8 ms·

If you pass this without passing radical reform of zoning and building millions more homes, it will be yet another wealth transfer mechanism from poor consumers

If you pass this without passing radical reform of zoning and building millions more homes, it will be yet another wealth transfer mechanism from poor consumers to wealthy California landholders. Rents will eventually match the increase in income as way too much demand chases an incredible, inhumane, History Will Judge You shortage of supply. Which, amazingly, is one of the reasons this could actually pass. California's property class seem to get everything they want, even if it's voting down small and inadequate reforms like SB-50 was (it was a start but not even remotely enough). California should be thinking about absolutely nothing else that's big except fixing their housing crisis. It's so big at this point that it's actually causing most of the other major problems.

oDot 7y ago
You write as if markets are a zero sum game, however they are most certainly not. You say the poor tenant will transfer wealth to the wealthy landlord as if the tenant is losing. However -- they are both gaining. Say the rent is $1000. Obviously, the property usage right is worth to the landlord less than $1000, otherwise he would've just used the property himself. He gains. The property usage right is worth more than $1000 to the tenant, otherwise he would've just kept the money. He gains. Both people gain. Both people get richer. Both people ended up with more than they had prior to the transaction.
- nradov 7y ago
  And what about the taxpayers? They lose. I'm not necessarily opposed to wealth transfers in principle, but they absolutely are a zero sum game.
  - oDot 7y ago
    I was talking about the voluntary transaction part, not the taxing part, which is not voluntary in any way.
    - throwawayhhakdl 7y ago
      Housing is an essential. You can’t just go homeless without significant consequences. That’s not “voluntary”. Just moving somewhere else is not always viable. To prove an extreme case, if I point a gun at you and say “$1k or I shoot”, you’re likely to pay. You gained not dying, but are you richer? Or did I merely use my power to impose an urgent need on you that you needed to pay for?
  - lozaning 7y ago
    Do you have anything I can read that explains why this must be true? I dont have a natural intuition that this has to be the case, nor one that its definitely false either though. I've always wondered if you just took billions from the richest Californians and gave that money to the poorest Californians if the people that had their money taken would actually be better of in the long run. If you increase the amount and velocity of money going through the economy could it not be possible that the rich that had their wealth transferred actually end up better off? I suppose it would largely depend on where the taken capitol had been invested and or if it was just sitting in low yield savings accounts.
- burlesona 7y ago
  The transaction isn’t even close to this. Imagine the case of a working class family that has lived in CA for generations. The elderly grandmother owns a home because she bought it in the 1950s when things were not so broken. She has two grown children, each with families. One family lives in her house with her, because that’s all they can afford, but that’s okay because they want to stay close to home. The other family rents a home nearby, because by the time whey were adults, hosing was out of reach. In California, the only thing stopping rent increase is people’s ability to pay. In San Francisco, a 3bd apartment costs at least $4500/mo, and the median price is more like 8-10k per month. That is because there are so very few available, and there are enough two income bankers and tech worker households who make enough to justify that rent that the market has no room for anyone else. We go back to the working class family example, assuming the adults are gainfully employed and each making $60k/year. All they want is to continue living in the town they grew up in, where they have friends and decent jobs and their elderly parent to stay near. They pay $4000/mo, which is near the low end of market rate for a 3bd home for their family of 4, and also about half their after-tax income. Now this UBI program (or any other change) happens, and a lot more income is suddenly flowing nearby. Anyone who for any reason finds themselves needing a new apartment has a little more money available, and so they can inch up just a bit in the market. But because demand so radically dwarfs supply, this means rents just tick up about 10% in short order. So back to that family, the landlord notices the market has moved, and he raises the rent 10%. The landlord gains $400/mo. The tenants gain nothing except the “privelege” of non-eviction. They now have to decide to pay more just to stay in place, or to try and downgrade to a worse apartment to keep costs in check. And if they do downgrade, they’re just displacing someone else who is farther down the economic ladder. You described a free market scenario, which works on a whiteboard. In the real world, California property owners have a monopoly on a fixed supply of housing, and nobody gets to participate in the California economy without a place to sleep at night. Thus any increase in productivity locally just goes to the property owners in short order, as they are enabled by the policies they’ve long fought for to extract their rental tax up to the ability of each person to pay. They use this unilateral power to extract all the gains.
  - lozaning 7y ago
    Your last paragraph beautifully sums up a point I try to make constantly on a local facebook community group Im a member of. It's chock full of people that celebrate the fact their house is worth 10X what they bought it for 20 years ago, and then out of the other side of their mouth bemoan that housing is so expensive that their kids cant afford to live there. Housing can either be a good investment, or remain affordable, both can not simultaneously happen.
- burlesona 7y ago
  I wrote a long answer to your post but a shorter one is this: the housing market in California is absolutely a zero sum game due to policies that essentially hold the supply as fixed.
  - oDot 7y ago
    There is only one Mona Lisa. A voluntary transaction where one party buys it from another is not zero sum, both parties gain.
