The story of Thunder Bay’s socialist Finnish restaurant (2018)
tvo.org
tvo.org
They had a scale at entrance and the shtick was to weigh your self before and after eating.
https://www.tbnewswatch.com/local-news/finlandia-co-operativ...
Today 44% of US workers are low wage ($18,000 or less). Of this group the majority can not afford more than food, shelter, transportation, and clothing. This is not what a healthy economy looks like. Part of the challenge of paying people a living wage is land lords can and do up rent to match their income slowly over time. The free market is great when there is competition, but time and time again we see in markets where there is limited competition or limited resources, the market starts to fall down. So while socialism (ie unions and social services) at first seems to benefits us all, it does not benefit low income workers.
Without some sort of regulation on the housing market, blindly upping minimum wage will lead to a slow increase in living expenses. Unionizing has shown to work and work well for middle class jobs, but if the job is a near minimum wage job, while unions do help, it's unfortunately a complex problem. Without some sort of regulation there will always be some group of people struggling to make ends meet.
EDIT: Thanks to all for the good comments. I want to stress that I understand "just build more" (by which I really mean increase supply however you accomplish it) is often not a simple answer, but it is the ONLY strategy that has a hope of working to make housing more affordable.
That's not necessarily sufficient. From Für eine wirklich soziale Wohnungspolitik[1], citing empirical studies of rents in Germany:
Im Ergebnis muss demnach festgestellt werden, dass eine verstärkte Neubautätigkeit unter den gegenwärtigen Bedingungen nicht zu einer Ausweitung von bezahlbaren Wohnungsangeboten führt, sondern vielmehr die Ertragssteigerungen im Bestand beschleunigt.
As a result, it must be stated that increased new building activity under the current conditions does not lead to an expansion of affordable housing offers, but rather accelerates the increase in yields in existing buildings.
The reason for this is that the newly constructed housing tends to be higher priced, and when old housing gets freed, rents tend to get raised on the new tenants.
[1] https://zeitschrift-suburban.de/sys/index.php/suburban/artic...
If they are able to do this, there still isn't enough supply to meet the demand.
It's a sort of bad mixture of politics and markets. People who sit on zoning boards tend to own property in the area (or get money and support from such people), and thus it's not in their interest to increase the supply of housing, as that would decrease the value of their investment. OTOH, the people who'd like to move into the area are not represented in the zoning boards.
One partial solution is to make zoning a national level decision rather than a municipal, like in Japan: https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...
Not necessaarily, no. The example of Vienna has already been brought up, where the city outright owns something like 1/4 of of all rented flats, and (as of 2017), about 2/3 of all citizen live in municipal or publicly subsidised housing.
There are reason why it's considered one of the most livable cities in the world.
This report from Brookings is illustrative: It shows that property values (and rents) in Cambridge have sharply risen after rent control has been cancelled. The article concludes:
"In short, the policy imposed $2.0 billion in costs to local property owners, but only $300 million of that cost was transferred to renters in rent-controlled apartments." [0]
That is undoubtly true, but seems to miss the point - the goal of rent control is not to help in optimal pricing of real estate. Rent control only seems to not work when high real estate prices are the goal of the researcher, instead of low rents.
[0] https://www.brookings.edu/research/what-does-economic-eviden...
EDIT: I think one core problem in this discussion is the assumed relation between real estate values and rent level. In hot markets these are only loosely correlated, though: Investors can often savely assume that appreciation alone will result in profits. An example for Berlin, Germany: from 2010 to 2020 real estate values rose about 400% but rent "only" rose 66%. This means investors can safely assume profitable investments even if rents are not part of the equation, by real estate appreciation alone. An unregulated real estate market therefore will certainly result in rising property prices, but this doesn't mean more living space will be available.
Maybe not across the country as a whole, but they are certainly voluntary participants in a given market which is likely limited to a small geographic area.
Obviously, though, this approach requires an awful lot of people willing to fill the newly developed land to make the infrastructure investment worthwhile.
Free lunches are few and far between. Sigh.
That's also ignoring the problem of landlords using the excess capital extracted from rents to drive the price of housing further from the reach of the people actually interested in using it as a house. The higher prices are then used by landlords as a justification for raising rent, and this cycle then repeats.
This is a bit of a popular myth. Vancouver is the only city i know of where it even approaches being significant. Try to dig up some statistics on empty properties for some cities that matter to you and you'll see.
Here's a report, covering England but with some extra detail on London, from 2019:
https://www.actiononemptyhomes.org/Handlers/Download.ashx?ID...
Table 5 tells us that in London, there were a grand total of 2126 empty homes in council tax bands G and H, ie the kind of property an investor might buy. The vast majority of empty homes are not offshore investment material.
In housing markets where there is a lack of competition this allows land lords to raise prices as much as they want, up to a point, as long as tenants can pay. Because it's an inelastic good, people have to pay or be homeless, so they'll pay up to how much they make.
China is a good example of this. It has some of the highest rent prices in the world with people crammed into these coffin sized living conditions, so China has strongly stimulated building development. This has let to handfuls of ghost cities with no one living in them, and yet rent prices continue to increase beyond just about anywhere else in the world.
Singapore is a good example as well. It's a country with limited land and a high population. The government there builds condos with a locked rate, so the average citizen can afford it. The government effectively becomes their land lord. "Buying" land there is renting, and the condos are quite nice. They have the resources to do this, it limits land prices, the people benefit from it, the government benefits from it. I'm not saying this is how other countries should do this, just that it makes a good use case to show an example of what reduces land prices and an example of what increases it.
