Comment by te_chris | Hacker News Reader

Comment by te_chris | Hacker News Reader

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This rings true and people always seem to forget that it's much easier to innovate when the cost of living is lower.

I'm currently living in Auckland, New Zealand, which by NZ (and world standards I think, though can't cite anything off hand) is quite expensive, but myself and my girlfriend have been contemplating moving to Sydney, Australia, a city which is one of most expensive in the world but where we would both be paid more. The cost of living there makes it a complete non-starter if you're not just wanting to work full time - and then trying to eek out a pleasurable life at the weekends.

I currently contract 3 days a week to support myself while working on my startup and trying to fit in some time for music as well in the other 4 days (and try to get relaxation each week too). The money I make wouldn't last very long in Sydney or any world city for that matter, I guess that's where the VC is supposed to kick in, but if it doesn't then you're in trouble.

If it's one thing I've worked out recently, full time, 40 hour week style employment is the enemy of me being able to pursue any sort of interesting side project, I'm sure it's similar for others. It's a realisation that, now I've had it, I can't imagine ever working under those conditions on anything but my own projects. High costs of living such as those in SF and Sydney (and even Auckland) can necessitate such income just to live with a modicum of dignity however, and then trap you with dining out at weekends and such, resulting in not actually achieving any progress on the projects that matter most to you. Worst of all this is the debilitating feeling that socialising and being a functional human being is preventing you from achieving your goal.

This rings true and people always seem to forget that it's much easier to innovate when the cost of living is lower.

The problem, or the balance that must be struck, is that it's hard to innovate without being surrounded by other innovative people. You need a city with a critical mass of innovative, talented people and a low cost-of-living. California in the 1970s had that. I don't know what the 2013 analogue is, or if it's even in the US. The Midwest would qualify, but it's hard to raise any kind of money (VC, bank loans) out there.

When real estate is expensive, money dominates peoples' lives-- even seemingly wealthy people who still don't make enough to raise a family. When it's cheap, people focus on other things and money is just one thing in it.

I'm ideologically against expensive real estate. I think that the government should buy, build and own about 60% of housing and set the prevailing rent per square foot. Rich people will still have the ability to buy property and to rent or own nicer private housing, but the basic prevailing rate will be set. This actually doesn't bring along the negatives of price ceilings (shortage) because the government can also build more housing and transportation infrastructure to increase available supply. I think we should hold the government responsible for that. No one should have to pay more than 1/4 of post-tax income to live within 20 minutes of work.

The reason New York is expensive is that people like me-- ambitious, hard-working, extremely capable-- are able to find jobs here. People like me make the fucking city great. For each person like me, there are 9999 who want to be around (or employ, or exploit) people like me and they drive up the fucking rent. Instead of benefitting from our contribution, however, we get charged for it when we pay these enormous housing costs. We should be rioting in the fucking streets over this.

The implicit conclusion from both of your points is that the government should be able to select fucking great people like you over others to offer affordable housing to. Sounds like a recipe to dystopia.

It's a lot easier to just have the government implement a land-value tax and repeal zoning laws than to actually administrate 60% of the "dwellable" land.

Expensive real estate is a deliberate policy of the government. Local government zoning laws keep the supply tight. And low interest rates and easy credit enable people to take out huge loans to bid up the prices of real estate.

To get cheap housing, the government would just need to repeal zoning laws and limit all the size of all home mortgages from any government subsidized institution (FDIC insured banks, etc.) to a maximum of 3X median income with a 25% down payment. That would get housing prices down very fast.

The government keeps housing expensive, because older home owners are one of the most powerful voting blocks. Your average 60 year old homeowner is much more likely to vote than your 25 year old apartment dweller. Furthermore, the homeowner is going to be irate and vote against any politician who enacts policies that make their home price go down, while the 25 year old is not really paying attention.

You're committing the "deus ex machina" fallacy where by you seem to assume that the government has the incentives and institutional ability to effectively manage public housing and keep the cost of housing down. The actual experienced history of government housing in the U.S. has been positively atrocious. And in terms of cost, government housing generally costs about twice as much to build as the equivalent private sector housing.

The really hard problems are: how do you wrest political power away from middle-aged home owners? How in general do you make government work for the general interest as a whole rather than work for powerful factional interests (such as homeowners, construction unions, etc.)

Wry reply: one thing that might help is the fact that not many Generation X (and Millennial) people are going to be cozy homeowners in their 50s and 60s...

What you say is so right that it's painful. Expensive real estate is a classic generational ripoff. These people had it easy but didn't save money, so they made up for it by rigging house prices with the post-1965 crowd paying a monstrous bill.

Let's not use FDIC as a crowbar to micromanage consumer banking, please. There are so many better dials for the government to turn than resorting to that.

"Let [us] not use FDIC as a crowbar"

Who's "us"? I don't work for or have any power over the government or FDIC.

You're making an argument. He's saying that your argument has the unfortunate consequence of using the FDIC as a tool to micromanage consumer banking.

