The Big City; Save the Flophouses (1996) | Hacker News Reader

The Big City; Save the Flophouses (1996)

nytimes.com

45 pointsChadNauseam45 comments

I imagine they’re all gone now. A great example of the free market creating a niche product that was useful and affordable to its customers and the government regulating it out of existence. I’m sure there were abuses by owners but the system worked for the majority.

If you can't afford a home up to our standards, better that you should be homeless? If you can't land a job at minimum wage, better for you to be unemployed? I wish that these were reductio ad absurdems rather than common place luxury beliefs.

It’s a lose lose. If you remove the wage floor many people with “livable” wages now would have theirs cut, it’s a problem of adversarial incentives a la nash.

Sure, but now there's a deadweight loss by allocation inefficiencies (plus the disemployment effects are strongest at the margin, so now many people are working less than they want to, because they cannot sell more of their work for less, so ie. they have part time jobs).

The "obvious" thing is to subsidize employment (by negative income tax for low-incomes to avoid discontinuities), and sectoral/collective bargaining (to avoid divide-and-conquer information asymmetry), and unemployment payments (to allow for the market to find new "healthy" equilibrium, so people don't have to take the first shitty job).

I really appreciate the level of discourse here on Hacker News. Thank you to threads like this and the authors of the comments.

I appreciate your argument, and you knowlwdge of economics adds weight to it. I'm wary of putting the burden on workers to remove information asymmetry and power imbalances in bargaining. Just because it's necessary now doesn't mean it needs to be. It could create a cycle of permanent extra work for those most in need of regulatory help.

I don't know if I had the full language of economic inefficiencies ready to flow like you do if that argument would be more effective. Or if there are other blocks, you know?

You have two underlying factors which make everything else downstream moot. Fractional reserve lending and plastic imports. FRL means a bank is depositing $5 and lending $50 then charging you interest for the $45 they never had in the first place. Now you must extract that interest from someone else, who likely finances the missing amount and compounds the problem. So that’s how we stay ‘afloat’ if you can call it that despite the problem of #2. #2. Plastic is made from oil. Whereas anyone would exchange labor for energy, energy prices money. It’s the civilizational bottleneck. It would be cheaper to empty fort knox into Boston Harbor than accept another ship of disposable plastic goods that we send to a landfill. It’s effectively taking a big wad of US wealth every day and lighting it on fire, then using the nonsense FRL to make up the difference.

Given all that, whatever labor or wage trick you do is rearranging the deck chairs on the Titanic. I know how to remediate the plastic issue, which is an engineering question. Until that’s addressed the union sq debt clock is counting the cargo ships docking to feed our money/energy/oil->landfill pipeline.

Money supply management is important for price stability. There's no debt problem in fractional reserve banking. (Exactly because debt is slowly inflated away while real assets keep their value [as their nominal value increases].)

There's a tremendous amount of economic growth. And as long as there are places where we can put in some better technology, a more efficient process or organization, then growth will continue, and the money supply will have to grow, and it's currently done via bank-issued money, because it provides some risk management. (Which is the most important factor of money creation. This is why finance and insurance developed intertwined.)

Energy is one bottleneck, sure, but there's no serious slowdown of growth of electricity generation capacity for example. And GDP growth is decoupling from carbon intensity. (As it should as we started to invest a lot of our economic surplus to do so.)

...

The important thing to remember is that there's a balance between how much money is needed now and how much is issued to be paid back later, and obviously if the growth would be almost zero the interest rate would be almost zero too.

If growth slows down (the fiscal multiplier goes down, there are no more public things to do, no more houses to insulate to get a smaller HVAC bill, no unemployed person to teach skills who would then work) then need for money also goes down, as no one will offer to pay it back with interest, so interest rate will go down, so whatever amount of money we have (as debt) we can keep rolling it over.

And of course the central bank can always exchange debt money to non-debt money. (And every time it wants to increase the interest rate it used to do something similar, it sold assets [US Treasury bonds] which removed debt money from the system. And back in the 90s there was talk about how the US central bank will adapt if the US government starts to run surpluses permanently.)

