8 ms·

The problem with charging below market prices for anything is that it necessarily leads to a mismatch of supply and demand. So the question is how do you alloca

• bedobi 3y ago
  I used to think like you but no longer do. A city NEEDS to have people of all ages, backgrounds, income levels etc in it to not die. Yes those people who live in that most central subsidized housing are in some ways winning a lottery ticket, and the real policy is to build a lot more housing as close to the city as possible. But Paris are doing that! AND adding new public transit etc etc. This multifaceted approach is better than just sterile economista policy. Vienna does it very successfully as well. Almost no one owns their home there, they're all renting very cheaply very high quality beautiful homes, including inside and very close to the city.
  • bko 3y ago
    Ok,think of the politician you dislike the most. Now imagine the discretion of "people of all ages backgrounds income levels etc" would fall to his or her purview to decide. Would you still support the system? We should have a clear objective system of governance that allows even terrible people to oversee it
    • digging 3y ago
      > Now imagine the discretion of "people of all ages backgrounds income levels etc" would fall to his or her purview to decide. How much room for discretion is there actually in promoting diversity? I suppose you could forcibly break up poorer immigrant communities which would be pretty harmful.
      • bko 3y ago
        It's simple, there are laws in the US that state that you cannot discriminate based on sex, religion, nationality, race, etc. if you would want to allow certain programs to help certain groups based on those characteristics you would have to lift those laws. Do you favor removing those laws?
        • digging 3y ago
          Oh this is one of those conversations; I'm leaving
  • bboygravity 3y ago
    Why does everybody need to concentrate in huge cities? If Romans where able to relatively evenly spread their towns and population all over the place in the analogue age, then why aren't we able to do so in the digital age?
    • 082349872349872 3y ago
      Rome may not have invented the apartment block (insula) but they sure were fond of their high density residential/commercial space... https://en.wikipedia.org/wiki/Insula_(building) https://en.wikipedia.org/wiki/Insula_(building)
    • penetrarthur 3y ago
      While being "huge", good European cities are quite homogenous throughout most of the area with 4-6 floor apartment buildings, small businesses in almost every building, parks, schools, good public transport system. They don't feel exactly "huge".
    • spywaregorilla 3y ago
      Because ~90% of the population was farming
      • Slava_Propanei 3y ago
        [dead]
    • ttymck 3y ago
      Did Romans enjoy walking to the coffee shop or the grocery store?
    • digging 3y ago
      The principles would be the same even if we concentrated on small cities. A city must promote social diversity to grow the quality of social interaction (even indirect interactions, like walking through a neighborhood built by different ideas and in different styles).
  • rafaelero 3y ago
    What do you mean cities need it not to die? Would you say Monaco is dead? What about Zurich? Oslo?
    • foldr 3y ago
      Don't those all have a reputation of being rather dull and culturally insignificant in comparison to Paris?
      • NovemberWhiskey 3y ago
        Are you suggesting there's a strong correlation between the number of low-salary workers living in the city and the presence of the Louvre or the Centre Pompidou?
        • foldr 3y ago
          Are you suggesting that nothing of cultural significance has happened in Paris since the Louvre opened as a museum in 1793? Or that Paris's culture can be reduced to a set of buildings? Also, mixed income housing in Paris has a long history: https://en.wikipedia.org/wiki/Haussmann%27s_renovation_of_Paris#The_Haussmann_building https://en.wikipedia.org/wiki/Haussmann%27s_renovation_of_Pa...
          • NovemberWhiskey 3y ago
            >Are you suggesting that nothing of cultural significance has happened in Paris since the Louvre opened as a museum in 1793? No; I'm not suggesting anything of the sort. In fact, that seems like a fairly strange statement given that I mentioned the Centre Pompidou (opened in the 1970s) in practically the same breath. >Or that Paris's culture can be reduced to a set of buildings? No; again, not sure where that's coming from. My point, which you didn't address at all, was that you seemed to be implying that there was some kind of correlation between lower-income housing in cities and their cultural significance. Was that your goal? If so, can you explain further?
  • moconnor 3y ago
    Interesting, so to put this in market terms, the city is allowing the value that such people add to it to be offset against the cost of their rent. This would mean that cities like Paris choosing to do this is entirely rational and GP's calculation fails to reach this conclusion because it ignores the actual trade that is being made in these cases? Or to make a clichéd example: being cool and arty isn't particularly rewarded by salaries because there are a limited number of opportunities for this to improve a company's profitability. But it can be rewarded by subsidised rents because people prefer to live in cities with a population of cool and arty people for the non-monetary benefits they bring to that society.
