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I’m in Munich with skyrocketing prices. And you are wrong about your halfway intelligent capitalist. You see, doing nothing will end in more money earned anyway

by lnsru 7y ago

I’m in Munich with skyrocketing prices. And you are wrong about your halfway intelligent capitalist. You see, doing nothing will end in more money earned anyway while doing nothing. So halfway intelligent capitalist can build couple hotels elsewhere. If this halfway intelligent capitalist builds apartment building, it will generate more rent from the new building, but less in total. That is not good for him and he will not build. And zoning laws is an argument to cover ugly truth.

darawk 7y ago
That's not how anything works. You would be right if one person owned the entire city. But that isn't the case. The equilibrium of independent competing actors is for them to build. Yes, if they all colluded together and agreed not to build, they might be able to extract more money (actually they wouldn't in the medium and long term, maybe in the short term). But you'd have to be a complete fool to think that sort of collusion is possible at the scale that would be required. What you do have are developers pressuring regulators to restrict competition. That is a real thing, and it's called regulatory capture. But that is exactly what I said needs to be fixed.
- lnsru 7y ago
  Maybe in a perfect world with equally distributed wealth it might be the case. But normally all cities have well connected wealthier groups inside. About Munich’s case: since property tax is calculated based on value of the plot, regulators are not interested in new buildings. They do nothing and collect more and more taxes! What a great situation.
  - darawk 7y ago
    > Maybe in a perfect world with equally distributed wealth it might be the case. But normally all cities have well connected wealthier groups inside. So, you are positing that the wealthy elite of Munich have come together and agreed not to build high density housing so that they can all make more money, even though if any one of them defects and builds an apartment building they personally would make more money than everyone else?

by lnsru 7y ago

darawk 7y ago

That's not how anything works. You would be right if one person owned the entire city. But that isn't the case. The equilibrium of independent competing actors is for them to build. Yes, if they all colluded together and agreed not to build, they might be able to extract more money (actually they wouldn't in the medium and long term, maybe in the short term). But you'd have to be a complete fool to think that sort of collusion is possible at the scale that would be required. What you do have are developers pressuring regulators to restrict competition. That is a real thing, and it's called regulatory capture. But that is exactly what I said needs to be fixed.

lnsru 7y ago
Maybe in a perfect world with equally distributed wealth it might be the case. But normally all cities have well connected wealthier groups inside. About Munich’s case: since property tax is calculated based on value of the plot, regulators are not interested in new buildings. They do nothing and collect more and more taxes! What a great situation.
- darawk 7y ago
  > Maybe in a perfect world with equally distributed wealth it might be the case. But normally all cities have well connected wealthier groups inside. So, you are positing that the wealthy elite of Munich have come together and agreed not to build high density housing so that they can all make more money, even though if any one of them defects and builds an apartment building they personally would make more money than everyone else?