> Money supply management is important for price stability

That’s an academic answer but it’s wrong. Price stability is derived from economic equilibrium, which means energy however you want to label it in and out must be stable. It’s not a philosophical debate nash models most of it. Our landfill pipeline is the source of our debt.

The classical hypothesis is that a swamp of credit is always going to buy some magic wand where the ends justify the means and there are infinite ways for society to store debt. What you get is fraud after a phase transition which is the society we live in now. Basically all I’m pointing out is no free lunch. There’s nothing to debate. I’m mapping no free lunch to the various materializations of energy in the economy. Food fuel labor oil power whatever you want to label it you have to pay for that oil. It’s potential energy whose current payment date is hundreds of years in the future. The whole global supply chain theology is laid bare a bunch of horrible trade offs which falsely claim credit for largely unrelated gains in raw human output and hidden costs.

Of course there's no free lunch, but economic equilibrium includes future obligations too (at a discounted rate), it includes the value of current unfinished things, there's a lot of real economic value backed by demand, because otherwise there's nowhere for supply to go. (Imagine if suddenly no one wants to build houses, because let's say everyone gets a tent. Suddenly there is an oversupply of construction services, and construction materials, and architects, and inspectors, and labor in general. Which will immediately triggers a drop in wages.)

You have a hypothesis about price stability, and it's easy to see that while energy prices do impact everything so do interest rates (and in general monetary policy), therefore you need a model that's more complex than what you propose.

Prices inherently aggregate almost all concerns, so even logically it cannot be simply determined by one thing (like energy). Even if energy is cheap if we misallocate it then food, housing, or transportation gets more expensive.

You seem to be mixing up monetarism with sustainability and diminishing returns.

Less than 1% of workers make minimum wage. There are effectively zero opportunities to increase employment by offering wages below the minimum. If someone cant land a job at minimum wage it is because the employers think they are a net negative.

> Less than 1% of workers make minimum wage.

So minimum wage helps less than 1% of workers, at the expense of people who don't have skills valued at the minimum wage? Why are you confident that's a net positive trade off?

> If someone cant land a job at minimum wage it is because the employers think they are a net negative.

That's why I think that people should be able to work for less, for employers who think they are a net positive at a lower wage. It's better than the true minimum wage of zero. It's not like the value of labor is discontinuous, such that it is worth zero if is worth less than a minimum.

> That's why I think that people should be able to work for less, for employers who think they are a net positive at a lower wage.

No. If someone cant land a job at minimum wage it is because employers think they would be a net negative at a $0 wage. There are a couple counter examples like walmart no longer being open overnight, but even then thats more because of theft than paying the employees. It is not hard to find a minimum wage job in the vast majority of the country. If you cant its because employers think you will do an exceptionally bad job. Every single adult has skills valued at minimum wage in the US, the question is just if they have a drug problem or mental illness or something like that. Those people wouldnt be helpful at $0 wage either

> If someone cant land a job at minimum wage it is because employers think they would be a net negative at a $0 wage.

Strong disagree, no foundation. There are lots of profits to be made at $10 per hour that can't be made at $15.

A minimum wage raises the bottom wrung of the economic ladder and declares victory for the workers.

> There is lots of profit to be made at $10 per worker hour that can't be made at $15.

Sure, if you have decent workers. But decent workers can make $15/hr so you cant get them. If youre stuck with the people who cant get a minimum wage job you dont have anyone you can trust and you cant build a business like that unless youre amazon tracking everyone's metrics with a billion dollar warehouse system. (amazon also pays well over minimum wage)

Why is someone who brings in $15.10 of value to a company a decent worker but someone who brings in $14.90 of value someone that can be written off completely? Obviously, we can quibble over the exact numbers and how one assesses value. But that’s kind of the point, we should let people figure that out for themselves what they’re worth and what they are willing to pay other people for.

