One of the main drawbacks I see in this system is that it provides little incentive for anyone to improve the value of their own property, or even to maintain it. The benefit of a market system is that it does provide this incentive, which I think is much more important than you admit here.
High housing costs at least lead to “skin in the game.” Without that, you probably need regulations to ensure that everyone maintains their property at a certain minimum level, and regular inspections to enforce it. I don’t see anything like that mentioned here—do you have any thoughts on how it would work, and how much the overhead costs would be?
Besides that, I’m also concerned about the effects on commercial property. You commented below that being assigned a store location would look more like winning a local election than signing a lease.
That sounds like another large source of overhead. I believe the amount that people actually spend at a store is a better measure of the value they derive from it than their voting could be. You could try to redesign your system to use store revenue as propinquity votes—but why? The free market already does that efficiently with no extra effort required.
I believe the amount that people actually spend at a store is a better measure of the value they derive from it than their voting could be.
The amount of money I spend in a shop is not necessarily proportional to how close I want to live to it. If I make 100 small purchases at $10 each, I probably want it closer to my home than the one where I make 1 purchase at $1000.
But just this point is a rabbit hole of questions in itself.
If we equipped every store with tracking devices that measured the amount of time spent by people visiting (!!!!), that might incentivize making products really hard to find in the store, or making really long lines, so people spend more time there.
If it’s the raw number of times people spend visiting the store, I am sure there are ways to game that too (“visit us 10 times this week for 10% off your next purchase!”). There could be laws against that, but..
One of the main drawbacks I see in this system is that it provides little incentive for anyone to improve the value of their own property
Indeed. I would like to highlight a particular example of this failure, namely the construction of multi-story buildings. In the modern market, the landowner builds tall buildings (which is a very difficult, and hence expensive procedure) because the owner profits from the rent gained from the extra real estate area. Mako in the main post suggests “we don’t need land markets to help us to decide when and where taller buildings are needed, it’s not that hard to get it pretty much right”, but 1) in practice, similar proposals (that have actually been implemented, both in communist and nominally capitalist countries) have vastly underestimated the difficulty of this problem, leading to large problems that have made life harder for many people, and 2) if the landowner doesn’t have a profit incentive to build higher, who will pay the cost of building higher? The local government? I’d rather the local government’s limited resources be used to do something that can’t already be done by the free market.
1) in practice, similar proposals (that have actually been implemented, both in communist and nominally capitalist countries) have vastly underestimated the difficulty of this problem
The USSR and pre-1978 Communist China are notable examples which are highlighted in Alain Bertaud’s Design without Order, but also modern zoning laws in the US and other first-world countries suffer from smaller, but still significant versions of this failure.
It seems like the US and other first-world countries have problem with the government making laws limiting density. I would expect the same for pre-1978 Communist China as Mao wasn’t a fan of cities and wanted to move production to the country-side.
From what I understand the USSR actually did manage to build high-story buildings under Khrushchev.
in practice, similar proposals (that have actually been implemented, both in communist and nominally capitalist countries) have vastly underestimated the difficulty of this problem, leading to large problems that have made life harder for many people
Singapore and Hong Kong are two generally-capitalist cities that have employed largely government housing development of very dense, tall housing.
It worked REALLY well in capitalist, uber-wealthy Singapore (GDP per capita substantially higher than the USA). ~78% of Singaporeans live in housing developed by the Singapore Government’s Housing and Development Board (https://en.wikipedia.org/wiki/Housing_and_Development_Board). It works a bit less well in Hong Kong, but still remarkably well considering how many people are housed in the very small area available.
I have known too many landlords who say, “ah, but, I have a responsibility to my tenants to maintain their house and provide improvements, which I fulfill, so I deserve the money”, while failing to maintain the house and while forbidding the tenants from doing it themselves. You’ll forgive me if I’m a bit skeptical about this framing. I’m not sure it should be the market’s job to improve the value of the property. Where I’m from, the market habitually failed to install adequate insulation, this ended up needing to be legislated on.
The person who most has an incentive to maintain the property is the person who lives in it. They may be less competent at this, but the land-owners aren’t always competent either. Removing barriers to their doing this might be helpful.
Ah. Apparently I removed the section about maintaining detailed, easily queriable information about every apartment (the system that maintains the data that the “requirements about the housing” field in preference expressions is about). I think that might have been the answer to your question of how inspections would be done. I removed it because I thought it was boring, but I suppose it might have been important.
