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Culture War Roundup for the week of August 12, 2024

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New homes and end to price-gouging: Harris sets economic goals

The Democratic presidential nominee's plans build on ideas from the Biden administration and aim at addressing voter concerns after a surge in prices since 2021.

The campaign's proposals include a "first-ever" tax credit for builders of homes sold to first-time buyers, as well as up to $25,000 in down-payment assistance for "eligible" first time buyers, a move that her campaign estimated could reach four million households over four years.

She has also called for capping the monthly price of diabetes-drug insulin at $35 for everyone, finding ways to cancel medical debt, and giving families a $6,000 tax credit the year they have a new child.

She is supporting a federal law banning firms from charging excessive prices on groceries and urged action on a bill in Congress that would bar property owners from using services that "coordinate" rents.

Though analysts say some of Harris's proposals, such as the ban on price-gouging, are likely to be popular, they have also sparked criticism from some economists. Bans on price-gouging already exist in many states, applied during emergencies such as hurricanes. But economists say the term is difficult to define and widening such rules could end up backfiring, by discouraging firms from making more at times of short supply.

Everyone likes free money, right? Building houses is good, having kids is good, paying less for life saving medications is good, taking power out of large landlords hands is good. But maybe trying to apply emergency price gouging laws to non-emergency situations is not so good. Maybe write a law that you have to lower prices when things are good as quickly as you raised them when they weren't so good. What are Trump's plans?

With populism ascendant in both parties, that cost has not dissuaded Trump's choice for vice president, JD Vance, from backing an even bigger tax credit expansion.

Economists predict that increased drilling would have limited impact given the global nature of energy markets and have warned that Trump's pledge to impose a tax of 10% or more on imports would drive up prices.

We're already producing a boatload of oil, but with russia somewhat out of the picture our european friends might appreciate it. Not sure about bringing down prices though.

What can she promise to boost the supply of housing instead of subsidizing demand? As long as cities have downtowns, you are limited by the driving distance and the quantity of roads and parking downtown.

She can't promise to raze and rebuild the cities with decentralized offices.

She can't promise to found new cities to allow first-time buyers to buy new homes cheaply.

She can't promise to upzone existing suburbs.

Even if she can somehow double the supply of housing, this will destroy housing as an investment. Which is also something people very vocally do not want. It's not like Trump can do anything about housing either. Maybe when the US population finally starts to dip...

Even if she can somehow double the supply of housing, this will destroy housing as an investment.

I am slowly becoming convinced that this is eventually necessary, but will be incredibly painful for many. There still are places we can build -- home prices in Texas are mostly down from two years ago, and California is trying statewide zoning changes that might work somewhat.

But we seem stuck with the choice of following other Anglosphere countries in making housing cost a lifetime or more of wages, or burning a whole lot of folks who thought it would be a nest egg. IMO the best course is probably to spread the hurt over a generation or so rather than rip off the bandaid into a culture where housing isn't expected to appreciate (Japan, somewhat?), even though that will probably hit my net worth too.

Of course housing should be destroyed as an investment. Living in a house is consumption. It causes wear and tear on the house. A twenty-year-old house is inherently less valuable than a brand new house. In a healthy economy, a house should depreciate in value like a car, albeit more slowly.

In a healthy economy, a house should depreciate in value like a car, albeit more slowly.

Houses tend to be maintained and upgraded better than cars. I never put a new roof on any car I owned, not even the convertibles.

Sure, and a car can last a million miles if diligently maintained.

I've lived in over 50 year old houses that are fine. Not as some ridiculous outlier like a million mile car, but in a neighborhood of perfectly suitable houses that just happen to be a few decades old.

Houses (the physical structures) depreciate very little over very long periods of time.

I know people who live in 100-year-old rowhouses, in a city of sufficient age to have substantial numbers of them. The neighborhood's inconvenient if you have a car, since it wasn't designed to accommodate parking, but the houses themselves are perfectly liveable.

It can, but the result will likely be you pay a lot more than replacing it a few times. And the result will still be a million mile car with high maintenance costs. So it makes less sense to keep maintaning an old car, and as a result they lose their value. It only very rarely makes financial sense to tear down a house and build anew, so old houses maintain their value.

Of course in areas where the land is far more valuable than the house, there's the additional factor of the land not suffering appreciable wear and tear.