    - twiceaday 7y ago
      I think zero-sum was meant from a perspective of a fixed-resource being divvied up among more and more people. In that case each person gets a smaller and smaller theoretical share. Any exchange is locally fair but globally everybody is becoming worse and worse off. This is especially true if you disconnect the concept of living in your own home from the investment opportunity. I doubt many people are going "Sorry honey, we cannot afford a house now or probably ever, but hey that's fair because if we could afford it with so little money we'd be getting access to an unreasonably good performing investment and that wouldn't be fair to others." I think most (reasonable) renters would settle for significantly worse performing housing market in exchange for cheaper housing so that they could transition from renting to owning.
- deleted 7y ago
  [deleted]
- creddit 7y ago
  Redistribution is zero-sum by definition.
  - jerf 7y ago
    It's worth modeling it as negative, because administration consumes non-trivial amounts of it, and in practice, often quite significant amounts of it. Part of the UBI idea is to reduce that overhead, though I'm at a loss as to how to ensure it stays low. The same politicians that turn our current system into a haphazard mess of special carveouts and regulations will still be in power and will have all the motivations (if not more) to add more carveouts and regulations to the new UBI.
    - AnimalMuppet 7y ago
      Create a new pot of money, and watch the vultures descend. Everybody's going to want to grab a piece.
  - oDot 7y ago
    Yes, I was not talking about the UBI part, but the voluntary transaction part.
- michaelt 7y ago
  Housing markets are a zero-sum game if you refuse to build more housing when demand exceeds supply If ten families want houses and there are only nine on the market, one family will go without whether you have auctions, price caps, land taxes, means testing, subsidies, or any other economic intervention, because nine is less than ten
  - JoeAltmaier 7y ago
    Houses get built, maybe just not in the favorite places. People get roommates. Sure housing is more inflexible than some products, but not a whole lot.
    - thereisnospork 7y ago
      > Houses get built, maybe just not in the favorite places. So 9 out of 10 families get to live in a commutable distance to where they work, or 2 families get to live in half the appropriate space. Not good for the economy, not good for the families, very good for landlords. Whether or not housing is naturally flexible, CA's government has done pretty darn well making it inflexible. See rents vs. inflation. Every dollar of rent above costs for construction and necessary administration is a monetary redistribution from the renting class to property owners. CA doesn't lack land, and it doesn't lack the ability to pour concrete into earthquake-safe cubes with plumbing; the difficulty in construction and resulting high rents is the result of intentional obstruction and regulatory capture by the benefiting property owners.
      - JoeAltmaier 7y ago
        Straw man.
        thereisnospork 7y ago
        Please elaborate: which man is made of straw? Has California real estate valuations and rents not exceeded inflation for the past decade+? In economic equilibrium should rents not equal amortized construction costs? Have increasing rents not impacted commuting distances and housing availability for the renting class worker? Would these impactions not hurt the economy as a whole? Or do you disagree that regulatory barriers to building housing benefit those who own existing housing?
- orthecreedence 7y ago
  > You write as if markets are a zero sum game, however they are most certainly not. People who say this are only ever looking at the node level, not the network level. Sure, new wealth is added to the network, but at a miniscule trickle compared to the everyday activities of the economic network. "Wealth is not zero sum" essentially, if taken to its logical conclusion, means "everyone can be a billionaire!" No, they cannot.
  - oDot 7y ago
    I have supplied a very specific example demonstrating this. "Not a zero sum game" means "both parties profit". That profit may not be money, therefore does not imply anything about billionaires.
jayd16 7y ago
>an incredible, inhumane, History Will Judge You shortage of supply. I'm starting to feel it's really just the massive demand. California cities are already quite dense. We can certainly do more but to say we're historically failing just doesn't make sense to me. I'd love to see numbers on just how much pent up demand there is and how much building would need to take place before residents felt it but I realize its not an easy thing to estimate.
- rjkennedy98 7y ago
  They are not dense. Not by any measure. Show me a statistic that shows that the Bay Area is dense in comparison to anywhere else in the world. I am so sick of people make such incredibly inaccurate statements about density and housing.
  - jayd16 7y ago
    >Not by any measure. Person per mile squared? https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population_density https://en.wikipedia.org/wiki/List_of_United_States_cities_b...
    - rjkennedy98 7y ago
      This is only the United States. You are talking about problems in the United States and comparing them to other cities in the United States most of which have the same problem. Its worth mentioning also that San Francisco city proper is a tiny area and not remotely reflective of the Bay Area. It has 800K people in an area with almost 8 million people. For comparison's sake. Seoul, South Korea has 40K people per square mile (total population of 8 million people). That is the entire city. Overcrowded San Francisco city proper has 17K people per square mile and it is by far the most dense part of the Bay Area.
    - ksec 7y ago
      I mean forget about the ridiculously crowed cities in Asia like Tokyo and Seoul ( Or the worst being Hong Kong ), even the European Cities are more populated. And SF isn't anywhere near close. If Americans dont fix housing problem, any form of UBI is meaningless. [1]https://en.wikipedia.org/wiki/List_of_cities_proper_by_population https://en.wikipedia.org/wiki/List_of_cities_proper_by_popul... [2]https://en.wikipedia.org/wiki/List_of_cities_by_population_density https://en.wikipedia.org/wiki/List_of_cities_by_population_d...

