There were some very Australian moments, like referring to the 2000s housing crisis as a crisis of falling prices, whereas in the US we regarded the mass foreclosures as the crisis.
Policy prescription was very Australian too. Cameron (like Steve Keen, despite very different worldviews) ends up at public housing/central government provisioning. It’s interesting because I think he has the diagnosis right: housing prices are set by mortgage liquidity, not zoning. Rather than a centralized solution, one could bump the interest rate premium on targeted metros, route that money back to the metro via servicers, putting it in a trust earmarked for supply expansion - get two downward pressures on pricing while keeping it local, avoiding price controls, and being liquidity-neutral.
Too bad he shrugged off fertility, had me missing the DC Yimby lady.
Obscured by basic restatements of interest rate and other market dynamics that no one disputes, is the argument that regulations “only” affect the temporal allocation of housing. This is a parallel to the argument that land use regulation only affects the spatial allocation of housing, which Murray has written well about in his “Scale Synthesis of Housing Supply” piece. Before diving in here I would just like to express how ridiculous both of these contentions are. By all appearances, we live in a spatiotemporal universe. With respect to _things_ there is nothing else that matters but their time and place! But I digress.
The section, “The Spatial Equilibrium Isn’t Evidence of Misallocation”, touches on the spatial component that Murray has written so much about. First, the section title is true! The economic value of land differs according to its natural features, and these differences in value are modified by the path dependencies of preceding settlement and ongoing economic activity. This is a tautology real estate agents will bark at you endlessly: _location, location, location!_
Despite Murray admitting there are clear spatial differences in the economic value of what gets built where—and he needs not admit it, for he does not live in Kamchatka—he argues _against_ Glaeser’s thesis that poorly written laws which dictate what may be built where misallocate resources. In other words, Murray admits there exists an economically optimal spatial distribution of people, but denies that policy which needlessly constrains how people are spatially distributed would hamper economic growth. It is hard for me to believe he would hold such a plainly contradictory opinion given his previously mentioned intelligent writings on the subject, but that is what the summary leaves me with.
Then there is Murray’s temporal claim:
> A core misconception: lowering regulatory costs increases construction speed and quantity… Reducing input costs makes houses bigger and better, not more numerous or faster to build.
This is, plainly, wrong. Regulatory costs are inherently temporal. Need reduced parking requirements, adjustments to setbacks, or upzoning to make your project pencil? That’s going to take money and _time_ [1]. You can either go through with the process, slowing time-to-build, or not do the project at all, contributing to a longer term supply squeeze [2]. Maybe you build it elsewhere, but then the original community, whether a neighborhood, city, or state, will lose out on the additional resident and accompanying agglomeration effects, for none of the other components that make a city desirable are themselves fixed, but are in constant conversation with one another and the housing market. The spatial distribution of jobs, amenities, and infrastructure can shift, for example, leading to a shift in population. These kinds of population flows are evident even at the national level, exemplified most recently by the immigration to the South and emigration from New York and California. Evidence for this behavior is contained as well within the countless anecdotes of the migrants that made the move, indeed in the stories of most migrants.
Fundamentally, people decide where to live under spatiotemporal constraints. That is a fact of life. Regulation that affects when something may be built affects whether it will be built because conditions change over time in irreversible ways. It feels frankly ridiculous that I should have to recapitulate these general ideas to an economist, but here we are. It is necessary to call this component out because it is ultimately the only aspect of Murray’s thought that is in the slightest opposition to YIMBY-ism. We are not campaigning against interest rates, but land use law [3].
[1] Notably, though perhaps this is an idea Murray is not fully familiar with given his choice to enter academia, it also takes time to accumulate money. Any regulatory barrier that requires money to be overcome, except for all but the best-capitalized among us, therefore acts as a temporal barrier, too. Likewise, a temporal barrier can bleed money. Most barriers combine this features in double-ended ways by requiring a fee + processing time. For example, let’s say you have to spend $6,000 to get a parcel rezoned to build your house. This requires you waiting on a few more paychecks before you buy the lot or can start building. Meanwhile, you are also paying taxes on the lot. Then, once you have the money, there is the additional time to wait for the rezoning process to finish; possibly there will be community engagement, creating uncertainty. This time will cost additional money. The monetary barrier to start the process costs time to overcome, and the temporal barrier of the process itself costs money. The two are intertwined.
[2] Whether there is in fact a supply squeeze depends on the lens you choose. Murray is right about that in the same way that the number of flies in front of me depends on your definition of “in front.” I don’t mean to completely trivialize Murray’s work here, it is useful to check our intuitions, but in almost every practical instance there is an obviously appropriate lens to choose, most often corresponding to our existing sociopolitical institutions and cultural identities (the neighborhood, the metro, the municipality, the borough—etc).
[3] The points of “YIMBY Reforms Are Continuation, Not Revolution”, are not truly “anti-YIMBY”. In this section it is not that the policies YIMBY-ism advocates for are bad, nor that they are not good enough, but that they are not as good as Murray says YIMBY’s say they are. It is pure posturing. Like other contentions throughout the piece, this one says remarkably little about anything.
