Hacker News Reader

Comment by ralusek | Hacker News Reader

I think access to debt unlocks the true value of a thing. You tell me what this is worth without constraining it to what you have in your pocket.

However, what things like housing and medicine have shown us are that wholly free markets aren't very good with things that people place nearly infinite value on. My life saving surgery will cost me 10 million dollars? Okay, where do I sign. That number might as well be a billion dollars as long as you're giving it to me. Housing is not too dissimilar. A thirty year mortgage is already in comical territory, it's already functionally synonymous with "a lifetime."

View on HN

> housing and medicine have shown us are that wholly free markets

Both of these examples are some of the farthest things from free markets. Try to build an apartment complex and run a medical service on the ground floor. Them being so far from free markets is the reason they're so expensive.

I think you have a point about regulatory capture. I would say, however, that in a market with massively unequal wealth distribution, those that control the capital are (1) looking for the best return on investment and (2) know that land value will continue to appreciate as long as population growth is trending up. I think you would need to both fix the massive wealth inequality _and_ the massively corrupt and inefficient zoning laws in order to address the whole problem. If you only fix regulation, the rich can still just buy up all the land and become modern day feudal lords and rent-seekers.

Excessive regulation causes (1). With developers able to match supply to demand, there isn't any return from a deteriorating asset.

(2) Land value can appreciate while housing prices dramatically fall when the land is able to be better utilized according to (housing) demand.

This reasoning that regulation is the cause for the price is way too simplified and isn’t a serious argument. Also even if things are cheaper to purchase without regulation doesn’t mean it’s cheaper for society, hence the entire concept of externalities. Please stop.

Regulation prevents supply from meeting demand. Developers can't use plots to develop huge apartment blocks, asymptotically decreasing land cost to a fraction. This causes the supply/demand imbalance to increase prices for decades, leading to people to treat it as a financial asset, accruing wealth. This leads to knock-on effects from interest rates because it's a comparable financial asset. I offer you SF and Houston as cities with regulations extremely correlated to housing prices. I welcome your contradictions to that correlation across the spectrum.

What isn't a serious argument is you offering no rebuttal except "Please stop." Your quip about externalities is tangential; externalities should be accounted for a properly functioning market. Nowhere did I make a contrary claim.

I appreciate you clarifying a bit on which types of regulations which does offer some nuance. The state of CA is having to step in and stop NIMBY laws in places to allow more housing. Houston also has some terrible regulations around parking minimums and is an egregious example of car culture gone wrong. Having no regulation would eliminate zoning and cause an untold amount of problems. It seems we can both agree it’s more about having the right regulations, which is nuanced and difficult as opposed to just thinking regulations are the problems and we need a fully free market.

Reply on news.ycombinator.com