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Notes -
On The Poverty Equilibrium vs NIBMYism
Big Yud recently posted an interesting thought, The Poverty Equilibrium. The most brutal possible summary is: despite an insane amount of technological progress over the last centuries, some people still toil all day in miserable jobs to provide for some urgent need and it's not clear why this is happening and therefore it's not clear that another 100x increase in utility will make it any different.
I have a not quite neat rebuttal. Maybe call it a partial agonist rebuttal: poverty kind of persists because of NIMBYism, but NIMBYism also prevents more poverty.
Lets take my town of Eugene Oregon as an example. Eugene has become a desirable place to live the last 10 years. It has moderate weather, rarely snowing but also rarely hitting the 100s. Is very bike friendly and it exhibits Portlandia levels of absurdity regarding organic and local food and products. You can exercise outdoors all year round, comfortably, and stunning natural beauty is a stones throw away. You're also surrounded by sensual hippies and violent crime is below average for the US, though there is the usual west coast share of scary homelessness and menacing.
Naturally, as a near-coastal elite city, building is heavily restricted and housing inventory is low so prices are high and home ownership is unreachable if you only make minimum wage ($14.70/hour). There are constant calls to build more affordable housing, but instead all that seems to get built are luxury apartments that don't alleviate housing shortages, regularly outraging the /r/Eugene subreddit.
EAs cry incessantly that NIMBYism is to blame for this state of affairs and if we would Just Fucking Build the cost of housing would plummet and gripping poverty would be solved.
One digression. Eugene has, wedged immediately against it, a town called Springfield. The quality of life is nearly identical, you have access to all of the luxuries I said above but maybe add 10 minutes of drive time. It's less bike friendly and the public spaces are a bit less nice. Alternatively, the police do enforce laws harder. Anyway, the cost of this almost-but-not-quite Eugene town is that housing is about 30% cheaper, into the range of comfortable if you make minimum wage. However, nobody wants to live there. Instead people treat living in Eugene like some human right and Springfield Oregon may as well be Springfield Missouri.
But back to NIMBYism, building more affordable housing would actually make living here worse and it can be argued mathematically: median income in Eugene is $30k. In the US, the top 10% of taxpayers provide about 70% of government funding. If you invite people who make less than the top 10% into your town, you make your town poorer. But it can also be argued in hand waving qualitative fashion: the population of the town is about 175,000. If we built 100,000 tiny houses that cost $400/month, the cost of housing would certainly plummet but the quality of life in town would collapse. Traffic, which barely exists here, would become awful, the public spaces would be full of much more homeless menacing, crime and littering would increase and the public services would be stretched thinner.
Aside from tragedy and also usual bad decisions that contribute to poverty (addiction, bad with money), poverty persists because it's actually pretty hard for some people to leave their town if it becomes unaffordable (family obligations, can't find a job in cheaper towns). Similarly, there are not robust ways to accommodate more poor people without making the entire town poorer. I can see how Kowloon Walled City can accommodate high population density but living there seems pretty unappealing compared to quiet quaint little Eugene. Could a 100x increase in utility fix this? Probably! If building was radically cheaper, I could imagine beautiful Sim City style arcologies that have these peaceful pockets of small towns that can support millions of people. But until then, NIMBYism is good actually and prevents poverty from spreading.
If you want Kowloon Walled City in America, on the other hand, what's stopping us? Plenty of room in Nevada. We can build a tech bro metropolis around it. Hell, I'd visit. I'd probably even buy an apartment there that's vacant 50 weeks a year.
Is this what you believe, or just what the subreddit believes? Because building housing of any kind (including luxury housing) absolutely does mitigate housing shortages and reduce prices.
When cities build luxury housing, the wealthiest people move into those houses, while moving out of their existing, less luxury housing. That housing in turn gets occupied by the next rung on the income ladder, and this continues right now to the bottom. House prices and rents drop for everyone.
I don't really believe your claim from first principles, aside from the fact that building any housing at all moves the needle slightly towards making you a place more aligned with building overall.
I don't have any data to argue against you with though, so take that for what it's worth.
Which first principles would they be?
Because it seems pretty self-evident that housing is fungible. If I can't live in a grade A apartment because there aren't any available, I'll live in a grade B one rather than sleep on the streets. If grade A apartments become available, I'll leave my grade B one, which will then go on the market. The more apartments that come on the market, the less buyers will need to pay because there will be the same number of buyers chasing more properties, and sellers will be forced to lower their prices.
'Luxury' housing is just the word we use to describe the most expensive houses, it's not a characteristic of the houses that makes them qualitatively different.
The only way for me to believe that building luxury homes doesn't reduce prices would be for me to believe that either:
It's even worse than that: it's a pretty meaningless marketing adjective that makes you feel better about paying a lot for something. Everyone slaps on the label except those at the cheapest, er "Value!" end of the market looking for price-conscious customers, and the polar opposite of brands that are well-known to the point where using the label is déclassé. And this doesn't just apply to housing.
Agreed. In my city, all housing that's not directly inside a high-crime neighborhood is marketed as “luxury”. I cannot find non-“luxury”-advertised housing, except in high-crime neighborhoods. Preliminary checks on other cities show the same thing.
Ah, the luxury of living in an area with the demographics of several decades ago.
That luxury has been reserved for the rich ever since the Civil Rights Act of 1964. See "When Did Healthy Communities Become Illegal?" by Charles Tuttle.
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