5 ms·

This rings true and people always seem to forget that it's much easier to innovate when the cost of living is lower. The problem, or the balance that must be s

This rings true and people always seem to forget that it's much easier to innovate when the cost of living is lower. The problem, or the balance that must be struck, is that it's hard to innovate without being surrounded by other innovative people. You need a city with a critical mass of innovative, talented people and a low cost-of-living. California in the 1970s had that. I don't know what the 2013 analogue is, or if it's even in the US. The Midwest would qualify, but it's hard to raise any kind of money (VC, bank loans) out there. When real estate is expensive, money dominates peoples' lives-- even seemingly wealthy people who still don't make enough to raise a family. When it's cheap, people focus on other things and money is just one thing in it. I'm ideologically against expensive real estate. I think that the government should buy, build and own about 60% of housing and set the prevailing rent per square foot. Rich people will still have the ability to buy property and to rent or own nicer private housing, but the basic prevailing rate will be set. This actually doesn't bring along the negatives of price ceilings (shortage) because the government can also build more housing and transportation infrastructure to increase available supply. I think we should hold the government responsible for that. No one should have to pay more than 1/4 of post-tax income to live within 20 minutes of work. The reason New York is expensive is that people like me-- ambitious, hard-working, extremely capable-- are able to find jobs here. People like me make the fucking city great. For each person like me, there are 9999 who want to be around (or employ, or exploit) people like me and they drive up the fucking rent. Instead of benefitting from our contribution, however, we get charged for it when we pay these enormous housing costs. We should be rioting in the fucking streets over this.

goldfeld 14y ago
The implicit conclusion from both of your points is that the government should be able to select fucking great people like you over others to offer affordable housing to. Sounds like a recipe to dystopia.
eli_gottlieb 14y ago
It's a lot easier to just have the government implement a land-value tax and repeal zoning laws than to actually administrate 60% of the "dwellable" land.
bokonist 14y ago
Expensive real estate is a deliberate policy of the government. Local government zoning laws keep the supply tight. And low interest rates and easy credit enable people to take out huge loans to bid up the prices of real estate. To get cheap housing, the government would just need to repeal zoning laws and limit all the size of all home mortgages from any government subsidized institution (FDIC insured banks, etc.) to a maximum of 3X median income with a 25% down payment. That would get housing prices down very fast. The government keeps housing expensive, because older home owners are one of the most powerful voting blocks. Your average 60 year old homeowner is much more likely to vote than your 25 year old apartment dweller. Furthermore, the homeowner is going to be irate and vote against any politician who enacts policies that make their home price go down, while the 25 year old is not really paying attention. You're committing the "deus ex machina" fallacy where by you seem to assume that the government has the incentives and institutional ability to effectively manage public housing and keep the cost of housing down. The actual experienced history of government housing in the U.S. has been positively atrocious. And in terms of cost, government housing generally costs about twice as much to build as the equivalent private sector housing. The really hard problems are: how do you wrest political power away from middle-aged home owners? How in general do you make government work for the general interest as a whole rather than work for powerful factional interests (such as homeowners, construction unions, etc.)
- philwelch 14y ago
  Let's not use FDIC as a crowbar to micromanage consumer banking, please. There are so many better dials for the government to turn than resorting to that.
  - bokonist 14y ago
    "Let [us] not use FDIC as a crowbar" Who's "us"? I don't work for or have any power over the government or FDIC.
    - nostrademons 14y ago
      You're making an argument. He's saying that your argument has the unfortunate consequence of using the FDIC as a tool to micromanage consumer banking.
Evenjos 14y ago
The problem, or the balance that must be struck, is that it's hard to innovate without being surrounded by other innovative people. You need a city with a critical mass of innovative, talented people and a low cost-of-living. I agree. Come to Austin, TX!
bearmf 14y ago
A real estate market separated into 60% government-owned cheap housing and 40% privately owned expensive housing strangely reminds me of NYC with its rent control/stabilization policies. Most of the current problems will not go away with government owning buildings instead of landlords. If the prevailing rate is low enough, a black rental market will soon form for government-owned units in desirable locations. What I agree with is that somebody must build new housing. If private developers cannot/would not do it, then its a market failure and government should step in.
- khuey 14y ago
  In many areas (including the Bay Area) the government won't allow private developers to build new housing (via zoning laws etc.)
  - Retric 14y ago
    Building a house is cheap, having the local infrastructure to support houses is expensive. Letting people build unlimited housing without restriction is a terrible idea. What we need is a tax on new houses that covers local infrastructure needs. We don't do this because developers have long fed on subsidies of there external costs by local governments.
    - khuey 14y ago
      We call those taxes property taxes, but thanks to prop 30 in California the situation there is totally messed up too.
      - Retric 14y ago
        Property taxes are a poor approximation of external costs even excluding prop 30. Most obviously there paid after the fact and the county needs infrastructure up front. Consider you add a new subway stop in an area and suddenly people want to replace single family dwellings near it with apartment buildings. The region paid for that subway expansion, but a few well connected developers stand to make a killing. When you get down to it Zoning is really an ideal way for local politicians to shift the benefits of public infrastructure into well connected private hands.
Retric 14y ago
Except the critical mass is something like 3 people. So, yes people help but having 1,000 or 1,000,000 innovators around you makes little difference.
- ovi256 14y ago
  For a proof-of-concept early-stage lean startup, no, number of trained people you may hire around you is not a key issue. As soon as you want to move fast and hire people to help you industrialize the business model you found, having trained people of key specialties around you is going to be necessary. I think the jury's still out on whether remote work can replace this.

