The $3500 Shirt – A History Lesson in Economics | Hacker News Reader

The $3500 Shirt – A History Lesson in Economics

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404 pointswallflower216 comments

I've posted in another thread about this but what interests me primarily is how housing has changed over time.

In 'ancient history', it's fairly well known that people lived in ridiculous conditions, ten to a house and so on.

But what strikes me is that in recent years (say, the last 50 or so), housing has rocketed out of proportion around the Western world whilst other goods have become basically irrelevant.

I could buy 1,000 decent spec laptops for the price of a modest home. Or over a hundred thousand cups of Starbucks coffee. The car I have outside? Sixty of them and I could get a bargain basement flat.

Renting? A brand new Android flagship for the price of a months' rent. An utterly imaginably spectacular device.

I'd much, much rather live in a world in which a laptop was a huge expense that I could only literally afford once every few years, but to be able to afford to put a roof over my head without hustling 8 hours a day.

Will we ever get there?

Adding to this; I could totally conceive of a situation in which I could end up homeless but still rocking a modern smartphone - because it just simply is an irrelevant expense in the grand scheme of things. It'd buy me 2 weeks worth of food and shelter, in exchange for losing my 'window on the world'.

I've seen homeless youth charging their phones at outside outlets.

And if that amazes you it marks you as old - because you remember a time when a mobile internet device was a frivolous luxury rather than a not-cheap-but-not-truly-expensive necessity. Ancient people can be recognized for having the same attitude about cell phones in general :)

I doubt it. You can't exactly mass-produce houses or land, so it seems that the gap will only grow as factory efficiency rises.

Average size of a home in the US is 2,600 sq. ft (2013), says http://money.cnn.com/2014/06/04/real_estate/american-home-si... . 40 years previous it was 1,725 sq. ft. The number of people per household has dropped, though only by a little.

(2.63 now and 2.7 in the early 1980s. FWIW, in 1950 it was 3.37. See http://www.infoplease.com/ipa/A0884238.html and http://quickfacts.census.gov/qfd/states/00000.html .)

So something has changed to encourage people to buy larger homes for the same number of people.

I've never really found looking at the 'average' (be it median or mean) experience to be very useful here, though.

In the UK something like 30% of homes are owner occupied with no mortgage. But at the bottom, millions are completely stuck struggling to even pay the rent, never mind even think about saving any money or getting the income multiplier / job security / deposit required to start along that path.

Far more relevant is how accessible the bottom rung is, and whether that top portion (and so the average) are simply propped up by legions of modern day serfs.

In the UK in particular I'd be happy to build a wooden shack on a bit of agricultural land near to some utilities, maintain it well and stay out of others' way. Capital costs would be incredibly low.

But then there are the costs of jumping through regulatory hoops. Or simply being shut down by a judgement that your society says you have to live in a city at ten times the cost, or else.

Our version of poverty is 'death by bureaucracy'. The welfare state has created a situation in which many are simply incapable of fending for themselves - and the results when the state turns its back (google for 'UK benefit sanctions' for more information) are truly despicable.

That was to get a base ground truth to establish that there was something to consider, and that I'm not babbling nonsense. If you have better numbers, I would be glad to see them. It's well known that housing sizes are going up in the US, and one of the associated terms is 'McMansion'. But name-calling like that makes for boring, go-nowhere threads.

The average residential size per capita in the UK is about 1/2 of the US. http://shrinkthatfootprint.com/how-big-is-a-house . That Independent (and other sources) go on to point out that the UK has "the smallest properties in Europe following the end of national guidelines in 1980", see http://www.independent.co.uk/news/uk/home-news/rabbithutch-b... . See also http://www.bbc.co.uk/news/uk-14916580 if you want another news source.

While you attribute UK's 77sq.m/person to the "welfare state", the Dutch and Danish welfare states have 115 and 137 sq.m/person. (UK has 255 people/sq.km, the Netherlands 409, and Denmark 128, so it's not a simple matter of density which causes the difference.)

In Sweden, where I live, there's been a huge increase in the amount of space per person. In the 1940s, it was considered spacious for two parents and three children to live in a flat with a kitchen and 2 or 3 other rooms. (See http://poseidon.goteborg.se/sv/Sok-ledigt/Bostadsomraden/San... , "Trots sitt syfte är de flesta lägenheterna tvåor eller treor, vilket räknades som en rymlig bostad för en trebarnsfamilj på den tiden.")

So I don't understand your objection. You have no counter-evidence, you bring up the UK which has the worst history in this regard, and what information I can find does not back your statement that something as broad as "the welfare state" can be the issue for the UK.

Planning restraint, combined with the way that housing is subsidised directly (rather than say, giving someone money to spend on building a new home).

I have nothing against the welfare state - I'd rather see a citizen's income than the nonsense mash of policies we have at present, though.

It makes no sense to me that the state should subsidise rental payments to private landlords in perpetuity. We should be building homes and relaxing planning permissions.

How is "The welfare state has created a situation in which many are simply incapable of fending for themselves" not a statement against the welfare state?

In any case, you're derailing the conversation, and my working hypothesis is that you want to talk about your feelings rather than put any interpretable numbers behind it. What is wrong with my analysis enough that it should be considered not "very useful here", which is what you stated. What is your objection?

I don't exactly know the situation in Europe, but in Israel,many city councils aren't giving permits for building small apartments, because they prefer to attract well off population to their area.

And while it's true that some are spend without thinking on a house, there are plenty who would prefer a smaller house.

In the US, especially in the Midwest, former farm fields are quickly flipped and filled with stick-built homes in mere months. Seems pretty "mass-produced" to me.

Sure you can, at least with houses: that's what a manufactured/mobile home is.

The problem is that in the US a manufactured home is usually considered substandard, low class or otherwise undesirable.

>You can't exactly mass-produce houses

There are certainly companies trying, depending on your definition of "mass produced". http://www.bluhomes.com/our-process

Doesn't seem much cheaper than conventional housing, but they are built inside, so your framing isn't getting rained on before the house is done.

>An utterly imaginably spectacular device.

Maybe, but it is also entirely unessential. Nobody has to sell you on the need for a roof over your head.

Nobody has to sell you on the need for being connected to society, which is why millions of people living in wretched conditions spend what little they have on cell phones.

And while shelter is necessary for survival, most of the walls, rooms, windows, wires, etc. of a modern home are entirely unessential.

As the trend towards urbanisation (rural flight) continues worldwide, and as population continues to grow, the rent isn't going to get any cheaper in the decades to come, anywhere.

Even imagining that 3D printing techniques can significantly cut down the cost of new construction (as is starting to happen in China), land scarcity will be the overriding factor. Save building cities on the ocean, we can't escape it.

There's plenty of land, the problem is that everybody wants to be in the same dense urban cores. Drive 3-4 hours north or south of San Francisco and you have lots of cheap, beautiful coastal land available.

Where, specifically, 3-4 hours south is the coastal land cheap?

Inspired by this comment I actually spent 30min looking on Redfin. Most of the coastal land I found is listed for around $1-2M (for ~1 acre), from SF area down to LA. Check it out! I was actually pretty surprised by this.

I really can't tell whether you find that to be surprisingly cheap or surprisingly expensive.

Are we really short on land, though?

It strikes me that by combining building high-rise blocks with expanding out into the countryside we could manage it.

The planning situation in the UK (which is a particularly dense country) seems utterly despicable to me at present. The game being played is essentially 'haves' bemoaning the loss of small amounts of countryside while 'have nots' are stuck paying dramatic portions of their income to the former group.

Add to that the long arm of the law (buy a field and stick a trailer on it? expect a visit) and it's almost dystopian.

(please read my comments if you're interested more on the UK situation - others have shown me that in the US rural land is actually affordable, if you have savings)

Huge areas of the UK are privately owned by a small coterie of landowners, which happens to include the royal family.

Excepting the odd toy village project, those areas will never be built on.

And London's so-called property boom is almost entirely a foreign phenomenon, with the world's 1% pushing up prices as part of a speculative bubble.

None of this is accidental. The UK could easily lower prices by building affordable social housing. Even in London, housing densities are lower than they are in many cities in Europe.

But it's far more profitable to ration property ownership, and to create a new landlord class.

As is often the case the underlying problem is political, and caused by concentrations of power that - history suggests - can't be sustained indefinitely.

Thank you for this post TheOtherHobbes; glad to see someone who can articulate the issue better than me.

The idea that people can just 'move a bit further out' is flawed here; we're not the US, running a car is far more expensive, for one.

> Are we really short on land, though?

We might be short on land the majority views as attractive enough to actually live on. Rural Wyoming is by no means short of land, but it's dry, desolate, windblown, and hundreds of miles from any regions with, say, hospitals, or airports, or actual grocery stores, or land that can grow something other than grass, or other frivolities of modern living. The fact that land is divided up into huge ranches is, therefore, not a huge loss for people looking for a little spread of their own; the only way the land could possibly be economically productive is in those huge ranches. A lot of it's owned by the Federal government, as well.