I understand that there are concerns with race to the bottom dynamics and ensuring a minimum standard of living, but there are better tools for addressing that than the minimum wage (a more generous EITC or negative income tax for example).

There are many vacant minimum wage jobs. I think the issue here is just that you overestimate the number of people who cant get a job because minimum wage exists. If you are a decent worker you are able to get a minimum wage job in this country, so if you cant you are by definition not a decent worker. Looking at the micro scale (employee only worth $14.90 to a single company) is largely irrelevant because there are plenty of other companies that find decent employees to be worth $15/hr. The level of incompetence you need to have to not be worth a minimum wage job to any company is so high that you are actively hindering business from being done.

If you’re worth $14.90 to the company they’ll likely hire you, even if just to free up someone who is worth $15.50. The people who wouldn’t be hired at $0 are what you need to solve to fix homelessness.

Conflating the two obscures both.

> Less than 1% of workers make minimum wage.

federal minimum wage, which is lower than many, many states, so stating this is a little misleading. It's also at or around 1% (for federal), not less - per this 2023 source: https://www.bls.gov/opub/reports/minimum-wage/2023/

In states like california, this number is much higher: https://lao.ca.gov/Publications/Report/4878/3

I'm not sure what standards you're talking about, but if you can't afford a home where you live you should move to a cheaper area. If the decision is being homeless vs moving, you should move.

Cheaper options almost always mean less jobs. I know lots of cheap places to live - in the middle of nowhere. Small towns that can't even support a gas station: the locals drive half an hour to get groceries. (they are close to their job on the farm, or at least some job that needs to be out there because the farm is there)

These places were great places for the poor. They are close to lots of people and that implies some of those people will be willing to hire you for a something cheap. It isn't a great life, but if you have very limited abilities you likely prefer to make your own choices in life vs whatever the shelters force on you. (some shelters/institutions have been very abusive in the past)

How about "if you are unwilling pay someone enough to cover most of their core expenses, you aren't allowed to hire them at all"? I like that phrasing better

The market for labour is a monopsony (the limited number of buyers relative to sellers make it a buyer's market). Just as suppressing price in a monopolistic market is unlikely to drive down supply and can actually increase overall sales, recent minimum wage increases have been found to have a net positive effect on employment.

> We present the first causal analysis of recent large minimum wage increases, focusing on 47 large U.S. counties that reached $15 or more by 2022q1. [...] We then find significant and larger positive employment effects, as the monopsony model predicts. We go on to document the presence of monopsony in the restau- rant industry. [...] The fast food industry’s monopsony power allowed it to accommodate large minimum wage increases and raise employment.

Source: https://irle.berkeley.edu/wp-content/uploads/2023/09/Minimum...

Yeah, the main flophouse discussed in the article (White House) closed in 2014 and is now a "boutique" hotel serving a very different set of clients

Hate to be “that guy”, but this isn’t regulation or government. Rather it’s the free market with actors willing to do anything to make gentrification profits. Which are, unfortunately for our society, quite sizable.

You can have flophouses. Officially or under the table. But you can’t have them in areas with the vultures circling so to speak.

Not saying gentrification is good or bad. Just saying, if gentrification profits are there to be had, it’s a bit foolish to expect people to not do whatever it takes to secure those profits.

Affordable is a stretch. When they went out of business in 2014, they were charging $30/night - $900/mo. You could definitely get actual rooms in NY or even a studio apartment for that much. Yes, it will be way out in the Bronx or Queens, in not a great neighborhood, but it is certainly better than a 4x6' room with a plank in it and just a knee wall between you and a number of strangers. Obviously for a lot of people coming up with $900 at once for a deposit or whatever could be the hard part, but these rooms were more of the equivalent of pay day loans than an actual value.

Perhaps they entered a price-increase death spiral as they were saddled with free-riders as the operator in TFA says.