oDot 7y ago

You write as if markets are a zero sum game, however they are most certainly not. You say the poor tenant will transfer wealth to the wealthy landlord as if the tenant is losing. However -- they are both gaining. Say the rent is $1000. Obviously, the property usage right is worth to the landlord less than $1000, otherwise he would've just used the property himself. He gains. The property usage right is worth more than $1000 to the tenant, otherwise he would've just kept the money. He gains. Both people gain. Both people get richer. Both people ended up with more than they had prior to the transaction.

nradov 7y ago
And what about the taxpayers? They lose. I'm not necessarily opposed to wealth transfers in principle, but they absolutely are a zero sum game.
- oDot 7y ago
  I was talking about the voluntary transaction part, not the taxing part, which is not voluntary in any way.
  - throwawayhhakdl 7y ago
    Housing is an essential. You can’t just go homeless without significant consequences. That’s not “voluntary”. Just moving somewhere else is not always viable. To prove an extreme case, if I point a gun at you and say “$1k or I shoot”, you’re likely to pay. You gained not dying, but are you richer? Or did I merely use my power to impose an urgent need on you that you needed to pay for?
- lozaning 7y ago
  Do you have anything I can read that explains why this must be true? I dont have a natural intuition that this has to be the case, nor one that its definitely false either though. I've always wondered if you just took billions from the richest Californians and gave that money to the poorest Californians if the people that had their money taken would actually be better of in the long run. If you increase the amount and velocity of money going through the economy could it not be possible that the rich that had their wealth transferred actually end up better off? I suppose it would largely depend on where the taken capitol had been invested and or if it was just sitting in low yield savings accounts.
burlesona 7y ago
The transaction isn’t even close to this. Imagine the case of a working class family that has lived in CA for generations. The elderly grandmother owns a home because she bought it in the 1950s when things were not so broken. She has two grown children, each with families. One family lives in her house with her, because that’s all they can afford, but that’s okay because they want to stay close to home. The other family rents a home nearby, because by the time whey were adults, hosing was out of reach. In California, the only thing stopping rent increase is people’s ability to pay. In San Francisco, a 3bd apartment costs at least $4500/mo, and the median price is more like 8-10k per month. That is because there are so very few available, and there are enough two income bankers and tech worker households who make enough to justify that rent that the market has no room for anyone else. We go back to the working class family example, assuming the adults are gainfully employed and each making $60k/year. All they want is to continue living in the town they grew up in, where they have friends and decent jobs and their elderly parent to stay near. They pay $4000/mo, which is near the low end of market rate for a 3bd home for their family of 4, and also about half their after-tax income. Now this UBI program (or any other change) happens, and a lot more income is suddenly flowing nearby. Anyone who for any reason finds themselves needing a new apartment has a little more money available, and so they can inch up just a bit in the market. But because demand so radically dwarfs supply, this means rents just tick up about 10% in short order. So back to that family, the landlord notices the market has moved, and he raises the rent 10%. The landlord gains $400/mo. The tenants gain nothing except the “privelege” of non-eviction. They now have to decide to pay more just to stay in place, or to try and downgrade to a worse apartment to keep costs in check. And if they do downgrade, they’re just displacing someone else who is farther down the economic ladder. You described a free market scenario, which works on a whiteboard. In the real world, California property owners have a monopoly on a fixed supply of housing, and nobody gets to participate in the California economy without a place to sleep at night. Thus any increase in productivity locally just goes to the property owners in short order, as they are enabled by the policies they’ve long fought for to extract their rental tax up to the ability of each person to pay. They use this unilateral power to extract all the gains.
- lozaning 7y ago