So it's trivially supply-and-demand, and the fact is the US, at least, has a huge supply of land for which there is essentially no demand. It's been allocated about as efficiently as it's going to be. Canada has a similar situation. Does that mean we're not short on land? Technically, perhaps not, but realistically, if the land is effectively unlivable, it might as well not exist for our purposes.

On the gripping hand everyone has a different definition of 'livable', even to the point of some people being willing to live in rehabbed ICBM silos in the wilds of North Dakota.

I think stegosaurus's idea is that a sufficiently motivated government or billionaire could make that land attractive to urbanites. Cheap rent in high-rises + an art and cultural scene attracted by the low cost of living + planning the city around public transportation and bike/walkability rather than personal cars + fiber to the home/office = I'd happily live somewhere that would otherwise be considered the middle of nowhere due to "boring" or unpleasant geography.

Pretty far fetched, but if Elon Musk wants to build The City of Tomorrow, sign me up.

EDIT: stegosaurus, for some silly reason HN hides the reply link for the first few minutes after a post is made, but if you click the direct link to my post, you can reply anyway.

That's easy to say if you've never experienced some of the weather Wyoming has to offer.

California isn't popular because of burgeoning art scenes, cheap rent, low cost of living, and good public transportation. In fact it has none of those things (Well, maybe some art scene). California is popular because girls can wear miniskirts and tanktops in the middle of February.

> I think stegosaurus's idea is that a sufficiently motivated government or billionaire could make that land attractive to urbanites.

I don't think they can. China tried: http://www.marketplace.org/topics/world/marketplace-25/china...

Can't reply to the below post (max nesting perhaps?)

I agree with the solution of constructing additional cities to an extent, though I can't speak too much about the US (British here).

What bugs me is seeing endless expanses of land within reasonable commuting distance of places like London that just aren't being used. There really is no need for people to have to move hundreds and hundreds of miles from their families.

I'm not even concerned that much about employment here, because a cheap home on cheap land would free people to work far less and/or simply retire after a few years in the Big City.

"but it's dry, desolate, windblown, and hundreds of miles from any regions with, say, hospitals, or airports, or actual grocery stores, or land that can grow something other than grass, or other frivolities of modern living."

So, sort of like Southern California before the boom, then. :-) Except that there are areas in SoCal that couldn't even grow grass. If I recall correctly, several of the early Spanish colonies starved to death.

If you could convince people to move there, the grocery stores and hospitals would soon follow.

Look up how cold Wyoming gets in the winter and tell me it's a viable place for a lot of people to live.

I don't like saying things like this, but unless you've experienced a zero-visibility blizzard which went on for hours on end, you don't know what rural Wyoming is like.

Look at how hot LA gets in the summer.

I'm from Alaska, by the way.

Summer temperature averages in LA aren't that much different from summer temperature averages across Wyoming. The big difference comes in the winter, where LA's record lows are in line with (or a little below) Wyoming's average highs.

> I'm from Alaska, by the way.

Coastal or inland? North shore?

We already are there; this is pretty much the situation in most of the world.

Out here in the Midwest, my quarter acre plot didn't cost a whole lot - but the house itself cost a fortune in materials and labor. Maybe I wouldn't have needed a 30 year mortgage if the place could have been 3D printed with novel materials.

I'd still need a job to pay my property taxes, but wouldn't have to bust my ass as much.

As others have said, you can machine print cars, laptops, and phones, but you can't machine print desirable land.

The price you pay for rent is the price to keep everyone else off of that land for some period of time (or 1000x that to gain the right to 'own').

The idea is that if you can't afford the cost, you should give up that space to someone who can (presumably is making more money).

Resource scarcity is a "hard" problem, and the hard truth is that because something aren't unlimited, not everyone can get what they want.

There may come a day where we can't feed everyone.

Will we ever get there?

At the moment, political and regulatory barriers dwarf technological ones, per Yglesias in The Rent is too Damn High: http://www.amazon.com/dp/B0078XGJXO.

In many areas, building with century-old technologies like steel frames and elevators is effectively illegal. Where it isn't illegal, the approval process is often so cumbrous that it substantially raise the price of building: http://www.theatlantic.com/magazine/archive/2007/11/a-tale-o....

We as a society have chosen to make a lot of housing very expensive.

No, the people who own houses have chosen to make them expensive. Because it is expensive, those people are quite rich. This gives them political power to make it more expensive. See: San Francisco regulations on construction.

It's a terrible feedback loop. Nobody who owns a house in SF in their right mind would vote for anything that could substantially decrease the value of their home.

The fix: (1) government re-regulates building to be easier and land to be more available, causing a housing boom. (2) government guarantees every house's value as it was before the reforms. If the value falls, government pays the difference. (3) Government raises a tax to pay this all off.

This is why we can't have nice things. Raise a tax to guarantee that the richest people keep being rich? Do not want.

But are the majority of SF residents owners? Is it really about voting, or about savvy political lobbying by property owners?

It does seem at least that homeowners tend to vote more often than renters:

http://journalistsresource.org/studies/politics/citizen-acti...

It's a bit juvenile to blame building codes without also admitting why we have them: they save lives. Look at the death tolls of earthquakes that happen in countries with and without enforced building codes.

On the other side of the coin, thanks to deregulation houses are commodities that people buy, sell and trade for profit, which raises their prices and causes volatility in the market.

Is that Atlantic article really comparing the building codes of Dallas and L.A. without admitting one of those cities has to plan for earthquakes and the other doesn't? And that one of those cities is already too big while the other is looking to grow? Where's L.A. going to get the water for these cheap new housing developments?

TL;DR building codes and growth restrictions are a lot more complicated than some rich people wringing their hands and using regulations to make themselves money.

How does turning something into a commodity that people buy, sell, and trade for profit raise prices?

Supply and demand? Increase demand, supply is largely fixed* , prices go up.

* a house in the boonies isn't really a substitute for a house in the city. Every house has demand from people who want to buy it as a home plus the demand of people who want to buy it to rent/flip/scrape it.

You are confusing land and housing - they are not the same. Land area is fixed but habitable space is not. In built up areas the constraint on building new housing is largely regulatory (mostly planning regulations).

I lump land and housing together because that's how reality does it. Aside from trailer-houses they all stay on one piece of land for the duration.

If an analysis depends on houses being able to fluidly change land positions I don't think it would be very useful.

It creates additional demand because the house not only provides shelter, but also takes on the form of an investment. How many people do you know who talk themselves into buying a house because of the potential pay off when prices rise?

I have heard that people do that, but I know zero people who have done it.

My dad tried. Lost a bunch of money.

It gets worse when foreign real estate speculation is allowed. Where I live most new condo developments are bought out by millionaires in Asia for the sole purpose of making money thus I need $700,000 for a tiny studio.

I don't blame building codes, but I do blame governments for just trying to derive their own building codes in an NIH fashion. Engineering best-practices (which is what building codes are) advance in global lock-step in every other industry, because—once it's proven that approach X fails less than approach Y under conditions Z—X should be used instead of Y for all Zs, no matter what country you find the Z in.

Regional considerations for things like earthquake proofing, density planning, etc. can be built into a single overarching engineering standard, just like considerations for different company shapes with different needs are built into a single larger tax code. There's nothing having many different local algorithms can optimize, that wouldn't be even more optimal as many different local parameter values to a single parameterized algorithm.

Building codes are not engineering best practices. They are minimum standards based on experience and filtered through the political process.

"Built to code" is the worst legally allowed construction. The equivalent in programming terms is "It compiles".

It is more complicated than rich people gaming the system to get richer, but that's definitely part of it, and the generations-long monopoly on land ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone) enables basically unlimited rent-seeking priced at whatever the market will bear.

http://m.sfgate.com/homeandgarden/article/What-San-Francisco... goes into what happens to building codes after e.g. an earthquake. TL;DR not much, and I'm sure SF will get absolutely wrecked in the next "big one", people will die because stuff is old and not up to code, there will be public outcry for safer buildings, developers will lobby against it and basically do anything they can to continue to slap apartments up as cheaply as possible while charging $3000/mo for a 500sqft studio, and they'll build even-more-expensive yet not much safer buildings in the ruins. Then repeat.

There's definitely some legacy family land holdings, but I don't know how much that effects the market. I would like to know, but I suspect that as you touched on they're making money off rents, maybe lending.

What I was getting at are the houses that are bought and the mortgage goes into a CMO[0] or a CDO[1] because the new owner really had no business buying a house in the first place but they're "getting into real-estate" and the bank found a way to get paid for writing really questionable loans. Why are people without money even in the real estate market? (See the 2008 financial collapse for more details.)

And that's just the worst of it, there's still the more legitimate case where people move their wealth into real estate because it's a good medium-term investment. I can't fault anybody for that, but I do believe it raises prices for everybody.

[0] - http://en.wikipedia.org/wiki/Collateralized_mortgage_obligat... [1] - http://en.wikipedia.org/wiki/Collateralized_debt_obligation

> developers will lobby against it

Eh. I don't believe this is true. For example, in the Great San Francisco earthquake, something like 90% of the damage was caused by fires. Most of these fires were and are caused by unsecured water heaters, rigid gas connections, etc. There are now building codes that improve on these issues -- all water heaters are now strapped, gas connections are flexible, etc. Among other protections that I know of, shear walls are mandated in certain cases, engineering reviews are done, houses are bolted to foundations at more regular intervals, the proportion of various walls that are windows is more limited, etc.