You're not a citizen?

I am a U.S. citizen. But that does not mean I use the words "us" or "we" when discussing the actions of a government bureaucracy. I'm sure I have a few shares of Microsoft in some mutual fund, but that does not mean I use the word "we" when discussing the actions of Microsoft.

Instead of parsing my imprecise usage of the word "let's", can you address my actual point?

I find that most people who use the word "we" or "us" when talking about government actions are not being imprecise. Rather they have internalized the civics class myth that ordinary citizens have a large amount of agency over government. I like to poke at this delusion when I can.

I'm not exactly sure why you think the FDIC should not micromanage the mortgage market. My guess is because the FDIC is government bureaucracy, and our government is so dysfunctional these days, that you think any attempt to manage mortgage markets would just make things more screwed up. And you are probably correct. Although I would say the cat's a little out of the bag with regards to preventing government bureaucracies from messing around with mortgage markets.... But my main point was not to make an "ought" argument, but to demonstrate to michaelchurch that if he wanted a particular "ought" outcome (lower housing prices) there are easier ways than to have the government buy 60% of all real estate. If you have even easier ways, that require even less government micromanagement, I'd be intrigued to hear them.

In any scenario in which Michael or I actually have enough power to direct the FDIC or government to carry out our madcap plans, the political situation would be so different that many current arguments against FDIC intervention would be obsolete. There might be new arguments against FDIC intervention, that would depend on the specifics of the changed political situation.

When I say "let's not do X", I don't mean it literally, it's just a way of saying "X is a bad idea". Let's just set aside that entire digression.

> I'm not exactly sure why you think the FDIC should not micromanage the mortgage market. My guess is because the FDIC is government bureaucracy, and our government is so dysfunctional these days, that you think any attempt to manage mortgage markets would just make things more screwed up. And you are probably correct.

Two points:

1. If you want to regulate the mortgage market, that's one way to go. But that should be a totally separate concern from FDIC and should be implemented in a separate way. Removing depositors' insurance because their bank didn't follow mortgaging regulations is a very poor way to regulate the banking industry.

2. The federal government subsidizes mortgages in many ways. Instead of legally regulating mortgages it might be sufficient for the government to just stop doing this. For instance, there are tax incentives for having a mortgage. The government also intervenes directly in the mortgage industry in the form of Freddie Mac and Fannie Mae. When I said "there are so many better dials for the government[1] to turn than resorting to that", those are some of the things I was talking about.

[1] Note my use of the third person--are you happy with that or did "let's" derail you from reading the second sentence of my comment?

I agree that if you were trying to lower housing prices you would start by eliminating all the subsidies.

There is some chance that eliminating all subsidies would not meet whatever price goal is desired. Housing near employment is going to inevitably be scarce in some cities, and people will inevitably get in bidding wars. If people can take out the maximum mortgage that a high-earning, two income family can afford, then everyone will need two-high earning incomes to keep up (see the book The Two Income Trap).

If you want to regulate the mortgage market, that's one way to go. But that should be a totally separate concern from FDIC and should be implemented in a separate way. Removing depositors' insurance because their bank didn't follow mortgaging regulations is a very poor way to regulate the banking industry.

I think it is most reasonable to have the insurance company be the regulator. This is common in almost all other industries. If you are a landlord, the apartment insurance company will tell you to not allow smoking in the apartment or else it will not insure you or will jack up your rates. If I was czar, I would consolidate the bank regulating functionality which is now spread across a half dozen agencies all into the FDIC. If a bank refused to abide by FDIC regulations it would either face higher premiums or be expelled. If a bank was expelled, all customers would have an opportunity to transfer their deposits to another bank. The executives of the FDIC would be given a comp-plan designed to make them balance the need for expanding credit and the need for overall stability. For instance they could be comped based on overall premiums, but with clawbacks of the last decade of bonuses if the FDIC faces systemic failure and needs a bailout.

Add to that the home mortgage tax deduction which doubled the price of a new home.

The problem, or the balance that must be struck, is that it's hard to innovate without being surrounded by other innovative people. You need a city with a critical mass of innovative, talented people and a low cost-of-living.

I agree. Come to Austin, TX!

A real estate market separated into 60% government-owned cheap housing and 40% privately owned expensive housing strangely reminds me of NYC with its rent control/stabilization policies. Most of the current problems will not go away with government owning buildings instead of landlords. If the prevailing rate is low enough, a black rental market will soon form for government-owned units in desirable locations.

What I agree with is that somebody must build new housing. If private developers cannot/would not do it, then its a market failure and government should step in.

In many areas (including the Bay Area) the government won't allow private developers to build new housing (via zoning laws etc.)

Building a house is cheap, having the local infrastructure to support houses is expensive. Letting people build unlimited housing without restriction is a terrible idea.

What we need is a tax on new houses that covers local infrastructure needs. We don't do this because developers have long fed on subsidies of there external costs by local governments.

