Hacker News Reader

Comment by roenxi | Hacker News Reader

Housing is a resource. If you have a magic wand to make resources exempt from economic forces, please wave it over food prices for the rest of us.

The reason economists get so excited about abstract issues of market efficiency is because if supply and demand don't balance naturally there will either be too much or not enough of something (effectively). Introducing rent controls will push the market towards the not-enough end of the spectrum and shortages will get worse.

> The unregulated market has never and will never provide affordable housing to all on its own.

That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.

View on HN

>Housing is a resource. If you have a magic wand to make resources exempt from economic forces, please wave it over food prices for the rest of us.

That magic wand is called public policy. There are similar things you could say about food -- i.e. how unregulated markets lead to developing countries being forced to export cash crops instead of growing food that people in that country need to actually eat.

>That is a huge claim. If people could use their land as they like there probably wouldn't be a housing shortage. Developers make large fortunes out of install dense blocks of apartments; and doing that isn't going to make housing more expensive.

4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people. In an unregulated market, landlords would not rent to these people, and they would be homeless, or they would live in actual slums, which don't really exist in the U.S., but would have to in a fully unregulated market.

I'm going to make the point that this is comparing an actual warts-and-all reality to a hypothetical "someone very reasonable will just get it right" system - the reality will never measure up to an ideal. That out of the way...

Public policy is not a magic wand that creates something from nothing. Governments that believe that tend to be called socalist and the worst case scenario for socalist governments tends to be much worse than for capitalist governments. Public policy can allocate resources from people who make money to people who make less money, but it is a lousy tool for trying to create more housing when there is not enough housing. A much better policy would be to remove government restrictions that actively prevent or disincentivise people from building housing/renting it out. That is to say: less controls on rent and construction.

> 4.8 million households in the U.S. depend on Section 8 to afford rent. These are direct subsidies to landlords to house these people.

I don't like welfare either, but it is certainly a step up from rent controls. Rent controls are an actively destructive policy that work directly against getting everyone in a house. Welfare is only questionable incentive structure and some welfare is appropriate.

> That magic wand is called public policy.

Public policy doesn't exempt resources from economic forces, it's just a mechanism to divert resources from one area to another. It just allows you to fudge a little bit, push resources here and there. The Soviet Union eventually collapsed because towards the end for all their fudging they couldn't keep up net economic production. All effective policymaking comes from understanding constraints and operating within them to achieve the best outcome. For that reason - pretending that constraints don't exist is a recipe for bad policy.

Public services can be exempt from economic forces if a society deems them worth the cost. Generally in most first world nations you aren't denied life saving treatment on a cost benefit analysis.

In the same vein, it seems like its almost necessary that governments be leading the density charge in building. There should always be a public housing option everywhere, and it shouldn't be a default ghetto. Japan does an extremely good job providing a baseline amount of public investment in dense urban housing that helps regulate the unit supply the private market is otherwise managing.

Reply on news.ycombinator.com