5 ms·

> Or more accurately, why would the powers-that-be in a given area want to do this? Well, they generally would not. Except there are firms that must pay salar

> Or more accurately, why would the powers-that-be in a given area want to do this? Well, they generally would not. Except there are firms that must pay salaries that are not in real estate that have to pay their employees higher salaries in order to pay for the "rent-seeking" of landowners. It would benefit them to lobby and influence city council. Also, powers that be love monopoly pricing but there are laws to stop monopolies. Still, author Cowen is an Economist, yet doesn't state the true reason for rising housing prices, a discovery made two centuries ago by an extremely famous economist, David Ricardo.

Arizhel 10y ago
>It would benefit them to lobby and influence city council. Why would city council want to bring down rents? They and their cronies are profiting off the high real estate prices. The city council is, after all, composed of wealthy people who own land in the city. You can't have a city council composed of people who don't even live in the city. >Also, powers that be love monopoly pricing but there are laws to stop monopolies. Those laws only apply to corporations; they have nothing to do with real estate, and this isn't a monopoly situation. There isn't a single company that owns all the land, or all the apartments, in these high-priced cities. There's merely a shortage of usable land, because of geography and physics. Basically, to fix this problem, we would need new laws at the State or Federal level, along with enforcement which would absolutely work against the wishes of these city councils. But there isn't much demand for such laws, because it's a local issue, and national-level politicians aren't going to do well trying to make it a campaign issue. Voters in rural areas just don't care about high rents in cities; they'll tell you that you just need to move out where they are and bring the high-paying jobs to their rural communities.
- davidf18 10y ago
  > "The city council is, after all, composed of wealthy people who own land in the city." I can't speak for your city but in NYC, I'm not certain if any member of the city council is wealthy. I know my representative is not. My point regarding anti-trust busting of monopolies is that federal legislation has been enacted before to combat deliberate attempts at market inefficiency and it could be done in the case of zoning density restrictions. In 2002, Japan enacted a federal law that overruled local land-use restrictions and as a result in 2014, Tokyo built 7 times the number of housing units as NYC (140,000 vs. 20,000). We should do the same in the US as they did in Japan and you'll see more affordable housing.
  - Arizhel 10y ago
    We can't do that; we don't have the culture they have in Japan. These things are a product of culture. Japan has a culture in which street crime basically never happens; the US does not. The US has a culture where the politicians are thoroughly corrupt, especially at the local level, and the voters like it and re-elect them happily. You can't just will culture to change.
savanaly 10y ago
Tyler Cowen knows about rent seeking and Ricardo. He's not writing an encyclopedia article on the topic of rising housing costs though, he's writing a short piece for a broad audience about the demand side factors that might stabilize the price of housing in the long run, given (what we all take for granted) a more or less fixed supply.
- davidf18 10y ago
  I realize that he knows about rent seeking and Ricardo. He was addressing the issue of high housing costs and the question to ask is, why didn't he address the solution which is to reverse the rent-seeking that benefits wealthy landowners like President Trump over regular citizen renters and home buyers. He should have written about this (article link was provided by another comment above) about how Japan solved the problem in Tokyo. We need a similar federal law in the US. An article by Cowen that solves the problem by showing how successfully implemented the law was in Japan for Tokyo would have been far, far more interesting and implementable. "The federal [Japanese] government recognized that these regulations were the problem, so in 2002, it passed the Urban Renaissance Law. The law stripped municipalities of the ability to control private property." https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-affordable-housing-strategy-build-build-build/#680ace0c48d5 https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-af...

Arizhel 10y ago

>It would benefit them to lobby and influence city council. Why would city council want to bring down rents? They and their cronies are profiting off the high real estate prices. The city council is, after all, composed of wealthy people who own land in the city. You can't have a city council composed of people who don't even live in the city. >Also, powers that be love monopoly pricing but there are laws to stop monopolies. Those laws only apply to corporations; they have nothing to do with real estate, and this isn't a monopoly situation. There isn't a single company that owns all the land, or all the apartments, in these high-priced cities. There's merely a shortage of usable land, because of geography and physics. Basically, to fix this problem, we would need new laws at the State or Federal level, along with enforcement which would absolutely work against the wishes of these city councils. But there isn't much demand for such laws, because it's a local issue, and national-level politicians aren't going to do well trying to make it a campaign issue. Voters in rural areas just don't care about high rents in cities; they'll tell you that you just need to move out where they are and bring the high-paying jobs to their rural communities.

davidf18 10y ago
> "The city council is, after all, composed of wealthy people who own land in the city." I can't speak for your city but in NYC, I'm not certain if any member of the city council is wealthy. I know my representative is not. My point regarding anti-trust busting of monopolies is that federal legislation has been enacted before to combat deliberate attempts at market inefficiency and it could be done in the case of zoning density restrictions. In 2002, Japan enacted a federal law that overruled local land-use restrictions and as a result in 2014, Tokyo built 7 times the number of housing units as NYC (140,000 vs. 20,000). We should do the same in the US as they did in Japan and you'll see more affordable housing.
- Arizhel 10y ago
  We can't do that; we don't have the culture they have in Japan. These things are a product of culture. Japan has a culture in which street crime basically never happens; the US does not. The US has a culture where the politicians are thoroughly corrupt, especially at the local level, and the voters like it and re-elect them happily. You can't just will culture to change.

savanaly 10y ago

Tyler Cowen knows about rent seeking and Ricardo. He's not writing an encyclopedia article on the topic of rising housing costs though, he's writing a short piece for a broad audience about the demand side factors that might stabilize the price of housing in the long run, given (what we all take for granted) a more or less fixed supply.

davidf18 10y ago
I realize that he knows about rent seeking and Ricardo. He was addressing the issue of high housing costs and the question to ask is, why didn't he address the solution which is to reverse the rent-seeking that benefits wealthy landowners like President Trump over regular citizen renters and home buyers. He should have written about this (article link was provided by another comment above) about how Japan solved the problem in Tokyo. We need a similar federal law in the US. An article by Cowen that solves the problem by showing how successfully implemented the law was in Japan for Tokyo would have been far, far more interesting and implementable. "The federal [Japanese] government recognized that these regulations were the problem, so in 2002, it passed the Urban Renaissance Law. The law stripped municipalities of the ability to control private property." https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-affordable-housing-strategy-build-build-build/#680ace0c48d5 https://www.forbes.com/sites/scottbeyer/2016/08/12/tokyos-af...