I enjoyed it.
There were some very Australian moments, like referring to the 2000s housing crisis as a crisis of falling prices, whereas in the US we regarded the mass foreclosures as the crisis.
Policy prescription was very Australian too. Cameron (like Steve Keen, despite very different worldviews) ends up at public housing/central government provisioning. It’s interesting because I think he has the diagnosis right: housing prices are set by mortgage liquidity, not zoning. Rather than a centralized solution, one could bump the interest rate premium on targeted metros, route that money back to the metro via servicers, putting it in a trust earmarked for supply expansion - get two downward pressures on pricing while keeping it local, avoiding price controls, and being liquidity-neutral.
Too bad he shrugged off fertility, had me missing the DC Yimby lady.
Obscured by basic restatements of interest rate and other market dynamics that no one disputes, is the argument that regulations “only” affect the temporal allocation of housing. This is a parallel to the argument that land use regulation only affects the spatial allocation of housing, which Murray has written well about in his “Scale Synthesis of Housing Supply” piece. Before diving in here I would just like to express how ridiculous both of these contentions are. By all appearances, we live in a spatiotemporal universe. With respect to _things_ there is nothing else that matters but their time and place! But I digress.
The section, “The Spatial Equilibrium Isn’t Evidence of Misallocation”, touches on the spatial component that Murray has written so much about. First, the section title is true! The economic value of land differs according to its natural features, and these differences in value are modified by the path dependencies of preceding settlement and ongoing economic activity. This is a tautology real estate agents will bark at you endlessly: _location, location, location!_
Despite Murray admitting there are clear spatial differences in the economic value of what gets built where—and he needs not admit it, for he does not live in Kamchatka—he argues _against_ Glaeser’s thesis that poorly written laws which dictate what may be built where misallocate resources. In other words, Murray admits there exists an economically optimal spatial distribution of people, but denies that policy which needlessly constrains how people are spatially distributed would hamper economic growth. It is hard for me to believe he would hold such a plainly contradictory opinion given his previously mentioned intelligent writings on the subject, but that is what the summary leaves me with.
Then there is Murray’s temporal claim:
> A core misconception: lowering regulatory costs increases construction speed and quantity… Reducing input costs makes houses bigger and better, not more numerous or faster to build.
This is, plainly, wrong. Regulatory costs are inherently temporal. Need reduced parking requirements, adjustments to setbacks, or upzoning to make your project pencil? That’s going to take money and _time_ [1]. You can either go through with the process, slowing time-to-build, or not do the project at all, contributing to a longer term supply squeeze [2]. Maybe you build it elsewhere, but then the original community, whether a neighborhood, city, or state, will lose out on the additional resident and accompanying agglomeration effects, for none of the other components that make a city desirable are themselves fixed, but are in constant conversation with one another and the housing market. The spatial distribution of jobs, amenities, and infrastructure can shift, for example, leading to a shift in population. These kinds of population flows are evident even at the national level, exemplified most recently by the immigration to the South and emigration from New York and California. Evidence for this behavior is contained as well within the countless anecdotes of the migrants that made the move, indeed in the stories of most migrants.
Fundamentally, people decide where to live under spatiotemporal constraints. That is a fact of life. Regulation that affects when something may be built affects whether it will be built because conditions change over time in irreversible ways. It feels frankly ridiculous that I should have to recapitulate these general ideas to an economist, but here we are. It is necessary to call this component out because it is ultimately the only aspect of Murray’s thought that is in the slightest opposition to YIMBY-ism. We are not campaigning against interest rates, but land use law [3].
[1] Notably, though perhaps this is an idea Murray is not fully familiar with given his choice to enter academia, it also takes time to accumulate money. Any regulatory barrier that requires money to be overcome, except for all but the best-capitalized among us, therefore acts as a temporal barrier, too. Likewise, a temporal barrier can bleed money. Most barriers combine this features in double-ended ways by requiring a fee + processing time. For example, let’s say you have to spend $6,000 to get a parcel rezoned to build your house. This requires you waiting on a few more paychecks before you buy the lot or can start building. Meanwhile, you are also paying taxes on the lot. Then, once you have the money, there is the additional time to wait for the rezoning process to finish; possibly there will be community engagement, creating uncertainty. This time will cost additional money. The monetary barrier to start the process costs time to overcome, and the temporal barrier of the process itself costs money. The two are intertwined.
[2] Whether there is in fact a supply squeeze depends on the lens you choose. Murray is right about that in the same way that the number of flies in front of me depends on your definition of “in front.” I don’t mean to completely trivialize Murray’s work here, it is useful to check our intuitions, but in almost every practical instance there is an obviously appropriate lens to choose, most often corresponding to our existing sociopolitical institutions and cultural identities (the neighborhood, the metro, the municipality, the borough—etc).
[3] The points of “YIMBY Reforms Are Continuation, Not Revolution”, are not truly “anti-YIMBY”. In this section it is not that the policies YIMBY-ism advocates for are bad, nor that they are not good enough, but that they are not as good as Murray says YIMBY’s say they are. It is pure posturing. Like other contentions throughout the piece, this one says remarkably little about anything.