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Comment by ummwhat | Hacker News Reader

My pet theory is cities are malthusian. Contrary to popular belief, Malthus didn't predict runaway population growth. What he actually predicted (and was right for most of human history), is that any gains in productivity would be eaten up by population growth until the average wealth per person diluted down to it's previous level. So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels. This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.

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There is also the Georgian explanation that rent seeking landlords will always increase rent to match any gains in production. Assuming that a landlord will always charge the maximum they can that market will sustain, any increase in production will mean an increase in what the market can pay for housing, and with time, what the landlord can extract from tenants. It neatly explains how cost of living correlates to job opportunities, and how all the productivity gains from technology end up not increasing the general population wealth.

Isn’t that where remote work kicks in but we’re too stupid to realize? If the tech people don’t need to concentrate in one area, good luck jacking up the prices to siphon off that wealth.

Tech needs to create a box. Literally, a hurricane proof box that that plugs into plumbing. Drop it anywhere in the world and fucking live in it. It’s the same box for everyone, like the iPhone, iPhones are not more expensive in Bay Area or NY. All this nonsense over the fact that we all simply need to live in a box somewhere.

Tech people, even those working from home full time, have to contend with living somewhere nice with good schools and perhaps a place for their partner to work (if they can’t WFH also). Given that those places tend to correlate with expensive real estate, it doesn’t seem like WFH is going to do this work for us.

Techies just don’t want to live in just boxes.

I know people living in those famously cheap Midwest areas people online always propose as the obvious solution to avoid high rents. Rents even in nowhere areas have blown up recently.

And remote work really won’t change rents much for normal people. People want to live where their family and friends are, where some good restaurants are, where some good weekend activities are, where some nice nature is an hour or two away, where a good hospital isn’t too far, and where grocery stores stock good food. Any one of these and landlords decide it’s okay to raise prices 30% a year.

People theoretically have a choice, but every landlord everywhere is doing this. People leave one town with rapidly increasing rents and go to the next, and those landlords do the same while the people in the already expensive town never lower prices. There is no escape or alternative.

> Rents even in nowhere areas have blown up recently.

Home owners are snapping up rentals to prepare to sell their property at market peak.

In a rising rates environment, house sale prices tend to fall (or rise much more slowly at best).

Really? Can you share more about this mechanism?

I actually noticed someone opposite (are maybe it's the same mechanism) in the area I live in:

House sale prices are rising like everywhere else, but rents stay mostly flat.

I'd love to learn more about it.

Rent stayed flat because of the moratorium, not because of the demand. You will start seeing the rent increase as the leases are coming up for renewal, many places are already up for 20% rent increase.

House prices are roughly dependent on income which means dependent on monthly payments.

Rents are even MORE dependent on income and it’s easier for renters to move, so rents often end up below the mortgage cost for a similar purchase.

Take a fixed monthly payment, with lower rates the principal can go up. Thus house prices can go up. On other hand renters have the same pretty much fixed monthly payment.

Rent's are not tied directly to value of property, but need to service the debt linked to property. Or equivalent one.

sokoloff was talking about rising rates, not rising rents. And I agree completely, when interest rates rise money is more expensive, thus credit/mortgage has more interest, thus people can’t afford that much of a property price for the same monthly installment, thus property prices are going down.

Let's see if they can pick it.

Personally, I think one of the greatest mistakes of capitalism is to make property an investment asset.

Nobody made it an investment asset, it just happened as certain pieces of land grew more valuable for practical reasons. This is unavoidable unless you make it so you can't sell property, which would also mean you can't buy property - the government would need to manage peoples' needs based on family size and do the maintenance of maintaining property to the same level as landlords.

Ending up in a monopoly.

This is not true. We did make it an investment asset around the advent of agriculture. And there is a way to avoid it without freezing the market, which is called the Land Value Tax. As far as I know, no serious economist (from any ideological perspective) seems to actually dispute the functional fitness of this tax.

https://en.wikipedia.org/wiki/Land_value_tax?wprov=sfti1

Bad money (like inflationary fiat currency) creates the need to use other assets to preserve wealth, which creates bubbles in those assets.

Bitcoin advocates say good money (Bitcoin) will return the value of all other assets to their utility value because the best passive store of value will be the money itself (which due to a fixed supply would be deflationary).

In that world, people would rather sell assets they don't use to accumulate bitcoin (or money x) because only useful activities will produce more yield than the money itself. This frees up housing, land, precious metals,... and all other resources that are artificially scarce due to hoarding for wealth preservation.

I've heard people estimate, under a Bitcoin standard, the actual utility value of a house would be approximately 5-10% of current prices.

This is hilarious.

Feel free to share if you have any criticism of this view.

It might not work in practice, but it is certainly a big factor behind using housing as an investment mechanism.

