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I’ve had this thought floating around in my head for a while, and it seems wrong, but I’m not completely sure why. I’m hoping someone more knowledgeable might b

I’ve had this thought floating around in my head for a while, and it seems wrong, but I’m not completely sure why. I’m hoping someone more knowledgeable might be able to set me straight. Prices on the coasts — like 5k rent — are astronomically high compared to prices in, say, the midwest. This shocks many people. You could easily make the same comparison between the midwest and some non-developed nation. The difference is, nobody is shocked about how prices are higher in the USA midwest compared to an arbitrary less-developed country. Why is that exactly? I loathe these insane prices, but my question is: could it be reasonable to view these high prices as a /good/ thing, as a sign of development?

bglazer 4y ago
I think the best comparison would be to other developed countries with strong economic growth
lordnacho 4y ago
> You could easily make the same comparison between the midwest and some non-developed nation. The difference is, nobody is shocked about how prices are higher in the USA midwest compared to an arbitrary less-developed country. Why is that exactly? Because there's no freedom of movement, legal or cultural, between the midwest and the large coastal US cities.
- deleted 4y ago
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- lordnacho 4y ago
  Typo, of course I meant there IS freedom of movement within the US but not across borders.
101008 4y ago
I think the comparison with other places makes no sense if you compare nominal prices. What I think you have to compare is (among other things) how much of your salary you spend on rent. Yeah, a non-developed nation you may get a 3 room apartment for 400 USD - but your salary may be not higher than 1k USD per month. If the average salary in Manhattan would be 300k per year I think no one would care. But it is not.
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jagged-chisel 4y ago
I think it’s the phrase “less developed country.” The US midwest and the US coast at the same, developed country. Sure, they’re long distance apart, and drastically different, but that’s not on people’s minds.
- sorkin78 4y ago
  I would disagree with you there. There are many areas of the US that resemble an undeveloped country.
jerojero 4y ago
Short answer: No. The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to get to these jobs. The reason it is not shocking that people in the midwest pay more than people in developed countries is because in the midwest most people have a relatively better life than most people in those developing countries. Whereas, say, a waiter living in San Francisco is not going to live a very different life from a waiter living in the Midwest who will, in turn, be living a much better life than a waiter in a developing nation. So I think people are shocked because they realise their quality of life is not so different but there is a huge disparity in prices. Same country, similar quality of life, hugely different prices? This is definitely an anomaly!
- golergka 4y ago
  > The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to get to these jobs. Haven't you described a problem that fixes itself through market forces? Restaurant waiters move to other cities, restaurants (and millions of other businesses) close, city becomes less desirable, rents go down.
  - mindslight 4y ago
    The mere existence of a negative feedback mechanism does not imply a "fix". Rather depending on the magnitude, momentum, and damping, can result in many different system behaviors, including increasing oscillation. Meanwhile the current conditions cause actual damage to people's lives, even if they may converge in the future. So no, market fatalism is not very insightful here.
  - michaelchisari 4y ago
cheschire 4y ago
There's probably a lot of reasons building up to this. I suspect that a lot of this comes from the constant reinforcement of equality as broad concept. The idea that all people should have equal opportunities seems to have been perverted by some into the idea that all people should be the same. Then there's the idea of america as "one nation" instead of a massive collection of communities. Throw in the american need to spread out, and you start to get this culture that is far more homogenous than in the patchwork of cultures of europe and africa. So with that backdrop, it seems the problem is people who think they're the same get shocked to find out they're not.
vehicles2b 4y ago
Can you clarify what you mean by development? As far as the apartments themselves, they can range from newly developed, to newly renovated, to very old and needing renovations. I figured the apartments along the coasts, and in particular the Manhattan area are quite old. I do think that development on a global scale has given people the ability to move to places like Manhattan, and so development outside, as well as within could create the demand for higher rent. Affordable apartments may not be developing at high enough rate to keep up with demand - but in a place like Manhattan, surely it is difficult to develop affordable housing.
- iamben 4y ago
  One of my favourite time-sucks is watching property/design videos on YouTube. I'm constantly amazed at how expensive it is for shitty accommodation in New York. London is expensive, but the quality is (at least in my experience) far better for the money, even at the cheaper end.
  - mrwh 4y ago
    Well that's a scary thought! It's been quite a while since I lived in London, but terrace houses barely converted into flats is my overriding memory.
asdff 4y ago
Yes and no. They are a sign of development, in that prices are high because there are enough people in the market with enough money to sustain these prices. Its a bad thing however because it means there isn't enough supply to keep prices reasonable for the actual real population versus just the top echelon that can afford these inflated rates on the shortened supply. The sticker shock doesn't matter as much as the relative buying power of hourly wages.