  Your last paragraph beautifully sums up a point I try to make constantly on a local facebook community group Im a member of. It's chock full of people that celebrate the fact their house is worth 10X what they bought it for 20 years ago, and then out of the other side of their mouth bemoan that housing is so expensive that their kids cant afford to live there. Housing can either be a good investment, or remain affordable, both can not simultaneously happen.
burlesona 7y ago
I wrote a long answer to your post but a shorter one is this: the housing market in California is absolutely a zero sum game due to policies that essentially hold the supply as fixed.
- oDot 7y ago
  There is only one Mona Lisa. A voluntary transaction where one party buys it from another is not zero sum, both parties gain.
  - twiceaday 7y ago
    I think zero-sum was meant from a perspective of a fixed-resource being divvied up among more and more people. In that case each person gets a smaller and smaller theoretical share. Any exchange is locally fair but globally everybody is becoming worse and worse off. This is especially true if you disconnect the concept of living in your own home from the investment opportunity. I doubt many people are going "Sorry honey, we cannot afford a house now or probably ever, but hey that's fair because if we could afford it with so little money we'd be getting access to an unreasonably good performing investment and that wouldn't be fair to others." I think most (reasonable) renters would settle for significantly worse performing housing market in exchange for cheaper housing so that they could transition from renting to owning.
deleted 7y ago
[deleted]
creddit 7y ago
Redistribution is zero-sum by definition.
- jerf 7y ago
  It's worth modeling it as negative, because administration consumes non-trivial amounts of it, and in practice, often quite significant amounts of it. Part of the UBI idea is to reduce that overhead, though I'm at a loss as to how to ensure it stays low. The same politicians that turn our current system into a haphazard mess of special carveouts and regulations will still be in power and will have all the motivations (if not more) to add more carveouts and regulations to the new UBI.
  - AnimalMuppet 7y ago
    Create a new pot of money, and watch the vultures descend. Everybody's going to want to grab a piece.
- oDot 7y ago
  Yes, I was not talking about the UBI part, but the voluntary transaction part.
michaelt 7y ago
Housing markets are a zero-sum game if you refuse to build more housing when demand exceeds supply If ten families want houses and there are only nine on the market, one family will go without whether you have auctions, price caps, land taxes, means testing, subsidies, or any other economic intervention, because nine is less than ten
- JoeAltmaier 7y ago
  Houses get built, maybe just not in the favorite places. People get roommates. Sure housing is more inflexible than some products, but not a whole lot.
  - thereisnospork 7y ago
    > Houses get built, maybe just not in the favorite places. So 9 out of 10 families get to live in a commutable distance to where they work, or 2 families get to live in half the appropriate space. Not good for the economy, not good for the families, very good for landlords. Whether or not housing is naturally flexible, CA's government has done pretty darn well making it inflexible. See rents vs. inflation. Every dollar of rent above costs for construction and necessary administration is a monetary redistribution from the renting class to property owners. CA doesn't lack land, and it doesn't lack the ability to pour concrete into earthquake-safe cubes with plumbing; the difficulty in construction and resulting high rents is the result of intentional obstruction and regulatory capture by the benefiting property owners.
    - JoeAltmaier 7y ago
      Straw man.
      - thereisnospork 7y ago
        Please elaborate: which man is made of straw? Has California real estate valuations and rents not exceeded inflation for the past decade+? In economic equilibrium should rents not equal amortized construction costs? Have increasing rents not impacted commuting distances and housing availability for the renting class worker? Would these impactions not hurt the economy as a whole? Or do you disagree that regulatory barriers to building housing benefit those who own existing housing?
orthecreedence 7y ago
> You write as if markets are a zero sum game, however they are most certainly not. People who say this are only ever looking at the node level, not the network level. Sure, new wealth is added to the network, but at a miniscule trickle compared to the everyday activities of the economic network. "Wealth is not zero sum" essentially, if taken to its logical conclusion, means "everyone can be a billionaire!" No, they cannot.
- oDot 7y ago
  I have supplied a very specific example demonstrating this. "Not a zero sum game" means "both parties profit". That profit may not be money, therefore does not imply anything about billionaires.