We call those taxes property taxes, but thanks to prop 30 in California the situation there is totally messed up too.

Property taxes are a poor approximation of external costs even excluding prop 30. Most obviously there paid after the fact and the county needs infrastructure up front.

Consider you add a new subway stop in an area and suddenly people want to replace single family dwellings near it with apartment buildings. The region paid for that subway expansion, but a few well connected developers stand to make a killing. When you get down to it Zoning is really an ideal way for local politicians to shift the benefits of public infrastructure into well connected private hands.

It depends on how the project is funded. Some improvements (such as bringing city water/sewer to an area on the outskirts of town or paving a dirt road) are typically funded via special assessments on the affected property. The local government can then sell bonds secured by the future revenue stream and pass along the financing cost to those who see the benefit.

Subway extensions typically distribute costs over a wider population (the regional/state/federal government paying for large chunks of it). On some level this makes sense. A special assessment on the areas within X feet of a subway station would likely be prohibitively costly for property owners, and the entire region benefits from better transportation infrastructure with more benefits. On the other hand, the person who owns the property across the street from the new subway station is benefiting much more than someone who lives on the other side of town. Perhaps a combination of special assessments and general revenue funding is more appropriate for this scenario? You're certainly correct that the current system transfers a lot of public value into private hands. The Central Subway in SF is going to make some property owners in Chinatown very wealthy.

There is no abstract "government" doing it. It is the work of people who do not want new housing to be built for some reasons. They probably have lots of influence in local governments.

Local governments are small and arguably inefficient, it is easy for special interests such as homeowners to influence them. But there is a long tradition of local government in US and they have real power. The solution here would be for higher-level (state) government to intervene, keeping in mind interests of all state residents and not only homeowners.

Except the critical mass is something like 3 people. So, yes people help but having 1,000 or 1,000,000 innovators around you makes little difference.

For a proof-of-concept early-stage lean startup, no, number of trained people you may hire around you is not a key issue. As soon as you want to move fast and hire people to help you industrialize the business model you found, having trained people of key specialties around you is going to be necessary. I think the jury's still out on whether remote work can replace this.

As an Aussie/Kiwi dual citizen in China, I wonder why you don't consider moving to Asia. Sydney, where I was born, is ridiculously pricey, and while the harbour is beautiful and the city fairly green (in parts), it's not really that international and the quality of life doesn't actually match the image once you start paying taxes and cost of living. That said, it's a safe choice.

Where in Asia? You might be a dual Chinese citizen, but most of us are certainly not, and the language would be another barrier. Singapore and HK have a lower language barrier but there's still the issue of visas and they are not exactly cheap. Japan is lovely but has the same issues of visa and language. You could sit on a beach in Vietnam or Thailand but if you're going to do that you may as well live in a country town here.

There's not many "perfect" options.

I'm not a Chinese citizen, I'm an anglo-Australian. I just happened to prefer living in Asia since about 12 years ago. By all means, if you don't enjoy risk taking, language learning or being in another culture, then stay in your home culture and pontificate about how great your country towns are. If you want the reward, you have to take some risk. All visas issues can be solved with persistence. Life is what you make of it.

Wow, you're reading a lot into my comment that I didn't intend. I have nothing against any of those things. I am just pointing out that you don't just "move to Asia"; there are tradeoffs to be made.

> then stay in your home culture and pontificate about how great your country towns are

Really uncalled for IMO. I have lived and worked extensively in Japan and Thailand and visit the region multiple times a year. Like most things in life there's no such thing as a free lunch and one must weigh the pros and cons of moving. My simply mentioning that there are, in fact, cons, is no cause at all for you to go on the attack.

I'm not on the attack, I'm just sayin'. For example, Singapore is a bastion of fascist conservatism, plain and simple. The fact you even mentioned it as a potential destination shows that you are either hyper-conservative or that you haven't had much long term experience in the region. Visiting and living are two different things. I agree there are pros and cons to everywhere, but comparing a beach in Asia to a country town in the west is in my opinion ridiculous. Each to their own though. IMHO, the developing world is where it's at.

You're not on the attack, you're just sayin' that I'm "either hyper-conservative or [..] haven't had much long term experience in the region". Right.

I mentioned Singapore because it's a city in Asia that speaks English, thus making it substantially more accessible. It's also a clean, modern, livable city. I probably wouldn't live there but I know plenty of people who do and it's hardly a bad place, especially for a startup.

I am just trying to point out that your views are demonstrably obtuse and your arguments absurd, given that you are claiming to have experience in the region.

The award for least Asian city in Asia certainly goes to Singapore.

Nothing I said was obtuse or absurd.

Anyway, it's obvious you have something to prove from these responses so there's probably no point discussing it further.

My interest is in not dissuading other readers from considering moves further afield to cultures significantly distinct from their own. We are an extremely lucky group and have this option, it is a shame to see people fail to consider it. I wish you the best of luck whatever your own preferences are in life.

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