6 ms·

That's how markets work, no? The goal of pricing a scarce good is to put it at what people are willing to pay, which for something you need to live, is all they

That's how markets work, no? The goal of pricing a scarce good is to put it at what people are willing to pay, which for something you need to live, is all they are able to pay. The system is working as designed.

treis 5y ago
The market working would be supply matching the demand to keep prices relatively steady. But supply is artificially restricted leading to stupid price increases.
- sudosysgen 5y ago
  The GP alluded to housing being a scarce good. Yes, you can increase housing density, but you eventually hit a wall where infrastructure is limiting and expensive to build meaning that you can't drop the price of housing. At which point the only solution is to build more cities or enter a death spiral. It's why China had to start building cities, eventually density stops being economically feasible either.
  - treis 5y ago
    Sure, but the wall is not a million bucks for a 3/2 home.
    - sudosysgen 5y ago
      For now it's not, but even when supply meets demand housing prices tend to increase, so it could very well happen in not too long.
- jfrunyon 5y ago
  That's a bit strange to say. Supply is restricted largely by capital required to compete. Because that results in more profits, it's the default tendency of capitalism/"free market" policies. So in a sense, it's naturally restricted, not artificially.
- TimPC 5y ago
  Supply is also naturally restricted because there is only so much land in an area. Especially when we are talking about people interested in their own dwelling/home where building a condo just means they look elsewhere. People forget this basic fact a lot when talking about housing.
  - reducesuffering 5y ago
    Luckily humanity learned to build skyscrapers eons ago. You're forgetting about the many people who would easily shift to condo housing if it was 2x cheaper, but aren't because it's marginally cheaper than a SFH, and they don't want to put 3x their net worth into a condo that will probably end up financially worse than a SFH. So you still have a huge population that would live in condo's if it was more affordable. And housing pricing is all about the margins of the market, so you fix that imbalance and you make the housing market a whole lot more healthy.
    - sudosysgen 5y ago
      Skyscrapers get expensive quick and can rapidly max out the infrastructure.
lamontcg 5y ago
Yeah for something like healthcare, people are desperate to live and not die, so the healthcare system in a market economy easily expands to the point where people are working their whole lives to the point where the healthcare system can ultimately confiscate all of that value back. You lose your job, your insurance, you draw down all your savings and then you get some level of poverty support. Meanwhile the insurance system itself tries to expand to grab all your marginal earnings increases before you actually get sick. Since the demand is completely inelastic and insensitive to pricing increases due to most people wanting healthcare to avoid their own death, it just expands.
- solveit 5y ago
  People forget that demand isn't the only thing that decides prices. The other player is supply, and the problem with healthcare is quite clearly supply. I hate to go all free market evangelist on HN, but the American healthcare economy is about the furthest thing from a market economy you'll see in the US and saying things like >the healthcare system in a market economy easily expands to the point where people are working their whole lives to the point where the healthcare system can ultimately confiscate all of that value back is ludicrous. Healthcare systems in market economies expand to fill a respectable but manageable share of people's budgets. You can tell by looking at literally any other country with a market economy (most of them) and checking what they charge for an ambulance.
  - lamontcg 5y ago
    Everywhere else has government cost controls on healthcare on the insurer/payer side.
  - quadrangle 5y ago
    While I agree with the gist of your point, the free market approach to health care doesn't account for consumers' short-term thinking. The market doesn't operate well on the scale of decades, it only responds to current activity. My point is: given a population of health-conscious, long-term thinking consumers, a free market to serve their needs is likely to work out pretty well… except for potentially getting flooded by long-term promises that aren't actually held up over the long-term. But if the population isn't focused on health and is short-term focused, we'd see market failure here, and yet the population and economy overall will still face all the costs of people not choosing to get the preventative care they need and thus spreading disease or other social costs long-term.
ako 5y ago
So the real question is, should we design a different system?
- quadrangle 5y ago
  as far as it relates to property and home issues, I think the iteration (not revolution really) we need is the Strong Towns ideas at StrongTowns.org which is really a mix that is very far from any typical right-left conservative-liberal sort of thing. It's relatively opposed to top-down but it's not at all the dogmatic libertarian free market either.
HWR_14 5y ago
It's not a good system, so who cares if it is "as designed"? If pushing the "confirm order" button on your ecommerce site launches a nuclear-tipped ICBM, the fact that it's "to spec" doesn't really mean much.