Even the article from 1996 is $10/day | $300/mo which would easily afford you a room in a cheaper neighborhood back then (I'll have to trust the HUD reports from 1996 since I was a child at that point with no direct experience)

A few years after this, a documentary was made about some of the men still living at the Sunshine (mentioned in the first paragraph): https://www.youtube.com/watch?v=G0m2FaC8GUs

Are these types of accommodations popular among tech people working in startups? I imagine if you are spending multiple days in a row at the office (or offices across multiple cities) it doesn't make sense to pay rent on a location you never use. I remember reading an article of a Google employee that lived in a box truck in the parking lot.

I don't think they are popular with anyone.

There are a few people who because they only need a bed use them despite having other options. I've read reports of a few people who sleep under their desk - if the company won't allow this (it is often technically illegal) such a place might be your best option.

There are a few people who because of "problems in life" need a place that is cheap. If your wife gives you a restraining order when you get home as your first notice the marriage is dead you need a place for a few nights while figuring that mess out. (sexism mostly because there are a lot more women's shelters - but otherwise this can apply to either)

There might be some people using this as a really cheap hostel.

But the article makes it clear - most of the people using the place were not what you would call "normal people". They are addicted to something and are there because they need a place to sleep so they can spend more money on their addiction. There is also mental illness - not so bad that they need to be institutionalized, but not really fully able to support themselves.

I get the impression that times have changed - 120 years ago it was much more socially acceptable to live in such a place. You get a bed, and otherwise you are using the city for everything (work, entertainment...)

Much of the “good” usage is taken up by budget hotels/motels. We don’t have a group of “missed the train” businessmen as Japan does to support capsule hotels, and the day laborers have cheaper options.

No, these types of accommodations don't really exist any more. That's kind of the point of the article -- they were becoming extinct 30 years ago.

I found this: https://www.napyork.com/

Your daily reminder that urbanism leads only to more misery. Dense cities will never have cheaper housing. And it will only get worse and worse as the density continues to grow.

And we know that the misery won out when people pose it like this:

> If you can't afford a home up to our standards, better that you should be homeless?

The third option is to LIVE IN CHEAPER PLACES. The US has 1.1 housing units per household. We literally have more homes than families! And this doesn't change much if we assume that illegal immigrants are undercounted.

The whole housing policy must focus on making MORE locations feasible, not trying to strangle the democracy with bike lanes.

I live in a big city with decent transit. I'm in my late 20s. Neither I nor any of my (white-collar professional) peers own cars. Do you have any idea how much money we save?

And yeah, bike lanes are part of it too. They make it easy to get around quickly & cheaply. Our bike lanes are packed with bicycle couriers and the impact on traffic is practically zero. Bike lanes are popular because they work.

High rent is caused by low supply of high-density housing. Apartment blocks are cheap. It's bad zoning, NIMBYs, and a slow pace of construction due to disproportionate focus on luxury units that cause housing supply issues.

> The third option is to LIVE IN CHEAPER PLACES. The US has 1.1 housing units per household.

Yeah, you know why people don't live in those places? They're in exurbs of Arizona, a thousand miles from anything. During the housing bubble, we built a bunch of homes in unlivable areas and now we're dealing with the fact that they're functionally useless.

> I live in a big city with decent transit. I'm in my late 20s. Neither I nor any of my (white-collar professional) peers own cars. Do you have any idea how much money we save?

None. You're losing money by not living in a cheaper place and overpaying for transit. Transit is FREAKISHLY expensive in time and money, it's not even funny how inefficient it is.

> Our bike lanes are packed with bicycle couriers and the impact on traffic is practically zero.

So you're in Manhattan? Figures

> High rent is caused by low supply of high-density housing.

Wrong. Hint: Manhattan is one of the most expensive places in the US. And recently elected a socialist who was promising state-run grocery stores.

> Yeah, you know why people don't live in those places?

Because toxic urbanism strangled the democracy with bike lanes. There are no jobs because it's cheaper for companies to build offices in Downtowns of large cities, offloading the externalities.