    • robertlagrant 3y ago
      > But it can be rewarded by subsidised rents because people prefer to live in cities with a population of cool and arty people for the non-monetary benefits they bring to that society. Well, some people do. But everyone is paying for it, even if they'd rather save.
      • underlipton 3y ago
        If the value your espousing is, "No one should ever pay to have others live better than them off a livelihood that they don't support," a great portion of the remainder of America's middle class gets Thanos snapped. A lot of the decently-paying jobs in services, tech, etc. that these communities rely on essentially make the world a worse place, but they're profitable, and people gotta eat.
        • robertlagrant 3y ago
          > A lot of the decently-paying jobs in services, tech, etc. that these communities rely on essentially make the world a worse place, but they're profitable, and people gotta eat. If those jobs are paid for by voluntary customers, then that's fine. If they're subsidised through taxes of people who don't want them, that's the issue I'm mentioning.
          • 3y ago
  • krona 3y ago
    > A city NEEDS to have people of all ages, backgrounds, income levels etc in it to not die. Correct. Therefore, subsidized housing is good and more of it is better? No, it does not follow. What you say is correct, to a degree. Beyond that, it is incorrect. There are no solutions, only trade-offs.
    • TimPC 3y ago
      If you agree the city dies without people of all ages backgrounds and income levels what is your alternative proposal to subsidized housing. It's just a fact that some income levels are being priced out of the city and certain occupations may become entirely unavailable without some mechanism of solving that gap.
      • krona 3y ago
        Either you willingly misunderstood my comment, or you are so absolutist in your thinking that you're incapable of understanding the concept of a limiting principle in social policy.
        • eszed 3y ago
          Whoa whoa, dude. You're being unnecessarily hostile. GP's question was a fair one, and not (by my reading) unkindly phrased. Even if I'm wrong about that, personal attacks aren't welcome contributions: flag and move on.
          • krona 3y ago
            Being strawmanned in the most mundane and cliched of ways is deserving of opprobrium. HN is better than that. It's tiresome.
      • dantheman 3y ago
        Building more types of housing. It's simple - allow people to build, allow denser construction, allow smaller apartments, etc. Hell most of NYC would not be allowed to be built today because the apartments are too small -- yet these are the most desirable areas...
  • rmbyrro 3y ago
    In general, I'm against govt interventions like this, but in the case of housing, I agree with you. For a society to function in a healthy way, it can't be divided in social class "gettos". It is the responsibility of the State to spend public funds to avoid that. This is not about fairness and equality. It's about the long term survival of a society.
    • mistermann 3y ago
      Even further: extremely affordable technology now exists such that the leaders of our "democracies" could ask the public's opinions on such matters in a wide variety of fine-grained ways, or even better: facilitate a high quality moderated public conversation that actually involves the public on these and other matters. This may even be a requirement for a healthy society. Unfortunately, current styles of "democracy" not only do not do this, they instead engage in deceptive propaganda to make it appear like they do this and more (how you can tell: observe how people praise "democracy", based on clearly silly memes). I often wonder if the quality of these institutions in an absolute sense (as opposed to a relative comparison to literal fascist dictatorships, the only other option dontchaknow) may have something to do with some people thinking they should be eliminated and replaced, a sentiment which is always and without exception represented as being dumb/etc. Note also that these institutions also control school curriculum, which "denies" the public the skills needed to realize any of this is going on, how utterly riddled with error and deceit/delusion the public conversation is, etc.
      • bedobi 3y ago
        > ask the public's opinions on such matters this would be a disaster take how Hidalgo is deprioritizing private automobiles on the streets of Paris most of the public was passionately and intensely opposed to that, but she did it anyway now, people can't imagine ever going back to how it was before - families being able to walk and ride bikes along the Seine and Rue de Rivoli is too nice = asking for peoples opinion on stuff in lots of cases is just going to result in locking in status quo because people don't really know what they want, but they're usually pro status quo and opposed to change
  • mytailorisrich 3y ago
    Subsidies always have a cost on public finances. In Paris' case, the financial situation is bad and getting worse with a debt on track to reach EUR10 billion. So it seems to me that Paris is borrowing like there is no tomorrow. This usually does not end well.
