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The logic here is that there are two different competing concerns—the use of housing as an investment (money in, money out) and the use of housing as a place to

The logic here is that there are two different competing concerns—the use of housing as an investment (money in, money out) and the use of housing as a place to live. There’s a lot of legislation that shifts the balance one way or the other. Things like property tax caps and zoning regulations shift the balance towards house-as-investment, and things like rent increase caps shift it the other way. If you don’t buy in to libertarian laissez-faire economics, which most people don’t, then this makes sense. (“Makes sense” is a much lower bar than “has the effect that we want it to have.”)

mcv 3y ago
Exactly. I see houses primarily as a roof over your head, not as an investment. And I think the investment attitude has done a lot of harm to the housing market, leading to extortionate practices and artificial scarcity. I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.
wyager 3y ago
Every physical good is a financial asset whether you like it or not. Ignoring this reality will not help achieve policy goals. I agree that you are accurately describing the economically illiterate thought process, just not that it's correct. Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.
- klodolph 3y ago
  Treating everything as nothing more than a financial asset is way too reductive. My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.
  - wyager 3y ago
    Thankfully we have a mechanism for working utility-theoretic optimization into economic calculations. The mechanism is called "prices". When you undermine this mechanism, you are not globally utility-maximising.

mcv 3y ago

Exactly. I see houses primarily as a roof over your head, not as an investment. And I think the investment attitude has done a lot of harm to the housing market, leading to extortionate practices and artificial scarcity. I wouldn't even complain if all houses halved in value, despite being a homeowner. That my home would be worth less is irrelevant, because I'm not selling it, and if I was, I'd have to buy a new house anyway. People who see houses as investment would hate it, of course.

wyager 3y ago

Every physical good is a financial asset whether you like it or not. Ignoring this reality will not help achieve policy goals. I agree that you are accurately describing the economically illiterate thought process, just not that it's correct. Price controls are one of those interesting things where there's a phase transition from near-universal support to near-zero support at a certain knowledge level.

klodolph 3y ago
Treating everything as nothing more than a financial asset is way too reductive. My point here is that housing is not only a financial asset, and should be treated as more than just a financial asset. Or if you want to take an economic approach here, you need to come up with a utility function that more accurately reflects what we care about—we think that two people who have housing is a better situation than one person who has two houses and one person who has none.
- wyager 3y ago
  Thankfully we have a mechanism for working utility-theoretic optimization into economic calculations. The mechanism is called "prices". When you undermine this mechanism, you are not globally utility-maximising.