Why do you assume that the space, materials and labor to build unlimited housing will be available? Those physical resources have to be pulled out of some other use, if they exist at all. And if they are available, that means you will burn a bunch of those resources, and cause a bunch of environmental damage, to create housing capacity that will never be used.
The significance of the launderers is that they may greatly increase the amount of such unused capacity, because they may be even less sane about prices than regular speculators.
I’m not sure that a system that burns resources because people “want” empty units (which they don’t actually want for their own sake at all) is a good system. And I’m not sure what surplus you mean. Surplus money, sure, but where’s the surplus wealth? Seems to me that the actual wealth is being poured down a rathole.
Why do you assume that the space, materials and labor to build unlimited housing will be available?
Isn’t that the whole premise of this discussion? If there are people who’ll overpay, use that to make more of it. If they’re not overpaying and it actually costs that much to create the housing, then the argument that “housing is unaffordable due to speculators” becomes much more tenuous.
“Make more” space? I’m pretty sure that violates general relativity or something like that.
You can make more steel and concrete, of course, and I don’t think we’ll run out of the raw materials for those, but we might find ourselves under water sooner if we keep cranking them out at too high a rate.
I suppose you could pay parents to make more labor for you. It’s been done in the past, but I think the approach has gone out of favor these days. The lead time is pretty long, too, and the labor you get will itself need housing, so you need to make even more of it.
Also, presumably the prices of all of the above have to go up before there’s a market signal to make more of them, so the price of anything else that relies on those inputs also has to rise, distorting market feedback on demand for those other items.
Seriously, money doesn’t actually create anything, and there are actually finite physical resources in the world. Any political or economic system that causes physical resources to be allocated to producing physical things that don’t physically benefit anybody seems like a system with a serious problem.
All you can extract from speculators is the money, not the physical stuff. The money launderers, if they exist in significant numbers, are going to be like super-speculators who provide even more money… but still no physical stuff. So they increase the misallocation. And how do you get the money from them, anyway? I mean, aren’t they already naturally subsidizing construction by buying up units? Obviously they’re still not solving the problem by themselves, because there are still people without housing. What’s the intervention that would put more of their money toward housing, and who would be in a position to make that intervention?
One of the big knocks people always used to give against communism was that central planning would produce too many boots and not enough chewing gum, or set unreasonable quotas that forced farmers to damage the long-term productivity of the land, or whatever. Maybe that’s not absolutely intrinsic to central planning, but it seems to apply to any plan to use this speculative phenomenon, no matter how you do it.
It seems to me that you really, truly only want to build housing (or anything else) if it’s going to actually get used. Obviously if you truly don’t have enough units for everybody to be housed even at 100 percent occupancy, then you need to build more. But you don’t want either existing or newly built units sitting vacant at any higher rate than you can avoid, no matter how much money moves around as a result.
Without having researched it in enough detail to be sure, the vacancy tax idea seems like a good first step, certainly better than anything that would create more vacant units.
Seriously, money doesn’t actually create anything, and there are actually finite physical resources in the world.
Awesome—that’s normally my line of argument when someone starts talking about large-scale behavior as if it were financed by a single entity. I’m very happy to see the reminder occurring more often.
At smaller scales, however (at a city level, even), money is a fine proxy for resources. We’re talking about living space, not land area—steel, concrete, and labor are pretty elastic in their exchange rate for money. Heck, many of the speculators (or just rich people who want to live there, and everything in between) WOULD pay extra for the underwater/floating arcologies.
It seems to me that you really, truly only want to build housing (or anything else) if it’s going to actually get used.
It doesn’t seem that to me. I don’t think housing is all that special of a good, and I don’t feel entitled to judge people’s reasons for wanting the attributes they care about in their goods. I want to build housing (and everything else) if someone wants it enough to pay me more than I spent to make it. At larger scales, the exchange medium for “pay” may change from currency to other promises of future output of goods and services, but that doesn’t change the underlying desire to provide everyone whatever they want, at a (small, if competition is unconstrained) profit.
Not at all a serious suggestion, but it popped into my head: You could solve this problem by making other forms of money laundering more convenient than real estate.
(or making real estate laundering less convenient/riskier, but that’s not as funny a thought)
The use of real estate as a store of value/unit of exchange makes me think of an old Diablo II issue. Officially, the medium of exchange in D2 was gold. In practice, it was a relatively rare item called the Stone of Jordan.
How did this happen? For a time, a serious bug allowed players to dupe items easily. Many of them chose to dupe the Stone. After the bug was fixed, players were left with a relatively fixed supply of a high-value item that used little inventory space. It worked very well as both a store and a medium, modulo developer attempts to clean up dupes. Thereafter, I understand that most high-level transactions were done with what amounted to counterfeit currency.
