Basic standard microeconomics (supply and demand) is a pretty strong model, so you’re doing great!
What you’re missing is formalizing the value or disvalue being pursued or created by the system. Right up until “If you do literally nothing at all,” the discussion was about prices and quantity, but then suddenly we care about aesthetics and infrastructure. Did you know that people would also pay for that, too? This might lead to things like some neighborhoods being more valuable than others and accordingly commanding higher prices for otherwise similar accommodations.
If a lot of people want to move to the city because the opportunity is so vast and they aren’t as concerned about aesthetics, developers would develop accordingly. If instead many of these people are pickier, well, developers would be too. This sounds bad because that means we can’t guarantee other people live according to our preferences, but it’s actually good because it’s demand and supply meeting up. Where things go awry is when these market exchanges create externalities that should be internalized by the market participants. If bare wires a strewn across the streets and children are being electrocuted every day, maybe we need a government to enforce some basic regulatory code to take care of that (because in this hypothetical, I guess the neighborhood is populated by selfish singles and the children come from elsewhere to play in these oh so attractive streets, so the problem won’t get fixed otherwise).
Yes, inventing a generic government can cover the really bad results (if they occur) from this market arrangement. The risk with this is that people may then seek to enforce their preferences through this government rather than letting the market handle it. That might be fine. Or it might be inefficient, maybe even unjust. “I think apartment complexes should have at least a one-car garage or two parking spaces per unit; I’m also super benevolent so developers can mix and match” leads to an absurd result when the would-be tenants just grin and bear it despite their preference for taking the available public transit or use their bikes. It just becomes a value-suck, raising prices and/or lowering supply, achieving one (foolish) objective to the neglect of the many (important) others.
I come from a mountain town—space is scarce. The government decided it would be more efficient, kinda neat in town, and better for tax revenue to implement onerous housing regulations but exempt mixed-use (residential on top, commercial on bottom, and you know it, parking in the back) from some (not all) of those regs. We got a lot more mixed use. The housing filled up since we had a shortage already. The commercial did not, wasting resources and space. This also cratered commercial rent prices, but the new building owners don’t seem to cry about it. Turns out the developers were building residential space; commercial rent would just be gravy since the commercial space was just to get the desired regulatory structure applied. That’s how valuable the residential space was.
Basic standard microeconomics (supply and demand) is a pretty strong model, so you’re doing great!
What you’re missing is formalizing the value or disvalue being pursued or created by the system.
Right up until “If you do literally nothing at all,” the discussion was about prices and quantity, but then suddenly we care about aesthetics and infrastructure. Did you know that people would also pay for that, too? This might lead to things like some neighborhoods being more valuable than others and accordingly commanding higher prices for otherwise similar accommodations.
If a lot of people want to move to the city because the opportunity is so vast and they aren’t as concerned about aesthetics, developers would develop accordingly. If instead many of these people are pickier, well, developers would be too. This sounds bad because that means we can’t guarantee other people live according to our preferences, but it’s actually good because it’s demand and supply meeting up. Where things go awry is when these market exchanges create externalities that should be internalized by the market participants. If bare wires a strewn across the streets and children are being electrocuted every day, maybe we need a government to enforce some basic regulatory code to take care of that (because in this hypothetical, I guess the neighborhood is populated by selfish singles and the children come from elsewhere to play in these oh so attractive streets, so the problem won’t get fixed otherwise).
Yes, inventing a generic government can cover the really bad results (if they occur) from this market arrangement. The risk with this is that people may then seek to enforce their preferences through this government rather than letting the market handle it. That might be fine. Or it might be inefficient, maybe even unjust. “I think apartment complexes should have at least a one-car garage or two parking spaces per unit; I’m also super benevolent so developers can mix and match” leads to an absurd result when the would-be tenants just grin and bear it despite their preference for taking the available public transit or use their bikes. It just becomes a value-suck, raising prices and/or lowering supply, achieving one (foolish) objective to the neglect of the many (important) others.
I come from a mountain town—space is scarce. The government decided it would be more efficient, kinda neat in town, and better for tax revenue to implement onerous housing regulations but exempt mixed-use (residential on top, commercial on bottom, and you know it, parking in the back) from some (not all) of those regs. We got a lot more mixed use. The housing filled up since we had a shortage already. The commercial did not, wasting resources and space. This also cratered commercial rent prices, but the new building owners don’t seem to cry about it. Turns out the developers were building residential space; commercial rent would just be gravy since the commercial space was just to get the desired regulatory structure applied. That’s how valuable the residential space was.
I can tell you what experts aren’t disagreeing on.