring land value), then it is amazing how much things could change. Regulations though shouldn't be the first focus. Restructuring the land/location tax should be - and it could generate a ton of money to lower income/sales tax too.

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