So I’ll propose a process. Residents would be expected to report on a long list of qualities of their house before moving out (or to pay to have someone else do it). They ought to mostly know these qualities as a result of having lived there. If the resident who then moves into that location disputes their reports (the system asks them whether it’s all okay), they have the choice between receiving a fine, or having an inspector come, and if the inspector confirms the disputation, a greater fine. Qualities being tracked are likely to include things like “generally clean”, “mold-free”, or “no terrible smell” (I suppose that one will have to be a bit subjective and the process might need to be complicated a bit. Lol what if residents got a quality like “haunted” or “bad vibes” added to the checklist. I don’t want to think about that right now.). If there has been a great degradation in quality over the course of the resident’s stay, they will be fined.
I agree that if store adjacency preference expressions were implemented in the most obvious way it might end up kinda sucking in a lot of ways. Leading to services having to spend some small but not insignificant fraction of what they previously spent on rent on advertising and campaigning.
I would want to design additional systems for streamlining this. The decisions of these systems should, in a sense, answer to residents, they should predict resident preferences, in the same way that our low-cost auction designs would predict the outcomes of a regular auction without requiring it to be carried out. Individual residents should not ever be expected to look through an unfiltered list of service proposals, and judge them without having been exposed to a lot of good information about whether their proposers are credible or likely to be serious.
There remains a lot of work to be done on this part of the design.
You somewhat misquoted me. Aside from likening it to local elections, I also mention a qualification system. The qualification concept would be one little step toward completing the design. Residents would not need to say very specific things like “I want this wallgreens proposal to be within one KM of me”, but instead, “I want some decent pharmacy”. Perhaps we could have prediction markets decide what qualifies as a decent pharmacy (whose bettors are then rewarded or punished based on reports that come later on). Alternately, I think I can see a system for maintaining an open set of qualification marks and associated qualification authorities. Marks would be more or less prominent depending on whether they are promoted by services who have those marks that are genuinely found to be beloved. The mark authority would be paid a reasonable wage, proportional to their adoption (so that they can hire more when they need to), but nothing crazy, most of what they do would be simply honestly reporting quality/price quotients and product categories. They get work in proportion to whether their mark is found to be actually meaningful. Their work is fulfilling and the mark promotion system would try to make sure that corruption would be met quickly with replacement. More development is probably needed. Hmm and I feel like a simpler process may be possible in most cases. Conceivably… the customers of a service are generally capable of providing information about whether the service made the mark (oh), so something much cheaper than that might be possible. Imagine a review site that isn’t kind of a joke.
I suppose the information systems like this would be one of the many dimensions of quality over which propinquity cities would vary. Some would have better, more meritocratic ways of gathering and pooling information and maintaining designations and score gradients. Hopefully the first one does a decent enough job.
> I believe the amount that people actually spend at a store is a better measure of the value they derive from it than their voting could be
If you use that as your optimization metric, as our cities currently do, you get overpriced services. The drawbacks of that as a mechanism are incredibly obvious, significant in size, but broadly overlooked as inevitable. I again invite you to question their inevitability and look for a mechanism that will produce better quality/price quotients than that.
I don’t think I emphasize this clearly enough or often enough: A system that forces stores to increase their prices, decreases their quality. Those features are on the same continuum.
There isn’t very much about burning money as a way of signalling desire that that could be said to be efficient.
1. Thanks, I’ve had much better experiences with my landlord, but your experience might be more typical. Lack of adequate insulation is a clear problem, and one that’s potentially worsened by the current system in which landlords pay for installing insulation but tenants generally pay for electricity. It’s also the kind of issue that wouldn’t become known to the tenants until after they’ve already moved in. So it makes sense to me that this would require legislation.
The process you propose for maintaining quality sounds reasonable enough. It might even be less susceptible to abuse than the current system of requiring security deposits, which the landlord can decide whether or not to refund. I’ve never experienced abuse of that type, but it wouldn’t surprise me if it’s relatively common.
2. I agree there’s a lot more design work to do here. But before diving into that, I’m not entirely convinced by this point:
If you use [the amount that people actually spend] as your optimization metric, as our cities currently do, you get overpriced services.
