Hacker News Reader

Comment by akanet | Hacker News Reader

The notion that increasing housing supply is similar to "trickle down" economics is common in discourses of housing policy in America, but it is misguided. Reagan's notion that increasing the margins of the wealthy would induce them to pass profits to workers was mistaken in that its proposed mechanism was entirely altruism.

Price reductions in housing from an increase in supply do not occur because the rich voluntarily leave some housing for the rest of society, but simply that they will less totally dominate the competition for this resource by virtue of there being more of it.

View on HN

My point is that increase in supply alone doesn't automatically lead to less domination.

For instance increasing the supply of high quality affordable housing by 2% in a place where there is high demand might not mean 2% more people will get the houses at a good price. It can mean instead that investors buy 2% more houses in that area to rent it at a price aligned with the market value.

Wouldn't it be ok then if the increase was 5 or 10 or 50% of high quality housing ? Sure...but have we ever seen this level of increase result in actual well designed and livable areas ? I've personally only seen mild ghettos and weird super structures, and not all by skimping on the budget, but also because it's just damn hard to create a flourishing living environment from nothing.

I mean that's a weird way to describe Tokyo but it does work. Your last point still stands though & I'm not sure where the tipping point is.

Does Tokyo have much affordable housing ?

It's a very special situation on its own, but buying a house will usually get you into the 30+ years mortgage plans, and old buildings are earthquake hazards so I wouldn't call them high quality. Rents haven't much fallen even as inflation grew, and cheap places like Leopalaces are a hell to live in. All in all it looks to me to be a hard to live town if you're not in a decently good paying job.

> Reagan's notion that increasing the margins of the wealthy would induce them to pass profits to workers was mistaken in that its proposed mechanism was entirely altruism.

No it wasn't.

Reagan push to lower taxes so rich people money would be used in investment instead of sitting idle. The notion that money in investment has a higher velocity than money sitting is basic economics. The main issue with Reagan is that his prediction that the increased velocity of money would produce enough economic activity to make up for the reduction in taxes - was totally incorrect.

It's really disappointing how many commenters criticize Reagan's economic policies without understanding them at all.

Reply on news.ycombinator.com