I think we really need to limit how many one can own. Start taxing very very very heavily for anything beyond a second home for individuals and and anything beyond another number based on statistics for a company. Also add attitional tax for every two months a property is owned but no one is living in it or using it for business. This should cut down on hording and incentivize companies and people to get rid of any property that is just lying there waiting for prices to go up.

Just institute high Land Value Tax and you kill these birds and their tax evasion schemes, with one very simple stone.

Land tax is horrid. A person should be able to live off the land if they choose, self sufficiently. This is impossible when the government demands yearly cash payment just for having your own place to farm.

A person who removes land from the common good should have to do something productive with it, give it back to the common good, or simply pay a fee to the commons for having kept it from productive use. A person absolutely should not be able to keep several blocks of downtown Manhattan off the market so they can run a private farm for themselves.

In practical terms, anywhere a person would want to do such a thing, the land would be cheap enough that LVT wouldn't really matter anyway.

They do pay a fee to the commons for removing it; it's called sales tax. They are also doing something productive with it, by living on it and using it.

If we are to keep trespassing laws, there must be ways to own land permanently and without further cost. There must be a way for man to survive without participating in government enforced labour. All land is owned by some entity; he can't live in the woods owned by the government or someone else; even after buying land and being entirely self sufficient, he cannot simply live, but must pay the government in their currency which he can only get through participating in the labor economy. There is literally no legal way to live freely by your own means. This is a form of slavery that the ancients would find absolutely intolerable.

Increase the price of land or the sales tax, limit the ownership a single person can have, levy inheritance tax, but an indefinite land tax is inhumane.

Huh... who does enforce trespassing laws? I'm 99% sure that's the state, and for good reason. Are you supposing that the unlanded should pay for the protection of the landed's assets, but that the landed doesn't need to?

> A person who removes air from the common good should have to do something productive with it, give it back to the common good, or simply pay a fee to the commons for having kept it from productive use. A person absolutely should not be able to breathe several kilos of downtown Manhattan oxygen off the market so they can continue their private lives.

Is this meant to be a counter argument? Because yes, if air in a given area were a strictly finite resource that everyone needs for survival (like land), one person should not be able to just indefinitely own enough of it for millions of people to live on.

That’s only possible if there’s is never enough housing for everyone. ITV does sort of work out because western building cannot be built for lower income folks as they cost too much. So low cost housing is essentialy all old end of life building

if you want to live in my house, and within the safe and comfortable legal framework of tenancy in a property lease contact, then you have to pay competitive market rates to live there.

"Pay your fair share" to the "rent seekers" if it is a place to live that you are seeking...

This falls apart when the rent seeker refuses to sell, or prices the sale out of the reach of first time buyers.

I can't square a landlord running empty properties when the economy colludes to keep people from buying properties.

Homes should not be straight up financial instruments.

> This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.

The same was true in pre-industrial times too. The cities have always been population sinks, and failed to reproduce naturally. They have always been supplied by the constant stream of people from countryside.

I forget exactly when this happened or which data set it's in, but at some point sanitation and medicine got good enough that cities aren't a population sink per se. They can have around equilibrium birth rates.

> So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels.

That's still okay, though, as during the process (and even at the end point in your scenario) much better lives and opportunity have been provided to much greater numbers of people.

If people like the QoL benefits of density, we should do what we can to provide it, even if it causes the same sort of CoL squeezing down the road with whatever optimizations we can put in place. It will still benefit more people, and maybe we can come up with yet more optimizations.

Malthus is the butt-joke of economics, so much it became a rite of passage to mock him. Marx's Capital and Henry George's Poverty and Progress dedicate some time to his humiliation.

> Malthus is the butt-joke of economics

Uh, he's not?

> Marx's Capital

Oh, that kind of "economics". Never mind then.

Malthus's arithmetic vs geometric model of population is grossly wrong, while also condemns a large swath of humanity to extreme poverty. What a clown.

Paraphrasing Henry George: "Malthus model that food grows arithmetically and population grows geometrically is as arbitrary as saying a dog grows arithmetically and his tail grows geometrically"

> Oh, that kind of "economics". Never mind then.

What is that "kind of economics"?

Malthusian model is the basics of modern understanding of historical populations. See, for example, Gregory Clark’s “Farewell to Alms”. The population very much reproduces itself geometrically (or at least used to for most of history), and the growth in food supply was much slower. In effect, the historical populations quickly hit the equilibria, and oscillated around Malthusian limit. Compare, for example, rapid population growth of colonial America, with very lackluster growth of population of England during the same time (and even then, the growth in England was partially fueled by food imports from America).

> What is that "kind of economics"?

Marx’s “Capital” is the bullshit kind of economics. If anything, it is the butt joke of economists today.

> Marx’s “Capital” is the bullshit kind of economics. If anything, it is the butt joke of economists today.