When I think about which services are overpriced, the first ones that come to mind are college tuition and healthcare. But the primary cost drivers there are not rent, so I don’t think your proposal would affect them very much.
If we limit our discussion to services that are overpriced due to high rent costs, the only one I can think of is restaurants. I’ve never seen an actual restaurant’s budget, but I’ve heard that their costs are generally split evenly into rent, salaries, and the cost of the food itself. And it makes sense that rent would be a major cost, since table space at restaurants is clearly inefficient—even in the pre-pandemic world, restaurants often operated at capacity for only a few hours each weekend. So I’ll grant that there’s likely room for improvement there.
2. This turns out to be interesting I think. I do think almost everything in the city is obviously overpriced, but it becomes devilishly hard to identify it as overpriced because it has incorporated its high prices into its defining functionality.
Luxury clothes stores say “it’s a good thing that we charge six or seven times the cost of production because it makes us a positional good”, cafes say “It’s a good thing we charge so much because it keeps people from loitering”, nightclubs say “it keeps out the riff-raff”.
There’s a sense in which, the thing that they are is “supposed to be that way”, they truly couldn’t be better priced and so it’s hard to call them overpriced. We end up with services like that because that’s all that survives.
A solution here wouldn’t look like cheaper versions of these things, because those things wouldn’t work if they were cheaper. A really livable megacity would mostly have different things instead of them, things that only start to become economical at the lower price ranges. Instead of assorting by class, social clubs would select on more targeted personal characteristics. Instead of luxury there would be genuine finery included under the craft designation, to an extent that couldn’t have been funded before. Instead of cafes there would be mostly unstaffed bookable spaces where you could meet people, that are quiet enough to have conversations in, because lingering is the point of them. They all earn little money but increase the total value of the city far beyond their opportunity cost.
Related observation: Nothing can be said to be overpriced if you submit deeply to the necessity of the overhead. Gold-plated audio cables can’t be called overpriced if you believe that you need them to be gold-plated. They’re only overpriced if you can accept the possibility of having audio cables that don’t need to be gold-plated. So, a lot of people will say things like, “bitcoin’s proof of work mechanisms aren’t wasteful because they’re necessary to making bitcoin work”, whether you accept that depends on whether you think there’s an alternative to proof of work (many projects do). And some people who weren’t in the mood to entertain the possibility of an alternative to rent would say this about rent, that it’s not overhead because it’s an irreplaceable part of the mechanism.
One of the main drawbacks I see in this system is that it provides little incentive for anyone to improve the value of their own property, or even to maintain it. The benefit of a market system is that it does provide this incentive, which I think is much more important than you admit here.
High housing costs at least lead to “skin in the game.” Without that, you probably need regulations to ensure that everyone maintains their property at a certain minimum level, and regular inspections to enforce it. I don’t see anything like that mentioned here—do you have any thoughts on how it would work, and how much the overhead costs would be?
Besides that, I’m also concerned about the effects on commercial property. You commented below that being assigned a store location would look more like winning a local election than signing a lease.
That sounds like another large source of overhead. I believe the amount that people actually spend at a store is a better measure of the value they derive from it than their voting could be. You could try to redesign your system to use store revenue as propinquity votes—but why? The free market already does that efficiently with no extra effort required.
The amount of money I spend in a shop is not necessarily proportional to how close I want to live to it. If I make 100 small purchases at $10 each, I probably want it closer to my home than the one where I make 1 purchase at $1000.
But just this point is a rabbit hole of questions in itself.
If we equipped every store with tracking devices that measured the amount of time spent by people visiting (!!!!), that might incentivize making products really hard to find in the store, or making really long lines, so people spend more time there.
If it’s the raw number of times people spend visiting the store, I am sure there are ways to game that too (“visit us 10 times this week for 10% off your next purchase!”). There could be laws against that, but..
Indeed. I would like to highlight a particular example of this failure, namely the construction of multi-story buildings. In the modern market, the landowner builds tall buildings (which is a very difficult, and hence expensive procedure) because the owner profits from the rent gained from the extra real estate area. Mako in the main post suggests “we don’t need land markets to help us to decide when and where taller buildings are needed, it’s not that hard to get it pretty much right”, but 1) in practice, similar proposals (that have actually been implemented, both in communist and nominally capitalist countries) have vastly underestimated the difficulty of this problem, leading to large problems that have made life harder for many people, and 2) if the landowner doesn’t have a profit incentive to build higher, who will pay the cost of building higher? The local government? I’d rather the local government’s limited resources be used to do something that can’t already be done by the free market.