    • kspacewalk2 3y ago
      It entirely depends on how the money is spent. If Paris is making investments that will enable it to substantially grow its tax base, it's a good prudent strategy, certainly better than the supposedly more fiscally responsible do-nothing strategy that can just as easily lead to financial ruin as irresponsible drunken-sailor spending.
      • mytailorisrich 3y ago
        > If Paris is making investments that will enable it to substantially grow its tax base Obviously, this is not what they are doing, debts growing with quite high tax rises at the same time ("taxe fonciere" [property tax] doubled last year). Paris is often depiected as a great model, especially by liberal foreign media, but the reality is rather different, and I believe that the Mayor's approval rating is currently abyssmal...
        • kspacewalk2 3y ago
          Not at all obvious. What is obvious is that returns on many investments, such as vastly improving housing and transportation for city residents, have multi-year lags. Like, obviously when you just spent billions on improving your RER, properly redesigning your streets to not be deadly by design anymore, and buying up housing, you'll be in the read that fiscal year. >"taxe fonciere" [property tax] doubled last year My French is rusty, but it was a 50% increase, it was previously the lowest of all cities in France, and it was not raised since 2011[0]. It is also peanuts compared to property taxes in Canada where I live, and especially compared to many parts of the US. Not an apples-to-apples comparison because property taxes pay for different things in different countries (i.e. in Canada provincial taxes pay for schools, in the US it comes out of your municipal property taxes). But still, we're not talking about one of the main taxes for an average French citizen, clearly. [0] https://actu.fr/ile-de-france/paris_75056/taxe-fonciere-a-paris-anne-hidalgo-annonce-une-augmentation-de-10_55025669.html https://actu.fr/ile-de-france/paris_75056/taxe-fonciere-a-pa...
  • Slava_Propanei 3y ago
    [dead]
  • closeparen 3y ago
    Suppose you get a job offer, or your adult child has a newborn, or your aging parent's health takes a turn for the worse. Instead of being able to simply move, this instead starts a decade-scale process that has a 1% of chance of allocating you a public housing unit in the end. What does that do for dynamism? People's intentions about when and where to move are important. A housing system that removes all individual agency from this question, abdicating everything to a government lottery/waiting list system, can meet other desiderata but is clearly losing something important.
• BWStearns 3y ago
  I get these arguments against it and I'm sympathetic to the reasoning, but the point of public policy is results and the Parisian policy certainly seems to just work better than most US housing policy. SF, Boston, NYC also spend a ridiculous amount of money ostensibly trying to achieve similar outcomes but their approaches just don't work.
  • datameta 3y ago
    Afaik 30% of all new luxury high rises are made low and middle income affordable and rent stabilized. In which ways is the NYC system inefficient? Do you believe that is due to policy, abuse by bad actors or some mixture of the two?
    • BWStearns 3y ago
      NYC is wildly unaffordable compared to Paris even accounting for the earnings differences. That is the outcome and the failure, not the presence or absence of some specific policy. I am not saying Paris' approach is transplantable directly to NYC, but rather that first principle analyses (such as gp's commentary) that say that the Paris approach doesn't work are flawed. I know these analyses are flawed because one can look at Paris and see that they have achieved their policy objective of Paris being affordable for a wide swath of incomes. Policies should be pursued, adopted, changed etc based on their outcomes above their adherence to abstract models. Models are great but once you have data that a policy has failed you should change that policy and try something else.
  • HDThoreaun 3y ago
    Paris housing works better than SF, Boston, or NYC because it is much denser, not because of public housing. American cities artificially limit density which drives up prices as everyone wants to live in the high demand area that cant densify.
• bugglebeetle 3y ago
  And yet Vienna is one of the most beautiful, livable cities in the world, with its masses of public housing, while major U.S. cities have homelessness crises and TV shows about house flipping for profit. Perhaps we should stop debating things based on the hokum of Econ 101 textbooks and look at what in the real world has actually worked (e.g. abolishing most forms of zoning, massive investments in public housing, robust public transportation, drastically curbing real estate speculation).
  • brainwad 3y ago
    Vienna has had the luxury of having had relatively little demand for housing for over a century. The population peaked in WWI and still hasn't recovered (it was 2.24m in 1916, 2.00m in 2023).
    • trgn 3y ago
      Manhattan's population dropped 25% from its peak in the early 1900s. Pre-war was just a different era, this is more of a function of changing living standards, people live larger, not of contemporary housing dynamics.