Yes, regulations were slackened in 1906, but

1. Earthquakes between 1906 and now show that regulations DO tighten over time. If developers are trying to lobby against these, they are failing. (More likely, the property owners paying the developers are the ones who would lobby. It benefits the contractor to charge for more work.)

2. Even if we didn't have historical evidence to discount your position, the resources available to the people of that time and the people of our current time are not remotely comparable. Our capabilities for manufacturing and building are dramatically more vast.

More on the evolution of these codes, which further contradicts your view that developers have been able to prevent their strengthening: http://quake06.stanford.edu/centennial/tour/stop10.html

75% of all SF housing units are over 50 years old. Source: http://www.sf-planning.org/ftp/general_plan/Housing_Element_... So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.

What ought to happen is proposition 13 ought to be repealed, along with the restrictive zoning laws. Then people who are sitting on lots of undeveloped property would have to sell it to developers, because the taxes would be unaffordable otherwise. And developers would put up new properties. Prices would then come back to earth and poor people would be able to live in houses again.

But the prevailing mentality in the US is that houses are investments, not places to live, so don't expect this to happen any time soon. Instead, you can expect politicians to intervene if housing starts to become affordable again, like they did in 2007. ("Oh no! Housing prices DECLINED!") It's basically a giant transfer of wealth from the young to the old. But people are too ignorant of economics to understand how and why it's happening, so you can expect it to continue.

You're right, and Prop 13 doesn't get nearly enough hate in these discussions. It's not just that people are sitting on investments like domain campers, though - it makes it impossible for many people to move, because if they did move to an equivalently valued home, they'd be paying many times their current property tax. This restricts the liquidity of the housing market and encourages hoarding, which leads to skyrocketing prices among the few houses that do go on the market.

If that was slowly phased out, prices would come down as more houses came on the market, and the houses that those people wouldn't represent such a huge jump in ongoing property taxes.

How does repealing Prop 13 change anything? Wouldn't everyone just end up paying the same or more taxes? Looking at property tax rates in other states (which presumably don't have such a law), we're about on par with them.

The people who can't move because of increased taxes would be forced to flee the state maybe?

We may be on par with them in terms of nominal rates, but those other states' property taxes rise with the value of the houses every year, whereas CA prop tax amounts are based on the cost at the time of purchase and adjusted at a max of 2%/year, even if their house appreciates by 10%, as it does some years. People who bought their houses in 1975 are paying taxes based on what their houses were worth in 1975 times roughly 1.02^40, or 2.2x. In the same period, the median home price went from $41,600 to $478,700, a rise of almost 12x. So, if they moved to an equivalently valuable home, they'd pay about 5.5x the amount of tax going forward, which can be very significant.

Housing prices take into account the amount of taxes one expects to have to pay, so if they're no longer locked, and one expects prices to rise, then the price one will be willing to pay will be lower. Also, prices will fall as more supply opens up, since there won't be such a big advantage to sitting on houses anymore, and people are more free to move to less expensive areas. Currently there's a bit of a rent control situation where the low rates can be passed on to your descendants, and there's a big incentive to stay in it rather than selling it and moving farther out, even if the place farther out is half the price. This effect is more pronounced on the high demand areas where prices have risen more.

Over time, the prices would adjust and settle. People may end up paying more tax overall, but we can play with the rate, or we could decide that the schools could use more funding (in many places, they could), and that we should keep the rate where it is. As it is now, the people who are just moving to CA are heavily subsidizing people who have lived here for a long time, and the lack of liquid housing supply is causing prices to shoot up.

"... but those other states' property taxes rise with the value of the houses every year, ..."

In Michigan, it's a bit more complex. The assessor calculates a State Equalized Value (SEV) on which the tax is based, and that cannot rise faster than the rate of inflation, or 5%, whichever is less. I assume lots of states have odd property tax quirks.

I explained it earlier. Repealing prop 13 forces people holding on to undeveloped land to sell it to someone who can make use of it.

It's funny that people accept taxes of up to 40% on wages (things the middle class earns), but can't understand how taxing vast landed estates (things the rich owns) would "help." Suggest thinking this through more clearly.

People who already own property in places where values are rising have no incentive to do anything to counteract the rising trend. So we have the spectacle of Mountain View denying Google's request for approval to build apartments for their employees near their campus -- at a time when housing in Silicon Valley is getting absurdly expensive.

I can't agree with this more. Anyone know when houses started to function as an investment? How far back does this go?

How tied is this to the business model of banks?

Oftentimes governments will place extra taxes on non-primary residences which discourage using houses as an investment vehicle. I'm not sure about the history of this, though.

We have something like that in Italy, except financial institution were made exempt to protect them from the housing mortgage crash of 2008, and now are holding on empty houses waiting for market price to raise again.

They can't sell at a loss because all mortgages given were put in books at the 100% repayment price and now they need to wait not only for the house to recover the price lost since the crisis but also to raise in value to match the expected mortgage gain written in books, to avoid negative impact on their ratings

From most anything I've read, they've for the most part (yes, with some exceptions) tracked the overall inflation rate very closely, up until around the year 2000, when ratios and charts in the US and much of the world started to massively deviate from extremely long standing trends.

I think part of it is credit (money) creation out of thin air, and it has to go somewhere. Another part is the massive productivity gains of past decades, that also has to go somewhere, and it isn't going into rising prices of consumer goods for the most part.

To me, it seems logical that the ratio between median housing prices and median wages has to be rather constant over time, and if it isn't, there should be a measurable offset somewhere else, especially when the housing is by far the largest purchase 90%+ of people will ever make - yet, I see no proportional offset (of decreased spending) elsewhere.

"So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes."

That's a nice theory, but it's wrong. The city is requiring buildings to get retrofitted with earthquake safe structural foundations. It's every building with greater than a few units, so the rather small 100+ year old Victorian I'm in will be required to go undergo retrofitting by 2017.

Do you have a link for that? I follow this kind of thing pretty closely and haven't heard anything like that, at least for private residences.

Here ya go: http://sfdbi.org/mandatory-soft-story-program

P.S. Thanks for all the good work you did at Reddit.

Oh, I missed where you mentioned this only applies to buildings with a minimum number of units -- I thought you meant there was a program that applied to single-family homes.

Re: reddit, pshaw, I was only there two and a half years. :) Most of the hard work was done before I showed up and after I left.

The latest SF seismic retrofit program is for wooden buildings. Brick buildings, which are at much higher risk in an earthquake, were fixed long ago.

There were 1,987 unreinforced masonry buildings in SF in 1990, and all but 158 were fixed by 2013. That's why, all over SF, you see diagonal steel beams inside brick buildings, sometimes across windows. There are now supposedly only 29 unreinforced brick buildings left, mostly ones that are abandoned or scheduled for demolition. A few are still occupied, including some non-patient buildings at SF General Hospital.

In a really big quake, many buildings will be damaged, but structural collapse in SF should be rare. The occupants get to survive.

> So the technlogical improvements in earthquake safety since the 1960s are simply irrelevant for most residents. They're living an ancient, unsafe homes.

Even if we assume zero retrofitting of old homes, what about the future residents of currently-new homes which persist for another 50 years?

> ("ownership", as much as any human can claim that a piece of the earth belongs to them and them alone)

They can claim it as long as they can defend it, and historically that defense has been by force. It should make you feel better that (by and large) we don't need to kill each other in order to reserve a spot to sleep.

Someone might argue that your capacity to compete peacefully was hard-won by government or elites dominating the use of force. In other words, you don't have to fight because a bigger entity already won for you. But should that entity fall weak to an external force, I think we'll see that many rights are built on a foundation of power, rather than a peaceful morality.

Safety related building codes are not the issue. It's disingenuous to bring them up.

If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities. All you'd need to do is copy the safety features for already existing larger buildings (which currently meet safety codes) and build them everywhere.

> If they were the problem, then you'd have little difficulty building up Mountain View to SF level densities, or SF up to Hoboken (a suburb of NY) level densities.

You just said that if building codes were removed there would be "little difficulty" in doubling the density of San Francisco or tripling the population density of Mountain View? What?

Like there's no logistical issues involved of doubling or tripling the capacities of roads and utilities, figuring out where the trash is going to go, where the water's going to come from, etc. Like there's no reason a city might reasonably decide against unlimited growth.

This is so far removed from reality I don't even know where to start. At the bare minimum, if you're going to call me disingenuous at least make a case of why.

You said "It's a bit juvenile to blame building codes without also admitting why we have them: they save lives."; namely, for safety reasons.

yummyfajitas pointed out that safety has nothing to do with the issue at hand.

Your follow-up post here now raises a bunch of reasonable issues, but none of them are safety-related.

Pushing infrastructure to the point of failure is most certainly a safety issue. It's a huge safety issue.

