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PaperclipPerfector  6d ago (text post)   2928 thread views

Small-Scale Question Sunday for October 19, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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I've been enjoying asking basic math questions to destroy dearly held beliefs and I would like to continue. This one requires more intuition than cold basic math though, but it's in the same ballpark.

Let's talk about housing. Housing's so fucking expensive. Especially in desirable places! YIMBYs (or maybe abundance democrats) argue we should build more housing. A lot more. But what kind of housing? Who are we trying to help?

Well. Take a town of 150k people. A one bedroom in a decent part of mine is approaching $1600 a month and inventory is also frustratingly low across the board. Before we get to my actual point lets focus on an absurd toy non-solution first. Let's build 1,000,000 Connestoga huts across town and charge $450 a month in rent. This eliminates a lot of housing pressure but anyone but the most hardcore libertarian would recoil in horror at the thought because it would mean the town would be flooded with poor single people. Per capita tax revenue would plummet while per capita demand on public services would likely increase. Traffic would explode. Parks would be overrun with trash. Police would respond to calls by lottery. This would turn the town into a nightmare.

But we don't have to get this absurd! My contention is, because of progressive taxation, public services are diminished even if you build housing that the median income family can afford!

Looking at federal income tax, the top 1% pay almost 50% in federal income tax. The top 10% pay about 75%. State and local income taxes are structured in similar progressive style. What about sales tax? More tax is paid by people who spend more, and things that are considered essential (like food and cheaper clothes) are usually exempt. Property tax? Lots with higher assessed value and luxuries are taxed at higher rates. Public service spending is carried by the affluent.

For another intuitive look at this, a family with two kids in public school will consume $3000-7500 per month(!) in state expenditure. Public education costs alone dwarf the entirety of taxes most families pay (of which only a small amount is even earmarked for education).

Not just education. The Medicare and Medicaid we all know kicks in at the federal poverty line, but the thresholds for some kind of subsidies are high enough that a family can earn as much as $85,000 in a city like NYC and still qualify for some assistance.

This means every municipality has an economic incentive to refuse newcomers that aren't making potentially 90%ile household income. This means sure, build housing, but only 90%ile housing, or become poorer.

I would like to be wrong about this! It's frightening to think of every newcomer to your town as making it per capita poorer unless they're very affluent!

One weakness in this rationale is we don't have a solid accounting of all of the transfers. E.g. if 90% of education was funded through federal and state revenues, you could imagine purpose building a town just to have a lot of schools so that people with small kids move to it and pull funds from the rest of the country and state. But I think that number is more like 60% and a lot of the "state" funds are likely a matter of appropriation and will be distributed ~right back to where they came from.

I'm kind of surprised nobody else is pointing this out! Am I hitting on some truth neither side really cares to acknowledge because it doesn't support their favorite platitudes or am I just smart enough at economics to twist myself into a gnarly retarded knot?

EDIT: oh! one argument that I've heard from a grimacing YIMBY is that he is forced to admit I am correct, but that's why we can't do this on a local level. Instead we must mandate more housing be built on a nationwide basis (e.g. a federal #NoZoneZone authoritarian order) so any one town or city would be protected from all of the poor not affluent people rushing to it at once and ruining it. This seems like a solution but I am still not convinced I am describing a true real and local deficiency.

The vast majority of normies (and probably still a majority of non-normies) lack a coherent answer to the simple question, "Should housing be more expensive or cheaper?" They want too many different competing things from one aggregate number.

What they want is housing to be affordable, but that's not a function of the price number (alone). Of course, if you try to optimize a complex problem by only concentrating on a single variable and asking "should it be bigger or smaller" - nobody would be able to give you a coherent answer, because there isn't one.

Much words have been said about how people bury incoherence in the phrase "affordable housing". What do you think it means?

I'd tentatively define it as a situation where a typical family (yes, I know it's a fiction but that's the only way to create a generally applicable definition) can eventually pay for a culturally adequate housing without incurring catastrophic long-term financial risk or heavy financial hardship.

Best I can tell, this is just a less specific version of the response that @disk_interested gave, which was followed up by agreeing that if we hold wages constant for a conversation about the price of housing, then it just cashes out as saying that the aggregate number for the price of housing should go down. Should I be interpreting it differently?

I'm not sure "agreeing that if we hold wages constant for a conversation" makes sense. I mean, sure, if you exclude everything but house prices, then it's house prices. But that feels like hollowing out the problem's complexity. These things are inter-related, and the relationship is not uni-directional - the house prices influence wages and the structure of other expenses. And most of the normies can not really appreciate the full extent of all those factors - I am not sure I truly can, for example. I just want to be able to live in a decent house and pay for it from my earnings without working three jobs or trying to win the lottery. How to arrange wages/prices/costs/regulations to achieve this is quite complex, and I don't think "just make houses cheap!" is going to answer it.

Do you think it doesn't make sense to do this for any other product, either? Like, we can't talk about healthcare prices or education prices, or car prices, or apple prices, without discussing every other aspect of the economy? Or maybe it's that we must at least discuss wages to talk about apple prices? I'm really just not sure how I'm supposed to think about this.

In some very theoretical and "well, akshually" sense yes, the price of apples is connected to everything else too, just less strongly. But we can say close to 100% of adults participate in housing marked in one way or another (maybe excluding prisoners, the military and such, but these exceptions are tiny) and for an average family, housing costs influence daily life and family budget significantly more than apples. Same for employers - many large employers literally have separate pay scale for "high cost of living areas" - which is mainly driven by housing costs. Discussing whether this arrangement is good or not will take us too much off course, but the huge influence of housing prices must be obvious. Not so with apple prices. If by some quirk of economy the apples become prohibitively expensive, you can just eat something else. If housing becomes prohibitively expensive, you have a society-wide problem on your hands. Having no access to apples for a year is barely an inconvenience. Having no access to housing - even for several days - would be catastrophic to most families. So if we approach it practically, housing is not "any other product" due to its oversized importance in the life of an average family and the society as a whole.

And sure, if we lived in an alternative word where you could buy a house (or any housing solution, however you call it) for the price of the week's wages (you still could buy a car for $1-2k - it'd be an old crappy car but it will get you from point A to point B for a while) then the picture would be completely different. But we aren't living in that world.

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My progressive liberal friends steelman it as wage to housing ratio is such that everyone outside of the lower class can eventually own

In practice, I’ve heard this described as pretty much everyone outside of poverty can budget for 3-10 years to afford a down payment and total monthly payment for a duplex, condo, detached house, etc. Currently, the issues are: the number of people near the poverty line has increased massively, and wage growth outside the upper middle class seems stagnant. I’m not an economist, so I’m not familiar the recent stats here, but I agree with my friends on affordable housing being about ratios in essence. Regardless, bad policy can easily hide in the term “affordable housing”.

In this case, I think that if we hold wages constant for the conversation about the price of housing, what distinguishes this from what I think the summary of it is: the aggregate number for the price of housing should go down?

I agree. That is essentially what the argument boils down to.

I prefer the ratio framing, because it frees us from the anchoring bias, which is especially confusing given recent inflation. To have a serious discussion on this issue, we all need to keep the relevant variables in our minds, and given that the complexity of the entire economy is in play here, most people are unable to think seriously about this issue, let alone have a discussion about policy.

The thing is, though, I think if you simply reword what they're saying in this way: "So, uh, you want the aggregate number for the price of housing to go down?" you are unlikely to get a simple "yes". They also want other things, don't know how to process it, and likely do not have a coherent position.

I have yet to meet a progressive liberal in the PNW who has a coherent position here.

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