jayd16 7y ago

>an incredible, inhumane, History Will Judge You shortage of supply. I'm starting to feel it's really just the massive demand. California cities are already quite dense. We can certainly do more but to say we're historically failing just doesn't make sense to me. I'd love to see numbers on just how much pent up demand there is and how much building would need to take place before residents felt it but I realize its not an easy thing to estimate.

rjkennedy98 7y ago
They are not dense. Not by any measure. Show me a statistic that shows that the Bay Area is dense in comparison to anywhere else in the world. I am so sick of people make such incredibly inaccurate statements about density and housing.
- jayd16 7y ago
  >Not by any measure. Person per mile squared? https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population_density https://en.wikipedia.org/wiki/List_of_United_States_cities_b...
  - rjkennedy98 7y ago
    This is only the United States. You are talking about problems in the United States and comparing them to other cities in the United States most of which have the same problem. Its worth mentioning also that San Francisco city proper is a tiny area and not remotely reflective of the Bay Area. It has 800K people in an area with almost 8 million people. For comparison's sake. Seoul, South Korea has 40K people per square mile (total population of 8 million people). That is the entire city. Overcrowded San Francisco city proper has 17K people per square mile and it is by far the most dense part of the Bay Area.
  - ksec 7y ago
    I mean forget about the ridiculously crowed cities in Asia like Tokyo and Seoul ( Or the worst being Hong Kong ), even the European Cities are more populated. And SF isn't anywhere near close. If Americans dont fix housing problem, any form of UBI is meaningless. [1]https://en.wikipedia.org/wiki/List_of_cities_proper_by_population https://en.wikipedia.org/wiki/List_of_cities_proper_by_popul... [2]https://en.wikipedia.org/wiki/List_of_cities_by_population_density https://en.wikipedia.org/wiki/List_of_cities_by_population_d...