One such solution I am unfamiliar if any country in the world does, is build more Ivy / high end business universities. The largest reason someone chooses to start a business in an area is because their social network is there. They get this network at a university. By building education up in a better way, more cities will form around those universities. We could get more cities with businesses, instead of people fighting over the few options in the US, despite all of the land we have.
Another such solution is limiting business in an area. If the number of workers in an area are limited, around those businesses house and rent prices become competitive and supply and demand starts working. Business that want to expand or new businesses would have to move to another area. (Of course, this solution is not without its faults.)
The European solution is two fold: 1) mixed zoning, so businesses are more inner-twinned with residential reducing commute times increasing the ability for supply and demand to work. 2) limit building size to regulate the residential to business employee ratio, which allows supply and demand to start working. We can see today that this works and works well.
One article about it: https://www.huffpost.com/entry/vienna-affordable-housing-par...
> limit building size to regulate the residential to business employee ratio, which allows supply and demand to start working.
Isn't this the opposite of what is needed? Build denser so that people can live closer to their workplaces?
Housing demand is more elastic than many people suppose. As you indirectly point out, people will generally take the best housing they can afford. If they can only afford a shared apartment or living with their parents, that is what they will do. If they can afford their own apartment, they will do that. If they can afford a mansion with a swimming pool, many will do that. People will sometimes move away from high priced areas and toward lower priced areas if they can manage it. To a certain extent, therefore, demand will increase and decrease relative to supply. So, back to my original thesis, if you want cheaper or better housing, build more of it. Ideally, you do this in places where it is in demand though I acknowledge it may be difficult in the highest demand areas. Alternatively, build rapid transit to increase the effective availability of housing (increase the reasonable commuting distance).
I know there are wealthier areas like out here in the SF/Bay Area, where there is much more of a gradient due to the average person making six digits. Keep in mind if the bay area was its own country it would be the second wealthiest country in the world, so yes the US has exceptions, but lower income rent is still capped to their income.
If you think housing is elastic either you misunderstand the word or you can always prove it by living out of your car. In comparison, eating out is elastic, despite it being food. You can easily prove it by cooking at home. Maybe you're saying living in an expensive place is elastic so the free market works? Yes, this is true for the upper half of the country. For the lower half it is absolutely inelastic. A tv is elastic, because you can easily prove it by not owning one. Utilities, eating cheap food at home, and housing are inelastic. Try living without power.
The reason the price is capped by the lowest income is precisely because demand is elastic, if the landlords raised prices any, they would find themselves without tenants. The prospective tenants might move back in with their parents, for example (and yes, some of them might just end up homeless). There is insufficient demand at a higher price level.
Utilities, eating cheap food at home, and housing are inelastic. Try living without power.
Sure, living without power sucks, but above a bare minimum, the amount that is used is highly elastic. If I am having trouble paying the bill, I will absolutely keep use to a minimum.
Inelastic is an economic term referring to the static quantity of a good or service when its price changes. Inelastic means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.
What happens when an adult child moves back in with their parents? They have "gone without" one unit of housing.
What happens when three friends move in together? They have collectively "gone without two" of the three units of housing that they would have otherwise have occupied.
Conversely, what happens when my wife kicks me out because I spend too much time on Hacker News? I am now looking for new housing.
In each case, the number of people remains fixed, but the demand for housing has changed. Price will definitely affect what strategy people adopt: whether to live alone or share with friends or whether to live in a cramped apartment or in a 3 bedroom house.
To first approximation, everyone needs a place to live,* but there is more elasticity in the amount housing each individual consumes than is commonly believed.
*I have known several people who have deliberately gone without housing entirely for a time in order to save money.
Textbooks, teachers, and professors, love to use gas as an example of an inelastic product when teaching the topic. However, if gas hit $100 a gallon you better believe people would be driving less.
In the 90s it was normal for truck drivers to literally drive 100mph in some parts of the country (No, I'm not making this up. A few states even had no speed limit on their freeway and semis would drive even faster.), but once gas prices rised during the bush administration most companies capped their driver's speed to 62mph to increase mpg.
During this time when gas prices shot up people stopped traveling for vacations as much. Ride share programs popped up at this time too. This was the time I got my first remote job, but that may be a coincidence.
And the lowest quintile of household income was $21,300 before taxes and transfers[2]
[1]https://www.epi.org/publication/swa-wages-2019/ [2]https://www.cbo.gov/system/files/2020-10/56575-Household-Inc...
Well, yes, in the McCarthyite era rightwingers learned that you could discredit any idea by calling it "communism" regardless of content or origin, and the discussion went downhill from there.
The cold war produced a strange politics where Western governments often had to offer real economic concessions to their workers out of fear that actual communism might become popular, while at the same time being very wary of the unions as power centers, culminating in the Thatcher/Reagan era of explicitly dismantling unionised industries in order to disrupt that power. They had a certain amount of support from the non-unionized public who were fed up with the level of strike action and disruption as a result.
That was also the era of significantly higher interest and inflation rates, which is a whole other sector of politics.
Well, it got corrupted when USSR was created (and also Chinese People's Repulic), and people suffered under its boot.
I'm probably saying the obvious but fun fact: These communist and fascist countries called themselves socialist and advertised themselves as such because it was socialists that fought against them the most. Socialists were the opposite to their authoritarian ways, so they lied to the people saying they were the same as their competitor.