goldfeld 14y ago

The implicit conclusion from both of your points is that the government should be able to select fucking great people like you over others to offer affordable housing to. Sounds like a recipe to dystopia.

eli_gottlieb 14y ago

It's a lot easier to just have the government implement a land-value tax and repeal zoning laws than to actually administrate 60% of the "dwellable" land.

bokonist 14y ago

Expensive real estate is a deliberate policy of the government. Local government zoning laws keep the supply tight. And low interest rates and easy credit enable people to take out huge loans to bid up the prices of real estate. To get cheap housing, the government would just need to repeal zoning laws and limit all the size of all home mortgages from any government subsidized institution (FDIC insured banks, etc.) to a maximum of 3X median income with a 25% down payment. That would get housing prices down very fast. The government keeps housing expensive, because older home owners are one of the most powerful voting blocks. Your average 60 year old homeowner is much more likely to vote than your 25 year old apartment dweller. Furthermore, the homeowner is going to be irate and vote against any politician who enacts policies that make their home price go down, while the 25 year old is not really paying attention. You're committing the "deus ex machina" fallacy where by you seem to assume that the government has the incentives and institutional ability to effectively manage public housing and keep the cost of housing down. The actual experienced history of government housing in the U.S. has been positively atrocious. And in terms of cost, government housing generally costs about twice as much to build as the equivalent private sector housing. The really hard problems are: how do you wrest political power away from middle-aged home owners? How in general do you make government work for the general interest as a whole rather than work for powerful factional interests (such as homeowners, construction unions, etc.)

philwelch 14y ago
Let's not use FDIC as a crowbar to micromanage consumer banking, please. There are so many better dials for the government to turn than resorting to that.
- bokonist 14y ago
  "Let [us] not use FDIC as a crowbar" Who's "us"? I don't work for or have any power over the government or FDIC.
  - nostrademons 14y ago
    You're making an argument. He's saying that your argument has the unfortunate consequence of using the FDIC as a tool to micromanage consumer banking.

Evenjos 14y ago

The problem, or the balance that must be struck, is that it's hard to innovate without being surrounded by other innovative people. You need a city with a critical mass of innovative, talented people and a low cost-of-living. I agree. Come to Austin, TX!

bearmf 14y ago

A real estate market separated into 60% government-owned cheap housing and 40% privately owned expensive housing strangely reminds me of NYC with its rent control/stabilization policies. Most of the current problems will not go away with government owning buildings instead of landlords. If the prevailing rate is low enough, a black rental market will soon form for government-owned units in desirable locations. What I agree with is that somebody must build new housing. If private developers cannot/would not do it, then its a market failure and government should step in.

khuey 14y ago
In many areas (including the Bay Area) the government won't allow private developers to build new housing (via zoning laws etc.)
- Retric 14y ago
  Building a house is cheap, having the local infrastructure to support houses is expensive. Letting people build unlimited housing without restriction is a terrible idea. What we need is a tax on new houses that covers local infrastructure needs. We don't do this because developers have long fed on subsidies of there external costs by local governments.
  - khuey 14y ago
    We call those taxes property taxes, but thanks to prop 30 in California the situation there is totally messed up too.
    - Retric 14y ago
      Property taxes are a poor approximation of external costs even excluding prop 30. Most obviously there paid after the fact and the county needs infrastructure up front. Consider you add a new subway stop in an area and suddenly people want to replace single family dwellings near it with apartment buildings. The region paid for that subway expansion, but a few well connected developers stand to make a killing. When you get down to it Zoning is really an ideal way for local politicians to shift the benefits of public infrastructure into well connected private hands.

Retric 14y ago

Except the critical mass is something like 3 people. So, yes people help but having 1,000 or 1,000,000 innovators around you makes little difference.

ovi256 14y ago
For a proof-of-concept early-stage lean startup, no, number of trained people you may hire around you is not a key issue. As soon as you want to move fast and hire people to help you industrialize the business model you found, having trained people of key specialties around you is going to be necessary. I think the jury's still out on whether remote work can replace this.