Can you point to examples?
The USSR and pre-1978 Communist China are notable examples which are highlighted in Alain Bertaud’s Design without Order, but also modern zoning laws in the US and other first-world countries suffer from smaller, but still significant versions of this failure.
It seems like the US and other first-world countries have problem with the government making laws limiting density. I would expect the same for pre-1978 Communist China as Mao wasn’t a fan of cities and wanted to move production to the country-side.
From what I understand the USSR actually did manage to build high-story buildings under Khrushchev.
Singapore and Hong Kong are two generally-capitalist cities that have employed largely government housing development of very dense, tall housing.
It worked REALLY well in capitalist, uber-wealthy Singapore (GDP per capita substantially higher than the USA). ~78% of Singaporeans live in housing developed by the Singapore Government’s Housing and Development Board (https://en.wikipedia.org/wiki/Housing_and_Development_Board). It works a bit less well in Hong Kong, but still remarkably well considering how many people are housed in the very small area available.
I have known too many landlords who say, “ah, but, I have a responsibility to my tenants to maintain their house and provide improvements, which I fulfill, so I deserve the money”, while failing to maintain the house and while forbidding the tenants from doing it themselves. You’ll forgive me if I’m a bit skeptical about this framing. I’m not sure it should be the market’s job to improve the value of the property. Where I’m from, the market habitually failed to install adequate insulation, this ended up needing to be legislated on.
The person who most has an incentive to maintain the property is the person who lives in it. They may be less competent at this, but the land-owners aren’t always competent either. Removing barriers to their doing this might be helpful.
Ah. Apparently I removed the section about maintaining detailed, easily queriable information about every apartment (the system that maintains the data that the “requirements about the housing” field in preference expressions is about). I think that might have been the answer to your question of how inspections would be done. I removed it because I thought it was boring, but I suppose it might have been important.
So I’ll propose a process. Residents would be expected to report on a long list of qualities of their house before moving out (or to pay to have someone else do it). They ought to mostly know these qualities as a result of having lived there. If the resident who then moves into that location disputes their reports (the system asks them whether it’s all okay), they have the choice between receiving a fine, or having an inspector come, and if the inspector confirms the disputation, a greater fine. Qualities being tracked are likely to include things like “generally clean”, “mold-free”, or “no terrible smell” (I suppose that one will have to be a bit subjective and the process might need to be complicated a bit. Lol what if residents got a quality like “haunted” or “bad vibes” added to the checklist. I don’t want to think about that right now.).
If there has been a great degradation in quality over the course of the resident’s stay, they will be fined.
I agree that if store adjacency preference expressions were implemented in the most obvious way it might end up kinda sucking in a lot of ways. Leading to services having to spend some small but not insignificant fraction of what they previously spent on rent on advertising and campaigning.
I would want to design additional systems for streamlining this. The decisions of these systems should, in a sense, answer to residents, they should predict resident preferences, in the same way that our low-cost auction designs would predict the outcomes of a regular auction without requiring it to be carried out.
Individual residents should not ever be expected to look through an unfiltered list of service proposals, and judge them without having been exposed to a lot of good information about whether their proposers are credible or likely to be serious.
There remains a lot of work to be done on this part of the design.
You somewhat misquoted me. Aside from likening it to local elections, I also mention a qualification system. The qualification concept would be one little step toward completing the design. Residents would not need to say very specific things like “I want this wallgreens proposal to be within one KM of me”, but instead, “I want some decent pharmacy”. Perhaps we could have prediction markets decide what qualifies as a decent pharmacy (whose bettors are then rewarded or punished based on reports that come later on).
Alternately, I think I can see a system for maintaining an open set of qualification marks and associated qualification authorities. Marks would be more or less prominent depending on whether they are promoted by services who have those marks that are genuinely found to be beloved. The mark authority would be paid a reasonable wage, proportional to their adoption (so that they can hire more when they need to), but nothing crazy, most of what they do would be simply honestly reporting quality/price quotients and product categories. They get work in proportion to whether their mark is found to be actually meaningful. Their work is fulfilling and the mark promotion system would try to make sure that corruption would be met quickly with replacement.