I don’t know if that’s still the case. I do know at one point the developer created a quest that could only be triggered by destroying Stones, presumably in an attempt to get rid of the counterfeits.
Why do you assume that the space, materials and labor to build unlimited housing will be available? Those physical resources have to be pulled out of some other use, if they exist at all. And if they are available, that means you will burn a bunch of those resources, and cause a bunch of environmental damage, to create housing capacity that will never be used.
The significance of the launderers is that they may greatly increase the amount of such unused capacity, because they may be even less sane about prices than regular speculators.
I’m not sure that a system that burns resources because people “want” empty units (which they don’t actually want for their own sake at all) is a good system. And I’m not sure what surplus you mean. Surplus money, sure, but where’s the surplus wealth? Seems to me that the actual wealth is being poured down a rathole.
Isn’t that the whole premise of this discussion? If there are people who’ll overpay, use that to make more of it. If they’re not overpaying and it actually costs that much to create the housing, then the argument that “housing is unaffordable due to speculators” becomes much more tenuous.
“Make more” space? I’m pretty sure that violates general relativity or something like that.
You can make more steel and concrete, of course, and I don’t think we’ll run out of the raw materials for those, but we might find ourselves under water sooner if we keep cranking them out at too high a rate.
I suppose you could pay parents to make more labor for you. It’s been done in the past, but I think the approach has gone out of favor these days. The lead time is pretty long, too, and the labor you get will itself need housing, so you need to make even more of it.
Also, presumably the prices of all of the above have to go up before there’s a market signal to make more of them, so the price of anything else that relies on those inputs also has to rise, distorting market feedback on demand for those other items.
Seriously, money doesn’t actually create anything, and there are actually finite physical resources in the world. Any political or economic system that causes physical resources to be allocated to producing physical things that don’t physically benefit anybody seems like a system with a serious problem.
All you can extract from speculators is the money, not the physical stuff. The money launderers, if they exist in significant numbers, are going to be like super-speculators who provide even more money… but still no physical stuff. So they increase the misallocation. And how do you get the money from them, anyway? I mean, aren’t they already naturally subsidizing construction by buying up units? Obviously they’re still not solving the problem by themselves, because there are still people without housing. What’s the intervention that would put more of their money toward housing, and who would be in a position to make that intervention?
One of the big knocks people always used to give against communism was that central planning would produce too many boots and not enough chewing gum, or set unreasonable quotas that forced farmers to damage the long-term productivity of the land, or whatever. Maybe that’s not absolutely intrinsic to central planning, but it seems to apply to any plan to use this speculative phenomenon, no matter how you do it.
It seems to me that you really, truly only want to build housing (or anything else) if it’s going to actually get used. Obviously if you truly don’t have enough units for everybody to be housed even at 100 percent occupancy, then you need to build more. But you don’t want either existing or newly built units sitting vacant at any higher rate than you can avoid, no matter how much money moves around as a result.
Without having researched it in enough detail to be sure, the vacancy tax idea seems like a good first step, certainly better than anything that would create more vacant units.
Awesome—that’s normally my line of argument when someone starts talking about large-scale behavior as if it were financed by a single entity. I’m very happy to see the reminder occurring more often.
At smaller scales, however (at a city level, even), money is a fine proxy for resources. We’re talking about living space, not land area—steel, concrete, and labor are pretty elastic in their exchange rate for money. Heck, many of the speculators (or just rich people who want to live there, and everything in between) WOULD pay extra for the underwater/floating arcologies.
It doesn’t seem that to me. I don’t think housing is all that special of a good, and I don’t feel entitled to judge people’s reasons for wanting the attributes they care about in their goods. I want to build housing (and everything else) if someone wants it enough to pay me more than I spent to make it. At larger scales, the exchange medium for “pay” may change from currency to other promises of future output of goods and services, but that doesn’t change the underlying desire to provide everyone whatever they want, at a (small, if competition is unconstrained) profit.
Not at all a serious suggestion, but it popped into my head: You could solve this problem by making other forms of money laundering more convenient than real estate.
(or making real estate laundering less convenient/riskier, but that’s not as funny a thought)
The use of real estate as a store of value/unit of exchange makes me think of an old Diablo II issue. Officially, the medium of exchange in D2 was gold. In practice, it was a relatively rare item called the Stone of Jordan.
How did this happen? For a time, a serious bug allowed players to dupe items easily. Many of them chose to dupe the Stone. After the bug was fixed, players were left with a relatively fixed supply of a high-value item that used little inventory space. It worked very well as both a store and a medium, modulo developer attempts to clean up dupes. Thereafter, I understand that most high-level transactions were done with what amounted to counterfeit currency.
I don’t know if that’s still the case. I do know at one point the developer created a quest that could only be triggered by destroying Stones, presumably in an attempt to get rid of the counterfeits.