Land is the main cost of buildings in most of the developed world, not building.

in vancouver it costs about a million dollars for a house on a standard lot in the city. it's about a million two for a lot without a house

Not quite. Land is the main cost of buildings in the most desirable places in the developed world. In the US Pacific Northwest as an example, outside of major metro areas people will spend about 1.5-4x the cost of land on the actual structure. If you buy a $150K lot in Boise Idaho as an example it's pretty standard to then spend between $200K-$400K on the structure and landscaping.

I agree with everything except that "we as a society have chosen" this. A very very tiny portion of people (far smaller than "the 1%") have chosen this.

As soon as people get a mortgage, they're invested in house prices rising.

Mostly they are just invested in inflation, the same way anyone with high debt of any kind is. From 1970-date inflation alone is responsible for a $120k house becoming a $700k house.

The fall in adjusted incomes is the real issue that everyone is overlooking.

An overall positive slope but the last decade has not been kind to the bottom 60%: http://www.advisorperspectives.com/dshort/charts/census/hous...

Nah. Unless you take out equity in your house, rising house prices mostly mean higher property taxes.

Now, inflation on the other hand, they now have a vested interest in, as it makes the loan easier to repay.

This all goes out the window if you're buying a new house every 3 years, of course.

In California, property taxes are assessed only when the property is sold. So people have an interest in seeing their "investment" become more valuable. Their taxes are the same either way.

What!?

In Canada, property taxes are assessed as a fraction that results in the city budget being met within constraints. Rising house prices for YOU vs. everyone else would result in higher property taxes, but a rising tide lifts all boats. The city budget and the relative worth of your home to your neighbors' determines your fraction.

It's more that the people who own houses in a city get votes as to whether the price of their investment should go up but the people who would like to move there don't get a vote.

But really in the Boston area it seems like a bigger force (talking with some co-workers) is not wanting poor people to move into their school districts for various reasons. If it were just prices there'd be a contingent who would want to be able to sell their plots to developers for even more than they could resell it for as is.

The actual cost of constructing a house is almost meaningless in most areas people want to live. What your paying for is the infrastructure around houses. So, if we really want cheap housing find out how to make cheap roads, bridges, water and sewer systems, electrical systems, schools, hospitals, ... etc.

That said, people are also living in much larger houses with more amenity's like AC, and dishwashers.

PS: There is a completely reasonable argument that building a new house or apartment complex should pay their fair share of existing infrastructure ~10k-50+k/person in most areas. That this does not happen is simply a form of corruption as zoning becomes a quick way to massively change the value of land after purchase.

> That this does not happen is simply a form of corruption...

That's what property taxes are, to the tune of ~$500 billion per year in the US! The market price of a dwelling is inversely proportional to the tax rate, so it IS priced into the sale.

A house in SF might cost around a million dollars. The same house in Columbus, Ohio, might cost 100k. Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?

No, "what you are paying for" is the artificial scarcity created by restrictive zoning codes and NIMBYs. If the city council let me build on one of the many open fields around I-280 tomorrow, I could get it constructed for a pittance-- and then turn around and sell for hundreds of thousands of dollars.

Do you understand how "the existing infrastructure" is funded? It's funded by taxes. And developers pay taxes like anyone else. What they do isn't cheap.

> Are you really going to argue that "roads, bridges, water, and sewer systems" are 10x as expensive in one place as in the other?

I would. Working around a couple centuries of existing infrastructure, dealing with the issues regarding vastly limited space, and of course having to stay compliant with California's ever-changing and ever-more-expensive environmental regulations -- pfft, 10x easily.

Systems get more expensive as they get more complex. Car repair is a salient example.

SF doesn't have "centuries" of infrastructure. The great earthquake and fire in 1906 destroyed nearly everything. SF doesn't have "vastly limited space" either. It's not even in the top 100 cities in the world in terms of population density. Source: http://www.citymayors.com/statistics/largest-cities-density-...

Nor are SF's roads and bridges really all that complex. Pittsburgh, Pennsylvania, has 446 bridges, and is one of the cheapest cities to live in in the United States. Maintaining two big bridges just isn't that complex, certainly not enough to explain a 10x factor in the cost of living. Sure, SF has a high minimum wage for construction employees, but so does California in general. And somehow it is not that expensive to live in Fresno or Sacramento.

If anything, rural and suburban areas tend to have to maintain more infrastructure per taxpayer, since people are more spread out.

Nimbys are strong in SF and prevent building up. Tokyo, which has a similar earthquake problem has built up.

Not really. Japan's "sunlight laws" make it really hard to go above around three stories or so, meaning that nearly all of Tokyo's skyscrapers are concentrated in a few hot spots with commercial zoning (Shinjuku, Marunouchi) plus a few mega-developments like Roppongi Hills where the developer could pull enough strings to buy a large chunk of land and bulldoze their way to an exception.

Of course, compared to Silicon Valley, even the suburbs of Tokyo are indeed densely packed -- but then, Tokyo also crams in something on the order of 7x more people into the same area.

This is the correct answer, all the others are looking the wrong way.

We know it is the correct answer because it identifies how farmland sold by the acre can turn into residential land sold by the 1/4 acre. All because the zoning (and/or approved buildings) changes on that same land, the value changes substantially.

Anything that has such a dramatic change in value is subject to some kind of scarcity, like the difference between a real cezanne and a very good copy.

I believe some cities in Texas have relaxed zoning, and the housing prices are much more reasonable as a result.

Cities like San Francisco and New York are also subject to physical scarcity because of water and topographical features, but it is artificial scarcity that drives prices up.

How do you undo it? I don't think that is possible, simply because there is too much vested interest. Existing owners and banks must keep the status quo or the 2008 problems would look like a picnic. Maybe with some gradual relaxation over time the eventual market structure could be changed. It's doubtful.

The boom and bust cycles of capitalism continue!

I do think it is undoable just big monopolies with special interests such as the Rockefellers were broken up. It takes leadership (such as Teddy Roosevelt) that is given a mandate by the people. The issue is that this artificial scarcity, "rent seeking" is not visible to the public at large, esp. those who are renters and the young. Specifically, if rents in NYC were made aware they might vote their representative in city council out of office and the mayor as well.

An even clearer way of looking at this is to compare

1: The price of a plot of land with a house on it 2: The price of an equivalent plot with no house but the right to build a house there. 3: The price of an equivalent plot with not right to build.

In places like SF where housing is expensive 1 and 2 cost within 10% of each other. In places where housing is cheap 2 is closer to 3.

In most of the US it's pretty easy to entitle the construction of a new dwelling. The difficulty tends to be proportional to demand - i.e. regulatory requirements reflect market forces as the result of political action by the citizens of a representative democracy.

In practice building with steel and elevators is more expensive than using traditional American methods involving stick framing and low rise construction. The more expensive methods only make sense when demand is high enough to justify the additional costs.

A primary constraint on development density in the US is parking. By the time resources are committed to accommodating residents' vehicles, only higher housing prices associated with 'luxury' class housing make development of a site with dense housing feasible. Again, it's a market dealing with the parking regulations. Parking regulations reflect the body politic's interest in protecting the commons that is our roadways.

There's cheap housing in Detroit. There isn't in Mountain View. That's just the nature of markets.

People will spend their money somewhere. As everything else gets cheaper, they dump more of their money into accommodation.

housing has rocketed out of proportion around the Western world whilst other goods have become basically irrelevant.

Only if you want to live where everybody else wants to live. I mean if I really wanted to I could sell my small flat in town and buy a nice enough house for less than 20% of what I got for my flat. The only problem is that the house would be in the middle of nowhere and I don't want to live in the middle of nowhere.

>Only if you want to live where everybody else wants to live.

There is no such place where everyone wants to live. SF is desirable to only a very small percentage of the population. Yet it has some of the highest housing costs in the world. All it takes is an imbalance of supply for the demand. If there are only two houses available in a location that 200 people are interested in, they are going to go for very high prices regardless of what the rest of the world thinks of them.

There are places where you can't afford to live even if housing costs zero - if "noone wants to live there" then after a single generation, the place has no jobs, no nearby infrastructure (schools, social services, etc), and all the goods and services cost more (if available at all) than in the affluent regions simply due to lack of economies of scale.

This is a big problem in some areas, where urban regions have a lack of housing despite a construction boom, while rural regions have empty houses available for 20-30% of what it would cost to build a similar house.

If I moved to a place like that, the extra cost in time and fuel in driving myself and (especially) the kids between there and a reasonable city would be much greater than what I currently spend on housing.

You can afford to put a roof over your head without hustling 8 hours a day. Even in the UK you can get two bedroomed terraced houses for the equivalent of around 20 decent-spec MacBooks, or less than a basic-spec Vauxhall Insignia. Or 25 years worth of drinking Starbucks on a daily basis

The compromise is that your house is in Burnley or Accrington with an oversupply of housing, rather than the South East, with an oversupply of purchasing power seeking to get on the property ladder.

Thank you for the tip on Burnley/Accrington, I genuinely appreciate it and will be looking into it more. Quite a bit cheaper than the North East, I was looking at about 60-70K GBP for ex council. Would leave a lot more leeway for a lower paid job.