Compared to what? Not other mid-19th century economic works... Marx published Capital prior to the so-called "Marginal Revolution" that presaged the emergence of Neoclassical economics - i.e. the first era of economic thought generally compatible with modern theory, so it's basically meaningless to claim that his views are derided by economists today.

Compared to "The Wealth of Nations", for example, which had much better economic analysis, despite being published a greater part of a century earlier. Ideas of Smith, Ricardo, or Bastiat predate Marx, and are very favorably cited today by modern economists. Marx's, not really.

It sounds like you mean to say that Smith, Ricardo, and Bastiat are more popular in casual online discussions of economics or economic history, because they aren't any more relevant to contemporary academic economics than Marx is. In fact, as products of the same classical era, they shared some of the same problematic views, including adhering to the labor theory of value, that would discredit Marx's economics.

Of course, any of those names would necessarily be more agreeable to modern economists by nature of not being inherently anti-capitalist, but that's no credit to their scholarship. If anything, extending the our gaze beyond the realm of the contemporary field of economics would reveal that Marx far outpaces these other names in citation value.

> It sounds like you mean to say that Smith, Ricardo, and Bastiat are more popular in casual online discussions of economics or economic history, because they aren't any more relevant to contemporary academic economics than Marx is.

No, I meant exactly what I said. Ricardian theory of comparative advantage, for example, remains being part of foundation of modern understanding of international trade. Every economics textbook teaches it. Same with Bastiat’s broken window fallacy. If their writings don’t get explicit citations in published papers, it’s for the same reason Pythagoras or Euclid don’t get citations in modern mathematics either: their results are so foundational that everyone knows them.

> If anything, extending the our gaze beyond the realm of the contemporary field of economics would reveal that Marx far outpaces these other names in citation value.

Of course, people keep citing Marx. Not economists though, or if they do, not favorably.

> No, I meant exactly what I said.

Ah, well then I will continue to be puzzled by your response - i.e. why you think any of the classical "economists" you've named are so much better qualified than Marx to critique Malthus (going back to the original premise of this discussion).

Adam Smith is, of course, famous for being the first "economist," but his legacy isn't the result of him being particularly accurate (nor are his actual economic views very clear or citation-worthy). What did Bastiat even produce that could be cited by economists today? Of course the broken window fallacy is popular in Econ. 101 textbooks, as well as with the Austrians and in the free-market blogosphere, but it's not citable research. Ricardo was a seminal figure in the development of modern economic thought, but he was also a product of his era who was wildly wrong about lots of things. Moreover, Marx was familiar with his work, both adopting and critiquing parts of it throughout his career, so it seems a bit peculiar to lionize Ricardo while portraying Marx as incapable of offering a critique of Malthus.

Let me clarify it then. The poster I responded to claimed that Malthus is a butt joke of economics, which is patently false, and to support that, he cited Marx, whose economic theory is in fact a butt joke of economics. Is that clear now?

I can see what you've written, but I'm having trouble with the level of certainty you ascribe to what is surely a highly-subjective claim. It's not at all clear that Malthus is not (or hasn't been), at least partially, a "butt joke of economics", nor is it clear that Marxian economics' heterodox status today has any bearing on the quality of Marx's critique of Malthus.

Both Marx and Malthus have present-day adherents, though current positions have evolved well beyond those of their progenitors, but they've both also been widely panned. Obviously, the fact that neither mass global starvation nor global communism have overwhelmed humanity makes it easy to critique the pair, at least on a superficial level. You might suggest taking a more nuanced examination of their legacies, but I think that would reveal this entire discussion's lack of intelligibility. Perhaps you'd like to take a nuanced view of Malthus, but view Marx superficially?

Economists do not cite Malthus either.

You’re wrong. I already mentioned Gregory Clark, who cites Malthus often. You can use Google Scholar for more.

You can't possibly believe the model that population grows until food is depleted at the margin, it's obviously wrong.

What stopped the world population from hitting 8 billion in year 1 AD already then? Why did population of British Isles was under 1 million at the time, instead of over 70 million today? You can’t explain this without Malthusian arguments.

In a Malthusian model there would be a larger share of poor and starving as food becomes more abundant, because remember necessarily population outgrows food production.

The Malthusian model predicts forever growing extreme poverty as a share of population.

You've demonstrated that you've fallen for the popular misconception of Malthusian theory. It's not that food is "depleted at the margin" as in people starve until death rates go up. What actually happens at the margin is, lacking in sufficient resources to comfortably do so, people forego having kids. Perhaps, in olden times, lacking the prosperity to get the fathers permission in marriage.

It is not true, as both societies with no food have kids and societes with plenty of food don't have kids.

They have only a tenuous correlation at best.

This is 60s boomer philosophy (it's called "cities as growth engines".) The people running California cities now also believe this, which is why around 1970 they essentially made it illegal to ever build or change anything. This was supposed to stop people from moving to California, but since they won't even build enough housing to let their own children live there it's just brought us where we are now.

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