bglazer 4y ago

I think the best comparison would be to other developed countries with strong economic growth

lordnacho 4y ago

> You could easily make the same comparison between the midwest and some non-developed nation. The difference is, nobody is shocked about how prices are higher in the USA midwest compared to an arbitrary less-developed country. Why is that exactly? Because there's no freedom of movement, legal or cultural, between the midwest and the large coastal US cities.

deleted 4y ago
[deleted]
lordnacho 4y ago
Typo, of course I meant there IS freedom of movement within the US but not across borders.

101008 4y ago

I think the comparison with other places makes no sense if you compare nominal prices. What I think you have to compare is (among other things) how much of your salary you spend on rent. Yeah, a non-developed nation you may get a 3 room apartment for 400 USD - but your salary may be not higher than 1k USD per month. If the average salary in Manhattan would be 300k per year I think no one would care. But it is not.

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deleted 4y ago

[deleted]

jagged-chisel 4y ago

I think it’s the phrase “less developed country.” The US midwest and the US coast at the same, developed country. Sure, they’re long distance apart, and drastically different, but that’s not on people’s minds.

sorkin78 4y ago
I would disagree with you there. There are many areas of the US that resemble an undeveloped country.

jerojero 4y ago

Short answer: No. The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to get to these jobs. The reason it is not shocking that people in the midwest pay more than people in developed countries is because in the midwest most people have a relatively better life than most people in those developing countries. Whereas, say, a waiter living in San Francisco is not going to live a very different life from a waiter living in the Midwest who will, in turn, be living a much better life than a waiter in a developing nation. So I think people are shocked because they realise their quality of life is not so different but there is a huge disparity in prices. Same country, similar quality of life, hugely different prices? This is definitely an anomaly!

golergka 4y ago
> The problem with these insane prices isn't really that you have disparity within the same country, but that a significant amount of people in these places cannot afford to live in there. You can't have a restaurant because you need to hire waiters but you can't pay waiters enough for them to pay the rent. So your service industry is disrupted or alternatively: people need to commute 1 or 2 hours to get to these jobs. Haven't you described a problem that fixes itself through market forces? Restaurant waiters move to other cities, restaurants (and millions of other businesses) close, city becomes less desirable, rents go down.
- mindslight 4y ago
  The mere existence of a negative feedback mechanism does not imply a "fix". Rather depending on the magnitude, momentum, and damping, can result in many different system behaviors, including increasing oscillation. Meanwhile the current conditions cause actual damage to people's lives, even if they may converge in the future. So no, market fatalism is not very insightful here.
- michaelchisari 4y ago

cheschire 4y ago

There's probably a lot of reasons building up to this. I suspect that a lot of this comes from the constant reinforcement of equality as broad concept. The idea that all people should have equal opportunities seems to have been perverted by some into the idea that all people should be the same. Then there's the idea of america as "one nation" instead of a massive collection of communities. Throw in the american need to spread out, and you start to get this culture that is far more homogenous than in the patchwork of cultures of europe and africa. So with that backdrop, it seems the problem is people who think they're the same get shocked to find out they're not.

vehicles2b 4y ago

Can you clarify what you mean by development? As far as the apartments themselves, they can range from newly developed, to newly renovated, to very old and needing renovations. I figured the apartments along the coasts, and in particular the Manhattan area are quite old. I do think that development on a global scale has given people the ability to move to places like Manhattan, and so development outside, as well as within could create the demand for higher rent. Affordable apartments may not be developing at high enough rate to keep up with demand - but in a place like Manhattan, surely it is difficult to develop affordable housing.

iamben 4y ago
One of my favourite time-sucks is watching property/design videos on YouTube. I'm constantly amazed at how expensive it is for shitty accommodation in New York. London is expensive, but the quality is (at least in my experience) far better for the money, even at the cheaper end.
- mrwh 4y ago
  Well that's a scary thought! It's been quite a while since I lived in London, but terrace houses barely converted into flats is my overriding memory.

asdff 4y ago

Yes and no. They are a sign of development, in that prices are high because there are enough people in the market with enough money to sustain these prices. Its a bad thing however because it means there isn't enough supply to keep prices reasonable for the actual real population versus just the top echelon that can afford these inflated rates on the shortened supply. The sticker shock doesn't matter as much as the relative buying power of hourly wages.