It doesn't really help that much though, unless you're willing to live hundreds of miles from family, friends, potentially split with your partner, etcetera.

The decent spec MacBook chat is interesting if you're a well paid worker, but not really otherwise. I can't see myself ever buying a full price MacBook or a new car unless my situation changes dramatically.

It's not really even the pricing that bugs me as much as the complete lack of understanding demonstrated by the Government. Every single policy is aimed at inflating house prices to the sky seemingly indefinitely.

The business model for a laptop and technology in general has become one of planned obsolescence. Products need to be cheap so that a new one can be purchased in a short time.

I do not necessarily subscribe to that notion myself. My phone is a Samsung Fascinate that was purchased in 2010 and runs Froyo. I have no tendency toward latest and greatest however I do not dictate the market either.

You make an interesting point on housing.

The planned obsolescence came from the huge strides the market was making. I don't care that old Pentium 3 chips don't last for fifty years, because they are already relics twenty years later.

Making consumer goods bombproof when they will be comically obsolete in a decade or two seems like a waste of time, money, and resources.

Yes you can, but you don't want to. You can afford $1 houses, come to Detroit. But no, you probably rather live in silicon valley or New York.

An amusing exercise is to visit http://zillow.com and search for properties <= $10000, $1000, $100, $10 & $1. You have to dig thru a lot of distractions, but in some large areas you can find some reasonable options (given circumstances).

I don't understand how a house can cost $1. What prevents me from buying 100 of $1 houses just for fun? Seems like a pretty decent investment if nothing else.

> What prevents me?

Property taxes.

I believe you would have to pay property taxes on these houses.

Some of them have local ordnances on them that requires money to be spent on fixing/securing.

Other people have answered that question for you, but I'd also like to point out that a number of cities have had problems from far-off speculators buying up dirt cheap properties and then failing to maintain them or pay taxes. In one case, it may have contributed to a gas explosion in an abandoned house in Cleveland: http://www.ideastream.org/news/feature/long_distance_ownersh...

You describe a paradox.

The cheap laptops and Android devices exist only because the population is manufacturing the devices by hustling 8 hours a day to keep a roof over their heads.

The parent suggested he would prefer a world where housing was cheaper but was willing to concede that electronics could be more expensive. Not a paradox.

Also I want to mention that it is unlikely we will ever get "there" as property is not a good that can be mass produced. If I spend 1 million dollars designing a phone, I only need 20 dollars to instantiate a physical model.

Property cannot be instantiated. It is only bought, sold, taken or discovered and there's no more left to discover.

Land cannot be mass produced, but dwellings certainly can be. There is plenty of unused or underutilized land in the US waiting for a high-rise to be plopped on it.

Well, there's also a question of what you're getting for your money.

A ten-by-ten one-roomed shack with a stove in the middle, no running water, no bathroom and no foundation can be had for about a few thousand dollars, and if you put it on an undesirable quarter acre in the middle of nowhere the land will cost you another thousand.

A well-built small home, a few hundred square feet with a well, a septic tank, electricity and the appropriate four or five rooms will cost you thirty to fifty thousand dollars.

The problem isn't just economics or regulations or technology; it's also one of standards and social status. I'm willing to wager that far more people buy a big expensive house because either they want the extra features -- air conditioning, plumbing, and enough bedrooms and bathrooms to qualify as a small mansion -- or because they want to impress their friends, family and neighbors, than do because the market doesn't make small, cheap houses available.

The high cost of housing is caused by "rent seeking" -- a microeconomics term in which politics rather than wealth creation is used to increase someone's wealth. Harvard economist Edward Glaeser and many others have written about this. Zoning is used to regulate housing density and overuse of historic landmark preservation both artificially increase the price of land. Thus, landowners with billions of dollars in property are made all the more wealthy.

Middle and upper class people are always desperately trying to figure out ways to keep people with anti-social tendencies out of their neighborhoods and away from their kids. As it stands in America there's no legal mechanism to banish annoying people, as was the historical way to handle this. Lower income is a very flawed but still useful proxy for criminal or otherwise annoying tendencies. So you get folks everywhere consistently trying to erect cost barriers to housing, because affordability excludes lower income residents. This is in reality one of the main reasons for the original suburban flight. The cost of car ownership necessary for suburban residency excluded social elements the new suburbanites were trying to evade.

If somehow there were a legal mechanism where people on a block could collectively say "No, these people aren't allowed to move in. Go away." Then housing would be way, way cheaper. Nobody would have nearly so strong an interest in driving up prices with artificial scarcity.

> Nobody would have nearly so strong an interest in driving up prices with artificial scarcity.

Except for the people who own the houses and want to see them appreciate.

> The high cost of housing is caused by "rent seeking" -- a microeconomics term in which politics rather than wealth creation is used to increase someone's wealth.

I disagree with the term "politics" here, because rent-seeking behavior is much broader and can involve other tactics.

The "cost" of a house is not the sticker price! Due to mortgages and resale market and inflation and such the actual cost of a house is two things; 1) taxes, 2) upkeep. Better materials will continously reduce upkeep over time so it's really just taxes and utilities.

You really don't need to hustle 8 hours a day to own a house. You need to pick one and live in it for 60 years or whatever and then give it to your kids and then they give it to theirs, etc.

It doesn't jive with modern western culture, but if the first things you did after high school wasn't to pile on x-million of consumption for college, housing, wedding/honeymoon, a whole new set of 'stuff', etc. then there would be little need to work at all.

It also helps a lot if you're cool with picking a house that isn't in the middle of the United State's most popular cities. As best I can tell, demand for property in San Francisco, Manhattan, etc has never been higher. The affordable homes of yore were not located in Times Square.

You're clearly not from New York because I don't know anybody who would willing choose to live in the theater district.

Your point is taken, but you might want to choose a different example neighborhood.

Yup, not from New York. Thanks for the note.

I have a friend who has a huge apartment on W 47th street, complete with a good sized backyard, but because of the location, the rent is surprisingly reasonable. That's obviously an exceptional case, but there are also pretty good restaurants on 9th ave, and great access to all the subway lines.

Hell's Kitchen has become something of a happening area over the past few years but it wasn't historically considered a desirable area of Manhattan.

I think another interesting bit is how little other stuff we're buying now. I'm finding it's becoming harder and harder to find birthday and christmas presents for friends and relatives...once you have a decent computer and smartphone, so much other stuff simply becomes irrelevant.

Thinking back 20 or 30 years ago, there simply used to be many more kinds of things that people would buy. As a child I had a toy closet full of games and toys of infinite variety. My friend's kids all seem pretty happy with a tablet and maybe some legos and that's about it.

Lego are still a thing! My friend and I discovered this. He bought me the Imperial Star Destroyer set for my birthday. We drank whiskey and built it all night -- it was one of the best nights I've had recently!

I'm jealous of that giant rock you're living under. How did you avoid the marketing campaign for the lego movie?

This is interesting in that I look at all the crap my kids have and was thinking the exact opposite. I had a handful of things. A few games. A few outfits. These kids have piles of stuff (alongside their laptops, smartphones, and consoles). We are always throwing out/donating stuff too.

Maybe they are just spoiled...

True. This article gives further support to this:

Teenagers Favor Tech Over Clothes

http://www.nytimes.com/2014/08/28/business/less-prep-more-pl...

Tl;dr teens buy less clothes, prefer tech, and restaurants. Why restaurants ? because of the wifi.

A bit part of it is that people like to live either in the center of things, or out at the edge with a nice green property.

That makes much of the in between land non valuable.

New York City has property worth almost a trillion dollars. That would be the economic return if someone could clone the city.

But we can't clone the city. We can only build out along the edges of existing cities. Or try to build dense in the middle and complain about regulations.

Why not grow smaller cities into New Yorks? Because the core of New York was built at a time when we built differently. Cities grow differently now thanks to cars, and it's very hard to build a new old city.

So places in the middle or on the edges of old cities are expensive. There are many places you could live for very little, but who wants to live there?

What's preventing people from making dense, mixed-zoning walkable cities with good public transit like NYC elsewhere? Why it a requirement that cities have their commercial areas mostly separate from the residential areas?

I remember a few years ago I saw a 7000 acre piece of land in eastern CA for sale. The price tag was $7M. How hard do you guys think it would be to convince a good group of people with diverse skills to go out there and start a small city? All initial people get a piece of land for very cheap or free. Later movers get smaller pieces, etc. Like a startup with equity.

I'm not really sure, I'm guessing you could get at least a small group of people to come. I'd consider it if it had a high proportion of geeks, seemed well managed, had good infrastructure (things like water rights, proximity to an airport, Amazon service, fiber to the home, good schools, etc), and wasn't too expensive.

I don't think you'd have to make it free - you could probably make a tidy profit off of getting services hooked up and then subdividing the land, and still providing people a better place to go.

John Galt, is that you?

Labour is too expensive to build the NYC subway again, and the dynamite would make OHSA throw a fit. Look how much a single new line costs these days.