This in turn makes housing near Downtowns more expensive because workers have to live there in order to get a job. This further increases the talent pool nearby, incentivizing more companies to open offices there.

Rinse, wash, repeat, and you get a misery-density housing spiral.

> None. You're losing money by not living in a cheaper place and overpaying for transit.

Oo, totally wrong! Fun guess though. The average monthly cost of car ownership is $1,300. The cost of a one-month transit pass is $150. I'm not gonna save $1,150 on rent by moving to a shitty suburb.

> So you're in Manhattan?

Nope.

> Wrong. Hint: Manhattan is one of the most expensive places in the US.

Yeah, because there's a shortage of apartments—that's what I said. Manhattan Island (being a rather small island) has physically run out of room for buildings, but that's not true of other areas.

> And recently elected a socialist who was promising state-run grocery stores.

Ok? So what? Maybe they'll expose private-sector price fixing & maybe they'll just be grocery stores.

> Because toxic urbanism strangled the democracy with bike lanes.

I'm honestly baffled. What makes you think bike lanes are undemocratic? Bikes are super cheap and take up very little space. Bike lanes really cut down on traffic.

> This in turn makes housing near Downtowns more expensive because workers have to live there in order to get a job.

Have you heard of industrial parks? It's pretty common for offices in big cities to be outside the city centre—far more common on the whole than downtown offices are.

The big advantage of downtown offices is that a city's downtown is the nexus of its public transit: If you work downtown, you can easily live a ways outside the city on cheaper land and then come in by train. So no, the point of a downtown is that you don't need to live there to work there.

Do you actually live in a city? I feel like you don't have a very strong understanding of how they're structured.

> Oo, totally wrong! Fun guess though. The average monthly cost of car ownership is $1,300. The cost of a one-month transit pass is $150. I'm not gonna save $1,150 on rent by moving to a shitty suburb.

The TRUE cost of one month's pass is about $3000 (with capital cost). The pure "just-keep-the-lights-on" cost is around $750. It's that you're paying it from your taxes and rent.

> Yeah, because there's a shortage of apartments—that's what I said. Manhattan Island (being a rather small island) has physically run out of room for buildings, but that's not true of other areas.

Yes, and it is metastasizing into other neighborhoods.

> Ok? So what? Maybe they'll expose private-sector price fixing & maybe they'll just be grocery stores.

Think about it again. If density works so well, why is there a significant number of people too poor to buy groceries?

> Have you heard of industrial parks? It's pretty common for offices in big cities to be outside the city centre—far more common on the whole than downtown offices are.

Not anymore.

> The TRUE cost of one month's pass is about $3000 (with capital cost).

Lol as if you can't just look up the transit commission's budget. (Annual budget) ÷ (average daily ridership × 12 months per year) = $180 per month per rider at most (since the pool of riders is larger than the daily average).

> Yes, and it is metastasizing into other neighborhoods.

Good. More apartments means cheaper rent.

> If density works so well, why is there a significant number of people too poor to buy groceries?

The cost of living is high because rent is expensive, obviously. I never said it was cheap to live in NYC. Focus on the actual subject of our discussion, please. Do you think rent in Manhattan would be cheaper if there were fewer apartments?

> Not anymore.

You're just saying stuff now. Only 40% of jobs are located downtown in my city, and compared to the other cities I saw when I was poking around for this data, that's high.

> Lol as if you can't just look up the transit commission's budget. (Annual budget) ÷ (average daily ridership × 12 months per year) = $180 per month per rider at most (since the pool of riders is larger than the daily average).

The farebox recovery rate for NYC is 20%, which is higher than usual, actually. So you can just multiply the price by 5 for a rough estimate.

Or you can do it your way, the 2023 operating budget for MTA was $19.379B and the annual ridership was 1.15B (2023). It works out to about the same: ~$17 per trip or ~$500 per month. Figures are from: https://en.wikipedia.org/wiki/Metropolitan_Transportation_Au...

