PS capitalism is awesome indeed
> A ceiling on rents reduces the quantity and quality of housing available. (93% of economists agree)
http://gregmankiw.blogspot.de/2009/02/news-flash-economists-...
Is land more expensive in developed countries? Are materials more expensive? Are workers more expensive? (probably all components are more expensive, but I still don't understand where those hundreds of thousands of dollars are coming from, those prices are just insane).
If Alice and Bob want to hang out then they have to pay a big proportion of their wage to Charlie the Capitalist for the privilege. The land owners sell us to each other.
More stringent building regulations probably add to the cost, but the planning system is the big factor. "Desireable area" makes a difference in some cases: a while ago Stoke-on-Trent were selling derelict houses at £1 to anyone who promised to renovate and live in them.
Demand and lack of (enough) supply. Buying a piece of land that you can build on in a city like SF costs a lot more than $5-10k for 100 m^2.
According to http://www.trulia.com/real_estate/San_Francisco-California/m...
Average price per square _foot_ for San Francisco CA was $962
Allowing occasional working from home has the same effects, and require no investment in infrastructure.
> But it is not just housing markets that hold back productivity. According to one study, employment in the Bay Area around San Francisco would be about five times larger than it is but for tight regulation on construction of all types.
I'm not familiar with Bay Area, but in Poland people constantly complain about overregulation of construction, and we have much less restrictive construction law than in western Europe (and it shows - public space in Poland is awful compared to Czech Republic or Germany).
You can have too loose construction law, and the result is a city centre were nobody lives - people just commute to work and back. This results in suburbia, and longer commute times - the direct opposite of the effect they wanted to achieve with the first point in that article.
It's not that Poland (or any other country) needs more laws. It's a problem of incentives, or lack thereof.
If a construction company has bribed politicians to keep giving them lucrative gigs on other people's money, they will have no incentive to actually do a good job.
If, on the other hand, there were free competition among construction companies, they would all strive to do their best so that they would be awarded more gigs in the future.
It's as simple as "corruption", but that's a misnomer because that's just the system working as intended. What's the point of being a city official if you're not in a position to get bribes one way or another?
With great power comes great.. opportunities for collecting bribes!
It's just that after communism people consider all regulation "communist-like restriction of God-given freedom".
It changes slowly for last few years, but '90s and '00s were awful.
Indeed. If only there were a way that people could do work without travelling to a specific desk in a specific building during specific hours.
I think most people still like to work physically with other people. That is why I go to a co-worker space. Because I am actually more productive at home.
In Poland people constantly complain about overregulation of pretty much everything (I'd say complaining itself is our national sport, but that's another topic) - but that's probably typical of humans. It's easy to complain about overregulation when the government tells you you can't do whatever you want and dump externalities on everyone around you.
But I agree with your conclusion. We have quite lax construction laws and people still commute. I don't really see how the two are actually related in practice. Majority of people doesn't get to pick and choose jobs. You can spend months looking for a good opening, and if you don't like one because it's on the other side of the city, then no worries, there are thousands of people who will happily take your place.
You can't predict where you will work in 10 years, why expect to live in the same house for 10 years? Of course - not wanting to move kids to a different school is valid reason, but still kids change school every few years. Many people could reduce commute with no bad side-effects, if not for the problems with renting flats.
People are very careful about renting flats to families with kids, because it's very hard to expel them if they stop paying right now.
I'm about to start a remote job, and this is the bit I'm most looking forward to. I'll be able to claw back that 2 hours I'm losing every day to a pointless commute.
Some amount of municipal planning is a good thing. It provides needed services for residents and increases the quality of what is built. But there is probably a limit to how much growth a government can handle in a responsible way. That suggests that building restrictions might even be a good thing. If the government is overloaded, the restrictions push the growth to other areas where the governments are more eager to plan for the growth.
The theory goes that these high-density population centres have higher productivity, for a couple of reasons:
- "Truer" competition -- distance is an artificial barrier that reduces employees' access to jobs and reduces employers' access to job candidates. It also reduces companies' access to each other.
- More cross-pollination as people a free to move jobs more often and (in theory) have more interactions with other companies.
There are no doubt some downsides to concentrating all of your nation's business in one place, and things like telecommuting and fast public transport will have the effect of bringing people closer together without straining infrastructure as much, but there's really no alternative to density.
We could always put progressive tax on capital and property. It will be very efficient redistribution.
If investment was made to comparable levels in any of the 10 or more other large cities in the UK so companies don't feel the need to work in London, perhaps we would solve productivity without producing a Mega-city.
It sounds easy and I know there are loads of bureaucratic hurdles and it doesn't help that local councils don't always want the change that is needed in their nice cities to create the influx of jobs...
http://www.independent.co.uk/news/uk/home-news/london-proper...
Also why do we "need" to give housing benefits to people? They don't go to people they go to landlords who have set their prices higher than the market can bear.
I'm afraid I disagree with you - the jobs aren't paying for the cost of land. The state, corruption and printing money via land are. And without it all the UK economy would have collapsed.
They will never try to stop the cheap money and money laundering.
http://bankunderground.co.uk/2015/06/30/banks-are-not-interm...
> the key function of banks is the provision of financing, meaning the creation of new monetary purchasing power through loans, for a single agent that is both borrower and depositor. Specifically, whenever a bank makes a new loan to a non-bank customer X, it creates a new loan entry in the name of customer X on the asset side of its balance sheet, and it simultaneously creates a new and equal-sized deposit entry, also in the name of customer X, on the liability side of its balance sheet. The bank therefore creates its own funding, deposits, through lending. It does so through a pure bookkeeping transaction that involves no real resources, and that acquires its economic significance through the fact that bank deposits are any modern economy’s generally accepted medium of exchange.
Banks create money and lend it against land. This is how western "economies" create money which we then label "growth".
The more productive we become the more the landlord takes.
One of the primary problems in London, and probably many countries with similar issues is that the politicians are far more likely to be landlords than the general public.
I read that in the UK 1 in 4 members of parliament are landlords, compared to 1 in 30 for the general public.
The side effect of this is that ever increasing demand for property, and then passing laws that make demand even stronger (right to buy for example), whilst limiting building programmes increases the politician's wealth for zero effort. They don't have the money to profit from lots of new builds, so its easier to constrain supply, and the general public who own houses will think they've never had it so good because their house is worth more.
Same thing in the US but for the arms industry.
Also mix in the fact that huge numbers of new build London apartments are being kept empty by Chinese owners (and others) and you've got a crisis waiting to happen.
There's going to be a tipping point for London - when young white collar workers such as software developers, accountants, graphic designers, marketing professionals and the other skills that make London competitive won't be arsed to travel to London for 1-2 hours, or live in a shoebox to get a salary that's 15% higher than in Leeds, Birmingham or Manchester where they could have a large house.
The way out isn't just building more property, but passing laws that force owners to rent out properties when they own more than say 3 or 4. Although that would of course crash rental income, so politicians won't do that either.
Sadly, general public don't read Economist or at least look at the facts. Govt "subsidies" public housing instead of land supply and ppl seems to complain but not analyze the issue.