You can buy a house for literally $1 in several neighborhoods in Detroit right now. Perfectly livable houses are available for the cost of a few MacBook Pros in other depressed cities and towns.

I think the issue is really that the places you want to live are also the places lots of other people want to live--not that the absolute floor on housing costs has risen so far.

In ancient history the people who lived 10 to a house also rarely owned the house or land where they lived. Either they lived in a society with little organized sense of individual property rights (really ancient history), or they were sharecropper tenants on some lord's land. Not so different from young people in a popular metro area today, except that back then there was almost no possibility of ever changing their lot in life.

As with most things, the one dollar Detroit houses are far more complex than that. For example, typically you will pay taxes on the appraised value rather than the one dollar. You're also buying into a neighborhood with little in the way of city services, although the city is working on that.

As with the shirt example in the original article, the cost of labour (i.e. paying people for their time) represents the majority of the cost in building a house. The other items you list are using cheaper overseas labour in their construction, whereas if you're building a house by definition you need to pay local craftspeople for their time. Also due to their physical size, houses require lots of people to put together (i.e. the time is in some sense proportional to size of the item being constructed).

Land in the city is a scarce resource. You can have a very cheap house in Siberia. Will you move there? I doubt.

We are already there. See Detroit.

The retirement systems is utterly inadequate and pensions are non-existent. Thus the middle class is entirely dependent on effectively a housing ponzi scheme to avoid squalor (or even homelessness) in old age. So they will always fanatically, desperately vote to raise property values whatever the long term consequences.

Even more importantly, mortgage holders and other large institutions have a vested interested in raising property values and will guarantee that polices drive that.

Obviously housing prices can't outpace wages forever so one generation, probably the current one, is going to be screwed with houses that can't raise enough in value and yet have no real retirement security.

Even better, once house prices stop outpacing wages and the average Joe realizes, we'll be in the situation where it is much cheaper to rent than buy, and stuff the difference into an index fund, which will yield much better than housing capital gains.

At that point, you're looking at long term house price declines which only stop when buying becomes cheaper than renting.

The next 30 years are not going to look like the previous 30 in the west. However, consumer goods will keep getting cheaper.

people buy too much house.

Its as simple as that

Two thoughts.

First, I'm currently in the process of remodeling my basement. And, it's quite expensive. What I'm spending on remodeling 1500 square feet is approximately the cost of 5 inexpensive cars. Although some of these costs have come from the building supplies, most of the costs have come from labor. Labor in expensive areas is more expensive.

But, then the cost of land is expensive. There are network effects. Upper-middle income people want to live around people like them. Educated people want to live around other educated people. Educated people want to live in nice climates, in places where they can go out into nature, where they can have ready access to nice shops, art galleries, clean cafes, etc. There are not enough of these types of areas to meet the demand.

Alternatively, one can buy an old house in a rust belt city for $25,000. People don't want to move there. It's cold, the people are less educated, there aren't fancy shops around, no good coffee, no hiking, no pleasant strolls around the neighborhood. There are fewer high-paying jobs.

In a rust belt city, you can build a brand new house for less than $90 a sq-ft. Sure, it won't have the nicest fixtures, but you can.

In rural areas, outside of the rust belt, you can buy an acre of land for $1000. You can build a nice place for under $100,000. But, do educated, upper-middle income people want to live there?

Some possible solutions: 1) reduce the costs of building. Services should pop up that import labor from less expensive areas. The rise of more modular housing, 3D printing of houses, etc. should lessen the costs. 2) create more areas where upper-middle income, educated people want to live. This is harder, because there needs to be jobs, first. It's a chicken/egg problem. How do you get employers to set up shop where there aren't any educated workers?

" A brand new Android flagship for the price of a months' rent. An utterly imaginably spectacular device."

But this isn't an utterly imaginably spectacular device. It's merely a run of the mill consumer-grade portable computer according to modern standards.

Your rent would be insignificant compared to, for example, the cost of a truly spectacular computer by modern standards, such as a modern search engine cluster with a price tag of perhaps a half billion dollars not counting ongoing opex.

Think of it this way: Whenever residents in a sought-after area get cheaper computers, that means they have more money. Since everyone (also outside the area) gets more money that means they have more money to pay for housing. And voila! The prices of housing in the desired area rises and all savings are gone.

Since desirable land is a limited resource, it's' price will simply rise with people's ability to pay for it.

I agree that the price of land is a tough nut to crack, but the cost of actually building stuff on that land could be reasonably expected to fall at a rate similar to the rate of other manufacturing. That it hasn't is, I think, largely because we build buildings right where they end up, so we can't take advantage of the efficiencies afforded by assembly lines and outsourced labor. This mostly seems like a good thing to me. The notable exception is trailer homes, for which the price of the land really does dominate the cost.

"Will we ever get there?"

Sure; move to Wyoming. San Francisco Bay Area and NYC do not reflect reality in the rest of the country, let alone the world.

>I'd much, much rather live in a world in which a laptop was a huge expense that I could only literally afford once every few years, but to be able to afford to put a roof over my head without hustling 8 hours a day.

I'd rather have the opposite, to be honest. Houses are affordable because there are mortgages; most people need lots of hardware in their life and only one house.

Who would be slaves then if not decades of mortgage or expensive rent? Nobody (with power) wants people to be too free and happy, because that won't make them work; only pressure will (physical in less advanced countries or economical in more so).

The sewing machine changed the world. I took a sewing class a few months ago, and the instructor was very clear that before that machine was invented, women would spend a significant portion of their time making clothing and other textile items by hand, needle, and thimble. The sewing machine is a classic example of how technology can fundamentally disrupt society by removing manual tedium. All of us here on Hacker News can be inspired by this seemingly minor piece of history. It's what we should strive for in our work.

As said in the article though, spinning and weaving actually takes up much more time than sewing. I would say the biggest innovations in clothing were the cotten gin, the power loom, and dry cleaning. Before dry cleaning, a suit had to be unstitched to be cleaned.

> The sewing machine is a classic example of how technology can fundamentally disrupt society by removing manual tedium. All of us here on Hacker News can be inspired by this seemingly minor piece of history. It's what we should strive for in our work.

The sewing machine shifted the tedium of manual pabor from most people onto a much smaller number of very poor people who now work in conditions which are illegal over here (and often illegal where they are too) for very little money.

When I buy a shirt I don't know if it's expensive because a fair proportion of the price is being paid to the people making it, or if someone near the sales end of the chain has "added value" and is taking increased profit.

I don't find it inspiring. I guess I should be considering what these people would have instead - looming carpets by hand perhaps, which would be worse.

I would really like to know that the £47 ($70) shirt I buy isn't exploiting the very poor.

While I agree that sweatshop labor is deplorable, the flip side of that can be seen by looking at the number of tailor shops in your area or mine. It won't cost $3500 for any of them to make you a bespoke shirt, that's a guarantee.

Now a bespoke pair of shoes on the other hand...

People who work in sweat shops would usually have much worse conditions to live in if they didn't work in a sweat shop. They'd be probably trying to pick things out of garbage dumps.

Because the sweatshops destroyed their agrarian culture, by selling a lie about economic opportunity.

Depending on the quality of the Garbage dumps, picking through them would be a step up from some of the third-world agrarian agriculture that I've seen - which is unsafe, backbreaking, soul crushing labor.

(Note - even in the United States, Agriculture is less safe than your typical chinese manufacturing factory)

A lot of people around here seem to think "economically rational" is the same thing as "ethical". In a lot of places and times in the world (including US cities in the early 20th century), due to crushing poverty and a glut of labor it has been economically rational for people to accept work in factories with horrific working conditions for wages that will barely feed them. That includes where they're physically locked into massively unsafe buildings. Such as the Triangle Shirtwaist Factory. That doesn't make the practice of offering jobs in such conditions ethical.

"Ethical" in these situations aren't black and white objective affairs. The relevant metric is that whether pushing the levers we have available to us as consumers, even policy makers, in the rich west, affects a more or less ethical outcome in the end.

We emphatically do not have the tools in our possession to make billions of people in south east Asia rich enough and educated enough in one stroke to avoid the situation you're describing ("crushing poverty and a glut of labor"). The one tool we do have to affect such an outcome, although slower than is desirable, is trade - and revoking that trade is pretty much the only lever we have to push, and the outcome for these people will be drastically worse.

That doesn't mean that there can't exist actions that businesses and individuals could and should take to improve matters, but step 0 is realising that those are drops on the ocean: We're not going to fix this wholesale, except by trading as much as possible.

By no means would I suggest cutting off trade as the solution to these problems (not sure why you jumped to that particular idea). Just saying that we shouldn't be satisfied with having our clothes and electronics made in death-trap sweatshops or factories where they're exposed to toxic chemicals (or any number of other ethical violations related to hours worked, overtime pay, or even freedom to leave) just because sweatshops are better places to make a living than trash heaps.

That's not the only choice available. We can still pressure brands to pressure factories to provide humane and safe working conditions, and hell - is it too much to ask for brands themselves (and the purported human beings working there) to make ethical choices without threat of bad press?