Also, WTF are your car numbers? The average total expense for _new_ cars in the US is about $1000 per month ( https://www.way.com/blog/the-real-cost-of-car-ownership-in-t... ), and for used cars it's about $600.

But wait, there's more! This is not an honest comparison. Not at all. It completely misses the capital spending on transit. Just one mile of tunnel in Manhattan now costs more than 1500 miles of 6-lane freeway! Unfortunately, there is no easy way to estimate the total capital expense wasted on public transit.

So the _real_ numbers for transit and cars are not even close. And not in the favor of transit.

> Good. More apartments means cheaper rent.

Nope. More apartments mean more _expensive_ rent. This is an ironclad law of real real estate.

The ONLY way to reduce the housing costs is to decrease the city population.

> The cost of living is high because rent is expensive, obviously.

Yup. And the rent is high because...?

> You're just saying stuff now. Only 40% of jobs are located downtown in my city, and compared to the other cities I saw when I was poking around for this data, that's high.

The problem is the continuing enshittification. Look at the dynamics, check the average pay in areas that don't have direct access to the city cores and the average pay in Downtowns. The gap is exploding.

> Nope. More apartments mean more _expensive_ rent. This is an ironclad law of real real estate.

I don't know how to explain to you that an increase in supply results in the price of a good decreasing.

> Yup. And the rent is high because...?

High demand, low supply. Obviously.

> check the average pay in areas that don't have direct access to the city cores and the average pay in Downtowns

Yeah, because downtown office space costs more & goes disproportionately to higher-paying finance jobs. That has nothing to do with density—that's just finance bros wanting to work in the fanciest skyscrapers.

> The average total expense for _new_ cars in the US is about $1000 per month

Your source refers to cars generally: "As of 2025, the average annual cost of owning a car in the U.S. has reached approximately $12,297, translating to about $1,025 per month." Even with your $500/month figure, transit is still much cheaper. And that $500 isn't just distributed among riders—drivers pay some of it too, as they should, since every person on the subway is person not driving on the road, reducing the need for road infrastructure maintenance & expansion.

> Just one mile of tunnel in Manhattan now costs more than 1500 miles of 6-lane freeway!

Again, Manhattan is unique. I don't know why you keep referring back to it as if its problems are easily generalizable. They put their trash on the street in bags because they don't have room for dumpsters. Also, yes, that's why LRTs are popular—no tunnel required.

> I don't know how to explain to you that an increase in supply results in the price of a good decreasing.

You assume that the _demand_ is constant. It's not. And the supply increases can't feasibly outpace the demand increases.

> Yeah, because downtown office space costs more & goes disproportionately to higher-paying finance jobs. That has nothing to do with density—that's just finance bros wanting to work in the fanciest skyscrapers.

And why does this happen in Seattle, SF, Chicago?

> Your source refers to cars generally

New cars. An average car is now 13 years old.

> Even with your $500/month figure, transit is still much cheaper.

I literally provided you the source that proves that just the OPERATIONS budget is the same order of magnitude as the _total_ cost of car ownership, including capital expenses, insurance, and financing. This ensures that the total cost of transit will dwarf the cost of car ownership.

> Again, Manhattan is unique.

No, it's not. Seattle's failrail will cost about the same amount per track mile. It's so far projected to cost $120B, or over $120k for each and every houseshold.

> Dense cities will never have cheaper housing.

Yeah there’s a correlation but I doubt it’s causation. There are underlying aspects like zoning (and other regulations as mentioned in article) that can make an impact on housing prices. Other reasons are because employment and career prospects are higher so that attracts more people, which creates more demand.

> Yeah there’s a correlation but I doubt it’s causation.

There is. Density-misery death spiral.

You can usually check for correlation vs. causation by looking for counterexamples. Do you know a city that increased density and that resulted in cheaper housing?

I don't. And I checked the stats for all of the US, Western Europe, and Japan.

So far, it looks like the only way to decrease the cost is to reduce the city population.

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