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Property and construction are the most distorted markets in a half of the world and this article is yet another proof of that. Our society as a whole would actu
by ivan_gammel 3y ago
Property and construction are the most distorted markets in a half of the world and this article is yet another proof of that. Our society as a whole would actually benefit if state intervention would make property market unattractive for investors by oversupply: government could invest 50-100B€ in creating non-profit construction verticals that will oversaturate market. The next logical step would be to allow some of the constructed apartments to be privatized by tenants at low cost: maybe not by everyone, but only by those who has a socially important job (police, firefighters, healthcare and social workers, teachers) and majority of difficult problems that government has to deal with would go away. Yes, a lot of people who bought expensive properties may forget about any returns, there could be some margin calls and banking system won’t be happy. But this would be a necessary sacrifice for a healthier economy in which money go elsewhere.
- amelius 3y agoOne can dream ...
- potatototoo99 3y agoWhat? Only "socially important jobs" could buy the cheaper apartments? What the hell
- debesyla 3y agoWhy not? It makes sense - not every job is equal and some are both important and usually not paid enough. Society or your local town won't collapse if there's not enough web developers but it may do if it lacks firefighters.
- splix 3y agoThat would be a payment, just not with money, right? So why it's better than just paying this money directly and letting the person decide, rather than introducing an extra step by putting the money into a development and then giving the property instead? The direct payment looks more efficient to me.
- debesyla 3y agoThat could be true indeed. I am just arguing in the scenario of "what if we build lots of flats", hah! I do wonder how did similar scenarios worked out historically?
- splix 3y agoSpeaking about historically, that was implemented in Soviet Union, and I don't think it worked well. Though it certainly gave extra tools to the government to control the people.
- est31 3y agoIf you have a thousand people competing for 700 apartments, prices will adjust until 300 are priced out of the apartments. Giving the 200 of those people with socially recognized jobs enough money to not be priced out any more will still mean that 300 will be priced out, it will just be different people. In other words, rents will just increase. The solution is to build 300 more apartments, and make them available at the bottom of the market, not the top.
- thfuran 3y agoBut it's highly unlikely that all 200 of those people would choose to spend that extra money bidding up those apartments, and that's the whole point. Distorting another market as a proxy is worse than directly addressing the compensation issue.
- est31 3y agoThe real estate market is extremely distorted by local governments, through imposing restrictions on where houses can be built, how large they can be, etc. To some degree this makes sense, because you want people to be able to enjoy nature or the city wants to be able to plan which roads to build out, but on the other hand, the focus on SFH urban sprawl plus the prospensity to avoid density increases leads to extreme price increases and losses to quality of life. There is huge demand for walkable high density neighborhoods, but the market cannot meet it because government.
- gloryjulio 3y agoThis is the Singapore model. Tbf I think it's fine to help most of the people to have places to live in
- polio 3y agoYes? Why is that hard to accept? Jobs with positive externalities are by definition undercompensated.
- sebzim4500 3y agoWhy don't you just pay them more? Seems easier than setting up a social credit system.
- polygamous_bat 3y agoI would guess because people don't like paying taxes even when the taxes are there to account for the externalities.
- est31 3y agoFor prices to go down, it doesn't really matter who gets to live in these apartments, as long as enough demand is taken off the market. And usually, with few exceptions, socially acceptable jobs are the ones which pay little compared to the effort they require, and also compared to the (non-monetary) value they bring to society. You also want these people in your city because sure it's great that you have tech workers, lawyers and bankers, but who is going to be in the hospitals?
- golemiprague 3y ago[dead]
- LunaSea 3y agoAnd why would social workers be more deserving than bakers?
- uoaei 3y agoIs that some kind of joke? It doesn't seem to be a question in good faith at any rate.
- hackerlight 3y agoRun this thought experiment. In one world, every banker disappears overnight and banking becomes illegal, in the other, every social worker disappears overnight and social work becomes illegal. Which scenario leads to a worse world to live in? Which scenario causes more human suffering?
- Quarrel 3y agook, but they were talking about bakers, not bankers..
- catmanjan 3y agoThey meant jobs important to society, bakers would probably be near the top of that list
- lotsofpulp 3y agoWhy would bakers be near the top of that list? Isn’t diabetes and obesity the top health problem around the world? The point of my comment is to show how ridiculous it is to try and rank “social importantness” of jobs.
- wyre 3y agoBread has been a staple in most diets for millennia
- jpollock 3y agoInstead of trying to define "socially important job", how about... If government is having trouble hiring people for roles they can either increase the wages paid, or enter into the housing market and include "free housing" as a taxable benefit for those roles. You know, like governments do for the military and other foreign service staff. However, maybe I'm just salty because I've been waiting for 6+ months (with no eta) for permission from the San Jose City Council to do a renovation.
- pyrolistical 3y agoWe cannot rely on the gov as the arbitrator on what is “socially good”. Society as whole needs to see the consequences of the status quo. We need to change. Then we need to vote
- ivan_gammel 3y agoIncrease in wages goes directly into the pockets of landlords. It’s hardly the kind of redistribution of taxpayer money everybody wants.
- thfuran 3y ago>government could invest 50-100B€ in creating non-profit construction verticals that will oversaturate market. Given how our infrastructure projects tend to go, I expect that level of funding would produce a single midrise apartment complex in Boston with construction completing in 2060.
- singleshot_ 3y agoI’d be kind of surprised if the building funded by the German government in euros ended up being built outside of Germany, but you know what they say: location, location, location.
- thfuran 3y agoWell, yes. I mean if the US were to undertake something similar to the proposal.
- prottog 3y agoGermany as of late doesn't do much better; see what happened to Berlin Brandenburg Airport, which was a decade and 4 billion euros over budget.