And that prostitute wouldn't earn enough to live off if I didn't pay her for sex. Sometimes it's too easy to twist ethics about until they fit what you want them to fit.

http://www.slate.com/articles/business/the_dismal_science/19...

One important fact to take into account is that the cost of labor in the middle ages cannot really be compared to today's minimum wage. The calculation based on $7.25 an hour, coming to $3500, is a bit of a hyperbole [1].

In fact, even today in many places in the world (India and Africa come to mind), artisans still produce fabrics, clothes and other low-tech products by hand for way less than American minimum wage [2].

I'm not a historian by any means, but it is my understanding that before the industrial revolution the major cost of production was the cost of materials, and the cost of labor was marginal. Contrast this with modern production, which is continually occupied with reducing the cost of labor, either by automation or by offshoring to third-world countries.

[1] Of course, any kind of cost comparison across 8 centuries is suspect. A quick search produced this: http://faculty.goucher.edu/eng240/medieval_prices.html

A peasant's linen chemise is listed as costing 8d in 1313, which is equivalent in purchasing power to anywhere between GBP 22.30 to 5970, depending on the index, according to this:

http://www.measuringworth.com/ukcompare/result.php?year_sour...

[2] http://www.bls.gov/fls/ shows cost of labor for different countries in recent years. According to the site the average hourly compensation in India in 2010 was $1.46.

It doesn't matter whether $7.25 is hyperbole. What matters is whether or not 479 hours is hyperbole.

Let's see. IRL, I own around ten t-shirts, and they seem to wear out in 2-4 years, so let's say around 100 wearings. I'll stretch that out to 730 wearings, because I'm "wearing it until it disintegrates".

I'll hope to buy a shirt on odd-numbered years, and new pants on even-numbered years. I won't buy any other cloth goods.

If I work 40 hour weeks, I have 2080 hours of labour in a year.

Suppose I am equally economically valuable to a spinner, such that I can trade one hour of my productivity for one hour of theirs.

If I need a new 479-hour garment every year, then I need to allocate nearly a quarter of my life to buying clothes, even though I wear clothes until they disintegrate, and only own one shirt and one pair of pants. That is fantastically expensive.

Depending on the era and location, slave labour totally skews the calculation too.

It doesn't change the calculations. All other things being equal, that slave would then sacrifice 100% of his life to provide clothing for four people.

It (drastically) changes the ethics of the situation, however.

The numbers seem to be based off current days knowledge of old world methods. I'd imagine after spending so much time doing a task, they must have found a way to be at least a bit more efficient at using their own tools to do the job.

Yeah, that's the crucial question in the estimating.

Here are some other issues.

She claims 2 yards of tie-off for every 4 yards of fabric, in both the warp and the weft. You only weave 4 yards before re-warping?!? Bullshit. And you don't use tie-off at all on the weft, as I understand it. So instead of 33% of thread being wasted to tie-off, I think 0% is a close approximation.

On the other hand, if I read the post correctly, it claims that there are 72 inches in 6 yards. So increase the thread requirement by 3x!!!

If I'm correct about both of these errors, a better figure would be 879 hours. Yikes.

Your shirts wear out much faster then theirs. The fabric is much thinner for one, and you wash (and worse tumble dry) it often.

Your calculation of 40 hour weeks is quite wrong. 100 hour weeks were completely normal back then.

So it took a month to make a shirt, and it should expect to last 10 years or so.

The Talmud says that a poor person had a budget of 50 zuz per year per person for adult clothing (not including shoes). Someone calculated based on the price of bread that 50zuz is equivalent to $166. Other calculations find 50zuz to be $1000.

One zuz was the average daily wage for an unskilled worker. So it would take you about a month and a half to get clothing.

I agree that 40 hour weeks was silly. ;) 100 hour weeks are also silly, however, especially when you consider the religious proscriptions against working on the Sabbath. 100 hour weeks is almost 17 hours a day (six days), leaving 7 hours for all sleep, eating, hygiene, recreating, family care, etc. Pretty much physically impossible. Also, as I understand it (though I am no expert), accounts of medieval life show that aside from sowing season and reaping season (when everyone DID work 100-hour weeks for very short periods), there was lots of leisure time. Let's compromise at 60-80 hour weeks.

I also agree with your points about my shirts (thin and tumble-dried). On the other hand, my shirts are woven/knitted from a very consistent fabric, which might help, and they're exposed to very little mechanical abuse outside of the dryer (I do not do physical labour, I'm very sessile, and for that matter I don't get much acidic sweat on them). And my shirts _are_ usually showing multiple (small) holes after those ~100 days of wear. You really think their shirts would last 3650 wearings, 36 times as much as my shirts? Thirty six times? Nonsense. My 7x might be low, but I bet it's closer than your 36x.

Also, as I mention in a cousin-post, I think the author screwed up her math twice, such that I think the correct number given her inputs is 879 hours, which I'm gonna call 10-15 weeks of labour. And then once we account for other clothing, as I did in my previous comment, by assuming that all non-shirt garments collectively are as expensive as one shirt, we're up to perhaps 25 weeks of labour total.

So it takes four months to make a set of clothes, and the set lasts a few years. So I'm no longer saying "one quarter of your life", I'm saying "more than ten percent". When you wear your clothes until they fall off you.

The Talmud reference is very interesting. You say 50 workdays (that's 8 weeks... you agree that the people referenced in the Talmud didn't work the Sabbath, right?) for 52 weeks of clothing, which is one sixth of one's life.

Sounds like our estimates agree.

Yah, we do mostly agree.

A few points:

I've worn shirts for longer than 100 days with no holes. T-shirts are very thin and don't last. Thicker fabric lasts exponentially longer, not just a bit longer. And the dryer is really hard on fabric.

I stand by my 10 year guess-timate - especially when you include repair.

I don't think there was ever any real leisure time. Instead it was low-energy time. For things like spinning and making cloth, but not hard work. So 90 hours a week might actually be right. (100 was too high.)

The Talmud numbers are for a poor person, not an average person. Those are the numbers below which someone should get social help. Most people would spend more I think.

The 1 zuz a day is income from outside work. A person would also work at home, so their income could be another 50% on top of that (not as money but as made at home goods). I assume the 1 zuz a day is for the poor person, not the average.

I do wonder if other people worked 7 days a week, and the Tamlud figures are not representative of the majority.

One thing that is in historic accounts, is that people used to die in the street in London quite frequently. This is probably related to the fact that their dwellings were so small.

If the person died in a not-so-good area street gangs would strip the corpse of clothes because they were so valuable.

That alone speaks to the relative value of clothes. Most of us wouldn't wear a piece of clothing we found, even if it was in good condition.

Puts the 'are computers going to drive as all into unemployment' debate in perspective. A 1,000 fold reduction in input costs has predated us, and the economic results speak for themselves. What's another 10x reduction compared to that?

Taking 500 hours (30,000 minutes) of labor to make a shirt (and that's just counting the final steps of production) and making it 30 minutes (if that), for production of 1 billion shirts, turns what would have been full-time employment for 240 million people into full-time employment for 240,000. (Typing on a phone, no pen handy, need to double check that)

What's super cool is from our perspective on the curve, no matter how far we've gone, a 99.99% reduction already, there's still always another 50% we can remove in labor costs.

Will true perfect AI let you jump the asymptote to absolute zero labor costs? Then our creation will have surpassed us and made us like mice are to humans today. Squeak!

The other really interesting subtext is the incredible input cost constraining production and mandating complete use and recycling. No such thing as a landfill when the inputs are precious even after being "worn to threads"!

The transition was pretty gruesome, so your analogy is not all that reassuring. Nobody thinks we will all die, just that a lot of us will be very poor.

I have the complete opposite interpretation. Life before was gruesome and today we live in a world of relative plenty if not obvious excess. Reduction of input costs makes us more wealthy not less. How many shirts do you own? How long do you work to afford a lavish bowl of berries and cream?

Not everyone lives your lifestyle. Most of the people who manufacturer your stuff are very poor and live in Asia.

And yet even most of them are probably better off than the average middle-age peasant.

Of course - I meant the transition, not the final outcome. But we will live in the transition, not in the resulting paradise.

For example, think about the native Americans in the US. Not to bash the US, just to illustrate. Millions of them died when settlers from Europe took over. Now living conditions in the US are great, but for the people who got killed in the process it was not so great.

Average global living standards have gone up, not down, during the time period covered by this article. In fact they have never been higher than they are now.

Some might say that happened in spite of the economic disruptions caused by technology, but the truth is that it happened because of those disruptions.

Average global standards may have gone up. The question is this: who really reaped the vast majority of the benefits from productivity improvements? Was it the worker who is doing the work, but doing it much more productively, or was it the few "entrepreneurs" who figured out a way to "monetize" the skyrocketed productivity of those workers?

We have the exact same argument with regards to software developers today, who are quite underpaid relative to the actual value they are adding to their employers. Yes, they may be living quite comfortably, but is that all that matters?

Average global standards have gone up, and not just a little. Orders of magnitude in just the last couple hundred years. Standards will continue to climb increasingly rapidly based on $1.6 trillion of annual R&D, and worth noting that private R&D investment is up to 75% of that (varies by country).