treis 5y ago

The market working would be supply matching the demand to keep prices relatively steady. But supply is artificially restricted leading to stupid price increases.

sudosysgen 5y ago
The GP alluded to housing being a scarce good. Yes, you can increase housing density, but you eventually hit a wall where infrastructure is limiting and expensive to build meaning that you can't drop the price of housing. At which point the only solution is to build more cities or enter a death spiral. It's why China had to start building cities, eventually density stops being economically feasible either.
- treis 5y ago
  Sure, but the wall is not a million bucks for a 3/2 home.
  - sudosysgen 5y ago
    For now it's not, but even when supply meets demand housing prices tend to increase, so it could very well happen in not too long.
jfrunyon 5y ago
That's a bit strange to say. Supply is restricted largely by capital required to compete. Because that results in more profits, it's the default tendency of capitalism/"free market" policies. So in a sense, it's naturally restricted, not artificially.
TimPC 5y ago
Supply is also naturally restricted because there is only so much land in an area. Especially when we are talking about people interested in their own dwelling/home where building a condo just means they look elsewhere. People forget this basic fact a lot when talking about housing.
- reducesuffering 5y ago
  Luckily humanity learned to build skyscrapers eons ago. You're forgetting about the many people who would easily shift to condo housing if it was 2x cheaper, but aren't because it's marginally cheaper than a SFH, and they don't want to put 3x their net worth into a condo that will probably end up financially worse than a SFH. So you still have a huge population that would live in condo's if it was more affordable. And housing pricing is all about the margins of the market, so you fix that imbalance and you make the housing market a whole lot more healthy.
  - sudosysgen 5y ago
    Skyscrapers get expensive quick and can rapidly max out the infrastructure.

lamontcg 5y ago

Yeah for something like healthcare, people are desperate to live and not die, so the healthcare system in a market economy easily expands to the point where people are working their whole lives to the point where the healthcare system can ultimately confiscate all of that value back. You lose your job, your insurance, you draw down all your savings and then you get some level of poverty support. Meanwhile the insurance system itself tries to expand to grab all your marginal earnings increases before you actually get sick. Since the demand is completely inelastic and insensitive to pricing increases due to most people wanting healthcare to avoid their own death, it just expands.

solveit 5y ago
People forget that demand isn't the only thing that decides prices. The other player is supply, and the problem with healthcare is quite clearly supply. I hate to go all free market evangelist on HN, but the American healthcare economy is about the furthest thing from a market economy you'll see in the US and saying things like >the healthcare system in a market economy easily expands to the point where people are working their whole lives to the point where the healthcare system can ultimately confiscate all of that value back is ludicrous. Healthcare systems in market economies expand to fill a respectable but manageable share of people's budgets. You can tell by looking at literally any other country with a market economy (most of them) and checking what they charge for an ambulance.
- lamontcg 5y ago
  Everywhere else has government cost controls on healthcare on the insurer/payer side.
- quadrangle 5y ago
  While I agree with the gist of your point, the free market approach to health care doesn't account for consumers' short-term thinking. The market doesn't operate well on the scale of decades, it only responds to current activity. My point is: given a population of health-conscious, long-term thinking consumers, a free market to serve their needs is likely to work out pretty well… except for potentially getting flooded by long-term promises that aren't actually held up over the long-term. But if the population isn't focused on health and is short-term focused, we'd see market failure here, and yet the population and economy overall will still face all the costs of people not choosing to get the preventative care they need and thus spreading disease or other social costs long-term.

ako 5y ago

So the real question is, should we design a different system?

quadrangle 5y ago
as far as it relates to property and home issues, I think the iteration (not revolution really) we need is the Strong Towns ideas at StrongTowns.org which is really a mix that is very far from any typical right-left conservative-liberal sort of thing. It's relatively opposed to top-down but it's not at all the dogmatic libertarian free market either.

HWR_14 5y ago

It's not a good system, so who cares if it is "as designed"? If pushing the "confirm order" button on your ecommerce site launches a nuclear-tipped ICBM, the fact that it's "to spec" doesn't really mean much.