- ivan_gammel 3y agoBoth governments and corporations poorly execute big projects, but public housing isn’t one of them. It’s thousands of small projects, that can be operationally standardized and thus become perfect job for Germans.
- pas 3y agothat's a problem onto itself. small scale building projects are very inefficient :/
- ivan_gammel 3y ago
- donmcronald 3y agoI think this (non-market housing) [1] used to be a more prominent thing in Canada. Basically we used to have a parallel system that was based on fair value instead of price gouging. Once that was lobbied out of existence things started going down hill. 1. https://vancouversun.com/homes/government-support-crucial-to-fixing-regions-rental-housing-shortage https://vancouversun.com/homes/government-support-crucial-to...
- davidktr 3y agoYou obviously have not been around non-profit, government run entities. The waste they create, the inefficiency inherent in such enterprises is terrifying. Yesterday I looked at a huge box full of perfectly fine laptops and monitors we will scrape because selling them or even giving them away would be inconvenient. At the same time, I have to pay parts of a business trip out of my own pocket because I chose not to fly but to take the train. The best part: My trip was CHEAPER than flying. But it was out of regulation, so tough luck.
- Avshalom 3y agohave you ever been around a for-profit, privately run entity?
- creato 3y agoYour experience at a big company in those two scenarios will likely be no different.
- thfuran 3y agoWhereas at a company, the equipment would be destroyed because it checks a box on some asinine security requirement.
- TeMPOraL 3y agoOr because it would be inconvenient. For a larger company, the bureaucracy may be thick enough that even if you'd find a soul brave enough (read: suicidal) to push for the initiative, by the time it's set up and verified to fulfill every relevant rule, bylaw, as well as the law, organizing the sale costed the company more than it stands to profit from it.
- TeMPOraL 3y agoTo be honest - and this applies to every such story I've heard - it's exactly the same in large corporations. Turns out, it's really not about government vs. free market. It's about size. The larger an org is, the more bureaucracy it has and the more stakeholders are involved. Eventually, you get this weird inversion of priorities that seems to defy common sense. But it's all locally rational - a corporation or a government both can trash a shipping container full of brand new computers, because doing it is cheaper than selling them, or than any other alternative, once the (real or perceived) process costs get accounted for. Or, maybe it's globally optimal to sell them, but since all the gains go to organization as a whole, while all the risk (financial, legal, operational) is concentrated on whoever coordinates the sale, no one is suicidal enough to try.
- singleshot_ 3y agoHey, if my money and property is “a necessary sacrifice” then who am I to argue? Come, live in my house; take some of my food. Do you need clothing? A car? I am at your disposal. Together, we can build a better economy (for you).
- rowanG077 3y agoAh yes. The classic straw man in the wild.
- colonCapitalDee 3y agoNot a strawman. Direct quote from the parent: "Yes, a lot of people who bought expensive properties may forget about any returns, there could be some margin calls and banking system won’t be happy."
- rowanG077 3y agoSaying housing needs to stop being viewed as an investment, and as such will be devalued, is not even remotely the same thing as saying, and I quote the person I replied to here: "Come, live in my house; take some of my food. Do you need clothing? A car? I am at your disposal. Together, we can build a better economy (for you)." The straw men here is that everything should be sacrificed at the alter of a better economy. Which is not what was claimed.
- singleshot_ 3y agoWhat was claimed is that OP wants some of my house. Unsurprisingly, I wasn’t in favor. No one is asking whether everything should be sacrificed, I’m just asserting that none of my things should be: not my home or my food or my clothing. When you attempt to steal these things I resist . This idea that we would all be better off if you simply had some of my stuff is bad and wrong.
- ivan_gammel 3y ago
- tick_tock_tick 3y ago> state intervention would make property market unattractive State intervention is why they are attractive in the first place.....
- ethbr0 3y agoNon-profit construction firms with nationally guaranteed access to redevelop land and waive local zoning, subject only to nationally-set conditions, would help a lot of cities. The enemy is the same as it's always been: landowners. Set a few KPIs (housing profit metrics, supply/demand, price vs national average) and trigger forced non-profit supply if they exceed thresholds. The problem now is there's an unbalanced equation in favor of homeowners. (Said as an owner and landlord)
- crazygringo 3y agoThere's no reason the government needs to invest in it. The market will take care of it on its own as long as regulations allow it. The government just has to ensure zoning allows it, height restrictions are relaxed, environmental reviews are sped up, and so forth. Of course, all those restrictions are there for certain reasons, which is why getting the balance right between those and new construction is so hard. Edit: Also, the idea of prioritizing housing for "socially important" jobs is backwards. Why single out housing? If we truly value teachers, just pay them more in the first place. That way they can choose whether they want to put it towards a nicer home or fancy summer camps for the kids or something else.
- polygamous_bat 3y ago> The market will take care of it on its own as long as regulations allow it. Unless there is more profits to be made by colluding, monopolizing, and scheming. In which case market will reward those who monopolizes the hardest.
- crazygringo 3y agoWhich is why we have laws against collusion and consolidation into monopolies. These aren't reasons to abandon markets, but simply to ensure they're properly managed as they are across the world.
- polygamous_bat 3y agoThank you for explaining why markets can't be self-regulating simply through competition and why they need external regulations.
- crazygringo 3y agoSure, my original comment was about getting regulations right. (Nobody suggested markets are inherently self-regulating.)
- ivan_gammel 3y ago
- hyperthesis 3y agoBut those people who bought expensive properties are the ones with the power to change the situation.
- wasimanitoba 3y agoIt would be a lot less disruptive and more efficient to just tax wealth and redistribute it instead.