    • em-bee 3y ago
      vienna also had a lot of buildings destroyed in the war which increased the demand. population was as low as 1.5 or 1.6m in the late 80s/early 90s. it grew back to 2m in just a few decades, and it is going to continue to grow, so i'd argue that it has recovered quite well.
    • malermeister 3y ago
      Vienna actually had a terrible housing crisis before the Austromarxists of Red Vienna built housing en masse. See this article for example: https://citymonitor.ai/environment/housing/red-vienna-how-austrias-capital-earned-its-place-in-housing-history https://citymonitor.ai/environment/housing/red-vienna-how-au...
      • brainwad 3y ago
• dangus 3y ago
  Basically, you’re assuming that this system is going to be like the underfunded and scarce public housing in the United States where a difficult to win lottery will be necessary to secure an apartment. In that sort of market of scarce supply, slumlords can overcharge for low quality rentals. But they couldn’t do that in a market where the government is offering a real alternative that you can actually get into. From the article it seems like the Parisian government has such a large supply of public housing that it is a serious market force that can influence the rest of the city and the makeup of its neighborhoods. Your description of the situation sounds more like America where a tiny inventory of antiquated public housing units built ~40 years ago (the last time any American politicians cared to lift a finger to address poverty and inequality) are made available by a bleak lottery. Just because the public housing system doesn’t work in America where it’s basically an afterthought doesn’t mean that it isn’t working in other places.
  • bko 3y ago
    Not Paris but NYC: > For many New Yorkers, the most desirable jackpot is not the New York Lotto, but to be selected in the city’s extraordinarily competitive affordable-housing lottery. Tens of thousands of people, and sometimes many more, vie for the handful of units available at a time. Since 2013, there have been more than 25 million applications submitted for roughly 40,000 units. Central planning has been tried over and over and has failed and led to more scarcity. It's like fitting climate change by regulating thermometers. Maybe this time is different? https://www.nytimes.com/2020/06/15/nyregion/nyc-affordable-housing-lottery.html https://www.nytimes.com/2020/06/15/nyregion/nyc-affordable-h...
    • amanda99 3y ago
      Your top comment sounded pretty sensible and fair but in your responses to comments you now just sound like a troll. Central planning works very well: that's how every corporation, city, and state works. It works well as long as you apply it to a small enough market and e.g. don't try to plan the whole economy. The problem in NYC is that there is not enough affordable housing. 40k units is nothing in the housing supply, and the rent inflation has been way too high lately.
• Ragnarork 3y ago
  > So the question is how do you allocate that supply? To adress this specific question for Paris, they put an upper limit on your income to rent specific housing with lower rent. I'll scale down your caricature of an example though, the offers you can see are usually 15% to 20% under market price, not 75% like you seem to imply. Not exactly sure what is your point otherwise, the difference in terms of giving someone an apartment with a lower market rent vs. giving that money outright will eventually lead to the same thing, except that the former is also a way to curb the very high rent inflation (among other things), and results in both cases in a significant increase in purchasing power, at a given income. > If we realized that with a system like this we're giving 1 out of 1k eligible people the equivalent of a 30k a year transfer This is not equivalent because giving someone that money doesn't mean they'll chose to live inside Paris, and this is a measure that goes beyond financial support. It's also a city policy aimed at achieving a specific population distribution.
  • bko 3y ago
    > This is not equivalent because giving someone that money doesn't mean they'll chose to live inside Paris, and this is a measure that goes beyond financial support.It's also a city policy aimed at achieving a specific population distribution. I don't know, I would prefer the autonomy to choose where I live and how I spend my money. Why don't we afford the same respect to people that are less well off? Why do we want to essentially force them to live somewhere expensive when they would prefer to use that money elsewhere? They're not some pawn you can use to feel good about yourself. "Oh look at all these people from different cultures that live here". They're human beings
    • TimPC 3y ago
      I think it's totally fair that a program designed to support people of a certain income living in Paris requires those people to live in Paris. If you want autonomy you can have it, just don't take the money/apartment. This feels like a cake and eat it to attitude. Government is totally allowed to have aims and reasons behind programs. Having low income people live in Paris ensures there are people available who can do work that can't afford to pay high wages. This is important to having a vibrant city and something reasonable for a government to aim for. If people could just take the money and screw off to anywhere in the country, then we'd effectively see people take a $30,000/year subsidy and go somewhere they could live entirely on that without working, which would accomplish very much the opposite of what the whole program was trying to do.