More development is probably needed. Hmm and I feel like a simpler process may be possible in most cases.
Conceivably… the customers of a service are generally capable of providing information about whether the service made the mark (oh), so something much cheaper than that might be possible. Imagine a review site that isn’t kind of a joke.
I suppose the information systems like this would be one of the many dimensions of quality over which propinquity cities would vary. Some would have better, more meritocratic ways of gathering and pooling information and maintaining designations and score gradients. Hopefully the first one does a decent enough job.
> I believe the amount that people actually spend at a store is a better measure of the value they derive from it than their voting could be
If you use that as your optimization metric, as our cities currently do, you get overpriced services. The drawbacks of that as a mechanism are incredibly obvious, significant in size, but broadly overlooked as inevitable. I again invite you to question their inevitability and look for a mechanism that will produce better quality/price quotients than that.
I don’t think I emphasize this clearly enough or often enough: A system that forces stores to increase their prices, decreases their quality. Those features are on the same continuum.
There isn’t very much about burning money as a way of signalling desire that that could be said to be efficient.
1. Thanks, I’ve had much better experiences with my landlord, but your experience might be more typical. Lack of adequate insulation is a clear problem, and one that’s potentially worsened by the current system in which landlords pay for installing insulation but tenants generally pay for electricity. It’s also the kind of issue that wouldn’t become known to the tenants until after they’ve already moved in. So it makes sense to me that this would require legislation.
The process you propose for maintaining quality sounds reasonable enough. It might even be less susceptible to abuse than the current system of requiring security deposits, which the landlord can decide whether or not to refund. I’ve never experienced abuse of that type, but it wouldn’t surprise me if it’s relatively common.
2. I agree there’s a lot more design work to do here. But before diving into that, I’m not entirely convinced by this point:
When I think about which services are overpriced, the first ones that come to mind are college tuition and healthcare. But the primary cost drivers there are not rent, so I don’t think your proposal would affect them very much.
If we limit our discussion to services that are overpriced due to high rent costs, the only one I can think of is restaurants. I’ve never seen an actual restaurant’s budget, but I’ve heard that their costs are generally split evenly into rent, salaries, and the cost of the food itself. And it makes sense that rent would be a major cost, since table space at restaurants is clearly inefficient—even in the pre-pandemic world, restaurants often operated at capacity for only a few hours each weekend. So I’ll grant that there’s likely room for improvement there.
Is there something else I’m missing?
2. This turns out to be interesting I think. I do think almost everything in the city is obviously overpriced, but it becomes devilishly hard to identify it as overpriced because it has incorporated its high prices into its defining functionality.
Luxury clothes stores say “it’s a good thing that we charge six or seven times the cost of production because it makes us a positional good”, cafes say “It’s a good thing we charge so much because it keeps people from loitering”, nightclubs say “it keeps out the riff-raff”.
There’s a sense in which, the thing that they are is “supposed to be that way”, they truly couldn’t be better priced and so it’s hard to call them overpriced. We end up with services like that because that’s all that survives.
A solution here wouldn’t look like cheaper versions of these things, because those things wouldn’t work if they were cheaper. A really livable megacity would mostly have different things instead of them, things that only start to become economical at the lower price ranges. Instead of assorting by class, social clubs would select on more targeted personal characteristics. Instead of luxury there would be genuine finery included under the craft designation, to an extent that couldn’t have been funded before. Instead of cafes there would be mostly unstaffed bookable spaces where you could meet people, that are quiet enough to have conversations in, because lingering is the point of them. They all earn little money but increase the total value of the city far beyond their opportunity cost.
Related observation: Nothing can be said to be overpriced if you submit deeply to the necessity of the overhead. Gold-plated audio cables can’t be called overpriced if you believe that you need them to be gold-plated. They’re only overpriced if you can accept the possibility of having audio cables that don’t need to be gold-plated. So, a lot of people will say things like, “bitcoin’s proof of work mechanisms aren’t wasteful because they’re necessary to making bitcoin work”, whether you accept that depends on whether you think there’s an alternative to proof of work (many projects do).
And some people who weren’t in the mood to entertain the possibility of an alternative to rent would say this about rent, that it’s not overhead because it’s an irreplaceable part of the mechanism.