I think you're focusing on the wrong thing. The question is not, are there a few (0.01%) people who have gotten supremely rich. As long as there is any notion of private property, there are, and always will be, a 1 percent. And a 0.001%. Generally the same people who provide the capital to fund the R&D leading to these advances are the ones who most directly reap the benefit of that R&D.

What we suspect is that providing these profit motives is the reason why people are willing to take the risk and make these wonderful things happen in the first place. To paraphrase, capitalism is the worst form of economic system, except for all the rest. It's what we have, and clearly it has worked wonders in just a few hundred years of human history.

To your point about developers, what other industry is more open to individual contributors quitting their day job and going to work for themselves? If you're complaining that working for someone else means that you are working for someone else, I don't know what to tell you. You can choose the security of someone else signing your paychecks, or you can go it alone and reap the benefits. What other choice could you possibly hope for?

If an employee (or group of employees) captured the entire value that they added, then by definition they would not be worth hiring! Obviously in order to take the risk of hiring an employee and committing to pay them a (substantial) fee a couple times a month for the foreseeable future, you would expect to earn a significant return on that capital when things work out! Besides the fact that the company is fully supporting and directing them in their efforts, and to the extent that is not true you would expect equity. Don't forget, in the vast majority of cases where these things don't work out spectacularly, while the stockholders lose their shirts, we don't ask the employees for a refund!

Fascinating article. While the concept of a "real" dollar is a leaky abstraction (hence the constant bickering about how the price indices that determine pensions etc. should be calculated), it still is a striking way to demonstrate how the relative prices of things have changed over time.

This is all well known stuff. But I am glad people are writing about it. Sometimes people seem to worship the past without realizing the incredible poverty people lived in back in the day.

Also, I like the jpeg of the black mask mag featuring the Maltese Falcon at the end. The best american modern literature is pulp fiction.

> Oh, and in the middle ages, it would be expected that all of the inside sleeves would be finished.

What does this mean, that the "inside sleeves" be "finished"? And is an "inside sleeve" different from an "outside sleeve"?

I think he's underestimating the yarn production rate for a drop spindle. But it's quite correct that textiles were incredibly expensive before machine production. Textile machinery launched the Industrial Revolution.

As for why textiles are so cheap now, search for "jet loom".

just looked at toyota jetloom video on youtube. That was an eyeopener.

This article shows the true value of innovation over time in saving time, money, and effort.

I think the article is incorrect in saying ". A shirt like this [...] would be a fine weave"

If it really took a quarter of a year to make a fine-woven shirt, poor people wouldn't have worn fine-woven clothing. It's too expensive, firstly to make, secondly because it doesn't last as long, and thirdly because it isn't warm enough in the cold months (for poor people that could easily be more than half the year. They wouldn't have glass in their window frames, and would have little in the form of heating)

Might be slightly tangential, but reading the post reminded me of Rational Optimist[1], a book about how key parameters of our lives are improving despite constant global pessimism. (e.g. Food availability, income, and life span are up; disease, child mortality, and violence are down)

[1]http://www.amazon.com/Rational-Optimist-How-Prosperity-Evolv...

I agree that we in most of the western world generally are awash in things and that we all are "ungrateful bastards" (wording mine).

But then the author goes on about how time it would take to make a shirt in the medieval age and then calculates the cost using today's minimum wage. That make no sense at all, and dies give us any information.

Maybe compare it to price of a loaf of bread back then, that would give us an idea. Then we'd have singing to go by.

Loaf of bread? Grind the wheat using a hand mill or mortar/pestle, mix ingredients, knead, rise, bake. Doing it all low tech, takes about two hours of work: price at least $14.50 per loaf on labor alone.

It's not really possible to compare prices across such large time periods. The author chose to fix the price of one commodity (unskilled labor), while you chose a difference commodity (food).

>That's why single women were called "spinsters" - spinning thread was their primary job.

Quite a revelation for me. Very interesting read.

I was expecting another story on Bitcoin :-) But this is great, too.

Good clothing is still surprisingly expensive relative to other goods. You can get a perfectly good new mini-fridge or microwave oven for $100. A pair of jeans that will last heavy usage for three years is over $100. I find that confusing. I would expect the mini-fridge and microwave oven to be many times the price of a pair of blue jeans.

Where are you buying your jeans? I live on a farm. A pair of jeans that will last under heavy usage is about $30 at Tractor Supply.

Non-selvedge denim will begin fraying badly at the cuffs and probably have holes in the crotch in well under a year of daily three mile walking, nevermind more active wear. Any selvedge denim jeans cost over $100. Sitting on a tractor or on various other farm machinery is not heavy wear.

Even my crappiest old jeans with holes at the knees (which could be patched, or built thicker in the first place) have never worn out the crotch.

Washing/drying wears clothes more than walking

I think you have your body to thank for that. All my jeans get completely destroyed at the crotch within a year. I just think that different body types create different movements and wear.

Crotch bursting (which is the hilarious technical term for it) is more common than you'd expect. Major reasons are over-washing, but a bad fit, stretch fabric, too-thin fabric, and poor stitching are the major reasons for failure.

If you are finding that your jeans are always bursting at the crotch, identify first if it's happening at a seam. If so, buy a different brand. If it's not, wash your jeans less.

If you must wash them, do it inside out, and always let them air dry. Don't use bleach, or any detergent with oxidizing chemicals (this is more common than you'd think). Ideally you should't even wash them in a machine. I think the absurd movement to wear jeans for months without washing is unacceptable if you ever plan to wear them outside of sitting down at a coffee shop, but hand washing them is much gentler and will have your jeans last for years. I own more than one pair of jeans that are years old, and have seen hundreds of days of use without any damage.

Oh hey /r/malefashionadvice

I manufacture jeans, and this is misleading.

The strength of any textile (knit or woven) is a first a function of the yarn and then of the structure. Any heavy twill that remains unwashed for long periods of time (as all "selvedge purists" seem to do) will last longer than a pair of cheap jeans that get tumble-dryed twice a week.

Please stop perpetrating this myth that selvedge denim is somehow inherently stronger or better than regular denim. It should be indicative that most people need to turn the cuff of a pair of selvedge jeans to look for the actual selvedge before they know for certain.

To your original point that you find it confusing that apparel is expensive relative to other goods, it's probably because retail margins are disproportionate to the amount of cost it takes to sell garments for a list of reasons out of the scope of a Hacker News comment. Apparel is, at the point of sale out the door of a manufacturer, cheaper than it has probably ever been today. The amount of processes involved between planting a cotton seed and loading a container of packed garments is absolutely awe-inspiring in scope, and the fact that a pair of jeans is billed by a manufacturer at ~>$10 is crazy.

> retail margins are disproportionate to the amount of cost it takes to sell garments for a list of reasons out of the scope of a Hacker News comment

I think it's perfectly appropriate for HN. Do tell us your thinking about why apparel is expensive relative to other goods. I've wondered this myself.

The emphasis of the scope was the word "comment" and not "Hacker News"; i.e., it's a lot to cram into a comment. Here are a handful of thoughts:

In a nutshell, I think apparel is too cheap, but raising prices isn't the solution because of the bargain-hunting and markdown pricing expectations that consumers have that is moving its way further upmarket every year. Brands are scared to raise a penny on their prices, and are right to be fearful because consumers don't have loyalty. While manufacturers are living on terrible margins, retailers (who get decent margins) have to deal with the ridiculous cost of retail real estate and stock write downs, which means that the only person who really wins is the importer (in cases when the importer exists) and the consumer. The importer can also lose this game if they work on a replenishment basis (double storage cost there if you're following along).

Plenty of other reasons exist. If we use the earlier example of a refrigerator, then things like automation come into the picture. The apparel industry, for the most part, is not really automated. I've seen TV manufacturing facilities, and they are so alarmingly automated it seems fake at first glance. Even then, companies like Sony have lost money every year for decades selling TV because the rest of the business can sustain huge losses so Sony can have their logo staring at you every day of the week in your living room. Apparel businesses don't have that kind of luxury because most are not small hobby businesses of a larger conglomerate.

Then there are lots of political issues such as the United States customs policies. FTA like CAFTA/NAFTA, AGUA, special treaties like the ones with Jordan are all affecting apparel. Do you know a synthetic garment from a country like Sri Lanka (lots of, for example, Nike production happens there, so think about an athletic garment from them) will be imported at a 32% duty rate?

"Fast fashion", which today basically means very cleverly convincing consumers to buy more clothes means the SKUs have gone up for manufacturers, but since nobody really gets paid anymore the margins get shrunk because of a loss of economies of scale right from the start of the value chain until things are put on retail shelves.

Etc. etc.

TL;DR Apparel costs about what it should, if we assume it should be a reasonably low-margin, high-risk business. Comparing it to the lower-margin, higher-risk electronics industry is not an easy comparison because of how different the businesses are.

Another example of what's great about HN: Ann offhand comment about the cost of jeans elicits detailed analysis from someone who actually makes jeans.

The breadth of expertise here is amazing.

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