• redandblack 3y ago
  Market prices rarely (almost never) consider externalities - situations like this where it is a societal decision, it is difficult to define what we want, much less define a objective function that the market prices can optimize on. Case in point - congestion pricing I prefer excess housing / school / living infra which is subsidized by the society
• eclipsetheworld 3y ago
  Allocating public housing could be done through an auction system. Bidders would submit offers for annual rent. The surplus, after deducting costs, could then be allocated to buying or building additional housing for this program. Alternatively, it could be used directly to subsidize rent for low-income individuals. In the end, this would solve the allocation problem while maximizing the available public housing. It would take a couple of years or decades to reach an equilibrium state I guess. I'm probably missing something obvious here. Can somebody point out my mistake?
  • bko 3y ago
    You've literally described a market system. A developer charges as much as they can for their rental units. If profitable they take that surplus and build new units up until the point that the marginal cost of providing an apartment is equal to the marginal revenue for renting such a unit. This isn't due to benevolence but how you maximize profit. The developer also pays taxes which pays for public services So yes, I am in favor of this system.
    • UncleEntity 3y ago
      The problem with this so called 'market system' is it allows people to chose their neighbors through bidding only on properties they know the poors can't afford. If the French wanted citizens to have the freedom of (dis)association they would have written it into their constitution.
• throwaway63467 3y ago
  It doesn’t take much to destroy a city with money, I can see it happen in a few cities in Europe now. Foreign money, mostly from non EU countries like Russia keeps pouring in raising the market value until no local can afford renting or owning an apartment anymore. Look at places like Sylt or some nicer towns in Switzerland or France, they basically got overrun by rich a••holes buying everything they could. Boggles my mind why people think it’s fair that local families compete with shady millionaires for living space.
  • rafaelero 3y ago
    Local families are the ones getting rich by having their houses surge in price. And they are probably also the reason why new houses are not being built.
    • nathan_compton 3y ago
      Assuming they aren't renting.
• schneems 3y ago
  If the goal is to have a diverse economic mix of people to live in a city center, then let the results speak for themselves. If another city has the same goal and can achieve a better result with less resources then that’s worth considering. The “they haven’t thought this through all the way” mantra you’ve espoused might be true. Also maybe you’ve not thought it all the way through. Maybe that has been tried and doesn’t work well for reasons. For example if you increase the flow of money into a market without increasing supply, prices tend to rise and the wealthier will absorb the rise better than the poorer. As you’ve helpfully pointed out, there are knock-on effects, however those effects don’t just apply to one side. So that’s why I advocate for aligning and judging success on the goal and comparing like to like.
• cultureswitch 3y ago
  When someone rents a small apartment in the center of Paris for 4k on the private market in all likeliness they're paying more than 3k of pure rent profit to the owner. The rent can be levied by the owner however the owner actually did not provide any of the investment or labor required to give the apartment the value it has. The apartment has value not because of anything inside the apartment or the building. It has value due to its location, something that the owner has no control over and did not spend a single penny to make more attractive. This is obviously a huge inefficiency in the economy. Why should someone profit from the attractiveness of a location they haven't actually built? This is a positive externality. Part of the solution of our huge housing crisis across most developed cities is obviously that there should just be more housing. This would bring prices down overall. However, new construction is extremely difficult, and that is due the in part to lobbies of wealthy owners which seek to keep prices high by maintaining scarcity. Turning private rent housing into public housing is a good way to eliminate the economic inefficiency of rent in that one case and it also drives the price of nearby housing down too, as the private market has to compete with the public offering.
  • its_ethan 3y ago
    > It has value due to its location, something that the owner has no control over and did not spend a single penny to make more attractive To be fair, the owner is paying property taxes - which do go towards improving the location. > The apartment has value not because of anything inside the apartment or the building. I think you'll find, in basically any city, that the quality of a building does correlate to it's rent price or value. You'll also find that owners do invest in increasing the quality of their buildings, which does improve the value or "niceness" of the location. If this wasn't true, gentrification couldn't exist. > Why should someone profit from the attractiveness of a location they haven't actually built? If you're claiming that since no real identifiable person or group "built" the attractiveness of a location, and that therefore no one should get to profit from it, you'd be seriously tampering with the signal that the natural markets supply/demand provides in the form of rental prices. That's going to lead to some significant "economic inefficiencies" for the area in the medium to long term.
  • dugmartin 3y ago
• Probiotic6081 3y ago
  [dead]